Ann: Quarterly Activities Report and Appendix 5B - September 2023, page-72

Personally , I agree with the company taking on some debt to help fund any JV activity. But DP is reluctant to use debt for drilling as that undid RFE, so that seems to be off the table.

Admittedly, different times and circumstances. RFE borrowed way too much for low yield, Tier 2 acreage development , whereas SWISH is high yield, Tier 1 acreage with a rapid payout and any borrowings should be relatively small compared to RFE. But a debt free company with cash flow is unlikely to go broke, so one can’t blame DP , based on his previous experience, not wanting to risk that. He will use funds for operations ahead of return to shareholders as he has stated , especially when the results of the operations should put a rocket under the returns to the company.

In addition, a company cannot borrow to fund a buy back. A company with existing borrowings that has surplus capital can commence a buy back, even with borrowings outstanding. I’m not sure a company with no borrowings that is conducting a buy back, can then decide to borrow to help fund operations whilst still conducting the buy back. That may be seen to be using borrowings to fund the BB.

Cheers

Dan