Ann: ORIGIN ENERGY LIMITED PEL 514 GAS FARM-OUT , page-11

re: Ann: ORIGIN ENERGY LIMITED PEL 514 GAS FA... You'd think PGS would be a takeover target.

Origin are spending $32 in Area B (PGS area) in Stage 1 to acquire 30%. That is only for the deep section.

That values PGS 20% at $21.33 million. This is a fair valuation metric as ORG have committed to spend money for this first 30%. They are paying the same for another 10% (should results be good). The current market cap is $8 million.

Also interesting to note, SXY have decide to hold onto the shallower sections, which bodes well for the oil from Sprigg (or at least to the potential for future oil discoveries).

So even putting aside the question of how PGS are going to pay for their share of drilling, we have ORG willing to pay the equivalent of $21.33 million UPFRONT for the deep sections of what PGS own.

If PGS can't fund their share, it would be easier (and cheaper given today's deal) just to take them out. I imagine PGS were approached to participate in the deal, and rejected the idea. The alternative, they weren't ask to participate because ORG (or SXY) are planning to squeeze them and take them out.

I know people get sick of takeover talk, but the above seems logical to me given the craziness of ORG paying so much to SXY when they could have just bought PGS outright.