September Qtrly, page-10

Two good articles & thks for sharing. The US$80/bbl brent price looks to be a good guide and is supported in this recent outlook eia Short Term Energy Outlook. Gas price will also be important to watch and movements in both could change our drilling targets and plans. D&L3 has a potential gas target so would be an obvious consideration as facilities already in place.

There are likely to be winners and losers if price falls further. Some like GGE are well placed and imo will still be profitable at US$70/bbl, this can be seen in the quarterlies and FY accounts. No debt, cash, profit, low cost wells, low administration costs and good well paybacks.

Last year my estimated avg brent oil price was about US$100.88 whereas currently that is around US$80.83 or 20% down. We have additional volume now coming from Abita & WK so whilst margins could be a bit lower shouldn't be a major drama as the past good performance has not been reflected in the share price imo and even at $50K per boed on 191 boed plus cash we are still at discount to EV. Mkt sentiment could continue to be a challenge so always good to consider all possibilities.

Plenty of opportunities around and the general negativity provides a good opportunity to look and watch and manage risk. Most SP's are down and not all this can be blamed on mgt of many of those companies so analysing the cash flows imo the best guide to any individual companies Short to Medium term prospects and performance. Those with little or no profitable production, low cash and/or debt are imo likely to be most affected if the price stays low.

All my opinion only
Cheers