Ann: Sugarloaf Operational Update , page-64

mir

That's pretty much as I see it. S/L has been drilled and the reserves flowed. Only a few wells, but consistency between them from previous data posted with TRRC and consistency with data from next door, in Live Oak. Hilcorp had access to some of the data from Live Oak under confidentiality, it was suggested. Hilcorp must have felt that Longhorn and Ipanema were in the trend, otherwise it's difficult to see why the should commit to drilling 4 wells.

But they do still have to be drilled and the market has not seen the geological data or the analysis. On the other hand, there are a lot of words and maps being published by other operators that provide encouragement.

I'd expect a bit of a re-rating against ADI as soon as Hilcorp announce mobilisation of a rig for drilling on [Longhorn]. That will increase the hope for early additional cash flows. Then it will depend upon the flow results.

The acreage alone won't determine the price multiple. Account will have to be taken of the larger issued share capital of AUT. That would trim it back to 3 x. But if it is richer in liquids and flows at comparable rates - who knows?

The current premium to ADI SP seems slimmer than historical average for no particular good reason that I can see. News of Hilcorp allocating resource to [Longhorn] should address some of that I would have thought.