Good morning fancypants/All We have to look at the situation...

Good morning fancypants/All

We have to look at the situation objectively irrelevant of what us shareholders think ‘should happen’ even though we can put up a strong argument as to how much us lot with invested interests feel that our 57% of the main Mahalo Block is worth.

The markets are valuing COI at just under $177 million (16.5 cents a share) which includes our 57% of the main Mahalo Block and 100% of Mahalo North plus the rest of the ‘stragglers’ that we have on our books – that may or may not come to fruition depending on how things unfold in the future.

I think there is a strong likelihood that Mahalo North will eventually become more valuable than the main Mahalo Block once reserves have been formalised with flow rates being superior to those next door. But it takes a load of money to get to the point where either the main Mahalo Block or Mahalo North is brought to a point where the taps of production are turned on.

The markets know this and are not valuing us on pending production – they are valuing us on what we have in the ground plus the likelihood of COI being able to turn ‘potential’ into ‘production’.

If our management entered into binding contracts with a third-party which detailed how production will be reached with the consequential costs getting to that point covered – then a revaluation would take place with the markets taking a view that within a known timeframe the taps of production would be turned on.

At that point COI’s market value would be calculated taking into consideration the status of the third party – the reduced percentage/s of COI’s interests in both Blocks – whether the ‘road-map’ to production with available funding is realistic – the timeframe to get to production. Until then we all watch the market cap rise and fall with the likelihood that when our gas reserves in Mahalo North are formalised – there will be the inevitable jump in share price which will likely be sold into by those looking to make a ‘turn’ – with COI ending up with a market cap that is not far off where we sit today.

Yes - this is mega irritating for those of us in for what has turned out to be an extremely long-haul – but I believe that if our management can’t find a suitable cash-rich third party with ‘status/form’ to fast-track one of the Mahalo’s to production – then we remain in the doldrums with our share price/market cap reacting favourably for a short time when good news is announced.

My belief is that we will either farm-out and be all/partly free-carried to production – or – we will eventually be faced with the uncomfortable fact that the offer that is made for COI is way below what many of us believe to be fair – but we will have run out of alternatives.

Should the most unpalatable of the aforementioned arise – I would hope that our management would be able to negotiate a situation whereby COI shareholders still have ‘skin in the game’ – with a lesser percentage of future production being attributable to us. Most importantly – a deal such as this has to be ‘watertight’ with penalty clauses for COI shareholders in place should future production be delayed.

In closing – the markets are looking for immediate returns especially with inflation rampant with the value/purchasing power of fiat currencies falling. They need to counteract the effects by finding investments that will ‘hold their own’ in times of great uncertainty and world turmoil. This does not fare well for the likes of COI which has bags of potential but is nowhere near bringing that potential to fruition and producing a yield when the production taps are turned on.

That’s my take on the situation for what it’s worth – the sad thing being that COI has a load of gas in the ground ready to be exploited at a time when everyone is searching for ways as to how to maintain gas supplies to keep the world/Australia afloat.

Let’s hope that our management can structure a deal which will fast-track us to production – after all 50% of production is better than 100% of potential with no realistic way of getting there - which I believe is the logic behind why the markets are valuing us as are today.

Good luck All…