Hotjohn wrote a couple of things I'd like to reply to...

Hotjohn wrote a couple of things I'd like to reply to ...

"Firstly let me say no one is more frustrated with this company than me.
However the past postings by grahamc(keep the faith)58 have proved to be extremely unreliable. Maybe You did know the path BPT had decided to take and due to circumstances beyond their control they didnt or couldnt take it. If you were privy to this inside info how about letting us know the reason the brilliant project planned with the capital raising did not come to fruition."

OK, heres the story, off people I trust.

Beach did the capital raising to buy into Santos' PEL114. Santos bid a substantial bid to get certain Cooper acreage, and kept 114 after it walked away from 115 (which then went to ACOA, off whom VPE bought it for a smallish amount of cash and a 4% royalty).

Santos then changed their mind, and decided it was going to drill the various small prospects in 114 ie Derrilyn etc. They finally realised putting money into the ground in the Cooper in $1-2m lumps is a winner, if you find $10m (or more) of stuff 42% of the time.

But by this point, Beach had already raised the capital, and they had no established Plan B. A number of us thought buying COE was their plan B, but they've done nothing so far.

"I do agree with you about the capital raising still being available to pick up smaller players who might not have the quick success they are hoping for.They will certainly be out there."

Beach has made no effort that I know of to farm into the VPE acreage, and apart from the recent Stuart farmins have not bought into eg Great Artesians drilling.

"Like every follower of oil stocks on hotcopper I appreciate the informed input of Ian Whitchurch. I have learnt a lot from reading Ians posts and used to wonder what was in it for Ian to go to to so much effort.
Well now I know the answer. It is self promotion for his business. Nothing wrong with that really and I hope he has success."

Actually, it was the other way around.

I do the analysis because I enjoy it, and because I get a buzz about being one of the best informed people on the Cooper Basin, and the hows and whys of what happens. The money really isnt the important thing, and if you closely read the Merlin prospectus, you'll see we aint being paid much by industry standards. Note that I've done work on Lion, on INP and so on - companies that I dont have any interest in, either personally or because I'm being paid. I'll also continue doing it, because I enjoy it, and because the more people who think I have a clue, the more people will be receptive to a tap on the shoulder once I have some sort of deal we're working on (as well, the people I tap on the shoulder are people I believe to have a clue ... and if one of them has major reservations, then it may well be a deal I'll rethink or walk away from. There are a lot of first-class minds who are very well informed on HotCopper ... together, they've been around for a long time, and seen just about everything).

It was well after I'd first done this in 2003 that I started to think I could make a business out of it - at least more than finding brutally undervalued oil stocks *grin*

The original deal was a farmin into Arwon by Accelerated Farmins - we had an agreement with Stuart for 10% at 3:1, until their Board changed it's mind and decided to go it alone (this is part of why I think Arwon is so good - I've seen the 2D seismic and some other technical data).

Merlin was our partner in that deal, and it was in that period (ie Jan/Feb '05) that we started working with Merlin. We raised most of their seed cap for them (about half of it off HotCopperites who like the story), and have kept working with them since then.

"One or two dud wildcats and the new players shareprices will be slashed.Look at EPE.
Time will tell what is the best investment gamble in the Cooper however I still think at todays prices BPT is the best bet. Im sure that 35 million will go a long way to securing the more desirable acreage Ian talks about."

In my view, the Primo acreage in the Cooper belongs to Santos, Stuart, Hughes/TriC and the Coalition of Vicpet, Roma, Impress, Tacnas, Lion and Merlin (whew). Specifically, the Primo acrage is 113, 114, 115, 111, 114 and 105. The rest are highly gas prone or spotty. Note that I am not a geologist, and this is based around a combination of nearology, talking to people I trust, and analysing the SA Mines Department's PEPS database of drilling.

Santos aint selling. Stuart aint selling, although they will cut you in at 3:1 (except fo Arwon. Sigh). Hughes and TriC probably aint selling, but they're Texans so they'd listen to offers.

That leaves the Coalition.

Even if the first few wells are misses, I can't see VicPet falling below $21m (ie 1.5 cps) - add a takeover premium, and thats $25m or so for 27-40%.

ITC or Roma might be targets, although they have substantial director and associate shareholdings. Roma also have some upside from the Surat. ITC have 15%, and Roma 11-20%.

Lion and Tacnas will come down to whether Guiseppe Mercorella wants to sell. Me, I think he's enjoying being an oil baron, and as he's from the racing industry, I think he understands that not all great 7 year olds were great 3 year olds. They have 12.5% each.

Merlin - if we get up - will be substantially owned by European institutions (we're raising $10m in London on a $12m minimum raising... you do the maths) who seem to be more interested in our Northen Territory elephant country. I dont think they'll sell until that acreage is tested out ... but I could be wrong. What I do know is I cant think of another onshore basin with established 60 mmbl+ targets that doesnt have political risk by the bucketful. We've got 27% of about half of 104, 111 and 115 (we think the best half) and zip of the rest of it.

Beach thus needs to buy 2-3 of them, and once the first move is made, the others get quite expensive. As well, if a number miss, then the acreage is obviously less Primo than I think it is *grin*

Basically, to summarise, I think Beach has missed the boat in the Cooper, and they havent shown a plan to use the cash that they have, and their exploration team hasnt got the ability to find hydrocarbons in the Cooper territory they have.

I think they overpaid for the Stuart deals, and that to me was a sign of corporate panic.

As well, they havent told the market squat about what their reserves are in the Eromanga, or what it's producing at.

I wont buy a company with that combination.

Ian Whitchurch
Accelerated Farmins Australia
Prefloat Consultants to Merlin Petroleum
0421 864 278
[email protected]

This is not investment advice, and before investing in any of these stocks it is important to read and understand all documentation and seek professional advice.