High Graded, page-17

You all need to read the announcement of 5th November, which in part states-

"•The Icewine#1 exploration well is designed to better quantify risk so that a farm-out can be achieved in 2016 => potential to unlock several hundred million to over a billion dollars in value for investors
•Highly leveraged opportunity due to low market cap (~US$20m) and bottom of cycle entry point => many multiple returns on investment possible
Concepts
•Expected Monetary Value (EMV): (Probability of Commercial Success * Potential Value on Success) Less (Probability of Failure * Cost of Failure)
•Strongly positive EMV leads to internal recommendation at Big Oil Companies to invest (subject to ranking with other prospects/developments, funding and strategy) Assumptions
•Belief that oil price will increase at some point in future (US$80/bbl long term assumption)
•NPV per bbl = US$3-$5 (internal estimate, shale success case only at US$80/bbl)
•1 billion barrel recoverable shale prize (internal estimate, shale success case only)
•10 horizontal appraisal wells required to prove play @ US$35m each = US$350m (prior to any rebate)
Icewine #1 Value Unlock Equation
4 Icewine #1 Value Unlock Equation (cont) Analysis
•Prior to Icewine#1 drilling, certain risks are hard to quantify => high uncertainty
•Large Cos typically will not invest at this stage
•Small increase in POCS => large increase in EMV due to large resource potential Conclusions
•POCS at 20-40% delivers an EMV for Project Icewine of US$320m to US$1.8b vs current market cap of US$20m
•Due to the size of the prize, a relatively small POCS would generate significant farm-in interest
•If risk can be mitigated to >=30% POCS then farm-out terms and competition will be strong – even at current oil prices
•Further upside possible from conventional potential"