With us in the driving seat managing the budget and exploration...

With us in the driving seat managing the budget and exploration programme at Mahalo on behalf of Santos - this has to be seen as good news. Santos clearly believe that what we will do moving forward is in their best interests plus this removes any future hold–ups with regard to this JV Partner dragging their feet when exploration/financial decisions need to be made.
Because we have done as we said that we would with the success of the horizontal drilling resulting in a decent reserve upgrade which will be announced shortly – Santos know that we are adding value to their share of Mahalo so it’s a sensible move for them.
As far as potential suitors are concerned – my money is on Santos being in the frame.
Firstly they give us the responsibility of managing the future work programme knowing that we will keep control of budgets and as we have more to lose than them – then if we add value to Mahalo as they envisage – a time will come when they will want to take things forward themselves and add our share to their reserve base.
The larger players always like the minnows to take the risks – then the few that are successful can be bought out. Slightly different in this case as Santos already hold 30% but the principal remains.
A sensible business model in that many of the risks associated with sinking holes into unknown territory are eliminated which tends to sit well with larger risk averse investors.
My best bet being that Santos will sit tight until another player expresses an interest whereupon they will show their hand.
Purely a thought process at this time rather than anything more substantial.
We should have a decent flow of news over the next few months with the reserves update followed by the first hole being sunk into those sandstone deeps at Galilee on our behalf by Vintage.