moby options pricing, page-4

re: moby options pricing-4 andalisa Dlux,

There is no right or wrong direction with these things, because at this stage nobody knows whether there is any oil or gas in the well.

Having said that, and having looked at the various companies with interests in the well, we need to look at the three most likely scenarios:

1: The well is dry or non-commercial
2: There is commercial gas there
3: There is commercial oil and gas there.

Based on the various estimates put out by the company and Sandfords who also did an analysis, if there is gas in the well, the shares could go to around 40 to 50 cents, and if there is commercial oil, they could go to between $1 and $2. If there is nothing, then the shares are going to fall sharply.

Let's say you want exposure to 1000 shares, with the view that they are possibly going to hit the jackpot. If you buy the shares, it will cost you $275. If you buy MOGOA, 1000 options will cost you $140. If you buy MOGO you only need to buy 500, so that will cost you $75. On the assumption that they move dramatically higher, you end up selling anyway and taking a nice profit, or you could exercise the options if you wish.

Let's say the well is a duster. With the shares, you will lose a large portion of the $275. With MOGOA, they will drop, but you live to fight another day. With MOGO, you will probably lose the lot, but nowhere near as much as with the MOG or MOGOA.

Moby Oil offers by far the most leverage into the Moby well of all the partners, despite what the Bulletin speculator says about Eagle Bay. MOGO offers the best leverage of the Moby share possibilities, and also provides the least risk on a per share basis (compared with MOG and MOGOA) in the event of a bad outcome.

Is there oil there? Time will tell...
Is there gas there? Quite possibly considering the proximity to Patricia Baleen and the seismic diagrams in the prospectus.
If there is any gas, is it any good? Time will tell...

It's the oil exploration business... you puts your money on the table, and you waits for the dice to roll...

happy gambling.