nice bounce, page-12

re: flow rates - experts please??? Lyns...

I assume it's IMP...driling in Cambria County

Cheap to drill...just US$250-300k or so per well

Cheap to connect...existing third party infustructure everywhere.

Premium product...Appalachian Basin gas sells at a premium over Henry Hub due to local market forces and higher BTU content...typically US$.80 over NYMEX (Henry Hub) which is currently US$6.80/mcf??)

Low flow rates of 25,000 - 100,000 cubic feet per day.

Longevity...can flow for up to 40 years or more!

Nothing to get excited about here...but yes, can be profitable long (very long) term.

Assuming production of 70,000 cubic feet per day and Appalachian gas at US$8.00 per thousand cubic feet (net of third party costs) we get income near US$560 per day per well.

Allowing for maintenance, shut-in's, down days, etc, we might be looking at 345 days annual production per well...equating to some US$193,200

Interestingly, this results in a pay-back period of about 18 months...after which, the remaining life of the well is pretty much free money.

The key here will be scale.

The current 5 well program should result in income near US$966,000 per year...but remeber, IMP only gets some 60% (US$579,600), which would barely cover their administration costs.

The next 10 wells will get them closer to the scale required...so...assuming all goes to plan, at the end of the next program, they will have say 13 commercial wells in production and incomes attributable to themselves of some US$1.5m per year.

At this point they would have reached equalibrium in my opinion...therefore it will be the next program, targeting some of their 100 or so drill targets, that will be the real money maker for them.

Upside of course is the price of natural gas, which will no doubt continue to rise...and of course, their other assets, including BMX.

They have also flagged further oil/gas acquisitions.

Cheers!