uk closed at 37.00p (aud$0.8740), page-16

re: re:hi dyno activity in uk & oslo last night

Hi Blackgold,

Not sure where you got 12.5%. The Argonaut report states 13%. Not much of a difference but that is what the report states. Let's have a look at what Argonaut actually stated on Jaguar and it's valuation and their assumptions. The report is long so I have taken selections from it. For a full understanding everyone should read the full report.

Cheers,
Brantley

Comments from the Argonaut report

Sensitivity

• This valuation and price target is based on a Chance of Success of 13% across all prospects and Oil in Ground Value of US$10/bbl. We believe we have been
  conservative on both these measures, and Table 6 shows the sensitivity of the per share valuation for the whole portfolio based on changes to these variables.
  
  
• It is notable that based on management’s average
  chance of success estimates of 26% (across their entire
  portfolio), the valuation at an Oil in Ground value of
  US$10/bbl increases to A$15.64 per share (A$2.35 per
  share after applying the market discount).
  

Additional Comments from the Report

• Jaguar alone provides an EXR net prospective unrisked resource of some 180mmbbl. This is planned for drilling in the first half of calendar 2006. Jaguar’s gross mean resource volume of over 400mmbbl is similar in size to Buzzard, discovered in 2001, which was the biggest discovery in the North Sea in the preceding 10 years.
  
  
• Although there have been few wells that have tested Upper Jurassic prospects in downthrown or synclinal positions in the Viking Graben, the Independent Expert notes that the Buzzard discovery is an analogue for the Jaguar prospect.
  

The Upside Potential and Buzzard Valuation

• * A 43.2% interest in Buzzard, the largest discovery in the
  North Sea in a decade, was sold by Encana (together
  with some smaller development and production assets)
  to Nexen effective 30 September 2004, for a total price of
  US$2.1 billion. We estimate that Nexen paid US$13 per
  recoverable barrel of oil for these assets, allowing for the purchase price and capital expenditure required for
  Buzzard’s development. This is approximately equivalent
  to US$7.50 per undeveloped recoverable barrel of oil.
  
  
• * This transaction provides us with an indication of the
  value placed at the time on recoverable barrels of oil in
  the North Sea. Based on this, we have used US$7.50/bbl as the low side in our valuation sensitivity analysis.
  
• * However, Brent crude at the date of the transaction was
  US$47/bbl (spot price). Since July 2005, Brent crude
  spot price has been an average of 30% higher, and we
  feel comfortable that the US$10/bbl we used to
  determine our valuation is reasonable.
  
• * Jaguar’s prospective recoverable oil net to EXR is 180mmbbl. At US$7.50/bbl, a successful Jaguar discovery would be worth some US$1.36 billion (A$1.82 billion). At US$10/bbl, Jaguar would be worth US$1.80 billion (A$2.40 billion). On a fully diluted basis this would equate to a range of A$20 to A$27 per share.
  

The valuation is based on the following assumptions:

• 
  A Chance of Success of 13% per well based on the
  Independent Expert’s assumptions for EXR’s
  Jurassic prospects. Note this is less than the
  Company’s risk estimates as they state that on a
  risked basis they have 240mmbbl net prospective
  resources, which on an unrisked 900mmbbl net
  prospective resource implies a Chance of Success
  of greater than 1 in 4.
  
• 
  We assume an In-ground Value of Oil (NPV) of
  US$10.00 per barrel (A$13.33/bbl), which we feel is
  conservative with Brent currently around US$60/bbl.
  
• 
  We assume EXR’s interests are diluted by 70% as a
  result of farm-out. Again, we believe we are erring
  on the conservative.