perspective

Ok, so whilst I am naturally disappointed with the farmout, I decided to have a look at RIA again over this weekend, essentially to see if I felt there was still plenty to play for, even with the lower interests that we have in both Accra and CI-202.

Current market cap is circa $34m, with current cash of $15m and I think cash of $10m due from Petroci, so $34m market cap and $25m of that I think is cash (or at the worst, cash and debtors), so their assets are worth $9m, so I guess the question I ask myself is, are the assets worth more than $9m?

My thinking is absolutely.

Speculating here, but RIA already have 2 wells suspended as producers on Gazelle. P4 in the UC-5 reservoir and P3 ST-2 in the UC-1 reservoir. 1 more well would likely bring production to somewhere close to the 100mmscfpd they were originally planning for, which is roughly 16kboepd, which would work out to be around 4kboepd net to RIA even after the current farmout. Unless RIA expect an early development of Gazelle, followed by Hippo / Bubale than this farmout makes no sense whatsoever, so I guess my speculation is that it may be possible, now that we have a large partner, that the next drilling programme (which has to be over the next 6 months unless they get an extension to drilling the 2 commitment exploration wells) is that this drilling programme, could be larger than the 2 well programme that is committed to. It would certainly make the farmout feel a lot better, if they were to drill say 2 exploration wells (lets say Condor and Arius), a development well on Gazelle and maybe an appraisal / development well or 2 on Hippo / Bubale. 2 appraisal / development wells would roughly cover the $50m that Vitol will cover. RIA would need to fund their proportion of the 2 wells, though with $25m in the bank (if Petroci ever pay up, sure this may reduce due to termination of the rig), RIA may need to raise around $10m, anything more and maybe they cover more of the Starfish well and keep a but more of that block than 5.6% (49% of their current interest roughly).

Hopefully we will hear something on developments on CI-202 once the farmout is completed and future plans on the exploration wells in the quarterly report due within the next couple of days.

Whilst I'm not a fan of the farmout, theres not a lot we can do about it, so I guess trying to understand what could go on over the next year is the best way to go forward as I doubt the farmout will change (unless we get a white knight offer from one of the other companies who looked at the assets).