agm questions, page-50

OptiontraderMGR; verbose doesn't do you justice.

To sum up, you seem to be suggesting that any success at 105 will derisk (to an extent) the regional assets. I am sure most people understand this. However, you are overplaying the impact:

1. "Block 105 success is paramount in keeping the share price in a solid upward movement. Failure will be catastrophic with the large holders, and will have a serious detrimental effect on the current uptrend of Neon’s share price" - your language is a bit extravagant. If Cua Lo is a duster the SP is going to go down in line with the amount it went up in anticipation of the spud. If you managed to average down to 18-19c you are laughing as the worst that can happen is that we see a return to these prices. However you've got the confidence knowing that NEN has a portfolio of assets in varying stages of development. Upside is coming from a number of fronts not just Vietnam.

I talk to a number of the 'large holders' as I work for one of the nominee holding companies on the register. The attraction of NEN is the suite of assets. Vietnam is just one arm of NEN's strategy to diversify its portfolio.


2. "The reason I believe the share price will fall significantly is due to the fact that all the bets now hinge on the final outcome in Block 120. Once you remove the safety net, the wall breaks, it’s every man for himself" - B105 is a hydrocarbon play. The JV is only drilling the Cua Lo (lead-4) prospect. The play offers up 21.4TCF at the high estimate, of which Cua Lo represents 14TCF. Lead 7/5 offer 2.2/2.5TCF respectively. Still no small fry. There are multiple prospects in the play. I do however accept that failure may compromise the other targets. Also Block 120 doesn't boarder 105. Block 120 is different in its own way, but interesting given its proximity to Exxon and Chevron.

3. "main focus should be Block 105. This is the first block that is being drilled; this is got to be the main focus. Its one thing to say that Block 120 looks very promising, but to deflect the importance away from block 105 makes no business sense" - Not sure why you think management are deflecting attention from 105. B120 is higher risk and is more prospective for oil. With the well location confirmed after the 3Dseismic at Cua Lo, plans can be ramped up on other blocks/projects.

4. "For those that are selling out now is because they probably want to see some success first with the first well. It gives them clarity moving forward, onto the second well in drilling block 120" - but then you miss out on the upside from spud at 105. While some have been selling on the recent strength I can only assume it is for a short term gain. NEN has other promising assets that are in production and earning. We also have cash to farm-in to other ventures. The company isn't a one trick pony. Rua Bien (lead 10) in B120 might be drilled, but 12/5/1 show similar reservoirs.

Any assessment of risk/reward should be done at the portfolio-level rather than Vietnam in isolation. That's too granular as we could get announcements like production capabilities at PD, and therefore farm-out agreement, NSA production upgrades etc. All could add or insulate against a Vietnam outcome (either way).