Ann: Quarterly Activities and Cashflow Report, page-3

Hi spec

You are prettgood on the numbers , they are down $6.4 mill in cash, they paid down $8.8 mill in debt but took back $4.4 mill so net debt decreased by $4.4 mil.... they also REALISED a $4 mil loss on closing out some Aneth hedges, which at this stage looks like a good move because the close out WTI price would habe almost ceratinly been at a lower price than where WTI is now... I am assuming they took a loss now because they believe the POO would continue to rise.. Alex is not in the office today so I will get specifics from him this week .

Without that hedging cash loss, they would have been operating cash flow positive to the tune of $3.5 million, rather than the $ 484,000 deficit. They spent $2.6 mill on investing activities and $3.2 mill on financing which is basically the net debt repayment of $4.4 mill but they drew out $1.1 million from the Grieve reserve account to help finance its development. Adding up the $0.5, $2.6 and $3.2 gives the $6.4 million decrease in cash on hand.

The financials for the next couple of quarters will be tight but will be improving. As you said , with Grieve coming online and costs of development completed , cash will be coming into the bank. Additionally, ELK will get $3 for each barrel flowing down the pipeline to Casper.

Interesting to see that they are not recording cash for CO2 sales, their net 3-4 mmcf CO2 per day ishould be generating about $50000 per quarter ATM, ( looks like they are getting about 10 cents per MCF)

The big kicker in cash flow will be Grieve ramping up and the refinance, both combined should provide at least a $10+ million net per quarter boost to cash, before they spend any money on Aneth.

I am expecting the next quarterly to see the company at least cash flow neutral as Aneth development is not scheduled to start till 3rd quarter and Grieve will be a net positive. At this stage for me , all is on track.

Cheers

Dan