re: teresa value, page-42

re: teresa value

Lory,

I stand corrected.

Off balance sheet item is the $130 M US oil fields.

$130 M ( Lets not worry if its backed by ASSETS OR IF THE rate is low as it's borrowed in US dollars. $103.
If the AUSTRALIAN DOLLAR falls 1.cent it adds an extra $1,300,000 in capital to the loan. Currently $3,9000,000 extra.

Total Loan now $134,000

Add the loan from NY $100,000 Million ( drawn down to $50M )

Total serviceable debt $184,000,000 Million.

DON"T forget the whole reason for buying these oil fields was because the were positive income producing assets......( "3 Teams on the ground in the US looking for other oil deals" as we speak was the comment by PB at the time.( Another DUD deal as far as i'm concerned.)

Of the $100,000.000 Facility borrowed to starve off a rights issue.

Going by the cash burn ,I reckon there is $50 M Left as of today.
This means that in 6 months time if there are no asset sales or J/V with money in the bank PB will need to pull a rabbit out of the hat.

However, Yes, the debt is what it is Massive as it represents $184 Million ( fully drawn )against a market cap of $450 M
0r adds appox $18 Million per year onto an already big cash burn.

Before u say the interest rate in the US is low ......don't forget it's written at 1.03 so if the Aussie falls to 1 to 1 parity to US dollar...
a fall of 3 cents adds 3.9 M to the capital account.
All this low interest rate spin does not fool me for one second neither should it fool you!

The debt of $184 and growing is massive and LNC needs a sale of Teresa or $120 M JV badly.

18 months ago it was sitting pretty with $500M in the bank and a possible sale of Teresa.
This has all changed......................No JV or NO sale of Teresa .....equals RIGHTS issue.

After 4 years of Teresa for sale ( Whats the reality of a sale within 6 months ? )

A JV at $4.50 per sale with China ( i just can't imagine these guys breaking down the door to sign on the dotted line)

Hence I say more downside risk than upside reward.