Good morning AngryBear You ask a question of me - so I'll give...

Good morning AngryBear

You ask a question of me - so I'll give it my best shot.

Sadly I know no more about the ‘lay of the land’ than you – but I do know unrealised/unrecognised value in a small cap company when I see it.

As to market shenanigans with folk buying and selling - sometimes with geared positions - to manipulate a company’s market cap – that sadly is the norm and something which I feel is totally unjust as it benefits those participating whilst disadvantaging core shareholders.

The biggest problem being that for every trade there is a government ‘tax take’ - so it is in the government’s financial interest to support any activity that increases it’s income stream – thus the situation continues with them turning a ‘blind eye’ to questionable activities regarding market manipulation – with there being a strong argument that a morally corrupt system is being supported.

As I’m sure I mentioned in the past – when I had a team of fund managers working alongside me back in the 1980’s – we used to seek out undervalued companies who’s net asset worth was not reflected in their market cap with us taking a hefty declarable shareholder position – thereafter doing our best to effect change from within working with the management of those companies to try and change the market sentiment so that the market cap rose to it’s net asset worth. As soon as that point was reached we sold our position as we weren’t interested in frothy sentiment pricing based on speculation alone.

Things were different back then in that geared positions were not available to individuals trading from a laptop at home using execution only on-line brokers. Those were the good old days when things were much more predictable and the markets were more of a ‘level playing field’ for everyone involved.

The one thing I do know as per MIStragic’s recent post – is that Santos needs additional gas and that the Santos MD/CEO made it clear that he is looking to work with COI to develop the Mahalo blocks.

Santos has played a clever game in that in the early days they negotiated a ‘win-win’ position whereby they took zero risk and palmed all that risk onto COI - meaning that Santos would benefit from the upside but not expose themselves to the downside. COI needed to prove itself as an exploration Junior and took up the gauntlet and ran with the risk – which paid off.

Now COI finds itselves in a strong position with gas in ground/resource-wise owning 100% of Mahalo North and 70% of the original block with Santos owning just 30%. Thus I have little doubt that we will end up either moving to production with Santos exercising their 50% option of both Mahalos – leaving us with 50%. Likewise I would imagine that once the risk has been seen as being as eliminated as much as possible that Santos will try and snaffle our entire holding in both blocks.

The negotiation at that point will be difficult in that there will be a number of angles for both parties to negotiate:

* How much is COI’s 20% of the original Mahalo block worth to Santos?
* How much is 70% of the original Mahalo block worth to Santos?
* How much is 50% of Mahalo North worth to Santos?
* How much is 100% of Mahalo North worth to Santos?
* How much is COI’s percentage in both blocks worth to a third party should Santos not exercise it’s 50% option?

Santos will of course want to acquire as much as possible for the least cost – COI will want to maximise upon it’s strategic position in both blocks with the threat being that once production commences – then cash burn turns into an income stream which takes all urgency away to do anything away other than use the income stream to strengthen it’s position.

So we have a ‘cat and mouse’ situation between both parties with neither wanting to show weakness with both parties remaining respectful of each other to maintain an ongoing working relationship.

That’s what I imagine is going on behind closed doors purely from an educated guess – rather than knowing any more than anyone else.