qpn - forum, page-27

Below I've outlined a summary of the conversation I had with Anthony last Thursday.

My apologies to "Lilly" as both of our conversations went along the same lines and therefore some of the information has already been discussed. However it does go to show that the messaging from Anthony is consistent.

As mentioned last week I emailed Anthony on Tuesday and he responded that night. I suggested a conference call at 1500NZT on Thursday that he accepted. In total we talked for close to an hour.

Firstly some additional information that came to light whilst talking to Anthony during the call.

The challenges with doing business in Indonesia. This was a point that he took time to stress and used the example of the lead contact in the government being fired due to political issues during the land purchase process. This resulted in the entire process going on hold for a number of months whilst the government official was investigated. This helps to explain why the land purchase process that was a point of contention earlier in the year took so long to settle.


Anthony is of the opinion that the political situation in Indo is on the improve, thus reducing sovereign risk, and furthermore if more land etc needs to be purchased or leased the experience that Quest has gained throughout the course of this year should expedite any such move.

1. How did Quest get visibility of the new Seismic data?

As suspected this data became available during the land purchase process. It was clear from Anthony's tone that the Quest team are very excited about this data and are going through a purchase process (circa 30k) and hope to have this data re-processed within 2-3 months.

2. Does the new target have similar all weather access thus decreasing wet season related problems?

The new target, although not on Quest land, does have all weather access. When questioned about whether this is an issue Anthony's response was very clear - if the data comes back indicating a strong prospect there are a number of options for Quest to gain access to the land at minimum cost.

3. At the current salary burn rate (circa 750kpa) Quest will be out of cash in 3 years. This normally wouldn’t be a major issue however due to the lack of clarity around what is going to be drilled when and for what cost it is impossible to get a handle on the end to end commercial picture and likelihood for further CRs. Therefore are you able to elaborate on expected drilling expenditure for the coming period (whether that is for the next quarter or year).

Anthony seemed comfortable that the timeframes re the new target are such that cash in bank won't be an issue. He was unable to answer the Non-Current Asset figure on the balance sheet and has referred me to his accountant - so watch this space.

4. The report reads as if Prabu is now on the back burner. Until now this was the core target, the key sell point for the last CR, and therefore Quest must have had very good intelligence as to why this was such a prospective target. Therefore is Quest considering drilling Prabu in parallel with the exploration of the NW? And if not – why not? It is worth noting that the change of tact away from Prabu is arguably the most concerning aspect of the annual report.

"Absolutely not" was Anthony's response. Prabu is a solid target and depending on how things play out we may find Quest drilling both targets in parallel but at the moment everything appears to be riding on the review of the new seismic (e.g. drilling Prabu is on hold).

5. Can you please clarify what Moyes and Co are bringing to the table? E.g. is the decision to focus on the NW of the block rather than Prabu resultant on recommendations from them?

Moyes apparently have considerable experience when it comes to Indonesia and other players in the area. I suspect that Moyes maybe used to lead farm-in discussions and as a sounding board when it comes to the strategy at Quest. Anthony did take the time to point out that they are not a PR company and therefore any communication short-falls are solely the responsibility of the Quest team.

6. The report doesn’t clearly state what shareholders can expect in the form of updates from the company over the following months. Once again can you clarify what information we can expect from Quest over the next quarter?

This was a point that we discussed in detail. Anthony agreed that the level of communications from Quest hasn't been at a the level required. I got the sense that a number of the top 20 maybe in direct discussion with him and therefore he felt that the shareholders were in the loop. I believe he now realises that although we may not be, well some of us anyway, in the top 20 the wider shareholder community needs to be kept up to date with developments on a more regular basis.

The next communication point will be in 2-3 months when the results of the seismic become available. I've suggested that a memo from him, in the short term, outlining his vision in respect to Quest over the next 12-24 months would be of benefit and he is taking this under advisement with his management team.

Summary

Anthony comes across as a genuine bloke and given he was willing to give his time to both lilly/kiril and myself is an indication that he is willing to discuss any shareholder concerns. What I believe he didn't realise is that communications is absolutely critical and unless this is well managed one can expect shareholder frustration - to the point where I believe he has received some very rude to the point of being threatening emails. This may go some way to explain why he hasn't responded to some information requests.

Clearly Quest feel they have found, through what appears to be luck, new information that has the team very excited. As a result I hold and watch with interest to see the results of the data processing and whether Anthony takes on board the comments about the quality and level of communications from the company.

And finally he has offered to have a regular check-in with me if I/we feel that we are not getting enough information from Quest. As a result I'll be in touch with him again in a fortnight to get an answer around the Non-Financials and whether we can expect a direct piece of communications from him.

Note I'm flying to Singapore today so if there are any points from the above summary that you would like clarified I won't be able to respond until later this evening.

DaveG