holding up well, page-7

I did a pretty rough estimate based on the last financial report and only assigning costs associated with running the business with one rig. Pretty conservatively, I think we can make around a $2.7 million profit before tax from revenue of $12 million.

This assumes;

Direct costs and royalties maintain the same share of revenue as per the Woodside contract

All costs are doubled from the half yearly except;

1)I have excluded impairment of goodwill
2)Including the stated savings from shift of premises
3)Excluding R and D because it is not related to operations
4)Excluding share based payments as cap raisings etc will be related to building more rigs

Components I have not altered that may be related to building more rigs include;

Employee benefits - how much of this was spent on constructing new rigs? Therefore I left the same ($2.1 million in costs)

Finance charges ($302k), unsure what this is for so I left it in.

Workshop expenses ($308k), may be related to building rig

Therefore, going on actual numbers from the financial report and being very conservative with costs associated operating the rig I think $12 million in contracts should get a reasonable profit. This should be able to justify the current share price. Remember, $12 million in revenue represents only 60% of the revenue predicted in CKK's reports that assume the rig is running at a 50% utilization rate. So in actual fact i'm only assuming a 30% utilization rate for the rig.

Now let's dare to dream of a 100% utilization rate, this would result in around a $20 million profit before tax from the one rig (not much less than current market cap).

Then there is CLRS, extra rigs and economies of scale. To be fair there would be additional operating costs but I cannot estimate that at this stage.

Cheers

Rusty