Good afternoon Pete01 From how I’m looking at this situation –...

Good afternoon Pete01

From how I’m looking at this situation – Statoil has strategically positioned itself whereby they historically moved all risk onto COI with the downside to Statoil being minimal but the upside substantial which was a clever move – which thankfully worked in COI’s favour.

As we know Statoil currently owns 30% of the Mahalo Hub - But there is an arrangement in place with Santos to potentially equalise equity interests across the Mahalo Gas Project - Mahalo North and Mahalo East providing for a larger initial development project focused on the high productivity fairway inside these three permits.

Added to this is the $13.15 million loan to COI from Santos – which was used by COI to acquire Australia Pacific LNG Pty Ltd.’s (APLNG) 30% interest in the Mahalo Gas Project. However - Santos has a six-month option to acquire an additional 12.86% interest in Mahalo from COI at the proportional acquisition value which from my reckoning has to be ‘done and dusted’ by 29th December 2022.

Should this option be exercised - COI’s interest in Mahalo will drop to 57.14% and the loan repayable to Santos will decrease proportionally. At that point Santos will move up to a 42.86% interest in Mahalo – leaving COI with 57.14% but still there will be an $8 million loan outstanding to Santos.

So - whether we like it or not COI is very tied to working alongside Santos – which is the reason why many of us including myself feel that Santos is the most likely suitor to buy out the entirety of COI’s interests in all the Mahalo Blocks.

This of course doesn’t exclude an unrelated third party entering the frame and giving Santos a ‘run for their money’ which could of course happen.

Santos could exercise it’s right to buy just a lesser percentage of the other COI 100% owned Mahalo Blocks and equalise it’s stake in the main Mahalo Hub by a further 7.14% at a price to be hammered-out between both parties.

However - I’m thinking that a total buy-out by Santos of all of COI’s interest in the Mahalo Blocks is far more likely as a ‘Go it alone’ situation will be far more comfortable for Santos.

As to the eventual take-out price - it's anyone's guess - with my thoughts on this at the start off this thread.

Just my take on the situation for what it’s worth – but at the same time – I’m ruling nothing out.

Good luck.