Graff -.2, page-34

I am going to suggest that a buyout would not be on the cards anytime soon, and is not what we want anyway. Might have some sums and ideas wrong but hear me out.

Let's assume Venus is a discovery and the PCL SP increases to say 1c. I know it could be more but let's hold our enthusiasm and be a bit realistic for a little while. What kind of offer would the board recommend? 1.5c? 2c? Let's take 1.8c as an example as it is easier for me to use current market cap as a valuation, which at 1.8c will put it a bit >A$100m. So A$100m for a buyer to take all of PCL which comes with 75% PEL87 ownership and a few other odds and sods (ok so maybe they are worth a bit more, but they haven't been valued so far and they won't be in a buyout situation IMO). Then the buyer have to drill a well for say A$75m (est). So, total cost for 75% equity in PEL87 with a drilled well (plus the other PCL acreage) is about A$175m. A$2.3m per % point.

On the other hand, lets assume there is a farmin for 50% equity (PCL retains 25%), paying 100% cost and drilling of one well (2 for 1 is considered a good deal these days). Costs of the well again is A$75m ish. So for $75m a farminee gets 50% equity in PEL87. $1.5m per % point.

Compare the above. Is the rest of the PCL acreage worth $100m? I think this kind of answers the question. A buyout price is not going to be huge.

Again IMO, it is actually much better for PCL to get a farmin for a deal like this and to retain 25% equity, paying no costs in an upcoming well targeting billion barrel potential. Upon reaching such a deal and again leading up to drilling, the SP would be moving way past a potential buyout price as described above.

We shall see.