Hi bootleg. I would have to say that the figures being bandied...

Hi bootleg.

I would have to say that the figures being bandied around are possible but there is a lot of immature pre-emptive ramping which some posters continue to feed. I have certain doubts about the credentials of some of these characters but that’s another story…

It is very easy to calculate a notional valuation on the targets, but a notional valuation is only a method of applying an asset value and is irrelevant to share price performance. On the other hand, undertaking an asset valuation for say the coal package/CBM provides valuable data should the coal rights be “sold off” to an interested party. A little tangential to the question first – as I’ve been discussing with a few of the boys at SS, its imperative that the company chase the oil targets asap and move away from the CBM for now. I have discussed the reasoning for this consistently and fail to understand how some investors are still suggesting that the company targets CBM. The main and only benefit of delineating the CBM right now is that once the extents are well defined the company may potentially have the ability to sell off the CBM rights (and retain a working interest), gain a very substantial boost to the bottom line and be free to get on with the core strategy of chasing oil and gas, possibly with their own rigs and crew. But, the ongoing issue with this is that it will take a few years of consistent drilling just to define the CBM extents hence will require extensive funding, possible package exposure dilution, possible capital structure dilution and then there are the complexities of segregating the CBM alone from the oil/gas targets! It’s a relatively difficult and time consuming process. On top of that we have the permit expiration periods to meet so the company should not be wasting any time at all on CBM when there are more attractive and easier targets to chase (and just as importantly retain exposure to!). Drill, find success and get a retention licence in place for the relevant EP’s of the coal package and move on asap. Anyway, I’d better stop before I get started…

So, back to the question - we have some very significant geological structures which themselves have the ability to give a notional valuation over and above the figures being stated here – but once again, notional. Take for example Johnstone, it has a notional value of just under $7.00 per share, so for illustration purposes only lets say adds 70c to the share price. Now 70c is great, but theoretically calculating this over the longer term valuation scenario (not taking into consideration all detailed factors) you would need to see a production rate of say 1500 bpd from Johnstone @ $40 bbl net and trading on a PER of 20 – so it’s not that simple. Whilst on Johnstone, it’s a highly prospective target and I’m very interested to see the colour banding results of the gore survey, Johnstone has had extensive survey undertaken aswell – pre 1987, 2007, 2008 survey)

In simple means, what would be critical to the shareprice performance is the production rates and financial bottom line, that’s how the market will ultimately value CTP over the longer term - Revenue, Balance sheet, followed by assets and “potential” which will generally be seen via the PER. Take BHP for example – Olympic Dam is estimated to be worth over $1 trillion of IGV, but BHP’s market cap is not $1 trillion. I’ll admit using BHP isn’t the best example given the obvious differences but it’s just demonstrates that in ground assets are not reflected in the SP as a whole. So some touting the Coal assets being worth $50+ per share, yes, that is possible, but realistically if the company chooses to be a part of the GTL scenarios then you need to look at what is being produced, the end product value, less high CapEx repayments (estimated to be around $25.00 bbl), less exploitation costs etc etc and then applying that rate of production in revenue, less taxes to get your NPAT, then apply the PER after that. That said If they were to sell the CBM rights/assets to an interested party then having that notional asset value will provide exceptional means for negotiations and value per share but it’s a lot more complex than that.

All in all – it is very possible for the shares to trade at significant levels, but this is not going to be based on simple NPV calcs that are easily touted around. If that was the case 9/10 exploration company’s would be trading in the 10’s and hundreds of dollars! It’s easy to get excited when the thought of big $$ are in the eyes, but people need to be realistic with performance and outcomes, things take time to happen, an array of external factors can hamper progress, there are consistently obstacles and barriers to overcome and the way the market values a share is not solely on assets and potential unless of course it is being taken over. I have come across rare cases in the US where explorers with tight capital structures have hit extremely large reserves, shot off 40 fold and stayed at those levels - for CTP this may be a possibility but there is quite a lot of work to do. If someone were to come along with the intention of buying out assets, then we may have a different story on our hands… but I’d rather not see this happen unless it was for the “right” price.

All IMHO only but hope that helps.