Regent Ventures Ltd RGVNF

Watching McCallan's Self Interest As the Key

[Monedas1]

I received several inboxes to the effect that my last post of 2006 was too indirect and of course too long. Therefore, here is the Cliff Notes version of my opinion excluding comments on the selling since I think Curtis and Umpolung have the issue characterized. 1. The payout scenarios are different for Regents shareholders and Regent's management as opposed to McCallan’s owners. However, the more stock in Regent’s that McCallan’s owners own, the more likely their short-term payout strategy will look like ours and the more likely ours is to become a reality. 2. If McCallan’s owners are the driver on concession deals, Regent’s shareholders will see a dramatic increase in Regent’s share price and liquidity if and only if the McCallan owners Hans Dietman and Wolfgang Rauball own a significant amount of Regent shares. As large shareholders they stand to gain immediately and long-term from increases in Regent’s share price and liquidity. This observation is why I am concerned that the 11.7 million shares be given to McCallan ASAP once the exact financing part of the deal with Aurelian can be proven to the satisfaction of the exchange. I believe the delay in this transfer is holding up progress and the committment of McCallan's owners to promotion and the CBM joint venture. 3. Once McCallan owns a significant number of Regent shares, the quickest way for the owners to make money is through an increase in the price of Regent’s shares. My opinion that a share price increase is quicker than revenues is based on the time frame that will be required for "significant" production revenues from the CBM property to hit McCallan. With a proper joint venture partner and 3-4 CBM confirmation wells, Regent’s could be worth $6.00-$8.00 per share in 6-8 months (see the initial performance of Falcon oil). 4. The best CBM deal for the McCallan, I believe, is to choose a single provider that will supply financing and management until the CBM concession is sold to a major energy supplier even if McCallan’s owners have to give up 51% of the concession. Having a single, long-term partner will reduce the actual and the investor perceptions of the risk associated with future financing or management. With less perceived risk, the share price will reflect the potential value of concession resources with less of a risk discount. 5. I am sure that McCallan can find a deal in which they give up less that 51% by finding partial and/or short-term financing for the CBM concession and/or by splitting the financing and engineering management components and negotiating separate deals. Giving away less that 51% would seem to potentially put more money in McCallan’s pockets but I believe that this view would be incorrect on McCallan’s part. This approach to the CBM will significantly reduce the potential short-term share price increase in their Regent's stock by as much as 50%-75% because of the increase in perceived risk of on the part of investors. I hear that McCallan is actively pursuing other options to try and keep a greater percentage of the CBM concession revenues for themselves. I don’t think that this approach is actually in McCallan’s best interest and certainly is not in Regent’s best interest. Most large, reputable joint venture partners will want 51% to operate/manage and provide 100% financing. Remember, AAA wanted 49% of both concessions for their $100 million and Polish Oil and Gas wants 50% of the Carpathian property incomes for 50% financing. Being cheap or greedy at this point in time given the our past history would be foolish and time is of the essence. Negotiating a 51% arrangement ASAP with a joint venture partner who will operate and finance until sale will leave a 26% interest in $8.8 billion revenues to Regents and 23% to McCallan plus their almost 16 million Regent shares that could be worth $100 million short-term. This type of CBM joint venture will ring true with shareholders.