Ann: Rialto completes transaction with Vitol and , page-26

re: Ann: Rialto completes transaction with Vi... We may not find out until production starts as they aren't releasing the details of the PSC. Having said that, watch out for broker research as Rob did mention that they would have meetings with brokers if they wanted one, to discuss this in more detail.

My understanding is the follows.

As it stands (pre EEAA) the interests are below.

RIA = 30.5%
Vitol = 56.5%
Petroci = 13.0% - free carried interest

Petroci have the right to acquire an additional 16% of the EEAA when it is granted but will have to pay back costs, which will be taken from their net proceeds - complication 1.

I'm unsure also as to how cost recovery will be achieved, whether Petroci gain their 13% immediately (I assume not as I assume this is where we gain the benefit of cost recovery), so the %'s could be 35% RIA, 65% Vitol until full cost recovery (as it stands $130m, plus an additional $120m) so essentially if Gazelle produces upto P50 resources, then Petroci gain very little, but they will gain much quicker on the additional tie back discoveries that we have. This is complication 2.

The 3rd complication is the % that Vitol can achieve. Their base is between 56.5% and 65% (depending on Petroci interest and cost recovery) and therefore we can safely assume it will be north of here. My guess would be somewhere around 80%, which depending on the Petroci carried interest, RIA would either gain 20% of cashflows or 7% of cashflows.

My personal guess is that Petroci will receive nothing until cost recovery, therefore RIA will not be impacted too much by these complications, as their end interest in the EEAA will by 24.9% (35% of 71%) versus receiving 20% based upon Vitol getting their cash quicker (though RIA will gain once the first $50m is recovered, as there will be circa $250m in cost recovery to be achieved), then they revert upto 35%.

Its a guess as the 3 issues can be read in very different ways, but thats my take on it, but I'll be looking for any broker research on this in the next few months, to revise my assumptions.