Ann: Magna Cambay Transaction Update , page-12

Magna.
I phoned Ron M on Friday and asked him for his perspective on the Magna shares. He said that Magna really wanted direct ownership of the resource - which was what the 15% was about. Now that they have the default share issue instead, he sees them as a stable cornerstone investor on the share registry. They have effectively given OEX a $4 M interest free loan for 12 months. They are bullish on the development of Cambay and will very likely be in a position to help fund that development with further investment.

Cambay. 77 H
I asked about how it was going. He said the Rig was about half way through Demob. Next step was for a fleet of large Vac Trucks to assemble at the Well and clean out the casing for Slumberger Frac team to come in. Once Frac is done there is further clean up required in the Well Bore before The Flow Test begins.

Cambay 73 V
I asked about the Gas from 73V and how it would get to market. He said that the Processed Gas Pipeline was 10 Km away from 73V & 77H. He also said that the OffSpec Gas Pipeline was only 2 Km away from OEX Wells ! He said when they were Flaring 73 V they had a steady stream of local Businessmen actually driving upto the wellsite and asking if they could buy the gas! He did not forsee any problems in selling the gas, either before or after treatment, as the Demand was far in excess of what India could produce.

Water
I said that on Barrow Is, where I work, they have issues with water in the reservoir. He said that that can be an issue but pointed out that of the 16 various wells that are in the Cambay Field, none of them has ever produced water! He said that you could think of the field like a balloon, with water in the skinny bottom section, Oil floating in the middle section, and Gas in the top section.

Canning Basin
I asked what was the next step? He said once the Aerial Survey results are processed, they would be in position to see where the Half Grabien lies underground. From that they will be able to approach the WA Mines Dept about a prospective drilling campaign and convert the permits to drilling permits. He said as part of that they would alter the Leases, and hand back what was considered unprospective, and keep the Prospective Areas. Before any Drilling started they would Negotiate Native Tiltle Agreements across the entire sections they retained to facilitate a successful campaign. I forgot to ask about any prospective Farminees (DOH!).

Ron was happy to talk and said that we could also email the Company and he would provide an answer. I encourage anyone who has questions to give the Company a call and leave your number and Ron will get back to you.

Cheers, Rusty