Ann: SM 71 No 1 Well Update,OEL-BYE.AX, page-11

reactor10, I note people are claiming millions of barrels of oil and quoting numbers of circa 5.6 million barrels. That number, however, if for "Prospective Resources". You will note on presentations the following comment (or similar) is made in relation to Prospective Resources:

"The estimated quantities of petroleum that may potentionally be recoverable by the application of a future development project to undiscovered accumulations. These estimates have both an associated risk of discovery and development. Further exploration, appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons."

Prospective Resources is the "best case scenario" based on information available at the time. O&G companies will usually use 1P or 2P Reserves when assessing discoveries. Banks, historically, will use 1P numbers.

In the case of SMI 70/71, BYE's share of the 1P (pre-drill) was estimated at c. 249,000 barrels. The 2P (pre-drill) was estimated at c. 343,000 barrels. These numbers are for oil only and do not include gas.

I have no idea what that translates into in NPV when you allow for development costs, tie-in costs, production cost, royalties etc. The "rule of thumb" used for valuation used to be about $10 per barrel "in the ground" (assuming commercial).

If the above is correct (and it just my view and accordingly inherently unreliable), the market has probably got it right (as is usually the case) based on the current situation (and not allowing for potential upside as per Prospective Resources).