Hi CmonThis is true, the acquisition has increased production...

Hi Cmon

This is true, the acquisition has increased production but also increased net debt materially. The acquisition was performed pre-crisis so it wasn't on the most favourable terms compared to what they could have got it for today? I don't know the quality of the assets tbh....we know that we have essentially sunk capex now to produce 5,000 boepd.

Now using Q1 numbers and the March exit run rate:

Talos market cap : $1.0b
Talos net debt : $1.1b (long term debt, accrued liabilities less cash = net debt items)
Talos EV : $2.1b

Talos production 70,000 boepd for March
Talos flowing bbl / EV = 30,000 boepd
Talos reserves = 260 mmbbls (using your numbers)
Talos reserves / EV = $8 bbl

Applying to Otto
Otto flowing bbls 3,000 x 30,000 = 90 m USD
Otto reserves 8.9 mmbbls x $71.2 m USD

To be honest, not that much different. Of course, the 8% increase in share price on Friday assisted.

Also, how does it compare to their acquired assets?

Talos paid $385m for 19,000 boepd and 68 mmboe:
Acquired assets flowing bbl / consideration = 20,000 per boepd
Reserves / EV = $6 per bbl

So slightly better metrics than what Talos trades on today! But, I'm not familiar with the asset quality. How much capex is required to develop the 2P? How does this compare to our portfolio which essentially has all capex sunk to produce 5,000 boepd...

Why would they be interested in Otto? Well, for $70m USD they could have a fair shot and pick up 5,000 boepd (Q3 exit rate) which would be:
- Value accretive at their current valuation metrics
- Prior to cutting $2m of administration costs per year, further increasing the metrics
- $1m x 2 to exit Hillcorp
- Alaska exposure is what, $3m? Who cares!

$70m USD = $100m AUD = 2 cps. I would take that about now with arms wide open. Don't trust management at all to deliver cash back to shareholders.

I'd expect 1 cps Monday if oil behaves tonight. With Saudi's again lifting the OSP, it should pop?