Ann: Quarterly Activities Report & Cashflow, page-2

Interesting bit here in the quarterly..

"Reduction of Commercialisation Interest Following the sale in the previous quarter of Cott’s 10m shares in Kina Petroleum Ltd and its withdrawal from PPL 437, the Company elected to pay International Exploration Services Ltd (“IES”) A$1.66m in return for reducing IES’s commercialisation rights in PRL 38 from 25 to 23.3 percentage points . IES previously held certain rights that entitled it to receive value up to a maximum of USD1m per percentage point less any costs from the sale of up to 25 percentage points of the PRL 38 held by Cott. Cott retains a 40% interest in PRL38, and IES’s rights apply only in the event of a transaction that commercialises Cott’s direct interest in the license."

A couple of things. First of all, clearly the sale of KPL shares has been a good thing for CMT. Just the difference in price achieved vs current KPL market price has enabled CMT to pay down some of IES' interest @ 1M per %, which i think is important for future valuation purposes. It still suggests to me that CMT saw it as a good opportunity as they expect to make more than 1M per % and could see the value in the extra leverage down the track.

The most important thing is the last sentence of the quoted paragraph. So for example, if CMT were to flip this asset on to another strategic partner that DIDN'T result in a commercialisation, i.e. say a Santos or OSH wanted a strategic stake, but weren't ready to commit to any commercialisation, then IES' rights do not apply. So no need to deduct that 25M at all!

Will be very interesting to see what Repsol do with this asset. I think it can only be good. They will either like it and get after it, or sell it. The sale will provide some updated valuation clarity and also bring in a presumably more interested partner.

It really is great news that Talisman are out of the picture!