more wells at florence, page-7

i am fairly certain that the us joint venture is set up to reinvest revenue in more drilling, not pay dividends.

John, my understanding of the funding agreement is a bit different.

As far as I understand Comet Ridge has no further cost for their US activities until they are dilluded down to a 20% share in the new company, Comet Ridge Resources ("CRR").

In the first step the US equity firm (Pine Brook Road Partners) contributed US$ 7 million in cash and US$ 2 million of (the former STX) assets - COI contributed their assets (at that time valued at US$ 7 million - what a joke ...).

These transactions arose the initial shares of CRR: Pine Brook retained 56.25% and COI recived 43.75% of the equity in CRR.

The deal included the right for Pine Brook to invest another US$ 19 million to increase its ownership in CRR to 80%.

These are the basics of the funding deal (IMHO of course).

In a second step (2.9.2008) Pine Brook increased their equity interest in CRR to 72.42% by investing another US$ 9.65 million - therefore COI has currently a 27.58% interest.

To cutting it short: Pine Brook has to invest another US$ 9.35 million (for the remaining 7.58% equity in CRR) before COI is in the position to put new money into the US projects.

And therfore they should get back their revenue share from any cashflow from the projects in question until Pine Brook increased their equity position in CRR to 80% - thats at least what I would expect from their massive "keep shareholders informed" - campaign ...


BTW, another interesting question could be:

They already hold US$ 16.65 million (7 + 9.65) in cash for their US projects - a lot of money for four shallow wells at Florence (each should cost not much more then US$ 1.5 million for drilling and completion; probably less of that) and a small seismic program at Grays Habor. Why do they need so much money at such an early stage of the US programme?

'hope they will surprise us with new acreage at Florence and impressive early production rates ...