I think that the conversation was about EKA.Using ADI as a...

I think that the conversation was about EKA.

Using ADI as a benchmark price for Sugarloaf, the calculation might go: 19.5 cents less cash 2.5 cents (ignoring the other Yemen block) x 70% (to reflect the different WIs) = 11.9 cents.

So, EKA does not look so out of line.

AUT is trickier because its other acreages have not been drilled. Because of the greater number of shares in issue, the value per AUT share for S/L appears to be similar, though cash is, perhaps, 4.5 cents. So AUT should be about 16.5 cents just valuing cash and S/L. That means that the other acreage is valued at about 21 cents. That is discounting a lot of risk.

Just guestimates. ADI looks stronger than AUT to meet its contribution obligations to an aggressive drilling campaign following the free-carry wells if the programmes on Longhorn and Ipanema are comparable. However, the programmes for those two will lag behind S/L (no drilling reported at present) and, if the free-carry wells show those acreages to be comparable in quality, AUT will raise capital (if required) at a significantly different price. Too early really to take a view on that but dilution might prove to be relatively insignificant.

EKA, on the other hand, may need some cash to cover its contribution to the post-carry programme on S/L. But we have no details yet and only 1 of the 3 wells is being drilled. EKA might get away with a less than 10% dilution. All guesswork but that seems to be in the price as well.