Ann: Proxy Form for February 25 Extraordinary Gen, page-9

re: Ann: Proxy Form for February 25 Extraordi... tlmy,
IMO success at Lempuyang should add around 40cps on the assumption that AED's estimate of 240BCF of recoverable gas in the prospect is established(remember that AED has a 50% share of this block). This will need to be confirmed by further drilling in the adjacent 4 fault blocks but a positive result in the this first well will IMO derisk the outcome in the other fault blocks. If the gas is condensate rich this should increase the value further and there should also be some speculative appreciation in the SP due to AED having other deeper targets in this prospect that they have estimated could increase the size of the find to 1TCF.

If you will recollect, the SP was in the low 50cent range when the gas kicks and HC indications started coming through for Lempuyang in Sept 2010 with the definitive announcement being made by AED on 8 Oct. Instead of the SP increasing it has since inexplicably declined. Therefore IMO an appropriate SP would be around 90c if 240BCF of gas is established. However, in the current environment where many are reluctant to enter the market and those in are either easily spooked or very sceptical, we may struggle to get into the 70c range without further appraisal drilling.

Still in disbelief with the market's reaction since the drilling results started coming through last year and the low SP that has continued to prevail leading upto testing, I further increased my holdings last week. Hopefully all goes well with the testing program and we get an ann. this week with the first stage results.

If Brunei lives upto management's expectations I will be very happy with my investment. In the near and medium term Brunei holds the key to AED's revival but further out Rombebai is the game changer that could propel AED back to it's former high and cheap entry into AED with a view to Rombebai could be running out of time. At this stage Rombebai is AED's high risk/high reward play.

ANZ