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Gold/Mining/Energy : Lundin Oil (LOILY, LOILB Sweden) -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (630)	6/9/1998 10:24:00 PM
From: Tomas	Respond to of 2742

The Falklands: Sodra v Desire Petroleum Sodra has 100% of 2,2 billion potential barrels = 2,2 billion barrels 80 million shares --> 27,5 potential barrels per share Desire has 25% of 2,7 billion potential barrels = 675 million barrels 47.3 million shares --> 14.3 potential barrels per share Sodras market cap is today US$ 92 million Desires market cap is today US$ 235 million This means 1 potential Sodra-barrel is worth $0.41 1 potential Desire-barrel is worth $3.50 Conclusion: 1 potential Desire-barrel of oil is worth 8.4 times more than 1 Sodra-barrel !! BUT: Desire also has Tranch I & L, but they haven't shot the commitment seismic yet, and I and L are NOT included in the 1998-1999 drilling programme. These two Tranches are geologically less interesting, that's why Desire has no working commitment at all. If commercial oil is found in any of the other Tranches, then of course I & L become more valuable. AND: If no oil is found offshore The Falkland Islands, shares in Sodra will then be convertible into Lundin Oil shares during October 2001, 12 Sodra for 1 new Lundin Oil, for details see lundinoil.com . Lundin Oil's share price is $4.6 today, 1/12 = $0.38. This means one Sodra share is worth $0.38 = 1/3 of todays share price of $1.14, even if not one single barrel of oil is found. Mathematically, the structure of the convertible means that if Lundin Oil shares, at the time of conversion, are worth SEK 108 = US$13.80, Sodra shares would have a value corresponding to todays share price of SEK 9 ($1.14). This is a very reasonable assumption, Lundin Oil has 264 million BOE in Malaysia and Libya coming on stream during 1999/2000, oil production will increase from today's 14000 bopd to 65000 bopd by 2001. Share price should quadruple before October 2001 even without any new oil discovered. Lundin Oil will probably start trading on the London Stock Exchange during 1999. Sodra is floating on London AIM on July 1. It looks like a safe bet. It's probably much cheaper to buy Sodra on the Stockholm Stock Exchange now instead of waiting until July 1 and buy it on AIM.