i now support acquisition of nse by buru

Why have I started to think like this?

(Before everything, my disclosure in advance is here; I am still keeping my NSE shares and I have no intention to sell them in the near future other than living expenses and tax payment purposes. I will buy more if i can).

I have always thought that NSE had a weakness with its technical management. (I said this on my Post # 7843248 on July 7 2012;). I have criticised NSE technical team in couple of occasions both here and directly to Sam Willis. And I said this on my email to Sam Willis after Nicolay-1 drilling on Oct. 2012; "I will not bring my concerns on the public arena for now and will wait for the results of our discussions. Then If I can’t see any improvement I will try to discuss the matters on the public arena".

Now I think it's the right time after GB-1 failure, long after Nicolay-1 and Lawford-1 well failures. I don't think there should be a fourth chance given to anyone. Enough is enough.

Why would I support the acquisition of NSE by Buru support?

I believe the acquisition of NSE by Buru, would create a much better and bigger company. NSE would be managed much better technically by Eric's expertise in the Canning area and O&G industry. Buru would have much bigger and solid shape and it would not be easily swallowed by the majors at least at the short term at a cheaper market cap value than $4b.

When the Gibb Maitland location is drilled again and a discovery is made (consider that they have already got the wet gas), there will no chance for Buru to make a punt like that.

The acquisition of NSE by Buru might be a big opportunity for Buru shareholders. It would also de-risk the investment of the NSE shareholders by not being exposed to NSE's inexperienced management IMO.

I have already mentioned about this idea both to Sam Willis and Eric Streitberg by emailing them in separate content yesterday evening. No reply is expected by me. It is up to them if they would like to think and talk about this opportunity. I am just talking about my opinions.

How could be the acquisition?

Buru takes over NSE and completely establishes itself as the new owner, the purchase is called an "acquisition". From a legal point of view, NSE still exists as an independent legal entity, which is controlled by the acquirer; Buru.

- Buru already has ~6% (18m) shares of NSE.
- Buru could offer 1 Buru shares for 5 NSE shares.
- I value 50c for NSE shares in this transaction.
- NSE has 17cps cash backing, 10cps value for Merlinleigh project, 20cps for Goldwyer Project and 3cps value for Lawford Project. Makes it 50c in total.
- NSE has $50m cash in the bank which would be used funding NSE's operations. Buru does not need to fund NSE.
- Buru would need to issue around 60m Buru shares for NSE shareholders (300m NSE shares / 5 = 60m Buru shares). Less Buru's own shares.
-Buru's total shares would be around 340m (280m existing and 60m issued for NSE acquisition)

This is a very rough calculation. We can discuss about the details later.

The strategy is here to pull NSE into a safe harbour from the point of an NSE shareholder.

From the point of Buru shareholders the view should be very advantageous because Buru would have much bigger and solid shape and it would not be easily swallowed by the majors at least for the short term.

That would make Buru the undisputable king of the whole Canning Basin.

I believe market cap of Buru would go north of $1.5b in very short time by this acquisition, represents $4.40 per share. if you look at the historic similar transaction in CSG business the takeovers by the majors were around #3b to $5b.

Similar large transactions;
- BG Group paid $5.75 for each QGC share and paid $4.7b in total on 2008,
- Shell paid $4.7 for each Arrow Energy share and paid $3.5b in total on 2010 (Shell already paid about 700m for 30% of AOE tenements two years ago though)

This means that if Buru can stay alive it's market cap would go over $4b which represents $10 per share. (I have considered 60m shares more would be issues for funding the operation expenses and the total of shares would reach to 400m)

This would be much better outcome for the Buru shareholders instead of being taken over at $5 in the short term.

The weakness which NSE is experiencing now is a big opportunity for Buru and Eric who is the creator of Buru.

NSE shareholders would also increase their share value significantly. A shareholder who have 100.000 shares at the value of 20cps with total value of $20.000 now, would receive 20.000 Buru shares and the value of shares would be $200.000 if Buru shares could reach to $10 (or $4b MC). A ten fold gain again.

Why would Buru reach to $1.5b market cap if it could acquire NSE?

I am quite confident that Goldwyer project has at least 1 billion barrel of oil in conventional targets, as well as having tens of billions of barrel of shale oil in Goldwyer shale targets. I believe Eric has the same belief.

Plus the Merlinleigh project, which will ready for drilling in next year with very high probility of GCOS (geological change of success). It targets the conventional gas reservoirs. The gas which could be discovered from there would be easily used as the gas for the Alcoa agreement because it is very close to pipeline (50km).