key may have something to bank shortly, page-11

Hi Marxist

U do have a valid point as per securing KEY securing debt facility in the future. This is the case with any project that has potential & needs wings to take it higher. I believe KEY has some amazing blocks in SSW & Namibia & would need more cash going fwd to fund its program.

KEY's cash situation in June '07 was $12.346m & July '08$8.89m. Thats about $3.45m spent in 12 months. Currently the only cash KEY are generating is from interest on cash in the bank (fin statements reflect this very transparently).

With upcoming seismics & infrastructure commercialisation being fast-tracked, it would take some time (2-3 months) b4 KEY gets money in the bank from the sale of gas from KN-1.

As for the field size, its a 'Catch 69', (view from the top or bottoms-up aka big but how big they we dont know yet). So yes they'll need financing going fwd, exactly from where? Lets leave it to the Directors at KEY.

KEY plan to drill 2 wells in this area in Q1-'09, so cash from the gas sale should have started coming by then. This will balance their cash books a bit but drilling & seismic will eat into cash at hand.

STX & BCC are 2 examples wherer-in the operator has cash coming in from existing fields but has securd debt (STX $11m & BCC $50m), so insto's do see a reason in lending as they know they are gonna get a decent return on this in time as long as things dont go south.

Just my thoughts.

cheers