Thanks to JK VPE is sitting on some great assets and I personaly...

Thanks to JK VPE is sitting on some great assets and I personaly hope that they havn't sold off any of the assets in the US.

They do have some great assets, by which I define to be cashflow positive or value add (such as Cooper Basin and CSG), but I certainly wouldn't classify those duds in the US as assets. When one takes over a legacy producing field such as FB, one assumes all kind of operational as well as geological risks. So far, the risk-adjusted returns on those assets have been very poor. If you then considers the ROI, the holding or opportunistic cost is even greater. Given they have spent millions in development/drilling cost, the returns have not been that good.

On the other hand, if they had spent the money in developing their CSG asset earlier, we would have been that much more advanced in unlocking the value in our CSG assets, as opposed to playing catch up to the market.

Irrespective of what business you are running, the key to increasing equity or shareholder value has to be in the net profit margin of an asset. Even if a gas field is to contain 100BCF, but it is producing so little that after cost, the breakeven point is 5 years away, it is what I would hardly classify as an asset. It's more of a liability. A good example of an asset is Strike's Rayburn project. Each well may cost 10mn to drill and complete, but the payback period is 4-6 months depending on the realised gas price, with the expected per well profit of 40-50mn over 3 years. The net cashflow has enabled them to become self-funding and given them the financial flexibility to keep drilling more producing wells, thus increasing their cashflow even more. That's an asset! IMO, the faster they sell off their US "asset", the better. Go back to the history of Eagles, FB, Margarita and Florence, etc, and I am sure you can work out how much shareholder value had been destroyed as a result of those "assets".

618