pre-open..., page-4

re: now in trading halt... Could LIO be looking to break all ties with Indonesia...???

If so, they would need to sell Bula and all associated plant and infrastructure, the associated rig business, their 2.5% of Oseil and of course, their long forgotten LTS plant!

Some figures for discussion on their Indonesian assets:

Seram - Bula field 100%:
Purchased from Santos for about US$2m when oil was only US$11 barrel...(book value?). Bula is producing about 520 barrels per day, which currently sells for about US$30 barrel. Hard to work out reserves, as the field re-charges itself...but given that Bula has already produced over 19m barrels from a 5m barrel reservoir and that field decline has recently turned up, meaning it's now re-charging faster than they can get it out of the ground...for all we know, Bulla may still have another 30+ years left at current production rates?

Seram - Oseil (Non Bula block) 2.5%:
Current Phase 2 development should lift production to about 18,000 barrels/day (LIO 450 barrels/day). Recoverable reserves were estimated at 48 million barrels of oil (mmbo) as at August 2004...LIO share 1.2m barrels.

Seram - Oseil Sole Risk Wells (Non Bula block) 100%:
Two prospects due for drilling, but still others that I will not include in my figures.
Dewang (OIP 25.4mmbo) - success probability 30%
Solan (OIP 13.3mmbo) - success probability 26%
They will need a JV partner to fund the exploration drilling, but should be able to retain a decent % in the initial stages.

LTS (low temperature separation) gas plant:
Currently in safe keeping in Jakarta awaiting utilisation. Replacement cost is estimated at US$9m but a realistic sale price is probably between US$2m and US$3m...not sure if anything can be done with this however?

Oil Service Co (Rig): originally part of the Bula field purchase from Santos, but has since been substantially re-worked so that it can be utilised by Kufpec for deep water drilling. The ownership of a services company is beneficial under the Indonesian tax system.

Summary:

Bula: Assume 3mmbo recoverable at US$4/bbl = US$12m
Oseil: Assume 1.2mmbo recoverable at US$6/bbl = US$7.2m
Oil Service Co: Assume rig and equipment at cost = US$2.8m
LTS Gas Plant: Assume disposal value = US$2.5m
Sole Risk Exploration: Assume 38.7mmbo risked at 26% x US$1 barrel = US$10m

That gives us...

Total value of Bula (including rig) = US$14.8m
Total Value of Oseil Phase 2 = US$7.2m
Total value of LTS plant = US$2.5m
Total value of Oseil Sole Risk exploration = US$10m

Therefore, their entire Indonesian assets could arguably be valued at something around US$24.5m (AUD$31.8m) with upside of US$34.5m (AUD $44.8)

Pretty impressive figures, but can they achieve these?

Comments invited.

Cheers!