Ann: Cossack Completes Acquisition of Gas Asset a, page-8

re: Ann: Cossack Completes Acquisition of Gas... COD

instances where a junior company has exposure to huge upside (800BCF prospective resource – could be worth over $2b) but a relatively low risk profile.

Usually, projects like this are expensive to acquire; however, the relationships in the Ukraine and the way the deal has been structured (vendors are getting scrip and the only cash paid is out of cashflow) has resulted in a very attractive investment proposition.

It is a large licence onshore Ukraine in a mature petroleum province, surrounded by producing oil and gas fields and criss-crossed with infrastructure. Any discovery can be quickly and inexpensively commercialised.

A High gas price environment US$12/mcf and 50% netback makes economics very attractive.

Prospects partially proven by two historic wells:
• Shallow prospect no 1 = 130BCF – or ~$400m NPV potential. With a Company market cap of <$20m => 20x uplift – and this is only one of multiple prospects on the permit.
o Independent log re interpretation suggests large gas / condensate pay in good quality reservoir
o Cheap re-entry or twin well appraisal opportunity
• Deep prospect no 1 = 162BCF – also $400m NPV potential.
o More expensive to drill but larger follow up potential and likely to attract a farm-in partner

Near term catalysts:
• Updated resource (additional vintage seismic lines are likely to be obtained which should increase the confidence around the resource)
• Progress on farm-out of deep prospect (and possibly shallow)
• Acquisition of additional licences
• Chevron moved into the area next door to Cossack