value of zola/wa-290-p/wa-49-r, page-9

There are a range of factors which make it terribly difficult to quantify the value of gas assets.

This includes for example not just the confirmed gas discovery, but the prospectiveness of the overall permit as well. i.e. There is gas at Zola-1 but what are the chances of more gas at other locations within the permit? The find nearby at Bianchi-1 increases the prospectiveness of other finds at 290p - but by how much? For me, quantifying aspects such as this is guesswork, and more of an art than science.

Another aspect that I find difficult to quantify is development costs, which impact on the expected rate of return, which in turn impacts on the value of the permit.

Development costs are a bit of a dogs breakfast in my view, given that you need to give consideration to proximity to existing infrastructure, likelihood of other resources that could be tied in for joint development etc.

Then there's just fluctations on labour costs which have gone up a lot in recent times and acted pretty much as a sledgehammer to returns.

At least the assets are governed by the laws of Australia so we don't have to worry about a foreign government trying to change the goal posts and deciding to nationalise the asset!