Chair Thanks for pointing out the updated Ungani U8H. In my...

Chair

Thanks for pointing out the updated Ungani U8H. In my opinion this field has generally disappointed with flows to date and I am guessing that the pressure is well and truly on the ROC side of the JV. They have outlaid big $ for a minimally profitable current operation and I can only assume that they are driving the "new" drilling approach of under balanced pressure, horizontal well completions. The mood at JV meetings if they can't lift Ungani production over the current 1,200 bopd may be a little testy to say the least. Unless the current drill programme kicks some big production goals Ungani because of accumulated drilling capex and low volumes will probably not be a low cost field.

The long touted target production of 3,000 bopd is becoming akin to the pot of gold at the end of the rainbow. This target has been around since at least the September 2015 company presentation. I didn't bother looking back any further.

I think we will need to get Ungani production to a level around this 3,000 bopd figure plus another discovery to push the button on a Broome based export route. With any material volume increases in production we must get as far as possible down the cost curve.

My expectation is that the JV will push through all the wildcat exploration targets until they hit payable oil. If it is on the first drill at YM, so be it. Additional local holes will probably follow on any oil hits. While I'd like to see all the Ungani exploration wells drilled before the rig moves north I will happily trade exploration success over another wildcat exploration well.

As I said above I think a second field on the Ungani trend will be needed in order to move away from the current long distance trucking operation.

More than a very interesting balance of 2019 ahead for all holders.