tpt to takeover jka at 11.2c per share, page-51

Crows, taxation isn't a primary issue, but time most certainly will be. Time value of projects would certainly come into it, and JKA have 2 that will most certainly be into development way before anything in Morocco. I would put any production in Morocco out to 2017 at the earliest, even if discoveries are made in early 2014. Bear in mind there is little infrastructure in Morocco and the indications are that the oil found in Morocco could well be heavy oil which will cost more than light oil (therefore tax benefits will be offset by increased costs).

Anyhow, my current viewpoint, is that TPT under valuations ensures a massive undervaluation of JKA and why I will vote against the takeover (unless of course TPT's share price comes back).

Crows, you seem to have a good understanding of TPT but I'm not sure you really get what you are buying with JKA as you seem fairly indifferent. My viewpoint that at this price, TPT are getting a steal. Bear in mind JKA, could sell their assets in Nigeria and Tunisia NOW and probably get more value than this takeover is valuing them at.

I will show you my valuations of both.

First TPT. I have risked each of the 3 prospects that will be drilled by the TAO-1 well based upon several things

Firstly, I need to provide a near term valuation if they are successful which I will use Lekoil in the UK (recent find in Nigeria). They have an EV/bbl of circa $1.37. Bearing in mind the time impact in Morocco and likelihood of heavy oil, I am going to discount this by 25%, so will use a value of $1.03 for any find. The unrisked valuation therefore is $1.12 / TPT share (that assumes all of the prospects come in). I risked Trident by 23% and the other 22 prospects at 10% (as I haven't seen a quoted COS for these) so therefore that provides a value of 19c / TPT share. Adding on the cash (assuming farmout completes) then TPT should be valued at around 29-30c.

If the above share price was to be reality, then I would probably be happier with the takeover (and would probably support it) as it values JKA at $45m or around $1.67 / 2C. Still cheap but the deal provides the financing required.

At the current TPT share price, this values JKA at $31.5m or around $1.16 / 2C resource which they could certainly achieve just selling the assets on the current market, so I see no benefit to the takeover for JKA at current levels.

At this point in time I will be voting against the takeover, the UK doesn't seem to be taking the news much better, so hoping that the deal will get rejected by JKA holders. Obviously if the Cairn well currently drilling is successful, then the game may change again as this may increase the likelihood of extra speculation into TPT.