STOCK CALL:AWE

Date:As at 23-09-06
CURRENT PRICE:$2.63
AWE - worst case scenario - FY ending 08.
Extracted from MorganStanley:

WTI $40.00 (June 2008)
Production - liquids 3.5 million cf 7.0 million
Production - gas no change
Revenue from gas = 209 000 000
Revenue from liquids = 3 500 000 x 40.00 = 140 000 000
TOTAL REVENUE = 140 + 209 = 349 000 000

Assume cost is the same: $118 M (for other and general and CAPEX)
EBITDAX :349 - 118 = 231
MINUS exploration expenses :14 (231-14) = 217
EBITDA :217
Depreciation (28%) :217 - 60 = 156
EBIT :156
- INTEREST Expense :8 = (156-8) = 148
TAX (30%) :45 (148-45) = 103
NET OPERATION PROFIT :103 million
/ shares outsanding 446 000 000 = ESP= 23 cents

23/6.25 = $3.60 fair value for each share

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FY08E - changed revenue with following assumptions:

WTI $50.00 FY08 (June 2008)
Production - liquids 3.5 million cf 7.0 million
Production - gas no change
Revenue from gas = 209 000 000
Revenue from liquids = 3 500 000 x 50.00 = 175 000 000
TOTAL REVENUE = 175 + 209 = 384 000 000

Assume cost is the same: $118 M (for other and general and CAPEX)
EBITDAX :384 - 118 = 266
MINUS exploration expenses :14 (266-14) = 252
EBITDA :252
Depreciation (28%) :252 - 70 = 182
EBIT :182
- INTEREST Expense :8 = (182-8) = 174
TAX (30%) :52 (174-52) = 121
NET OPERATION PROFIT :121 million
/ shares outsanding 446 000 000 = ESP= 27 cents

27/6.25 = $4.20-4.35 fair value for each share

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WTI $45.00 from $56.5 (end June 2007**) (average price of OIL WTI at $45.00)
Production - liquids no change
Production - gas no change
Revenue from gas = 74,650,000
Revenue from liquids = 1 900 000 x 40.00 = 76 000 000
TOTAL REVENUE = 74 650 000 + 76 000 000 = 150 650 000

Assume cost is the same: $22 M (for other and general and CAPEX)
EBITDAX :150 - 22 = 128
MINUS exploration expenses :13 (128 - 13) = 115
EBITDA :115
Depreciation (28%) :115 - 32 = 83
EBIT :83
- INTEREST Expense :8 = (83-8) = 75
TAX (30%) :22 (75-22) = 53
NET OPERATION PROFIT :53 million
/ shares outsanding 446 000 000 = ESP= 11 cents

11/6.25 = $1.7-1.80 fair value for each share


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JUNE 06 QTR (shares on issue 446 million)
CLIFF HEAD OIL - awe share is total 98 991 (27.5%) barrels of oil (total is 359,967 for the quarter) (4.1million barrels)
TUI OIL FIELD - (28million barrels) AWE Share 42% or 11.76 Million Barrels Of Oil.

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UPDATE

CLIFF HEAD OUTPUT

Sep06: 235,000
Dec06: 220,000
Mar07: 230,000Forecast
Jun07: 230,000Forecast
TOTAL for FY07 915,000

915,000 x US$50 = $45m x 1.32 = $60m revenue from CLIFF HEAD
$74 revenue from GAS
TOTAL $134m