ebr could be 4/5 months away, page-13

re: moby float analysis *warning* Before anyone decides to invest in the Moby float, they need to concentrate on some basic facts.

One, the EBR press release of 31 October 2003 stated

"Bass Strait Oil Company (BSOC) has excercised it's option over VIC/P47 and is required to drill the Moby prospect ... estimated to cost $3.75 million dollars to earn a 75% interest in the permit".

Now, thats pretty cheap for an offshore drill, but the rate BSOC are paying EBR is that old industry standby of a third for a quarter ie 100% of costs for 75% of whats found.

Two, the fine print of the Moby prospectus (11.6, Table B) reveals that Mr Albers owns 58.2% of BSOC. Good for him.

Three, the fine print of the Moby Prospectus (footnote 3 to section 7 Independant Experts report) shows "Farmin agreement between Moby Oil and Gas ("Moby") and BSOC approved 12 February 2004 whereby Moby has agreed to earn a 35% interest in in Vic/P47 from BSOC in joint venture with BSOC and Eagle Bay Resources NL by carrying out and financing by Moby certain exploration works required to meet work obligations for Vic/P47".

Wait a second. So BSOC (aka Mr Albers, Chairman of Moby) bought 75% of Moby, in exchange for paying the $3.75m cost of drilling it, and then they set up and float Moby to buy 35% of Moby-1, in exchange for paying the $3.75m cost of drilling it.

This leaves

EBR - gets a free carry, holds 25% of Moby-1.
BSOC - gets a free carry, holds 40% of Moby-1
Moby - pays 100% of costs, gets 35% of Moby-1.

ie BSOC paid EBR a third for a quarter. Moby pays BSOC at three to one.

Now, I personally will pay 3-1 to get a chunk of Arwon-1 in the Cooper Basin. Offshore, I want in at 4:3 (ie a third for a quarter), and will need a lot of convinving to get in at 2:1.

But 3:1 for offshore ? Never.

The Moby float is a mechanism for BSOC to get suckers to pay for drilling Moby, and to thereby get the owners of BSOC a 40% free carry on the well.

Ian Whitchurch