gas deal done!, page-10

Poor description by me.. and really rough numbers....

Point I was trying to convey was if someone invested say $1M a year for the next 3 years (and I have no idea whether this is accurate) then they are going to expect a return on that invested capital.

Usually the leaseholder invests in the gas gathering infrastructure on their lease and connects to some mainline that heads towards a gas plant (especially so with Wet Gas and sometimes it depends on what these guys allow to be transported in their pipelines - same thing Gassed as what goes on in the Cooper with raw gas and sales gas)

In this instance Mercator is providing that. If it were to permanently stay that way - life of field (say 20yrs) - then about $330K/yr in todays dollars assuming - so about 16.5% deduction

I was just running a pencil and paper calcs.

It would certainly be more complicated than what I've outlined as:

a. As Gassed pointed out 24.5Bcf is not necessarily a large amount of gas - but no one really knows yet how much would be produced - so don't want to over or under invest in the pipeline infrastructure

b. All important will be how much gas is produced over time (have to factor in decline and new well additions). Mercator will want as much of its capital "repaid" (not in the loan sense) an so would seek the highest percentage dedcution possible for as long as possible. AKK and partners want the opposite - so they will need to come to grips with both pricing floors and ceilings as well a volumes.

This does a lot more for AKK than meets the eye IMO - do you think the contract terms will be disclosed - I don't.