Ann: Sole Orbost Update 19 June 2020, page-133

Hi Jake,

That's the "nightmare scenario" IMO. Being picked up for cheap by a PE group.

THE biggest consequence to COE is the delay in cash flow (fortunately(?) rig availability is a problem short term so the Capex is not hitting us at this time).

The greatest jewel(s) in COE are the GSAs ... both Sole and Otway Basin. Their portfolio approach and the low risk expansion of supply opportunities (particularly OP3D) would be highly attractive to PE seeking PDP assets and brownfield expansion.

Like you I'm a long term holder, and very surprised that we are seeing a 30 handle. That said it is very obvious in my Residual Earnings Model that the effect of the increase in Risk and decrease in immediate Net Income has had on the SP.

I'm waiting on the the Audited FY Financials and outlook but the preliminary summary numbers from 5,000 Monte Carlo simulations of



For me that's a pretty conservative view ... and the best way to read it is when "risked" by setting the cost of capital to 15% (so we require a rate of return better than 15% to get any residual earnings) the share price ranges between 35 - 45 cps. This is based on Net Income for FY 21 & FY 22 that have also been simulated thru 5,000 iterations based primarily on volume and sales price to model net income. I'll get into details after the FY 20 results.

Keep in mind this is not an Enterprise Value of the business.

Location Location Location ... and East Coast Australia Domestic Supply has challenges that COE addresses better than most others (Beach included). Speaking of Beach, why are allowed to produce and sell gas, some of which lies in our permits without a unitization agreement ... anyone know why???