trading halt in pre open, page-55

Bhutos,

This is the valuation of backreef which Gordon Capital Research did in April before this production test.

The farm-out deal with Green Rock Energy does two things for OBL:
1. Fully funds the production test ($700k estimate);
2. Puts a firm market price on the Backreef Area acreage (minimum $18m in total).
The deal is as follows:
GRK will make a non-refundable payment of $1.1 million to OBL (with an additional $625k for a 5% stake due by
30th April 2012).
GRK can then elect to exercise an option to either a 5% or 20% interest in the Backreef Area by purchasing an OBL
subsidiary by paying either $625k for 5%, or $2.5m for 20%, which must be finalised no later than the earlier date
of 24 hours prior to the rig-up of ADS Rig #2 onsite at Backreef-1 or 30 April 2012. Note that GRK has raised
additional funds to meet the 20% commitment (ASX release 12/4/2012).
This implies an indicative market valuation range on 100% of the Backreef Area asset of between $34.5m and
$18m. OBL’s share of this is between $17.1m (retains 95%) to $27.6m (retains 80%). The wide ranges of values is
consistent with the pre-test uncertainties of the Backreef Area.
Should GRK move to a 20% stake, it will contribute $2.5 million on future operations (an Extended Production
Testing of Backreef-1 and/or the drilling and completion of a second well) by 31 October 2012.
Note that GRK does NOT participate in any future payments from Buru Energy, should it elect (within 90 days of
declaration of discovery) to back-in to the permit. Should the flow test of Backreef #1 prove successful, the “change in POS” of the mapped leads could be worth 2–
5 cps.

The last line is what you should be reading, an increase of 2 to 5 cps was stated when the shareprice was 6.9c. The market has factored in failure. This is how I came up with 12c = 6.9c plus 5c plus the possibility of a corporate player coming on board. The attractiveness of the canning is growing every day and CNNOC are looking for more ground and other majors are doing the same.

The other 3 projects are discussed on the Gordon Capital research paper. Worth reading on the OBL website.