talon petroleum initial valuation, page-8

Twinpeaks,

Couple of things to add to your thoughts:

1) Cash was $16.8m as at 30/9/12. While TXN has an effective indemnity for anything they spend on EFS drilling & fraccing they have to pay transactions costs (RBS & minter ellison & maybe Albrecht & Assoc as well) plus Olmos drill/fracc costs + interest if they draw down on the debt facility in the mean time.

As a result I think Talon will be lucky to get away with $11m.

2) Wandoo PGA - yes it is valuable and yes Dave Mason knows it. He's actually getting another 11m shares to continue the agreement with Talon so the issued shares will actually be 256m.

3)The Leighton Olmos was sold for US$12.4m in Feb/Mar this year. The MR Olmos field is about 1.5 times bigger. My guess is that they'll try to develop this up pretty quickly and sell it off for say US$18m.

So cash backing alone I think will be about $22m ($11 + $18 less costs & tax)

So thats ($22m/256shares) $0.086 cash /share.

then the new leases use some of that cash and the value is either discounted or increased according to how exciting they are.