solid finish to the week, page-16

re: nervous nellies! If an investor cannot afford to lose money, they should not be in oil explorers in the first place. In fact, they should not be in share market full stop.

I reviewed a number of oil explorers and found NXS to have one of the highest risk/reward ratios. They are drilling at least 4 and possibly up to 6 wells, each of which could be a company maker and nearly all in the low risk Bass Stait basin. Apache is also a very good explorer. They would not commit $17 million on a 2 well program if they did not have a good chance of success.

The first well will have gas in it - the issue is the flow rate which is dependent on the permiability/porosity of the sands, from both the sands found so far by BHP-Esso and those untested as yet.

If Longtom is not good then there is another well immediately after. You say it will only go up 20%. I think 37.5% of 104MMbbl would make an impact more that 20% on the share price. Perhaps you are thinking of the small fields in Central Australia. A 20% increase in share price from the present would be 42c/barrel valuation. A very good takeover target.

I am also prepared to wait if Longtom does not prove economic. I still have:

Grayling (37.5% of 104MMbbls)
Haddock (50% of 50MMbbls)
North Grayling (37.5% of 80MMbbls)
Galloway (100% of 30MMbbls)
Etc.
(source: mean results for NXS annual report)

Given that the success rate in Bass Strait is 1 in 3 based on 2D seismic, I think they have at least a reasonable chance of success based on 3D seismic.

Now please provide real data statistics to show that success leads to 20% increase and failure to a 50% fall. Assume that the discoveries are based on the prospects shown above.

G