great news, page-15

Ron

I must say this whole outcome is quite unexpected.

I suspect they are choosing Hawkeye as it would be a cheaper drill than Cinco.

Yes, there is no way that they could sole risk this drilling. That would be reckless.

Still, with a $24M kick start to a farm in discussion, Otto could well end up with a good chunk of free carry and perhaps be prepared to risk $10-15M of their own money as well.

Therefore the farm in negotiations would be much easier with the BHP money. They could accept as little as 1.25:1 farm in formula and still end up with a decent free carry, part funded by BHP via this settlement. Could see them with a meaningful % of such a well if it gets drilled and of course the licence gets extended to them.

Quite possibly you might get some smaller players coming to the table. I do not see KUFPEC as the major to take a big chunk but they may come along for a smaller chunk if the other party(s) involved are grunty enough.

This whole outcome is fascinating and in my personal experience a first time I have ever seen something happen like this. A credit to whoever negotiated that farm in deal with BHP.

This is where their Galoc money in the latter half of 2014 and beyond will come in handy once the Galoc project debt is mostly cleared away. I would think at that point they could afford to risk $10-15K at that stage.

Also getting a capital raising away once a deal is agreed and the drill rig is ready to drill, would be no trouble at all. Could easily raise the $10-15M I am talking about.

I do still have a nagging doubt though as to whether other parties will actually want to risk money drilling this. Time will tell I suppose.