Another’stab in the dark’: Ifwe took the price of gas being...

Another’stab in the dark’:

Ifwe took the price of gas being $8.50 a Gigajoule with our production costsbeing $5.50 a Gigajoule and we were producing 50 Terrajoules/Day – this wouldleave $3.00 per Gigajoule net profit.

Thisequates to $3.00 (net profit) x 1000 (grossing up to Terrajoules) x 50(Terrajoules per day) x 365 (Days a year) = $54,750,000 Post production profitwith 40% attributable to us = $21,900,000

Takingthe latest published P/E Ratio that I can find for the industry being 25.4 –this means that our share of producing Mahalo would be worth 25.4 x $21,900,000= $556,620,000 should we sell out at that time.

Obviouslythere’s a big difference in price between what we would get today with plans inplace to produce in 15/18 months against when Mahalo is producing – but thecloser we get the more the perceived risk is eliminated and the higher theprice.

Witha market cap today of under $200 million I would suggest that on Mahalo alonewe are way undervalued and the markets are attributing zero value for Galileeat this time.

AtGalilee lets achieve successful retrieval of that logging tool from Albany 2and have a successful sidetrack at Albany 1 – and with porosity valuesexceeding 15% which are above pre-drilling expectations – solid foundationswill have been laid for the future.

Thetimeline between where we currently sit and first production is shortening – ifI were Santos or indeed any other player wanting to get involved and snaffle40% of Mahalo production – I wouldn’t leave it too long because as we move evercloser to ‘certainty’ of profitable income stream from production – the moreit’s going to cost them.