Ann: Quarterly Report for 30 September 2010 and A, page-2

re: Ann: Quarterly Report for 30 September 20... Thought I would make a few comments regarding the Quarterly. Been in Vic have had a long weekend so didn't comment earlier.

Reading the Offshore Tanzania Asset Divestment I see the following comment: "The Company is prepared to divest whole or part of its interests and may continue to participate if a satisfactory offer is not negotiated."

What I like about that is that they now may only divest part of it, and not all of it depending on the offer. First time I've heard them only discussing divesting of part of it. That makes me a little happier. We may still retain part of what we all wanted a piece of initially. Better than divesting all of it.

They are still talking about 200-400 brls of oil a day from Linsey. Lets say it is only 100, and operates only 300 days a year - that is still 30,000 brls of oil at say $70 a brl - $2.1m. Looking at the figures 100brls a day would be around 5 times as much as we are getting. If they can pull of the 200 - then payback on just redrilling this well alone could be within a year (gross income to exploration expenditure).

EP437 - P90 figure for both wells at 400k blrs of oil. Inground value would therefore be at $70 would be $28m. I think it would be pretty fair to say that if we struck even the p90 amount and it flowed enough to be commercial, then we should see a re-rating of the SP. My view only.

Cashflow wise - looking at production and production expenses - currently the profit is $140k - with is a gross profit % of 29.2%. I would think (having an accounting background), that some of those expenses are fixed expense (i.e. same cost regardless of production). Therefore a lift in income should see a lift in the gross profit %. Time will tell, but in my opinion, we should see a movement to that effect hopefully in the march quarter after Lindsey is drilled - if successful.

So we do have a bit to look forward to in the next month I think. How long will it take to drill two shallow wells? A week or two?

Anyway just starting to feel a little upbeat about this whole fiasco. I think an announcement regarding EP437 if positive, should see a SP increase, and a full takeup (plus extra's) of the SPP by shareholders. I think the SP may wallow for a bit as people take some profits of the table (normally happens with most SPP), but next year might be a good year for us.