This is Mr Lincoln Augustus, first second cousin of...

This is Mr Lincoln Augustus, first second cousin of Holymagiman

It is coming on to 9.15 am on a fine Wednesday morning here in Kingston and all is well...here, that is.

But all does not look too well on the OIP front though.

Just a lot of little loose ends that need tying up, so to speak.

Just a lot of unanswered questions that need to be answered, so to speak.


And on 30 April 2009, OIP reported in its quarterly report that Kurrabooma CSG corehole in PEL 428 and Moree- 4 core hole in PEL 427 each intersected about 5m of gassy coal.

The family is still awaiting the promised total gas volumes in the coal which were promised in the "next few months."

It appears to the family that, for whatever reasons, ESG moves very slowly at times.

It has been implied by the Independent Valuer that the coal seams in these seams were thin and unproductive.

The family suggests that anyone interested should read up about the coal seams in the Horseshoe Canyon in Canada which is a most prolific coal seam gas producing region.

This is from Wikipedia, to keep things at a very simple lebel, for those who profess to be able to value things fairly, so that they could possibly educate themselves in aspects that they may not be too clued up on:-

"The coal zone may contain 20 or more individual thin seams and interbedded sandstone and shale, which combine to make an attractive multi-completion CBM target for drilling companies."

On 3 July 2009, the then MD, Mr Barry Smith responded to a ASX query with this response:
"In relation to your third question, and as we discussed earlier today, there is no doubt that the increase in Orion?s share price is due to today?s ASX and media announcements about Santos? dealings with Gastar Exploration and Hillgrove Resources. Santos has now
purchased interests in petroleum licences immediately south of Orion?s own licences in northern NSW. Furthermore, Santos has purchased a 19.99% stake in Eastern Star Gas
(ESG), which is a major shareholder in Orion. Hence, the market?s interest in Orion is a function of our involvement with coal seam gas exploration in northern NSW and our
corporate association with ESG. I believe that Orion?s share price rose because of market speculation relating to Santos? recent acquisitions."

So, if we read it rightly, the then MD of Orion believed that Orion's coal seam assets at that time justified the price rise.

In the 30 June 2009 quarterly, Orion had this to say:

"CSG-defining seismic that was acquired earlier in the year has identified numerous CSG prospects in the southern area of PEL 6. Up to two CSG coreholes will be drilled in this area of PEL 6, starting during the third quarter of 2009."

The report also stated that:Exploration expenditure for the period totalled $100,000, which was principally related to the evaluation of the CSG potential in PEL 455.

The family has not heard anything about the evaluation reports. Possibly they are sitting in a drawer somewhere, safely tucked away from the dust and dirt.

And the report said this:"Acquisition of CSG-defining seismic in PEL 6 has provided the joint venture with important data to mature prospects for drilling later this year. Numerous CSG prospects have been defined and Eastern Star Gas is planning to drill up to two farm-in coreholes in PEL 6, commencing in the third quarter of 2009. Coals within sediments of Triassic and Permian age are the principle targets for this drilling program."

So the family wonders why were these mature prospects not targetted in the drilling by ESG? Why were the holes put in the extreme boundaries to test the lateral extent, instead of being put plumb smack in the middle to test what was possibly there?

The Numba ones that we are smoking just now while awaiting the breakfast that is being prepared by Mma Mouloo do give us such pleasant feelings of euphoria that we can but sit and ponder which genius from Eastern Star decided where those drill holes were going...............

In the Good Oil Conference in September 2009, Orion stated that:
"Two important CSG coreholes coming up in PEL 6
 Milguy-1 has a Triassic Moolayember objective
 Gwydir-1 has Permian Maules Ck and Mool. objective"

On 29 sept 2009, Orion stated that:
"Milguy-1 will test the coal seam gas potential of Triassic Moolayember coals 20 km northeast of the Moree Township. Gwydir-1, 20 km south-southeast of Milguy-1, will investigate the Permian Maules Creek coals in addition to the Moolayember unit.

