valuation, page-58

You have an initial test flow rate. Further testing will result in one of three things.

(1) Flow rates drop.
This is unlikely. They will try different choke sizes to maximize flow. If bigger chokes cant increase flow due to a lack of pressure, they can always revert back to the current size. All through the drill the ann have refered to high pressure and gas kicks. This outcome will result in a sp drop but is highly unlikely. For arguments sake 10% chance.

(2) Flow rates stabilize at current level.
After trying several choke sizes, the pressure is insufficient and they revert back to the smaller choke. Under that scenario the well is still commercial and the sp is about correct for the possible revenues, although actually going into production will probably see some rise(perhaps short lived?). Again, pressures have been high throughout, so one would expect an increase in flow as testing continues. For arguments sake 25% chance.

(3) Flow rates improve.
This is the most likely outcome, but the big unkown is how much will they improve. IMO no increase in flow rates is factored in to the current sp. So any increase will directly result in proportional increase in sp. Lets say 65% chance.

In the above three scenarios, you have a 10% chance of a lower sp, a 25% chance that the sp will remain at or slightly above these levels, and a 65% chance of nice gains which will vary depending on individual optimism.

Risk factors low, reward high. Just like the original FP presentation stated. Nothing has changed their.

Personally I think GGP did the right thing in cap raising before a result. They limited the impact of scenario (1). But that came at the expense of dilution, and with only 20% WI they have less exposure to upside. Acquiring Silverwood added diversity too.

VIL will definately need funding at some point and probably as a hedge against risk should have already tapped the market, doing so before the next update is impossible due to time constraints and could also spook investors. A convertible note is still very possible and even with a high interest rate circa 15% would be an excellent outcome.

Dilution is in the back of everyones mind, and can have serious impact to both VIL and moreso VILO. Once this is sorted a rerating will most likely occur and big money may enter. A convertible note or bank loan would be a huge positive for VILO in particular.

The time factor for VILO is a concern, but as someone stated, we were above 9c last week. Sentiment changes quickly and a good announcement next week could see those levels again. Then VILO are basically in the money with a few months to spare, providing opportunity to appreciate further or sell for profit.

My average is 2.1c, i would average up in a heart beat if i knew the funding issue was sorted.

Low risk, High return. Ticks most the boxes. If we knew more it would probably tick all the boxes, but the sp wouldnt be 4.9c