Ann: Quarterly Report March 2015, page-3

So I finally had a chance to sit down over the weekend and take a real look at DLS.

Just some thoughts on the Quarterly after listening to DLS and BPTs briefings.
(sorry its quite brief, life is a little busy right now).

DLS - Quarterly

Live within their means (unlike BPT and SXY)

Brad hammered this particular point home, 42 wells in PEL 91, yet only producing from 22, and even then, they are not online all the time. i.e. The only limitation is their ability to transport it. This excludes any further drilling which will obviously occur. "DLS has legs". PEL 91 is going to be producing for many many years to come at high production rates -( IT’S A CASH COW.-my words).

Wet Gas fields with Santos - 3 weeks time. Full meeting on all future plans and tie ins etc. DLS hope that as many fields as possible will be brought online AsAp (but probably still 6-18 months before any substantial uplift)

Nearby Santos gas pipelines underutilized - so fields should be able to be brought online efficiently in the future with no issues in regards to constraints.

DLS/STO - Free carry, still not used up, possibly by end of this year (Brad clearly states lots of exploration and development still to come before DLS pays anything), depending on development expenditure, as the cash can moved around a bit depending on priorities. i.e.. Capex on bring wells online, or more exploration wells, or more appraisal wells.

Bauer Field - Bauer 19 - flowing over 3,000 bopd for first month! 7 more wells to be brought online still. And of course, Bauer will see more wells in the future.

PEL 91 production to stay at 12,000 for rest of year if not longer. Water handling upgrades quite cheap ($2 million per 25k bwpd) Future expansions likely but no rush.

ATP 940 uncon flow rates etc. Not exciting. But not much different to BPT result. Basically sit on it and see if gas prices rise.

PEL 101 drilling program in FY16, 100% certain.

DLS staff went from 100+ to 70.. So admin will come down quite a lot.

In summary, DLS is the opposite of BPT. It has heaps of fields yet to be brought into production, large oil and wet gas reserves (comparatively to BPTs market cap) and very low capex and low cost production. That is why I feel it is the logical target of BPT…. Or STO or any other predator.