Junior Oil Company that has their iorns in the fire with oil shale plays in Northern Alberta. It is not stated in this news release.

Date: Fri, May 14, 2010 at 1:34 PM
Subject: Kallisto Update: potentially $4.72/share, $1.90 based on their partner
To:


Hi Folks,

Kalisto is partnered with a private company called Triaxon on their key Crossfield Viking project. To see kallisto's latest presentation, click on the following link: http://www.kallistoenergy.com/documents/Kallisto_April_2010_Corp_Pres_Final.pdf

As you can see, they have about 29 million shares outstanding, about 500 boe/d of oil production, a little bit of debt, and a significant resource base focused on the Viking that could yield up to 12.5mm barrels of recoverable oil net on their current land base. There is the distinct potential this could double given the closure of farm-in transactions. Assuming a $20/bbl recoverable metric, this works out to $250 - $500 million of value. Kallisto will have to raise capital to fund their next round of drilling as per their budget, (assume $15mm at $.80/share), which is roughly 19mm shares outstanding. Using the lower number of $250 million, based on the 19mm share issue and assuming all warrants and options are exercised, there would be about 53 million shares outstanding. Therefore, $4.72/share.

Kallisto's partners are Triaxon, a private company that sold their last company to Crescent Point last fall for $250 million. They are raising $52 million at $2/share and will end up with approximately 40 million shares outstanding with about $40 million in cash and 95 boe/d of production with about the same land base, (actually a fair bit smaller net but let's just call it about the same as Kallisto).
If a person ascribes $50,000/flowing bbl for oil assets, this implies a $4.75 million value for their production. Add $40 million in cash and their land is worth roughly $35 million. Kallisto has about 500 boe/d of production so that should be worth $25 million against about $5 million in debt. Given their land is approximately the same as Triaxon's, it is worth about the same: $35 million for a total value of $55 million. On the current shares outstanding of 29mm, this works out to $1.90 versus a current share price of $0.89. Adding in the dilution from a $15mm share offering at $.80 and on a fully diluted basis gives a value of $1.32 which is still a 50% return just to be the same value as Triaxon.

Therefore, Kallisto is less than half the value of their almost mirror image partners and have substantial upside. Total potential on the current shares, after a $15mm financing, is $4.72/share.

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