Convertible Notes, page-3

Agree that the Notes are weighing heavily on the SP. We have about 15 months until the Notes mature (30 September). They can be redeemed at any stage up until that date by the Noteholder for shares at $0.11 per share. This would effectively double or more the shares on issue if all Noteholders elected to take shares in lieu of repayment.

If we are successful in the current drilling campaign and we ramp up production from 9pj to 20pj as forecast by management then out revenues (based on 9pj) would be in the order of $4.5m to $5 m per month. It is hard to forecast what expenses would be per month but profits should be well in excess of $1m and could be closer to $1.5m per month.

IMHO, if we had to repay the Notes as opposed to issue shares then I would assume that management would either look to refinance them with existing Noteholders at a more attractive rate (remember 15% was when the company had little or no revenue and were trying to consolidate) or look to more traditional debt as frmen1 alluded to. They may be tempted to retain any cash reserves for future expansion as opposed to paying down debt.

Just my thoughts.

Cheers