Ann: Oil and Gas Overriding Royalty Acquisition and Funding, page-7

Tony, from the information put out to the market so far, we have PGS going from a small cap oiler with cash in the bank, to an indebted small cap with revenue (and zero control over their producing asset). I agree with you in the sense that it will look nice having revenue, but when all it is supporting is admin... well, I feel I made my point earlier.

The fact that they have a $15 million dollar facility, implies they are going to fully use it. I mean, the market cap is only $11 million. Are they going to have more debt than the company is worth soon? If they are so keen for royalties, why not buy them in the Cooper Basin? (there are quite a few existing agreements if you do a search for them).

Anyway, I am in no way hoping shareholders do badly, I would be happy to see you make some gains, like CVN holders did today. I just don't believe PGS management are doing the right thing. IMHO of course.

btw - The interest rates seems quite low, approx 5% from some rough calcs. So that is not the issue. What is is how much they are going to make? 650k before tax?? 3% decline per year (so for example, they will be earning


Yr1-650
Yr2-630
Yr3-611
Yr4-593
Yr5-575

so 30% off that?

So maybe 400k for the first couple of years, then lower etc. They are paying $4.6 million, so payback of at least 11 years! In 12 years time it will look nice having profit, but honestly, will you be holding PGS in 12 years?

Happy for my post to be picked apart. Just sharing an opinion.