amplitude extent, page-25

The mind boggles dcheckers. In reality its very difficult to predict how this will play out.

Whatever the path taken, its important to understand the value attributable to a commercial discovery. This is the key to understand what is going to flow back to investors like you and I (whatever the path/structure). As I mentioned in an earlier post NEN will need to 'shop-out' this discovery as they are going to pay a huge bill. The fundamentals will need to be explained in order to justify and support the capital raising. Instos, and sophisticated/professional investors will be salivating. The offer may very well be at higher prices as opposed to a discount. Knowing that the Vietnamese government needs to secure and then support the development of gas resources/projects these investor groups will be concerned about:

a) The in ground risked potential (as we only have a discovery).

b) The production economics and therefore project feasibility.

The price of acommodity is very important. At a) the industry generally assumes a price of USD$0.50, which is the risked price. i.e discounted for probability of the project getting off the ground, CAPex/OPex assumptions, funding costs/probabilities. At this price, and at the NET to NEN resource size the NPV calcs return a value somewhere in the order of 500M-650M. This translates to ~$1ps in value. This is all based on a conservative resource estimate.

What really gets me excited is the NPV or economics around the production scenario. A junior can get there. Have a look at the contract prices that are being delivered into the southern power stations in Vietnam (note mcf converts to 1.02 mmbtu). 2009 figures. Think big, just like NEN did when they attracted then set the terms for ENI/Kris. These prices translates to 6-9x the in ground NPV. The point is that these prices mean big returns in a production scenario - more and more likely once we get the commercials back:

My estimates for pipe and plant construction (most expensive path to production) CAPex is in the vicinity of US$550-700M total. This is 130-175 to NEN - peanuts based on b) or ~US$3-4B.