voelte sovereign risk, page-18

Entropylord,

This talk of soverign risk with the RSPT, etc, if I was reading this as a potential investor can sound negative. Though I am staunchly against the RSPT, PRRT has been in place and the O/G sector is still growing. So those are the fact.

It is difficult to compare PRRT to RSPT, because apart from the 5% buffer on top of bond rate, RSPT reduces the ROI on a project. Mineral mining has a long lead time so the advantages of the Gov underwriting some of the risk through the rebates is only good for marginal players. It is my understanding that ROI takes into account the life of mine and to take 40% off the ROI minus say 6% can have a detrimental effect on the DCF valuation of the shares today especially if it is to effected immediately 2012.

Can someone please tell me I am wrong with my understanding. I am not an accountant so I am making many assumptions. So if this is the case sovereign risk will not affect O/G generally offshore.