Alameda Prospect Brief Review - value, risk, RF, follow-up etc, page-38

HI justinmetals,

Difficult to come up with any NOTIONAL value but IMO, based on the following key caveats, I'd be hoping that the Market may give MAY at least ~25% or ~9.3cps (Slide 1) of the full resource's NPV. This is before any production tests but builds in the factor that both the Upper Sheet & Lower Sheet Plays have extensive production in northern Cuba, thus relatively close-by play analogues exist.

Key Caveats:
- U1 & Shallow discoveries increase the pre drill estimate of the U1 objection by 50% - based on IMO potential of, so far, up to 170m of oil pay in this section
- the N objective discovers MAY's pre drill estimated resource
- the Alameda objective discovers MAY's pre drill estimated resource
- Recovery Factor increase of 20%
- the NPV* A$25/bo I've used (ball park estimate from onshore discoveries worldwide) isn't too conservative - but as the recent drilling issues have shown significant delays can occur adding to drilling costs etc.

I would emphasise that for both the Upper Sheet & Lower Sheet Plays the northern Cuban analogues don't just provide analogue data for appraisal & development of discoveries but also potential of: net pay (all reservoir parameters), log analysis parameters such as Rw, the Recovery Factor, and very importantly a personnel experience base from which to draw on, etc.

All IMO, trust this helps & no doubt many will disagree but maybe a starting point.

Cheers
VOGC


(From internet - *Net present value (NPV) is a method used to determine the current value of all future cash flows generated by a project, including the initial capital investment. It is widely used in capital budgeting to establish which projects are likely to turn the greatest profit.)