half yearly, page-3

If there is an obligation to pay in $US for the drilling - say $US300,000 per day then there is no loss on the trade.

If TDO was unhedged they would be taking a risk on the $US/AUD exchange rate.

As it worked out with exchange at 95 cents rather than the hedge at 88 cents TDO would be better unhedged as they would have paid less AUD for the same drilling but that is a hindsight situation.

In mid April TDO will drill what is effectively a development well and a contingent well with a combined target of say 10 - 40 million barrels.

The oil is pumped from an unmanned platform 10km to the Gippsland shore for gas removal. Offshore FPSO costs are about $US20/barrel so this must under $US10/barrel.

High quality Bass Strait oil over $US100/barrel and if both targets productive around 1 million barrels pa and $100 million pa gross cashflow. There are RRT + other taxes and costs but net of $A50 million feasible.

Do not fret over the hedging the big story is about to unfold.