club sugarloaf, page-124

Hi Mick,

I did try but my broker could only place a limit order and that was wiped out 3 days successively because the price moved immediately after the morning auction by more than 5%.

I'm not too fussed by exchange rates as there are a whole lot of other factors. For instance, EME has an interest in Block A and any positive news there will be likely to move its price more than ADI's. Then there is the responsiveness of the two markets. Then there is the basis on which the market will value the shares. EME has half the number of ADI shares in issue and its interest in Block B for Kowalik and at least the next 3 wells (and, possibly, the 3 after that) is comparable. So, the EME shares have 2x the gearing but I can buy 2x the number of ADI shares. That evens up. That is in very round figures.

After those wells are drilled, ADI sails away with a straight 20% and EME, barring other deals, less than 1/3rd of that, 6%. If the market is going to pay more attention to cash flows over the next 15 months or so, there should be little in it. It's a difficult call. However, if EME does forge significantly ahead, then ADI would offer a significant gearing advantage and I may try to switch some of the EME shareholding (again). The last time that I did a switch, EME was about 60p and ADI was about 40cents. But it's difficult to compare EME's composite interest to ADI's straight 20% whilst the market is clearly attaching such a large discount for risk to both.