uganda value

KPMG thinks Uganda at most is worth $125 million. Thats a max of $66 mill for the 30 mbo Simon has identified - and the same for what has yet to be discovered.

The value for the "30 mbo Potter has identified as recoverable" is based, according to KPMG on using it to produce electricity for the locals and some kerosine - and it ears on a NPV basis $2.02 per barrel. WOW.

Potter recovaerable as we all know is really 30 to 90 mbo - but he did not want to say that at the time - I wonder why - maybe $4 million in up front salary and bonuses won the day. Whatever 0 the KPMG valuation is based on a very expensive way of getting value out of a "small" amount of oil.

What KPMG should alkso have done is a sensitivity analysis on the value of Uganda if .....

(a) the upper limit of Potters implied reserves had been used - e.g 90 mbo (remeber his famoputs 'half full comment' - 100 to 300 mbo oil inplace - 30 mbo recoverable)

(b) -a- as above plus some extra discoveries - which we are seeing already - and which RISC has allowed for as probable enouigh for their analysis..

Then the valuation will be done for ovber 100 mbo recoverable - and the economics change dramtically - from $2.02 per barrel to around $20.20 per barrel.

The upper limit of sensitivity moves the valuation, with little change in initial assumptions from $66 million max to 20 x that - or $2.5 billion.

OK - so looking at "sensitivity" is not a rock solid "conservative" worst case valuation - but for God's sake - why is Hardman being valued on a worst case no upside valuation basis for full 100% takeover purposes.

For takeover - the bidder needs to pay for potential upside and a lot for control.

This takoever is a travesty - it is opportunistic timing (OK - thats within the rules) - very aggressive priceing (OK - thats allowed too) - but supported by the target compony (thats what I can't stomach).

I would put the value of Uganda as between $2.5 billion and $125 million - lets take the middle - $1.3 billion - then add the rest of Hardman.

If they were offering 100% shares - I would maybe support this deal - as I would be swapping Potter for better management - but at 40% share conversion only - I am paying for Potter - giving away upside to Tullow - while Potter gets his salary a his f*cking bonus as a farewell gift. F*cking hell.