Ann: Woodside Enters Into Exclusive Option on Namibia PEL 87, page-126

I probably wasn't expecting a massive re-rating from this, purely because the stock is valued at around $100m at the moment.

What it does do, is significantly reduce risk, and improves prospects for future SP growth.

Whilst not a huge amount of cash, receiving US$1.5m (with our option to buy from Custos later fully covered by WDS's cash payment on the exercise of the option) it shores the cash balances up which will reduce any dilution risk. US$1.5m is worth around A$2.2m and added to their A$1.5m balance at the end of December, provides PCL with cash of around A$3.7m. With cash burn of around $250k / quarter, this provides for upto 15 quarters of financing (just under 4 years), so will almost certainly take us through the first drill.

So tick - dilution risk minimised until after the 1st drill - assuming WDS exercises their option

The Seismic reduces risk for PCL too. As I mentioned in the other post, it either validates the current models they have (which if it does, I would be shocked if WDS didn't exercise their option) but even if it didn't and it validated a smaller size potential field, then with the amount of other finds occurring at the moment, then it creates opportunities for lower cost tiebacks into other developments, and potentially utilising excess FPSO capacity.

A farm in to this acreage, particularly by a major, was going to be a game change. Possibly not in terms of the current SP, but certainly for the longer term prospects of the company. I get people might be spooked by the FAR sale, but bear in mind PCL will retain a higher % of the block than FAR had and also we are in a much stronger oil price environment, so if a discovery is made, then I would expect a higher sale price than what FAR achieved for those 2 reasons.