I understand the selling but I have continued to buy this week...

I understand the selling but I have continued to buy this week despite the news on Marathon/Shale. When oil cos have drilling disappointment you need to look to the underlying assets in the company and the prospects.

1.cash of $26m au or $0.11au

2. Us assets comprising Main Pass 270,Marathon and others-NPV still $30m US. -$0.14au
The reality on Marathon is reserves will be static. The value in the increase unfortunately Has gone due to the water contact in 3 of the 5 wells.Marathon is still a vg asset.
MP 270 production was up again this ¼ but was naturally overshadowed by shale and Marathon.

3.Fern was asked on the conference call why not cash up USA and get the $30m to join with the cash. He did not agree that was wise as he believes the drill program and in particular Hummer-60 183 bcf and 5m bo-37.5% and
Ship Shoal 63-123Bcf and 5mbo-75% were vg prospects. They have spent a lot of man hours getting both these ready.
I also think more drilling around MP 270 may occur. This has proved a vg area and they have leases nearby.

4. Tax losses of $100US. Tax losses are often overlooked in a value situation as in many cos they can sit and wither.It is clear now that Psa are looking to buy existing production and thus the tax losses make revenue straight thru to bottom line. I believe the new Directors are looking at this.I assume they would use some debt to fund which in light of their share price is ok.

If they merged with another producer the value would be in the tax losses also of approximately $30-40m US or $0.14 to $0.18 au.What haircut you take on that is dependent on the other cos exact situation and current tax rate.However they have value.

Just on the shale. It didn’t work out and i support them taking the hard decision to walk away. Oil and gas cos drill and fail. Its the nature of the business. Psa with cashflow and cash and prospects will live to fight another day.

Cash 11c
US assets 14c
Drilling prospects Hummer and Ship shoal/Mp-?
Tax losses –value determined by internal production or external merger.
I have been a strong supporter of Co as they know oil in US.When oil cos have a failure you need to recalibrate, look at time frames and make a decision to stick or flee. With the existing value and vg prospects that they control I still sticking despite others reservations.