Gooddiscussion around value, it pays to know you're comparing...

Gooddiscussion around value, it pays to know you're comparing apples with apples.

I know the AIanalysis is partly for sh1ts and giggles, the structure is actually prettygood, but the devil is all in the detail (which I know you realise), for whatits worth here's my take on things....

Peoplelike to use the Warrego to Hancock West Erregulla transaction to put a value onPB gas - which makes sense.

Thisoccurred for A$440m for a 50% stake in 422PJ of 2P reserves or 324PJ of 1P.

- if we value on 2P its near enough your $2/GJnumber

- if we value on proven reserves, 1P, itsabout $2.70/GJ

What'sworth remembering is that these were proven and probable reserves. WestErregulla had (I think) 5 wells in the ground that proved the continuity andextent of the volumes. If Triangle finds something at Booth, most investorswill not instantly subscribe these kind of multiples on the basis of a singleexploration well. This is especially true given the Perth basin has dealt out afew blows since the Hancock purchase of West Erregulla, which is going totemper investors enthusiasm. I'm referring to Strike's failed appraisal wells intheir 2P at South Erregulla, the reserve writedown from the Waitsia JV and thefailure of the downdip Lockyer Deep 2 well.

Somy thumb suck on value for the Booth prospect, assuming they make a discoverywith a good Kingia thickness and permeability is below.

Ithink given the recent history of the Perth Basin, investors might be moreinclined to risk any discoveryat closer to the low case prospective volume, lets call it 100PJ (I think its113Bcf or something like that). Then, given that volume is still going to takesome further cost / dilution to prove up (more wells, more time etc) I thinkyou'd be unlikely to see people pay $2/GJ, so lets take $1 or $1.50, whichgives the discovered resource a gross value of between $100-150m. Net toTriangle this is $50-75m, enough to see the share price up by 50-150%, butdon't expect a Disallowed on just a sniff of gas in this well. There are ofcourse other prospects and the UK contingent resource on the books that holdsome value for TEG, but I think most of us know a lot is riding on this firstwell.

If you'remore bullish, and think the smart money is going to value it on the mid caseand A$2/GJ then ok - the AI is basically bang on, 140PJ net to triangle, at$2/GJ gives $280m, but if you think this can command a price the same as WestErregulla from a single well discovery then good luck to you. A barn-burningrate or surprisingly high thickness might help get you there.

Whathas remained pretty strong is the WA gas market and gas price. Which is apositive for Triangle. Strike provided a few insightsin their quarterly out today. Ave realised price for Walyering was A$7.82/GJ,spot price is around A$8/GJ. But remember this is what you can sell it for -not what its worth in the ground. It also sounds like Woodside has beenbringing quite a bit of volume to market lately, in an effort to encourage thegovernment to go soft on the changes to the dom gas reservation policy, I'mhappy to assume about A$6/GJ for long term WA gas price but know it could goeither side of this.

So I agree, thecurrent shareprice is disappointing, I thought it would be higher and washoping to take some off the table at about 25c prior to reaching reservoir - ithasn't worked out that way. The PB has lost a lot of its lustre after Strike'sfailures at SE and people are taking money off the table ahead of this binaryoutcome for Triangle - I think for those of us holding you have to be preparedfor downside, but I feel the risk weighting, at 17c ffs, is in our favour.