I've read them all again and still have those questions unanswered.
I have sent this e-mail to John Hannaford and will let you know any details of the reply.
E-mail reads:
Dear John,
Congratulations on what seems like a great deal for Emerald and your fellow shareholders.
I hope you have some time at what must be a very busy period for you to answer a few questions for myself and a number of associates who are also shareholders in Emerald.
There are a few issues about the exciting new venture that I feel have not been clarified:
From the announcements it seems that the 80% is earned on a well-by-well basis with the 4000 foot around the well coming under the deal when a well is paid for. I wonder if this means that P&J can stop the deal when they see fit after the initial 50-well program? ( I assume the first 50 are pretty much set in concrete)
I interpret the $25m to just allow Avanti access to 40% of the gas on the six initial wells they fund. Is this correct?
Do Avanti have any further participation rights beyond the initial six wells - either paying or free carried?
Do they also share the rights to the surounding 4000 foot and hence the step-out wells within this 4000 foot area of the wells they finance?
If so would they then contribute their 40% WI share of costs to developing these additional step-out wells? Or are they free carried this 40%?
If they are paying 40% for the step-out wells, does this mean emerald pay 60% for their remaining 40%, or are the step-out wells then paid 40% EMR, 40% bank, 20% P&J?
One other question - you say Emerald are earning 80% WI through a US subsidiary, and say that Emerald will own 90% of that subsidiary. Who owns the other 10%?
Does this mean they actually will be getting 80% * 90% = 72% of revenue? Or does the subsidiary actually get 88.8% and EMR gets 90% of that - so they get 88.8% * 90% = 80%?
All of these issues have a significant bearing on the value of this field to Emerald and hence to myself and fellow shareholders. These point would ideally be clarified to the market as an ASX release, though I am happy to have you reply by e-mail and I will relay the information to the others.
Thank you for your time,
Neil
EMR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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