merlin pays dearly !, page-4

Graham wrote

"It looks like ITC turned Merlin Petroleum down . I take it that Merlin would have approached us , as they went to RPM .Anyway we can see if they want to deny this ????"

For really obvious reasons, I cant talk about any of the deals Merlin might have looked at and didnt finalise - the ones we are with are in the prospectus.

But I will say ITC only had 12.5% to play with, and it's difficult to farm down further from a number like that.

"Time will tell as Merlin is digested . One point though, if a stike is made , calculations would have to include the dilution effect of the inclusion of the options , as they come into the money at 20c payable . Merlin share price has got to get over 40 cents surely on a successful drilling of a hole . ITC will certainly double ."

While thats true, you also have to include the cash injection from options, and not all the options will excersise at once (all Merlin options expire on 30 June 2007).

Exercise of a substantial number of options will clearly put substantial cash in the tin, and thereby enable Merlin to move forward with it's corporate strategy to expore it's 32 000 km2 of exploration acreage in the Northern Territory and South Australia ... and as the prospectus indicates, several targets in that territory (Avalon and Blaemore) are ready to drill.

Finally, Enterprise paid 2:1 to GOG for 25% of Smegsy-1, a circa 20 bcf gas target, and Beach paid Stuart 3:1 for 33% of Harpoono and Derrilyn. I believe it's fair and reasonable comment to say that those deals set the benchmark in the Cooper.

Ian Whitchurch
Accelerated Farmins Australia
Prefloat Consultants to Merlin Petroleum
0421 864 278
[email protected]

This is not investment advice, and before investing in any of these stocks it is important to read and understand all documentation and seek professional advice.