PLAYING LGO

In the coming weeks we would have the flow rates for the 3 wells on Pad 4. I would conservatively estimate the production at 600 bopd (200 bopd a well).

The current production is at 1,550 bopd  with a value of 2.5 pence in March 2015 prior to the beginning of the drill in Pad 4. This works out to about 1.6 pence per 1,000 bopd. Since then oil price has increased 12%. Applying the 12% increase to our 1.6 pence per 1,000 bopd, the current price should be 1.79 pence per 1,000 bopd.

Therefore 600 bopd will effectively contribute 1.79 x 600/1,000 = 1.07 pence to the current share price.

So it is expected that once Pad 4 begins production, the share price should be at a minimum of  3.97 (Current) + 1.07 (Future)  = 5.04 pence. If the combined flow rates rises above 600 bopd, then expect this price to rise as well.

It is expected that the CPR will effect a 50 % - 100% increase in the share price.

Therefore we will have:

5.04 x 150% = 7.56 pence
5.04 x 200% = 10.08 pence

The above are just my own opinion. But I will definitely sell a quarter of my portfolio at 8.00 pence. My BUY call was from a base of 3.60 pence, therefore it will deliver me a profit of 4.40 pence (122%) per share. all within a year's time frame. This will free up some money for me to invest elsewhere (UKOG because flow test will start at the end of summer or PPHM because the Phase III trial will complete recruitment in December 2015).

For the remaining, I will keep for another 12 months because I am confident that LGO could reach 15 pence by then.

I MUST reiterate that this is just my opinion. You should always evaluate your own option(s). Always do your own research because our risk appetite differs.