Buru permits over which Fitzroy River has a 2% Royalty Interest, page-5

poyndexter,

I've been holding FZR for years, and will continue to do so for decades. One of the analysts (Strachan I think) once called them "shares to leave to your grandchildren", in that there is a massive prospective resource in the Canning that just needs to be monetized. Whether it is BRU or someone else who does it doesn't matter to FZR - they'll just take 2% of every barrel/cfg that anyone gets out of the ground.

As to whether BRU is leveraged to success in the Canning, arguably yes because they own many of the tasty permits (in JVs with e.g. Mitsubishi), however monetizing the massive prospective resource will take money (i.e. farm ins) which will dilute their interest.

So if you believe that (a) there is a potential world-class gas resource in the Canning, and (b) it will eventually be developed by someone because the world needs energy, then FZR is arguably a great (the best?) investment vehicle into the Basin because their interest will not be diluted as the resource is developed.

I'd argue that FZR is currently priced based on expected BRU production in the next year or less, with nothing in the sp for BRU upside (3000 bopd at A$50/bbl after costs through 91m FZR shares at a 20x PER). If BRU were at some point in the distant future to be producing e.g. a Bcf/day through a pipeline to Perth / Kimberly / wherever, you'd expect the FZR sp to be more like $3.50/share (1000 TJ/d at $3/GJ through 91m FZR shares at a 20x PER).