A clever farm in deal whereby we sit tight without any upfront...

A clever farm in deal whereby we sit tight without any upfront expenditure with Vintage funding the first $3.35 million of expenditure in return for a 15% interest in the Deeps. Thereafter if the gas flow rate is good we move to production testing at an estimated cost of $1.2 million with 75% of that cost attributable to us if we choose to get our cheque book out. If not - Vintage pick up the entire cost for a further 3.5% interest in the Deeps reducing our interest in the Deeps to 81.5%.

A win win situation for us as 81.5% of something is far better than 100% of nothing - with us retaining the option of keeping an 85% interest for an estimated $900k of capital input.

Moving forward - to Stage 2 - again we either choose to participate financially or not. If we do it will cost us an estimated $5 million with Vintage the same - if not and Vintage decide to spend their $5 million and another $5 million on our behalf their interest in the Deeps rises by another 15%.

This farm in deal allows us to assess the situation and consider future Deeps viability at each stage of the game as the data is collected. If all looks good - we fund future works keeping a greater percentage for ourselves. Should future funding be problematic then we exchange equity in the Deeps for our share of the expenditure.

Let's not forget that we are only farming out and giving in exchange a percentage of our equity in the Deeps - NOT the coal seam gas in the Shallows. Ongoing discussions with interested parties to explore the Shallows presumably farming down on a similar equity split basis for capital input/funding.

A sensible move by our Management with regard to Galilee - maximum upside potential with minimal expenditure if we choose - What's not to like?