they just can't get it right, page-21

imho

i think the not a forced seller view was when confidence was high, but the tactical change of the bidders last year to look at the cash position of texon close, made bidders change their views, they looked at it in terms of bankrupting the company instead and no one actually went in for a winning bid. placing permits on all boundaries and forcing wells to be drilled became a group mugging of texan oilers on texon shareholders.. they show that they know how to squeeze out anyone that has a slight weakness.. and boy oh boy, they went in boots and all..

the result is a weakening of texons position to the stage of near desperation imho.. leaving a merger option which will be beneficial, and in that respect imho only to SEA shareholders

yes its true that the current management view that as of now, its best and only proposition for texon holders beating bankruptcy remains the merger, but imho its not the way the company should have managed this efs asset

as for talon.. i am yet to be impressed with any of the prospects of wandoo,, in fact they didnt discover any efs asset, it was simply laying there in the mcmullen acreages under the olmos awp field. so serendipity only, not exploration.

i review the talon assets closely, and monitor all wells in the roundhouse, the latest well, which is a horizontal, was drilled by NFR energy,, they call it DK

over all the 6000 foot horizontal is struggling bigtime, they are getting about 1500 BO per month!!

the frac was obviously not suitable, and they are working with devon which is currently scheduled to frac a horizontal completion near by, and devon is completing a second horizontal. nfr and devon are sharing data, and that will be beneficial to them and ultimately to tanos and talon.

i have heard a devon presentation a few months back where they briefly talk about the roundhouse. devon is withdrawing from a lot of positions, and to see them this active on this play gives me some hope.. just a glimmer..

but the first well was not a success, and talon cant say they have a target that is going to be commercial, but with $10 mill already blown by NFR and devon about to spend $20 mill, thats means they are not giving up, they are early on the development and by mid year, those 2 wells may be fracced before talon decides to drill. that could mean we have a great shot of commercial success.. real high risk right now..

this was a report last month

NFR internally-generated new venture prospect with 76,000 net acres

• Exciting play concept in the updip liquids window of
Cotton Valley Lime

• Proven system: 4+ TCF produced in downdip gas window, 5 MMBO produced on-trend with NFR acreage

Industry leasing and activity within the play has increased:
Devon, Tanos, Ironwood, O’Brien have positions with initial test wells planned

• Devon completing their initial well, drilling on second

NFR initial well (Bancroft 1H) started flowback in August

Large amount of frac water to produce back

Producing oil and gas, confirms acreage is located in the
oil phase

Still very early in play evolution

• Bancroft well was difficult to frac, determined key design
changes to incorporate in future wells

• Working with Devon through data trades and technology
sharing

• Monitor industry activity, work with operators to share
lessons learned



page 20 of this report..

http://www.nfrenergy.com/events/20130104LenderPresentation.pdf