Ann: MEL announces scrip merger with Elk Petroleum, page-33

At risk of flogging a dead horse here..

This deal is conditional on MEL sourcing additional funding by March 15, this is clearly, clearly, the expectation of a government pay out. If the pay out doesn't eventuate then MEL walks away with the potential loss capped at $2.5m minus the value of converted equity (if ELK still viable).

We are paying the equivalent of a large discount to ELK's current share price. It's share price at the beginning of the dramatic phase of the oil price collapse was almost 7c. MEL hasn't been 7c in a while.

What business case are you referring to with MEL? As it stands there is a high risk of there being NO business. The board absolutely needed to do something to diversify some risk and to start being active again.

It would be nice to partner with a large player to push through CMB, but come on, do you really think that 1, any large player would be interested in taking on the PR disaster that is the northern rivers or 2, MEL would be able to negotiate terms at all in favour of their shareholders?

So right now we have two potential companies, what would be your preference?

i) A gas company with a single highly prospective conventional resource and several CSG prospects that has been encumbered by a politically scared government that is currently awaiting a court decision. The prospect of continuing operations is highly uncertain. Cash balance $9m.

OR

ii) An oil and gas company with two assets: an oil project based in a welcoming regulatory environment which is well advanced in development with cash flow potential in 2017, near term funding secured ($2.5m). Also has a highly prospective conventional resource and several CSG prospects that has been encumbered by a politically scared government that is currently awaiting a court decision, the prospect of continuing operations is highly uncertain. Cash balance $6.5m.

I know what I'd choose.