News: Nido Petroleum: 2014 Outlook , page-43

I classify myself as a longterm investor, but tend to swap in/out of NDO & OEL.

Obviously both companies get their income from Galoc, and I believe both are good long term prospects. As Nido holders know, the worst thing for investors is dilution. Most oilers go backwards because of this. Few junior oilers make enough cashflow to avoid placements leading to dilution. With Galoc phase 2 both Nido & Otto are in the enviable position to progress their exploration without dilution. Few junior oilers can do this. To me this sets them apart from the rest of the pack.

Otto has a 44% more NRI in Galoc than Nido (22% cf 33%) I look at the relative market caps based on this ratio,

What it comes down to, is what they do with their free cashflow.
No matter how good you think both Nido and Otto’s other projects are worth, at best they all have a GCOS of at best 27%. In other words a 4 to 1 chance of failure. So it comes down to how confident you are in management’s ability to invest this free cash flow + luck. IMHO NDO’s management has changed for the better, Otto has always had conservative management.

Having said that, nothing ventured, nothing gained. I like Nido’s new philosophy of taking a max of 20% in each project to maximise exposure & reduce risk. With Nido’s 4 drills coming up and relatively small outlay for these drills, I’m hopeful at least 1 can come off, which will be very material to the company.

It’s funny how the 44% ratio between the 2 companies mc bounces around depending on the markets perception of drilling times for the various projects.