posiedon size, page-5

Bob & Sandy,

I'll be brief cos its late, so:-

1. 2nd Sept Review states $240m cash. I think cash problem currently unlikely.
2. I couldn't see KAR considering a buyout before results of current drilling campaign, especially as COP paying for most of it. 3 more wells to go (currently committed)so would be surprised to see it in next six months or so but u never know!
3. Unlike alot of other O & G explorers KAR has been careful to ensure that it doesn't issue to much paper and it hasn't needed to so far. Even the recent placement and SPP only increased total shares on issue by app. 26m. As the CR was only carried out June/July u would expect that they took into account their funding requirements for the foreseeable future/current exploration.

Some idea of the capital requirements for the future development of the resource can be gleaned from the cash flows (CF) in their regular reviews released to the market but these are likely ball park. The CF suggests that the first significant amount of funding won't be required until 2011. I would expect some to be capital and the bulk to be financed unless the option of further farm down was seriously considered (to COP).

Cheers
ANZ