Ann: Becoming a substantial holder, page-14

You are spot on with regards to the company having a lot going for it. By most valuations, it is extremely cheap. I say most because there is one exception - being Macca.

On a EV/2P+2C basis, it is approaching what it was just before WGO was taken out...



I still stand by my valuation of DCF 33c for Walyering, SE Peaker and WE and Risked NAV 14c for Arrino, Kadathinni and Booth (all risked at 10%), and OH risked at 20% and ED risked at 50%.

Bell's numbers aren't far off if not for their heavy risk discounts...



Even then, its valuation of 31cps is still >50% more than what the market is pricing STX at right now.

As has been pointed out several times now... if the market continues to discount our equity so heavily, we will be repriced either by a takeover or asset sale. It reminds me of how the market was so focused on WES's ROC metric that it simply wasn't valuing the sum of parts properly. Eventually the WES board had enough and demerged Coles (which was capital heavy business with low ROC margin, dragging the overall ROC down for WES). At the time of demerger, WES was consistently struggling to go above 35. Right now, the combined share price is 87. Of course, there have been several other factors (Bunnings outperforming all expectations, Kmart turnaround, Mt Holland, etc), but in the immediate aftermath of the demerger, the two companies traded at over 45, or >30% higher.

If this underperformance continues, I'd personally be urging the board to consider divesting some asset (particularly WE) if the price is right, and use the proceeds to prove up OH and the rest of our drillable inventory. If ED is successful, I'd be surprised if Hancock (most logical buyer of EP469) won't be tempted to buy if we are to offer EP469 and operatorship to them for somewhere between 500-600mn. I think this is a win win for both parties as I don't believe Hancock is actually interested in exploration (though I could be wrong). This way, they get their hands on a lot of gas and have full control over what to do with it. We get to tell the market to shove it, and use the proceeds to prove up OH and the other candidates such as Arrino and Kadathinni as well as developing SE peaker which will provide a half decent revenue stream for the next 50 years

I'd like to see what the market reaction would be then.

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