new direction for ogy?, page-22

yep, thats the $M question for sure.
i was quite disappointed.
particularly that we won't now participate in Hornet.

"Orca also retains a “back-in” right to participate in any other conventional oil wells proposed by Senex in the PEL 115 block (outside of Fury and Burruna) before the current
expiry date of the permit on 12 May 2014".

I think that means we cannot back-in to Hornet, because backin seems to relate to any wells "proposed" by SXY up to May 2014. So if SXY don't propose any new conv wells, then the "back-in" rights are useless?


but the upshot seems to be that SXY does not need to make a t/o, because they already have 80% of J/V, and have 20% of equity in Orca. So no one else will bid for Orca, because SXY already have an iron grip on register.

the 80% interest in permits is well enough to control operatorship and thus drilling program, and is enough to farm-down if need be. so it seems they don't necessarily need our 20% anyway.

so whilst I am sure SXY would buy out the 80% of shares it does not own in Orca, I presume that the price they offered or considered, was no where near fair value - otherwise our Board would have accepted that offer.

so prior to this deal we had only $1.9m cash.
it seems we need funding for:
- pay calls on exisitng drilling over runs
- pay drilling costs on Texas
- pay share of costs for 3D ?
- pay for drilling costs/pilots for Hornet and other drills scheduled for PEL 115
- admin

so $1.9m will get us no where.

a CR when we had an SP of about 2.2c would have diluted us out of existence.
we cannot farm down a piddly 20% interest, and SXY probably had a pre-empt anyway.
so reluctantly, this deal seems to be the best way out.

SXY has a drilling program planned, and if ORca cannot meet its cash calls, I am pretty sure that ORCA would be forced to relinquish its share of the permit.for no consideration?

so the Board seems to have taken the decision to focus our conventional oil potential in both PEL115 and PEL 110, because the cost of the wells is cheaper, and the potential for quick oil flow is high from Fury and Burana, we are covered for 3D in the PEL 110, and mgt and SXY seem to think that PEL110 is quite prospective for conv oil.
Of course also with Fury and Burana, the cost of getting oil to market is cheap as the infrastructure is close by.
Also we have the right to back-in to any conv oil discovered in PEL 110.

anyway, lets hope Fury is a gusher.

cheers