The problem with the options is that they expire in March 2009...

The problem with the options is that they expire in March 2009 exercisable at 35 cents. If KN1 fails to pass the commerical threashold then it is far more unlikely that the oppies will be "in-the-money." The only thing that could get the oppies to 35 cents (assuming failure at KN1) is success in the Po Valley in Italy. However in reading between the lines I have concluded that in effect, Ken Russell and the Key Petroleum team are waiting for the Italian authorities to give then the green light for operations there, and there is absolutely no guarantee that this will happen before 2009.

In summary if KN1 is good, then I see extreme upside in the oppies (hence, yesterday KEY down 10% KEYO up 10% - I assume profit takers in transition between KEY and KEYO) but if it's bad, then the oppies will essentially be valued at zero.

Take a look at MOG and MOGOA for yesterday when they drilled a dry-hole. They are in a similar predicament. Heads down 45%, oppies down 97%.

SS.