AZA is set to blow, please read the following:ľ BMG Set to...

AZA is set to blow, please read the following:


ƒæ BMG Set to Become an Integrated Project ¡X JV signs a conditional gas contract with Alinta (AAN.AX -A$14.16; Not Rated) for 225Pj. Subject to project sanction, BMG could produce gas by mid 2009. Without the gas contract AZA is worth $1.07/share, and with it AZA has a dcf of $1.39/share.

ƒæ BMG Oil Project Commissioned but Problematic ¡X oil production is presently constrained by the high level of associated gas production. Some debottleknecking ofn compressors should improve solution gas handling
capacity. View is that gas production will be limited below previous expectations.

ƒæ Oil Deferred Not Lost ¡X even if gas handling is not mproved significantly net production could rise from 2.5MMboe in 2007 to 3.3MMboe in 2009. However, the arrival of a larger FPSO in 2009 should alleviate production constraints. The start-up of the integrated gas and oil project could lift production towards
5.5MMboe in 2009.

ƒæ Value On Numerous Measures ¡X I assume a 90% probability project FID will
be awarded to the integrated gas/oil development ¡V thus still not included in our
P&L. However, inclusion of the project when FID awarded could lower the 2009
PE to 2.7x, the EV/1P boe to US$7.84/boe and the DACF (pcf adj for debt) ratio
to a low 2.2x. A gas contract over all 2P gas reserves could raise my dcf towards
$1.48/share.