stlamc .... been digging and I think your options don't quite...

stlamc .... been digging and I think your options don't quite cover the most likely outcome.

1) I had a look at the US tax rules. approx 35% on capital gains with the exception that any funds reinvested into another land venture within 180 days are exempt.

2) John Armstrong has made the comments in a couple of his announcements that he would like to see the shareholders directly benefit from any transaction. Possible options for a straight land sale would have to be a dividend. Paying a slab to either the IRS or the ATO before distributing takes some of the attraction out of a straight land sale.

3) Both Albrecht & Associates and RBS Morgans have been appointed as advisers to the sale.

So as stated in one of my previous posts I personally believe we're looking at a corporate transaction.

So I dug some more....

4) I searched the Texas companies for variations of Texoz = 2 new companies Texoz E&P III and Texoz Eagle Ford Holdings

5)Through ASIC I ran a director's search for John Armstrong = a number of new companies the most interesting of which is "Australian Shale Oil Resources Company Ltd". A new public unlisted company with 34 shares. Corp sec is Des Olling but most amusing is the directors are John, Bernard and no not Dave Mason or Cliff Foss but.... Rob Douglas = head of corp finance for RBS Morgans.

Looks to me like TXN might be considering a "split" whereby some of the assets are transferred across to the new entity eg the Wandoo/Seitel prospect generation agreement. Then I really have to start guessing - but a possible float of the new entity on the ASX (can't think of any other reason for Rob Douglas to be in there!) to chase the new prospects/leases.

Not sure what would happen to the existing cash?!?! Call it $20m after the new drills. I assume it would stay in the existing entity and be paid for $ for $.

So how much does another company pay for an ASX shell with $20m in cash + 7,200 EFS acres in it (+ Olmos, Wilcox & the gas targets - Scarborough, Coolangatta etc) and how would it be paid?

Again - just speculating - but I'd guess that they're looking at either merging or possibly delisting TXN and amalgamating into a larger company. Given the neighbours (Swift/Murphy/Chesapeake/Anadarko etc ) are mostly US companies my guess is that the TXN shareholders will be offered cash and not shares = simpler for the shareholders.

How much? There's the question! Given Cliff is chasing 7m 70c options, John 6m 70c options and Des 100k 70c options - I'd say definately in excess of 70c!

$1 = (245 current shares + (7 + 6) optiions)=AUD$258m
US & AUD are almost 1:1. Isolate the $20m of cash = $238m for the acerages = $33k/ac. A little high?

Again my guess = $28k/ac = $202m. Add the cash back in = $222m. Divide by 258 m shares = $0.86. About right for the premium on the directors options.

As a result my final conclusion is an off market offer for between $0.85 to $0.90 per share offered shortly after the AGM where the directors ask for their options.