great value..., page-15

Another way to look at it is to ignore Mesquite, and the cash on hand (8.7mn) which cancels out out 8mn debt. Also ignore Hybrid, Rioli gas, and all their acreages in Carnavon Basin, Cooper Basin as well as other prospects along the same Wilcox trend onshore Gulf. Let's focus our attention on Rayburn alone.

Based on its current market cap of 85m, the market is effectively pricing our Rayburn discovery at US4.85/mCF based on 100BCF recoverable reserve, or US2.42/mCF based on 200BCF rec res, or US1.61/mCF based on 300BCF. With 6 successful wells drilled (4 producing and 2 to be tested and connected), we're talking about developed reserves here, not in ground undeveloped resource. At the rate of 40mn of revenue per annum (say 10mn NPAT with 30mn for overheads, OPEX and further development/exploration drilling) to be conservative, it'd be hard to argue that it's cheap!?

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