Strike 3, page-6

Speaking of risk/reward:

Metgasco’s interest in the SM74 prospect is for a 30% working interest and a 24.37% net revenue interest.Metgasco will pay 40% of the approx. US$11 million dry hole cost and Byron Energy Limited will pay theremaining 60%.

So 40% of $11m is $4.4m. Now I understand risk/reward and that SM74 is a compelling target, but this well will be close to a company-breaking proposition if we hit water again. The question in my mind is whether a company the size of MEL should be taking bets of this size? The success or otherwise of SM74 is almost a binary option "multi-bagger or bankrupt" scenario, so I have to admit its making me question my largish investment in MEL. And BYE's recent track record hasn't been stellar at all. F1: partial success, partial failure. F2: mostly fail. Redrilling of F2: probably another fail. F3: success. Weiss-Adler: fail. All from my fading memory.

I'm less worried about my investment in BYE as they can sustain another duster due to F1/F3 revenue. 

Having said that, is there any way that you'd tell management not to participate or to reduce their interest in that one? No, because on paper it is a cracker.

At this stage I'd say "Yes, reduce interest to 20%" and let Otto take the other 20%. Which leads to another question: why isn't Otto participating? You'd think they would jump at the chance to participate if the prospects look so good. Perhaps they simply don't have enough funds?