When these calculations were done, I allocated the same costs to...

When these calculations were done, I allocated the same costs to some of the wells done last year as those to be done this year.

Ideally, the 3.1 mill reserve should have a cost of $33.93 ($2003 year cost as per Sept. Presentation).

I did use $26 for 2004 's costs due to a very large component of barrels from just the Awon well (eg. it costs just as much to drill a hole to find 1 mill barrels as it does to find $5 mill barrels) and of course the total year's barrels will be much greater than last year's 3.1 mill., if ARWON is successful.

However, I am prepared to use $30 costs/barrel to include the 3.1 mill reserve as well, so the costs of the 7.54 mil barrels becomes $226.20 mill to deduct from revenue ($452.40)=$226.20! mill before tax.

Tax at 20% is $45.24 to deduct from net revenue or $226.20= $180.96 mill or $2.89. That is if this oil were converted into cash.

It won't be, therefore allocate 67% or $1.93/share.

To this must be added:
1. The remaining assets above ground.
2. The value of the Gas. Sofar, STU has not included this but according to Tasgarta, it will become important once sale agreements are in place.
NB: More wells are to be drilled this financial year but have not been included. (Note the calender for drilling is from Jan/Dec, but the financial year runs to 30 June.
This needs a premium IMHO).
3. The high quality of Management (Their 67% strike is the highest in the Cooper Basin).

So, all up. I consider a share price of $2.20 after a successful discovery of ARWON, a reasonable proposition.

Gerry
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