cnooc & drilling 2011, page-7

Hi all

I think this is reflective of a couple of things:

we all wanted an American or European company. Chinese investors while having lots of money have not proven to be the best of partners. As soon as I saw a Chinese JV partner my heart sank. Think many others responded similarly. I wanted Shell, Chevron et al.

However I am wondering if at the same time there has been a misunderstanding about what the deal actually is.

EXE has not sold 50% of the company. It has sold a 50% interest - note not controlling (yet) in the development of these tenements DEPENDING on $50m being spent on drilling and proving up the resource by August 2013.

At the end of December 2012 CNOOC has an option to buy 19.9% of the EXE at 31.5c per share - which they won't do if there is no resource which we will well and truly know by that time.

Another issue to consider is that there a fair slab of options that expire on 31/3/11. The directors also have performance shares dependent on meeting the following criteria (Tranche 1 almost met). Worth considering (see below).

The big question is will us mug punter shareholders at the bottom of the food chain get a return? Most likely yes in the long term pending Chinese corporate foibles and idiosyncracies.

Short to mid term? Don't know - dependent on spud dates, expiry of options and early results I guess.


Performance Shares
The performance shares will be issued in 3 tranches on terms summarised below....The Performance Shares will automatically convert to ordinary shares if a relevant milestone condition is satisfied by the relevant milestone date. If the milestone condition is not satisfied by the relevant milestone date that tranche of Performance Shares will automatically expire.....The Performance Shares will also automatically convert to ordinary shares if Exoma is subject to either:
? a takeover bid and the bidder has achieved acceptances in respect of 50.1% of Exoma shares or if the bid becomes unconditional; or
? a scheme of arrangement for the transfer or cancellation of all Exoma shares.

Tranche
Milestone Condition
Milestone Date

Tranche 1 One third of total Performance Shares
Exoma entering into one or more farmin agreements under which the farminee(s) have an obligation to spend at least $20 million on exploration for the development of the ATPs.
OR
The volume weighted average price of Exoma shares traded on ASX for any 15 consecutive trading days (?VWAP price?) being at least 40 cents. 30 months from date of issue of Performance Shares.

Tranche 2 One third of total Performance Shares
Certification by an independent expert that the ATPs contain contingent resources of 200Bcf of gas.
OR The VWAP price being at least 50 cents.
42 months from date of issue of Performance Shares.

Tranche 3 One third of total Performance Shares
Certification by an independent expert that the ATPs contain contingent resources of 1Tcf of gas.
OR The VWAP price being at least 60 cents.
60 months from date of issue of Performance