$27 million for pep 11 drilling, page-19

Trent,

Re PEL 11 - I can see where you are coming from but would like to suggest the following as a counter:

1. BUY have to give away 85% in exchange for 1 hole because small unfunded companies always have to give away a majority share in exchange for initial drilling. Remember they had already given away 25% pre drilling deal so we are actually looking more at 60% for the hole. KAR and MEO have both have to give away the same (or more) in areas already known to be gas rich and with above average chance of an elephant discovery.

2. Oil and gas discovery has changed quite markedly in the last half dozen years - as have the economics of gas. Majors (and minors) frequently walk away from projects that later prove hugely lucrative. Shell and Hardman comes to mind; Karoon and its leases in the browse (or those in the fast emerging Santos Basin).