inp getting slaughtered, page-16

re: valuation then between yarrow2 and ipo Goblins,

I think right now gas has an NPV of $1m per bcf in ground in the Cooper, and oil in the ground is worth A$15.

INP has 35% of 2 fields, Yarrow and Flax, plus 35-50% of some decent (but not great) exploration acreage.

Yarrow is a lot less valuable than it was ; it was estimated at 58 bcf, but with the tight sandstone in Yarrow-2, you'd need to adjust that downwards. How much, I dont know - a lot will be riding on Yarrow-3, as and when that gets drilled. If Yarrow-3 is also tight, the entire field may effectively be non-commercial at current gas prices (just like STU/COE's Kiwi).

Flax was producing at 500 bopd dring the DST, and was said to have circa 5.2mmbl of oil. If it can produce at that rate on production, then thats about 2 mmbl of reserves for INP. In additon, it has 38 bcf of gas, so thats 13 bcf of gas for INP.

Oil in Flax is therefore worth $30m for INP, and another $13m for them for the gas ...

By my rough back-of-the-envelope numbers, they have $2m in cash (last quarter, plus $1m for their cap raising, minus $700K for Yarrow-2). They've also got another couple of mill coming from their options, so they should be OK for cash until Flax starts coming in with oil (at net A$20, 500 bopd is thus $3500 a day for INP. Minus the directors cut, thats still $3K a day).

But, really, until we've got a better idea of Yarrow, and if we know if Flax can sustain 500 bopd, then I cant really put a definite number on INP's valuation.

Sorry if this isnt that helpful.

Ian Whitchurch