Tap Oil said the preferred valuation attributes only 16% of the value of Arc to its net assets excluding exploration and 84% of the value to its exploration portfolio, which contains "significant", inherent risks.
"The PWC Report has not compared the valuation for Tap and Arc on 'like for like' basis. It has attempted to compare what Arc may in the future with what Tap (in PWC's view) is today," Tap said.
"Specifically, it has taken into account ARC's exploration potential but not Tap's. Tap has a far greater number and range of prospects with a value well in excess of Arc's exploration potential."
Tap said it noted the wide ranging potential recoverable volumes from Hovea -stated in the report to be between 1.5 and 30 million barrels - however "this is an indication of the risks involved and the inconclusive data available," the company said.
Tap rejected Arc's assertion it need to raise funds and pointed out the possibility of a dilution of Arc shares if Arc proceeds with trying to raise additional capital to fund its current activities.
"Tap is offering Arc shareholders the opportunity to become part of a larger and more diversified company and not continue on in one that is heavily reliant on the outcome of one well," Tap said in response to Arc's target statement.
