Valuation/EV, page-4

It depends on the type of valauafion methodologies you use and the degree of risk discounting you out on each project.

For example, Indonesia gas fields are worth a small amount if the PSC is not extended, and a large amount if they are extended by 20 years. The Indonesian government have announced the extension for 20 years but this is not yet confirmed by said Government in writing so cannot be confirmed by the Company.

My estimate is that the gas fields are worth between USD 50m and 100m pa over 20 years.

I also estimate that when processed into LNG this is also worth 50m to 100m.

If you dcf these and us a discount rate of say 15% you still get a big number in excess of 1 billion.

Then looking at Indonesian electricity, the value depends on whether or not the right to continue to own and operate the plant is extended after 2024. It is has to be sold back to the Government then the company gets about 40m. If it was extended for 20 years then the value will deepens on the exact terms but its reasonable to assume it is a bit more than 40m....

In Philippines the assets are very very strategic. The economy is going to experience a decline in production of indigenous gas from 2023 onwards. This gas powers 25% of the Luzon economy. In addition electricity demand is growing at 6% pa.

The government is trying to encourage the development of a project that is similar to the Company’s asset but so far this has prove to be difficult and slow. It is looking like there will be no alternative to the EWC project ready to go by 2023. The strategic value of the asset should therefore be quite evident to professional infrastructure investors. At the moment the market is holding off rerating the value of the asset in the Philippines until the company can prove the connection and financing issues are resolved. Into opinion this will be sorted within weeks not months.

The replacement value of the Philipppines assets are USD $2billion.

In Australia the gas fields are worth USD 200m to USD 500m unrisked.

So, to value the company you just add up the assets then deduct your net debt and then discount again for the risk each of these projects faces. Eg, I think the gas fields in Indonesia get extended for 20 years but you might now so you will value differently ...

Then you get the value.

Also don’t forget the share price is AUD and these values are USD.

Adding it all up, I get a number of AUD 1.50 per share unrisked and 75c a share with an aggressive discount for risk. Either way, this is a long way above 18c....

This is using a fairly high discount rate also when valuing Indonesian gas and LNG. I did not include Indonesian electricity yet because of the uncertainty surrounding that situation.