Metej64,Extracts from SGL's 3rd Quarter Report:PRODUCTION &...

Metej64,

Extracts from SGL's 3rd Quarter Report:

PRODUCTION & SALES

Production and sales from the Camden Gas Project with JV Partner, AGL continued during the quarter.

Sales - Total sales volume (i.e. 100%) from Rosalind Park Gas Plant (RPGP) wells during the quarter were 1,320,078 GJ (1,320 TJ).

"OPERATIONAL ACTIVITIES

CAMDEN GAS PROJECT

�� At the end of the quarter, a total of 120 wells were drilled in the Camden Project area of which 72 wells are producing and a further eight wells currently going
through the dewatering phase.

o The average production of the producing wells during the quarter was 201 GJ per day (SGL has a 50% share in this production).

You say:

"QGC announced it produced 105Tj in one day previous highest around 90Tj from 100 wells. Compare this to SGL 1320Tj per quarter from about 77 wells.Is this correct...have I got my units in order."

Analysis:

QGC - 105Tj per day from 100 wells gives a record production rate that averages out to 1.05TJ per day per well or 1,050 Gj per day per well.

This compares with SGL's average for the quarter production rate per well of 201 GJ per day. That is QGC is currently generating about 5 times more gas per well than SGL.

However, a lot of SGL's wells at Camden are verticle wells produced over a number of years. In comparison, i would expect that the majority of QGC's wells are CSM in-seam wells which flow at a much greater rate than CSM verticle wells.

SGL was very late to start using in-seam wells. I don't know the number but think it would be of the order of about ten in-seam wells have been drilled with some still waiting to commence production.

Extract from SGL's 2nd Quarter Report:

"PRODUCTION & SALES

Production and sales from the Camden Gas Project with JV Partner, AGL continued during the quarter.

Production (SGL Interest: 50%)

�� EM38 was the best Surface to In Seam (SIS) well this quarter producing above 900 GJ per day.
�� GL06 delivered the highest individual vertical well production of 800 GJ per day during the quarter."

As can be seen from the above extract, SGL's in-seam wells and even some of its verticle wells are approaching the productionn rates achieved by QGC. Hopefully, the new CEO with axcess to additional drilling resources from AJLucas, will increase the rate at which the in-seam wells are drilled which should lead to increase in gas production by SGL.

The late and slow adoption of in-seam drilling by SGL has been frustrating and I believe is one of the reasons SGL's share price has been left behind compared to QGCs. Hopefully, will fix this problem and also address some of the other strategic issues facing SGL.

However, SGL currently has a market capitalisation of $165M compared to QGC market capitalisation of $4,663M. Consequently, there is the potential for a higher rate of return from SGL if the CEO can improve SGL future performance along the lines of QGC and AOE.

Regards

SP