buyers building, page-30

Atlam,
an interesting question indeed. Valuations are hard to extrapolate at the moment based on the lack of factual information. But, on a fundamental basis, we can still obtain a figure based on what we can ascertain.

People - Management of VIL are pretty much secondary as they are not the operator of this well. However, their cap raising at 2.6 cents was not done at too much of a premium (i.e. 2.8 cents market price). They would also need to ensure that this well is proven commercial to ensure that the options get exercised to give them the added exposure to the whole fausse project. Do understand that additional acreage was acquired. As such, we will need to look at the operator's capabilities. Which in this case is proven as they have operated in the state and have put a number of wells to production.

Property - Known prolific area to produce oil, condensates and gas. Just a matter of hitting the sweet spot and engineering the appropriate solutions for optimal extraction.

Politics - State of Louisiana is advantageous to oil and gas exploration. Tax revenues and exploration expenditure benefits are at the low end.

Promotion - Marketing of their projects have thus far been good. With positive results and a new drilling plan, share price should have more momentum.

Push indicators - Flow rates, resource estimates, new presentations, options "in the money" etc

Comments - Fundamentally, their share price should head north to a conservative estimate of 9 cents - 15 cents post flow rates and commercial nature. One needs to understand that the well was extremely cheap to drill and once the initial surface processing facilities have been accounted for - the payback periods for future wells are going to be really short. More cashflow to come through the door with substantial re-ratings of share price. This is why they are taking so much time evaluating the potential infrastructure and development. Of course, if they do a resource delineation then all bets are off as the share price will then correlate with the valuation given.