Davo 22, I said I was working on assumption that will produce...

Davo 22, I said I was working on assumption that will produce for at least 5 years, hence P/E for project. would be in range of 70-100m. If recoverable reserves came in at 5m barrels (the company's low end projection) then that equates to my low end asset valuation of around 60c per share. However, this is a very strong cash flow story and that is how it will be primarily regarded by the market.

PE is for the project, not the whole company, so it includes production costs but not overhead. The return on the capital would come from financing further development of N San Arno and, more importantly their other proespects which the co has stated it will be turning its attention to in coming months.

The reality is that with the Arno project up and running, its own team in place, cash and cash flow positive, and other prospects starting to drill, the market will probably put SAE on about 15x PE judging from its peer group.

At $1 per share, this would infer profits of US$8-9m from Arno, which is very achiveable. If the sustained test from the horizontal well (which should be out within a week I think) is more than 300 bpd, these numbers could be somewhat higher.