“Just look at slide 15 comparing reserve bases. Who should be buying who? Look at slide 16 on 08 production. Who should be buying who again? Look at the exploration upside. Who should be buying who again?” Those reserves are like comparing apples and oranges. PEG has heavy oil that is worth a lot more than the PSE gas reserves, even if the gas reserves at this time are larger in quantity. At current prices PEG has operating netbacks of WTI – $15.25 – $18 (transportation) = 95-15.25-18 = US$61.75/boe. The first 35 mmcf/d of PSE’s LCA gas was contracted for US$3.72/mcf or US$22.32/boe. So as of today PEG has netbacks that are about 3 times larger than the LCA revenues, based on a boe unit comparison. So in honesty they deserve to have a higher market cap. The PEG reserves at 65 mmbo are equivalent to about 200 mmboe of PSE’s gas, at current oil prices. All this while PSE has 106 mmboe in reserves. This being said, the name of the game is not to grow CF. It’s to grow CF/share. And this is where the deal falls apart in my view. You can grow your CF but if you keep issuing shares to offset that growth in CF then your shares never go up. The way Petro Rubiales issues shares is crazy. They have to do a reverse-split of their shares IMHO or when they switch to the TSX they will not get full support from some institutions b/c they will be below the $5.00 threshold. Right now I calculate that at 8,000 bod (net) and a $61.75/bo netback the market is paying 7x CF (fully-diluted) at PEG’s current price of $1.28. So PEG’s current price looks as if it has baked in some future production increases and it will take time for that production to come on and justify the price. If LCD comes in and it’s size is anywhere near what LCA is I can’t see how any PSE shareholder, outside of the board of directors, could vote in favour of this deal in early 2008. That’s like telling us to piss away $20-25 in short-term value and accept 8.85 PEG shares that currently value PSE at $11.32. Someone should get fired under that scenario unless the bid is drastically sweetened. I have no problem tendering my shares to a PEG bid. But not at a price, where if LCD comes in, I have to give up ½ my worth in this company just to get a shot to bid on something that we might not even get, in a bidding round that takes place in the fist half of 2008. That is just about one of the dumbest things I have ever seen. Sweeten the bid. 8.85 shares just doesn’t cut it. Especially when I see the sell-off in PEG as about 500 mm shares just hit the market. It’s taking PSE’s value down with it. Before the news we were at $14. With PEG at 1.28 we are now being valued @ $11.32. That is a 19.1% drop in value in less than a week. Thanks for nothing! If that wasn’t enough of an insult, now if LCD is a success I have to give all that away for nothing as well. Under that scenario Arata should get fired and the board should be replaced. That is as bad a job as I have ever seen in wealth destruction for one’s shareholders. It’s pathetic!