Ann: Flames Well Operations Update, page-9

Let the fun begin. Went to the luncheon in Brisbane and was impressed. One of the main points to come out was that there are both formations on each block - one oil rich and one gas rich. It time, they will come back and drill the other formation. So there are plenty of wells to be drilled, but they plan to stick with 4 wells per annum or thereabouts (depends on the oil price and how much cash is coming in). Reserves and long term flow rates will be established after 6 - 9 months of production history. But these wells are valued on flow rates rather than arm-waving reserves (remember Shell and BP had to reduce their reserve estimates by 30% about 10 years ago - too much arm-waving and not enough real numbers).

The guys running the operations in the USA are bringing the wells on line within budget and are doing a commendable job. My own estimates were that the company would be producing at 1mmbbl oil equivalent/annum by say January which was confirmed. Oil is heading up and this has great upside. I hit David with a lot of questions and couldn't fault his answers. No BS here. Overall, very impressed and will buy more. No downside and plenty of upside.