Ann: TDO Sells Interest in West Seahorse Oil Field, page-3

The price anything is worth, is what someone is prepared to pay for it.

At the time, we don't understand what management was thinking or what the strategy that they had in mind, as we can only guess.

My take is that they either:

1) Needed to raised more money to fund there obligations in the development (huge dilution of shareholders if it proceeded), or
2) Sell out and focus on other opportunities.

They obviously chose the latter, as they may have had the deal with Beach in the pipeline. Also, the deal also allowed TDO to keep some upside in West Seahorse.

I think this was a smart decision given that Beach are aligned with Origin in the Cooper Basin and have the cash flow and resources to fund the development of a potentially large gas resource in the Otway . Don't forget Origin purchased a large resource from Woodside may years ago for over $500m. This resource purchased by Origin is less than the field size that TDO has earmarked for discovery.

Also, Beach has previously held ground in the region and would have had a very close look at the 2 D seismic.

My take is that the West Sea Horse field will also be on-sold, if have the success that is forecast, as it will help fund the real play which is the gas deposits.

I think all this was factored into the sale price of US$5.50 per barrel insitu reserves. While US$10 per barrel would have been preferable, it was unlikely to happen given they were a price taker and not the price maker.

Its all about doing the deals, which I think management is doing a good job at given there financial position. ie no ongoing cashflow.

The end game is to get ongoing cash-flow, to build a great company. Gas in the Otway, is TDO's best opportunity for this outcome, or a large paycheck if they decide to sell out or down.

DYOR