Ann: Oil and Gas Overriding Royalty Acquisition and Funding, page-22

The asset's appear to be located over several USA states which spreads the risk in effect.

I don't think knowing the locations of the properties matters really.

What they don't disclose is whether there is any exploration upside on the properties and whether they would be entitled to a proportionate amount of income from any new discoveries. Nor does the company disclose how much revenue comes from oil & how much from gas. Also no info on how much $1 movement in oil price & $0.10 in gas price would affect the level of income received.

$650,000 PA (declining 3% a year) on a $4.58M investment, isn't a great rate of return to say the least. After 5 years you've just about banked enough to pay off the $3.2M loan that's it (provided the oil & gas prices don't move).

Fail to see the strategy on this unless they are simply failing to show the deals upside potential for now, if there isn't any then the board have some serious questions to answer.

If the Cooper Basin wells come in then the amount of income they are talking about in 6 years time from the ORRI will be meaningless in comparison to that, strategy seems all wrong.

I'm looking at something right now in the USA, its a small deal with existing production & low risk upside, if the upside fails completely you still get payback in under 4 years, if it succeeds then your looking at payback in under 7 months & 100% profit on the money invested before the end of 2015.

Now ask yourself which you'd rather look at of the two?

LOTM