Ann: HY2015 Half-Year Results Presentation, page-23

Sorry, but by cutting their capex DLS has more or less admitted that their growth plans are in disarray. All good to have partners funding work but with no revenue time frames behind it, the work is only as valuable as what they can receive for it in a sale process. Through no real fault of their own, their growth ambitions have now become a drag on their conventional oil revenues. If they couldn't move their cash position forward in the last half with a cost of $32.80 and an average realised oil price of $105.40, what hope have they got with a price of $50 or even $90. They are going to spend $55-70 million in capex in the next half, against revenue of at very bestof about $125 million and costs of $49 million. They will be very lucky to make somewhere between $6 and $21 million before tax on this basis. That's between $12 and $42 million on an annualised basis. They need to make the top of this range in the next three years or face the prospect of running out of cash, selling assets or diluting existing shareholders when the notes vest.

Maybe I'm a rank amateur, but on the face of it DLS always looked bullet proof to me. I'm starting to see them differently now. I'm looking for stocks that will survive through market melt downs. If a melt down happened in the next couple of years, DLS would probably survive by selling whatever gas assets it could, diluting or running down cash to practically zero. The conventional oil business would probably hold it up, but boy would its SP be cheaper. Might be the time to buy then. Stock doesn't look like a long term bargain to me at the $1.00 level. Growth story is up in smoke. Let's see how they handle it from here.

Eshmun