MARION ENERGY LTD (MAE) FINANCE FACILITY EXTENDED Sales Process Ongoing. The extension of fi nance suggests a timeframe for the sale of the assets and a level of confi dence by its bankers. However MAE is increasingly risky due to its increased debt levels with no income to cover the 11.375% interest rate payments. MAE also announced the expiry of 20m incentive options, unexercised. With limited insight into the outcome we maintain our HOLD recommendation and can only highlight some basic facts: • MAE have certifi ed reserves of 139bcf of 1P and 225bcf of 2P economic at $US2.50/bcf with a resource of 2-4tcf. • Previous transactions in the region have averaged US2.50/mcf although recent low gas prices will have an impact on pricing and appetite for assets. • Increased debt and near term expiry suggests success on a sales outcome only and is highly risky. Patersons Securities Limited acted as Lead Manager to the Placement issue that raised $15.0m at $0.86 per share completed in August 2008 and previously acted as Lead Manager to the Placement issue that raised $43.5m at $0.90 per share completed in November 2007. In addition, Patersons Corporate Finance Limited acted as Marion Energy’s merger and acquisition advisor for the acquisition of Odyssey Energy’s assets announced in June 2008 (due for completion on 1 September 2008) and has been retained by MAE to assist with both present and possible future corporate advisory assignments. HOLD
MAE Price at posting:
23.5¢ Sentiment: Hold Disclosure: Held
