Ann: Quarterly Report March 2015, page-3

I also thought it was a good update and tried to explain in clear non-technical terms to shareholders how the Thai payment arrangements operate, as well as clarify that share price has been hit by two instos selling down their holdings

In addition to our strong cash balance of approximately $102 million, we retained an important cash flow when we sold the first half of our Thailand production asset that ensures a substantial contribution toward our operating costs into the future. With this in mind, we configured the consideration to include a future cash flow that is based on the level of production from the Thailand field and the oil price. These payments will continue until Carnarvon receives US$32 million, or we reach the 20th anniversary of the deal.
In terms of how the payment arrangements work, each year the purchaser (Loyz) owes Carnarvon a payment determined as 12% of their share of revenue from the Thailand field in that year. As an example, if production averages 5,000 barrels of oil per day (gross) and the average oil price is US$50/barrel then the purchaser’s 20% interest in revenue in that year is US$18 million. From this amount they would owe Carnarvon 12% or US$2 million. If the oil price is US$100 / barrel then they would owe Carnarvon US$4 million. The first payment to Carnarvon is due in November 2015 which will be based on revenue from the June 2015 quarter. Changes in production and oil price affect the timing of the receipts to Carnarvon, not the final amount received. It’s worth noting that Carnarvon does not have any obligations with regard to ongoing operating or capital expenditures applicable to these Thailand field operations.
A number of shareholders have asked me about the Company’s share price performance recently, particularly in light of the positive volume estimates for Phoenix. The primary factors affecting the share price recently are the subdued nature of the oil sector, driven by oil price uncertainty, and in our specific case two institutional investors selling large volumes into this weak share market. That selling activity now looks to be complete.
I remain very optimistic about where the company is headed when you consider we have over $100 million in cash, the above mentioned receivable of up to US$32m generating future cash flow, the free carried Roc-1 well due for drilling this year, the discovered resources at Phoenix and Phoenix South and the broader potential in the Phoenix acreage that we intend to uncover with new seismic data being acquired.
In my view there are very few companies in our space right now that can match our financial and technical capabilities and who have strong well-funded growth opportunities.
Adrian Cook
Managing