"Statoil's investment in the Southern Georgina Basin is...

"Statoil's investment in the Southern Georgina Basin is decidedly bullish for Baraka as it represents a major show of confidence in the prospectivity of PetroFrontier and Baraka exploration permits.

The deal underwrites the drilling of wells in all the permits including EP 127 and EP 128, ensuring that exploration will continue and that drills will turn in the quest to unlock the riches of the Basin.

Indeed, Statoil has flagged that it could drill 10-20 wells by 2017 and has described the Southern Georgina as a “potentially highly prospective play at low cost, with high risk but also with significant upsides”.

The farm-in also renders Baraka as very attractively leveraged to drilling success of the JV with Statoil funding exploration given it is retaining its holding in the JV’s.

While Baraka holds net Southern Georgina Basin acreage of about 2 million acres – for a current EV/acre of about US$12.85/acre, Statoil is taking stakes in about 8.45 million net acres (including the two exploration permit applications), equating to its investing about A$23.54 per acre.

This values Baraka's acreage at about A$47 million, or about $0.024 per share.

On this basis, there is valuation upside for Baraka of around $0.024 - $0.027 per share.

However, if comparisons with other companies operating primarily in unconventional basins in Australia are taken into account on an EV/acre basis: New Standard Energy (ASX: NSE) standing at about A$42/acre and Buru Energy (ASX: BRU) at about A$74/acre, then the upside equation looks even stronger for Baraka.

Taken together, this demonstrates that the value ascribed to Baraka's assets by the Statoil farm-in is substantially higher than it is currently valued, providing BKP holders with significant upside potential : )