new hartleys report, page-24

Hey Swan,

My post was not an attack on you, it is more so me airing my thoughts and asking questions to provoke thought and comment.

The thumbs up you received for a post, which was well thought out, was a clear indication that many on the forum agreed with you, however, it was full of holes. You left an opening for me to shoot at them, so I did.

While I'm too lazy to post all the risks of the deal to consider, here are two of the bigger ones: The risk of Tullow walking before or after a 3D or issues with regard to sovereign risk.

Most people here are aware of FAR and Shell. Now we have BHPB doing the same thing to OEL. These things do happen.

No assumption is incorrect. Modelling is based on assumptions, however, one can be aggressive, while another conservative. I am a conservative and compare apples with apples.

The market will dictate the value of PCL after this well and over the months up until announcements of the second BG well. It is highly unlikely that during that time PCL will have a market cap of ~$75 million after a Sunbird failure.

I mean FAR is ~$100 million market cap with a confirmed 2 well campaign around the corner and here we have people expecting PCL to be worth $74 million off a well (Namibia) that will most likely be 18 to 24 months away. There is no certainty with Namibia, so we cannot price $60 million in. (I don't hold FAR and I haven't since Shell pulled their nose at them)

As for your cake reference, if someone agrees to pay you $5 to purchase half of your cake, but agrees to give you that $5 sometime in the future, then your cake is not valued at $5 in present value terms. It is valued at less than $5 (factor in interest rate) in present value terms. I'm sure you understand the time value of money concept, however, you did not consider when you posted that did you? :)

As for Tullow factoring in risks, they only factor in risks they bare, which is a $60 million commitment. There may be some penalties if they do not proceed, however, we are unaware of them to comment on them.

PCL is exposed to far more risk than Tullow as you are effectively at Tullow's mercy. If Tullow says BYE, PCL then has to go to court and Tullow could just drag things out. This can jeopardise the permit and have all sorts of negative implications.