matanda, page-187

9l...

Do not underestimate the offshore...block 6 initially for attracting to eisting reserves in shallow waters, but also for the prospectivity of this block given the limited drilling to date and fact it lies in the direct path of the dominant offshore trends.

Look up Petrobras and their horizontal drilling plans for later this year...they have mentioned 1 billion barrels in place, but at 18 APU oil, traditional vertical wells were not viewed as potentially economic.

This vew was also not helped any by sub $20 per barrel oil prices at the time.

With 10% held by Falcon and I assume say 4% net to CVI, imagine the impact of a confirmed 1 billion barrel field in Block 6, with say 300m barrels recoverable?

That is just existing and confirmed discoveries...good chance of plenty more given only 8 wells (memory) have been drilled over the entire concession...a literal pinprick on exploration terms.

With drilling planned for later this year designed to convert previous discoveries to commercial production, do you really see CVI sitting at 11c?

That's drilling before the end of the year!

Block 6 could well be significant to CVI...and better than the othere three blovks combined. Petrobas would not be drilling a small marginal find.

The other blocks are actually far more oil prolific than 6...but also expensive. At just 2% net exposure however, each $100m well will cost CVI just $2m. With a success rate near 78%, an outlay of say $10m (5 wells) per block will likely see between 5-6 successful wells. Based on similar results throughout the excised portions of each permit, we may well be looking at something like 100,000 barrels per day+ combined production from such an outcome.

That is 2,000 barrels per day net to CVI...or $220,000 per day before costs and taxes. Even if they net just 20% profits from this, payback will occur in just 7-8 months!

Multiply this by three (blocks 15, 17 and 18) and we are begining to talk serious numbers.

None of this includes the onshore.

I am con fused about block 33 though and read a lack of reference to it as indicative Falcon will shift this asset prior to CVI acquiring their 40%. Then again, it may well be that 33 will still be there, just not a commitment priority for now given the less than expected success on that block to date. I do believe there has been a reassesment of drilling results, with a new approach based on an alternative model for this part of the basin. It may well be that block 33 is not quite dead yet?

Frankly, when CVI secure these blocks, which I am 100% convinced they will, a different type of player work their way on to the register.

Cheers!