Ann: AusTex Reports Significant Increase in Reserves, page-16

Redrun,

The issue with the oil line seemed to be capacity. They may have just turned some wells on and off so that they could prove 40 wells could produce. But they may not be able to produce all at the same time if you get what I mean.....so still may be an issue.

Madjae,

Intrinsic value: EV=$120-130M not unreasonable based on current production. Valuation would obviously be higher if you used reserves / NPV10 as your metric. Market seems to be content to be on the conservative side, however, and use the lower metric. I'd assume therefore that intrinsic value and actual value will ratchet up as production increases - pipeline, new rigs, etc.

What is missed by the market, I think, is that AOK has very little risk and create alot of value per $. They have almost 100% success rate with their wells. 40 wells (about $30 million of drilling) have created $330 Million of value (NPV10), From memory RFE spent $100-150Million and have less NPV10 (and soon less production also). AOK is actually creating value. Some oilers are just buying production / reserves. The tables never show you how much money was spent to achieve the nice numbers so its easy to over look this.