Ann: Sugarloaf Operations Update , page-20

Personally, I am relieved that they have managed half. The early wells were experimental. The real test will be the new design wells. They will be designed for the multi-stage fracture stimulation. Kowalik was not designed for stimulation at all and, if you remember, Kennedy ended up in the Eagleford but there was no prior statement that the Eagleford was actually the target.

There is a clear statement by the company that the results to be produced will be representative of the potential. That must mean that they are satisfied with that bottom 2,200 ft. First we need to see what it does flow, then we need to see Easley flow about double that....

Then we need to see it replicated...

But don't kick the frac team for problems with the design and construction of these early wells.

We need to sweat it out a bit longer....there's no alternative.

However, think how ghastly this would have been had the jvps been stumbling onwards without the guaranteed funding of 3 new design wells. If Easley, Morgan + other prove to be good, that will be vindication of the farmout strategy.