petrobras 4th quarter and fiscal year results, page-32

Donman,
If u run some numbers thru the options of a takeover cf. a farmin the case is compelling in favour of the farm-in. Here are my calcs:-

1. Takeover to get 70% of Artemis
-Shares on issue plus exec.options in the money approx. 484mm.
-My guess at minimum T/O price that would be required is $1.20 but there will no doubt be some debate about this.
-Total investment for T/O=$580mm
-Cost to drill exploration well assume is covered by MEO's funds on hand.
Therefore, total required to secure 70% of Artemis and test it for gas is $580mm

2.Farm-in for 50% of Artemis
-Cost of seismic back costs say$10mm
-Cost to drill exploration well say $40mm
Total cost to acquire 50% of Artemis and test it for gas is $50mm.

The case for acquiring an extra 20% of Artemis is an extra $530mm. IMO Petrobras/Farminee can not justify the extra expenditure to its shareholders with a GCOS of 32%.

I acknowledge that there are some assumptions in the above but I've tried to keep it simple.

ANZ