"Milguy-1 and Gwydir-1 will be the first CSG coreholes in PEL 6. Coring of the target coal members will
provide important information to Orion and its joint venture parties, allowing it to assess thickness, gas
content and reservoir properties of coals that the well encounters."

In the 2009 Annual Report, the then Chairman Mr B C Hung stated that:
"During the past year, the Company has considered many opportunities and assessed some 14 in detail. However, none of them met the strict criteria set down by the Board. Management will continue this search but, in line with
the ?cautious optimism? mentioned above, will widen the scope of the search to include low risk exploration plays. "

It is indeed telling that when Mr Hung was replaced, the new Board members saw fit to ignore this sage criteria and decided to get involved with a moribund company like GGX.

Nothing like a new Board to get rid of old out-dated ideas.

It would appear to the family that either the new Board members are being extremely foolish in their service to shareholders or else that they are being too clever by half. we are still trying to see which of the two options is the more likely.

In the quarterly report for 30 Sept 2009, Orion stated that:
"Analysis of the core data from Moree-4 in PEL 427 is continuing.(The family is wondering if Alvin the Idiot is in some way involved in this analytical process, but Alvin has most vehemently denied such involvement.)
"Preliminary gas compositional analysis indicates that the gas recovered from the core is composed ALMOST ENTIRELY of methane with only minor amounts of carbon dioxide and nitrogen present.
"Core analysis for Kurrabooma-1 in PEL 428 is in progress.(Alvin denies any involvement here either, but we have our doubts.)"

On 9th Nov 2009, Eastern Star stated that:
"Mr Casey added that ?internal ESG estimates indicate that PELs 6, 427 and 428 could contain a high-side prospective Coal Seam Gas resource of 3,500 PJ. The results of seismic work carried out earlier this year within PEL 6 have been used to locate the Gwydir and Milguy coreholes SO AS TO MAXIMISE the prospects for quickly proving up this resource.?

Bear this objective in mind as you read the results of the next two holes and how they were finally targeted.

On 6 January 2010, Orion stated that:
"Gwydir-1 was designed as a reconnaissance exploration well on the POORLY EXPLORED eastern limit of the exploration licence. This was the first well in the permit specifically targeting CSG. Encouragingly, it confirms the presence of the Moolayember play across the extent of PEL 6 and provides critical control to locate follow-up wells to target this play in AREAS WHERE THICKER COAL DEVELOPMENT is known to occur."

Why was Orion giving away a part of PEL 6 to ESG for exploration of areas where the thicker coals were known not to occur. Which wise man, in a burst of uncanny widom, decided not to drill in the target areas with the thicker coal? Many reasons why such a choice of the drill area was made has been tossed about by the family, and not one of them has given us any comfort.

The drilling, as far as the family is concerned, does not quite correspond to the stated objectives of Mr Casey on 9th Nov 2009

It would appear to us that perhaps the drilling had been done in an area where the thicker coal development is KNOWN to occur, then the Orion share price would be far far higher than where it is today.

And so we come to Milguy-1, which seems to be drilling and drilling and drilling - and probably we will see results sometime on or after next Wednesday. Hopefully they have targeted the thicker coal seams this time, but then again, maybe they want to check out on the 'lateral extent" as per before.

Hopefully the drilling of Milguy-1 will correspond to Mr Casey's objectives of 9th Nov 2009

And so we come to the most recent developments and it will be very good to witness the possibility of Orion slipping out of the control of the present board and its erstwhile affiliates.

And if Eastern Star does put in a counter bid, the family will spend many a sleepless night wondering why the Eastern Star Board is suddenly squandering the shareholders money on an asset that has been given such low value by the independent assessor.

And again, if ESG does vote for the merger and then finds that the whole deal has become undone because of Octanex's move,it would be most interesting to see if Eastern Star Board goes on to make a strong takeover offer for GGX, since it appears to be such a fine company with such exciting prospects, and has such a fine and ethical Board.

Blessing of the Lord.

MLA