why bother investing in rey?

Some of you may have seen comments on the BRU thread but they really belong here so I thought I'd try and transfer the discussion over here...

http://hotcopper.com.au/post_threadview.asp?fid=1&tid=1760341&msgno=8205174#8205174

The bit concerning REY starts on 14/06/2012 at 11:05.

In my humble opinion, there's two reasons (or a combination of both) to invest in REY:
1. You like their developing coal projects
2. You like the potential in their 10% holding, free-carried to production, over two tenements in the heart of the Canning.

The Duchess Paradise coal project seems to be plodding along with native title progressing. They are still looking for a partner to sell down on as they are running out of cash by themselves. I've seen a research report valuing the company at $0.39 based purely on this coal project. No doubt, with coal prices as they are at present, this is looking a bit optimistic. Coal has always been management's focus but they seem to be slowly coming around to appreciate the value of their oil and gas. Anatol's research has got their attention.

Regarding the oil and gas, REY and Gujarat (an Indian company that bought the 90% for a song several years ago from previous management) aren't doing anything really other than watch Buru drill and prove the massive extent of the BCGA in the Laurel formation. It seems very likely this extends well into REY's tenements. The problem is it will be ages until anything gets proved up and REY only owns 10%. 10% (free carried to production) isn't a lot compared to BRU and NSE, but 10% of something massive is still valuable (hopefully several times REY's current market cap).

In Chris1983's post on the Buru thread, he highlights the potential dilution risk due to their cash position. Management have indicated in their latest quarterly (and response to ASX query) their preferred method is to sell down Duchess Paradise rather than raise capital, but they've been trying for a while now...

In REY's favour, is the fact that REY is the missing piece in Buru's Canning Basin Puzzle and is so close to Valhalla North and Paradise 1. Buru are likely to know the potential of REY's tenements.

All in all, I don't see REY moving substantially in this current market (other than down) until either:
1. They sell down Duchess Paradise on reasonable terms
2. Corporate activity commences in the Canning Basin from major O&G companies.

Buru announced in their capital raising yesterday "Funds will provide flexibility to immediately follow up discoveries made during 2012 and provide Buru with the ability to participate in any further consolidation of the Canning Superbasin acreage." They are cashed up, have a good partner in MC and taking out REY would put them in the best position to reclaim the 90% currently owned by Gujarat.

Am I missing anything else?

I personally see good potential with REY, but is BRU (or others) a better bet in the Canning? Chris1983 raised many valid issues to consider in the BRU thread. Interested in other opinions.