Ann: Trading Halt, page-68

Assuming areas A,B and C correspond to Western Fairway, Central fairway and Eastern fairway, respectively....that means we (the core JV partners) have farmed out 60% of 2.4 bbls for US$23m....or US1.6 cents per prospective bbl leaving the JV with 960 mmbbls (720 mmbls for 88e and 240 mmbls fro BEX). All on a pre-royalty, WI basis.

Which essentially values our prospective resource in area A at about US$11.5m or A$17m. Which is bugger all in terms of direct SP impact. Of course sentiment could have a bigger impact, particularly as the drilling event approaches, simply because the value in the FO is not in the economics of the drill per se....but the potential latent value, potentially unlocked. Given all prospective horizons in the western fairway are being tested by the proposed Charlie #1 drill (as an aside...I'm still trying to resolve in my head how this is possible - but accept what has been announced at face value...for now), this single well FO has theoretically opened the door for as much of a discovery as would a 2-3 well program in the one area. Or so it would seem that DW is claiming.

Accepting that....beyond the drilling event, if Charlie 1 is successful and any discoveries can be quantified as P1 PUD, the most recent transaction values (OSH/Armstrong) on the North Slope would value that at between US$1.30 to US$3.00 per bbl. Which would give us an upper range of A$3.1 b (720 mmbs x us$3 / 0.68 exchange rate), which is nearing A$50c per share. Less of course if not all resources are classified as PUD, and/or a price at the lower end of the OSH/Armstrong scale were applied.....but still many multiples of today's SP.

Areas B and C are much smaller in scale, and it appears that Premier's option to earn 50% WI is in only one of those two areas....and is tied to area A success as well as a US$15m spend in the respective area being earned into (at least that is my interpretation - the ANN is not overtly clear here). I assume that the $15m spend is a cap for their investment in those acreage (either drilling or further seismic). If we assume it will be the larger of the remaining two areas (area B - aka central fairway), that means the premier FI there is valuing the prospective resources at US8 cents per bbl prospective resource. Makes sense as this option is predicated on area A success and hence much higher than pre area A success.

It is undoubtedly a moot point to speculate on the value unlocked if these further drilling events are successful, so I won't try. Similarly, Area C,YG, Winx and HRZ. Not sure how much, if any, fundamental value is locked up in those plays....but there real value is not in their current fundamentals, but rather in any actual reserves unlocked. Still some time before the dominoes for each of those plays are put in place.

Today is a good day....irrespective of how the SP responds in the near term, as we have taken a necessary step towards testing prospectivity (which has minimal value) to hopefully unlock actual reserves/assets (which has considerably more value). However, as always, our actual fortune will reside with any success found at the end of a drill bit. Despite recent track record, drilling for conventional in the oiliest place on earth, with the backing of a much bigger independent explorer/producer, is compelling for a punt. For me.

All IMO and GLTA.