Ann: Second Quarter Update Presentation , page-14

hi trader,

As I stated before, the comparison was between the profitability of the business, not the play type. Of course AUT's EFS generates the bulk of its revenues from liquids, but that doesn't mean to say it will be profitable.

I'm sure you have been looking at the profitability of these wells and the quarterly reports and wondering when the company will make a sustained profit? the land values are based on this.

AUT Mkt Cap does more or less reflect the prevailing land values. The question is are these land values reasonable? Or are we in a land value ‘bubble’ as some commentators suggest

The acreage value is underpinned fundamentally by the well profitability. The wells need to be able to make a profit now or sometime in the future in order for the land to have any value. So how do we determine if the wells are making a profit or have the potential to make a profit? AUT have never showed what the actual full cycle economics are and have never actually stated if or when profits are likely to happen. These are key questions for investors.

One way to determine profitability of AUTs EFS acreage is to look at the accumulated ‘full cycle production costs per boe’.

This can be calculated by summing all the costs to run AUT’s EFS business to date and dividing by the total production to date.

Plotted below is this information, which can all be found in the Appendix 5B’s and financials. The historical costs/boe have always been greater than $90/boe, and looks to be plateauing since 4Q 2011. It actually increased in 2Q 2012 to $100/boe. In order to make a profit in the future, the price/boe must be greater than $90-100/boe or these production costs must fall significantly. Last quarter the average realised price was $76/boe (see financials).

Based on this, the current wells make no profit as yet, but the market thinks that the wells will be profitable in the future.

Given that AUT cannot control the oil price, the must bring the costs down. How are they going to do this?