CVN & JP MORGAN (SEEKING BIDDERS) AFR STREET TALK, page-28

I could be wrong but I think Dorado was post Quadrant sale and it could be STO paid a low price that reflected little blue sky potential. Perhaps adding the royalty to the deal was the sweetener to reflect the potential of Bedout. Not sure how much of Bedout area blue sky was included in the royalty. Both parties would be happy though. Bedout so far has been a bonanza and with an incredible strike rate on discoveries (>50%). I recall one player stating they keep finding oil where they were expecting gas. Most of the new plays following recent seismic works are indicated as gas mostly with huge potential. That's why I'm reluctant to sell out.

Prolific early Dorado and Pavo cash flows (my estimate is around USD500,000 per day in year 1) could easily fund more exploration. At say USD25m per well; USD2.5m to CVN) that's 1 well every 5 days. Of course borrowed money would need to be repaid but by my calculations payback was less than 1 year. If Dorado/Pavo achieve the plan then I'm not sure lenders will really want their money back as risks would have been reduced while high interest rate would remain. Nice problem to have.