Arbitration vs deal

Perhaps it's a good time to look at the pros and cons of going to arbitration or taking a settlement, should it get to that . I know many here like the all or nothing approach, for myself I would rather have something but a reasonable something..

It's obvious if successfull with arbitration FAR can't do it on their own so would have to have to have a deal with whoever backs us and that is likely a year away. Unsuccessfully PE we end up with nothing and a $1mil plus bill.

On the other hand if a satisfactory deal with WPL could be reached then we come away with something substancial and not in a years time, so we can proceed with that out of the way..

We'll that's the basics of the choices, we are either doing a deal with WPL to make arbitration disappear for them, or we are doing a deal with our backer which would likely be more luctrative with the possibility of getting nothing.

That leaves us with what would these deals likely produce:

A deal with our backer post a successfull PE would be based on our share of 35% of the total JV leases 2C ( at that stage reserves would also be booked to complicate things). If we take 900Mil Barrels 2C for simplicity sake then we are looking a net 350 Mil barrels 2C plus whatever may turn up in the basin. CN has been talking about $US 4-8 a barrel 2C being paid depending various factors, so by any measure we are talking about big money, the payment to WPL of the original deal plus money spent on top would have to be subtracted.
There is also the possibility of gaining a larger WI for ourselves but I think any backer would wan't it all, they will likely lose some to Petrosen anyway . Operatorship would also need to be factored in...versus nothing if not successfull.

Even if we extracted $US 2 a barrel net of WPL's costs , or $AU 2.60 a barrel we are talking almost $AU 900Mil ..so we are talking serious money, one can see why CN is wanting to protect shareholder value and will do what is required to try and achieve it, however I doubt she would risk coming away with nothing...

So that would leave us with what figure could WPL offer that would make CN blink and I have no idea on that but it would have to be related to the next RISC upgrade ,the results of SF 1 and would probably need to be between the maximum realistic value post a successfull PE and nothing at all IMO and would be a nice sum regardless...CN may be a risk taker but getting nothing while leaving it all to WPL because of greed or gambling would not go down well with her or anyone else IMO...it is good knowing we already have at least 13.7% regardless..

My bets are now on a deal , WPL will certaianly not want to gamble on the results of the arbitration Court either and have more to lose...Although COP is who we have the dispute with WPL would have to sort it out with them anyway if it wants some control on proceedings...

Interesting times indeed..

Cheers Whisky