neon energy corporate presentation july 2012, page-31

Stapleman, the component parts of Neon, ie NSA plus positive outcomes for Paloma, Paris Valley and Blocks 105/120 could exceed $4.

Vietnam is wildcat drilling so you're looking at a 10% chance of success (at very little cost to Neon). However both Paloma and Paris Valey are appraisal situations. ie the oil/gas is there but they have to prove it to flow at commercial rates. Discovery risk has been eliminated from these two projects.

Paloma is already suggesting to me a value of $1-$2. But that is based on an area that is about 35% of our Paloma acreage. We hav'nt touched the rest with a drill bit as yet. Given that shale is a bit of a landbank in the way coal bed methane is, we could expect Paloma to yield yet another $1-$2 if the first stage is successful.

So Paloma alone may have upside to $4.

Paris Valley is smaller in expectation say 25c-$1. This can be reassessed as we get drill data.

Timing for Vietnam is an unknown regarding drilling but there is sufficient time between now and Christmas for the seismic currently underway to have been fully interpreted. This may or may not translate to drilling in the New Year but it seems a possibility. Perhaps made more so by the fact Eni have their own rigs.

As to timing?

Tricky as both Paloma and PV by nature (unconventional reservoirs) take time to mature, they are likely to be continually upgraded over time as new drilling takes place unlike the conventional reservoirs of Vietnam which will be recognised as successful/unsuccessful within a fortnight of drilling completion.

If the current works at Paloma are complete for reserves purposes by say Oct/Nov maybe an sp of $1.20. PV may have runs on the board before Christmas so say that adds 25c but Paloma is then worth another 20c so say $1.65. Block 105 drills January, completed late Feb, result known March, we add $3 and another 25c for Paloma and 10c for PBV so say $5.

I emphasise though this is very much my guess of a Neon roadmap that assumes success for every step outlined. The reality is we are much more likely to be successful at Paloma/PV than at Vietnam based on industry success ratios.