transforming nse, page-4

You can see the estimated budget of NSE for 2014 which includes the Eagle Ford and Cooper transactions.(a little bit more detailed than the I made before). I sent to Phil as well.

You can see that NSE would have no money at the end of 2014 but would have with $15m bank debt and $5.3m deficit (excluding contingency).

This might easily open the doors for a very cheap takeover of NSE by MHR (Magnum Hunter Resources-US) or/and OEH-PFE (Outback Energy Hunter which is sunsidary of PFE Holdings PL)

Phil has confirmed that this budget is quite right. He is aware of the deficit and said they had plans to close the deficit without any more share dilution. That would be good. (I wouldn't be able to ask and he would be able to tell me the details of those plans in deed)

But my guess is here; If they can farmout the Merlinleigh there will be no deficit because the farmin partner will drill it on its expense and $7m drilling cost (shown on the budegt) will not be on the shoulders of NSE.

By the way this was first time I have spoken to Phil. He sounded to me that he is a very smart and diligent guy with a great business accumen, and most importantly with a very honest charecter. He shared and acknowdledged all my concerns on everything I said. That means he is aware of everything, even every concern we discussed here. On my emails sent him recently I used very harsh language but I can see that he didn't deserve that. (I am sorry Phil).

2014 Budget
Cash Outflow
--------------------------------
$15m payment to Magnum Hunter
$3m performance payment to MHR (in 10 months)
$1.6m for Cooper PEL570 asset.
$1m for Cooper PEL570 asset (in 10 months).

$13m drilling of 1st 2 wells in EF in Q1-2014
$13m drilling of 2nd 2 wells in EF in Q3-2014

$6m 3D seismic of Cooper basin
$7m drilling of Merlinleigh
$2m excess expense in drilling of 3rd well SC project
$3m administration cost
----------------------------------------------------------
$64.6m Cash Outflow

Cash Inflow
--------------------------------
$35m at hand in Jan.1 2014
$15m US Lending Facility
$5m Net income after cost from existing 5 wells
..........(300boepd x $45 pb x 365 days)
$4.3m Net income from 1st two wells Q1-2014
..........(400boepd x $45 pb x 240 days -8 months)
$? No income is considered from the 2nd two wells will be drilled on Eagle Ford in Q3-2014
----------------------------------------------------------
$59.3m Cash Inflow

$5.3 Deficit at the end of 2014
$6.4m Contingency is considered for 2014. (%10 of cash outflow)
-----------------------------------------------------------------------------------------
$11.7m Deficit at the end of 2014 (including contingency)