todays trade totalled $73.50, page-31

AOK only started developing their Snake River Project in the Mississippi Lime play less than 2 years ago.

It takes time to develop and understand a new play such as the Mississippian. All the major players like Range, Cheasapeake and Sandridge have been in the play a lot longer but they are still trying to work out the best areas to drill and the best completion techniques.

If you consider the fact that AOK could potentially drill 200 wells in the Snake River Project, 16 wells is statistically not very many at all so IMO it is still very early days yet.

The Mississippian is known for its unevenly distributed hotspots so there is no guarantee that the remaining 184 wells we drill will have equally good results as the initial 16 already drilled and this IMO probably explains why the share price is currently on hold. The market wants further confirmation that drill results will be good across all of AOK's Snake River acreage, not just Production Hubs 1 & 2 which is concentrated on the Western parts of their acreage.

The company has only recently just drilled 2 new wells (Theda #24-1 and #25-1) in the eastern part of their Snake River acreage (third production hub 3.5miles east of production hub 2). It will be interesting to see how good the results there will be.

I have personally invested quite a lot in AOK because I have taken a calculated gamble that the likelihood of success for the Snake River Project is high simply based on the drill results from AOK's immediate neighbours like Range, Devon, Osage etc. and based on the fact that acreage immediately east of the Nemaha Ridge has historically been good (and oilier) both from vertical drilling and horizontal drilling. So far, so good, but I continue to follow the results reported by AOK's neighbours very closely.

I have a gut feeling that AOK's June production numbers will not be as great as some are expecting but these numbers will not be a reflection of the potential that the Snake River Project has because as I said before, it is still early days and it takes time to work out the optimal completion techniques as the only way forward is through trial and error. Not being negative, just managing my own expectations.

I also doubt AOK will be drilling horizontals anytime soon as the company does not have the expertise or the funds to do so. Nevertheless, verticals offer a very good return as well and I see no problems with them continuing to drill verticals moving forward especially if they can continue to replicate their existing drill results.