permian verticles, page-7

Fender, I really don't know the solution. Their are several things that need to be addressed.

1. Management change
2. Funding
3. Legals
4. Lease retention
5. Performance.

How you go about making those changes and what the reward is will be different.

1. Management change
Whether you agree or not, sentiment is bad and that is almost solely at the feet of directors. They made some changes at the EGM and it was an improvement. Even if you don't blame Graves, a realist would atleast acknowledge a change would help sentiment turn. Provided it isn't just a friend.

2. Funding
Personally I'd swallow the bitter pill now. Take it in one swoop. Consolidate and recapitalise. Raise enough to terminate Lind and maybe even buy back some notes. Or just force them to convert as part of recap.

Other options are continue down current path...looks grim.

Find a JV...looks unlikely.

3. Legals
An out of court settlement is obviously the best outcome regardless of how strong or weak our case is.

Many of these issues are linked. Eg funding becomes easier without the legals. And I beleive new management would have a better chance of negotiating a settlement. Graves and Page most likely aren't on good terms.

Barring a settlement then obviously continue down current path. Stall as long as possible. Drag it out. Appeal. Buy time. Time is salary.

4. Lease retention
Again this is linked. If funding and legals were sorted then you would strive to retain all leases. My personal preference is to relinquish some leases and focus on a smaller acreage.

Doing that also mitigates Page claim as he is free to do what he wants with the leases we relinquish. And easier/cheaper to buy him out of a smaller lease hold.

We are only $8mil ($4mil on a bad day) market cap. A well managed (cough) smaller lease would easily justify multiples of that.

5. Performance
Been bad. Delays in achieving the plan. poor flow rates and poor technical decisions. Change of management may address it. JV may address it. Deal with Page as operator would address it.

Summary
Their are many little variables. But the main thing would be to get credible management in which improves sentiment and boosts confidence which will be needed to raise more funds. Then consolidate and recapitalise. open dialogue with Page for settlement.

Basically i would do things completely different to current management.