Seamfiend, a few comments about your statementsA) "good job...

Seamfiend, a few comments about your statements

A) "good job investor. write up a valuation base on 3P.

which basically means there is a 10% chance currently of extracting that resource.

so if spin the risk wheel into it, your wowser of a target is degraded to $4.18 to just 42cents. how does that work?"

1 MONTH ago Santos announced that it would be acquiring Eastern Star Gas (ESG) for $0.50 per GJ of 3P reserves.

"Attractive acquisition price of A$0.50 per GJ of 3P reserves" page 6 of STO presentation

ESG has LESS 3P reserves than BOW!

Whilst there may some differences in fields, I dont think that ESG's is more than 3 times more valuable than BOW's.

B) "What is it on a 2P basis?"

I agree with you on this.

Why sell BOW on its current 2P reserve of just 238 PJ of 2P (August 2011).

BOW is aiming to increase is 2P by 525% in the next 12 months (238 to 1,250)

Logically if they achieved this, the offer price should be materially higher than the current offer as it would a multiple on 525% higher asset base?

C) "When do CS Co expect to monetise the resource?"

BOW has CASH and is not a forced seller.

Whilst BOW will need money to monetise its assets, I dare say that they will be selling the gas for more than the $0.15 per GJ that is implied in the deal.

Domestic gas prices are currently in excess of $3.00 GJ.

It also assumes that BOW NEVER has exploration success EVER AGAIN and that the current take over price means that ALL of BOWs CSG assets will only every produce 2,752 PJ of gas.

Whilst there is always loss of converting from 3P reserves into actual production, I dont think that the total saleable gas held in BOW's tenements is limited to 2,752 PJ.

D) "What is the dillution on BOWs shares?"

I agree that if BOW does not accept a takeover from a larger rival and independently sells its gas to domestic/export markets it WILL need to raise capital to link its fields and build a gas pipeline.

I have no problem if BOW undertakes this strategy if it can generate higher returns for its shareholders as it mostly likely will be selling its gas for $3.00 GJ (domestic) and +$5.00 GJ (export).

Given the potential of its resource base, this could provide +20 years of cashflows.

Also management has stated that if they build a pipeline that they would likely to do a sale and lease back to companies like APA, DUE or HDF. This would reduce the amount of capital required.

Finally I would like to add that I am not placing a +$4.00 price target on BOW but I have made the back of the envelope calcs to highlight that I believe the $1.48 offer is well below my value of its assets.

Like BOW I am not a forced seller and dont want to give Shell all the future upside so some can make short term gains.

Thanks