advisory 17/7, page-13

I must be missing something here. In the last operational report on June 18th 3 weeks ago) the S&A was completed and being prepared for a frac mid July.

Now 3 weeks later the company says the plan has changed in order to save $1M in frac mobilisation costs. So the rig sits idle for 3 weeks (21 days) at $26K/day = $546K to save $1M. So really the savings are only $454K, before further deducting rig costs for the extra days it has been on the S&A due to problems with kicking off the lateral.

What I think I'm missing here is two things:

1. Before the company started the NS drilling campaign it was stated they would drill both wells and then frac together. As late as June 18th it appears the company intended to proceed to frac S&A before drilling Billabong - that was different to the upfront plan, and we now seem to be back on the upfront plan - so why was S&A going to be fracked in the 1st place?

2. If they were going to pursue cost savings of $1M why wasnt that the intention before starting the drilling campaign (in fact I thought it was) - why is it that the company now seems to be returning to the original plan and making it sound as if it was a great idea they seemed to have had just recently?

It all seems rather odd to me. At least when Zavannah was drilling NS wells, there were no problems during drilling, only fracking (and why on earth are they going with an experimental frackng plan when they have a proven formula?).

I'm getting concerned about all this. It doesnt look good.

Cheers, Sharks.