Ann: Mukuyu 1 & Sidetrack Well Results Amendment, page-733

I’ve been thinking through what timelines IVZ may look to drill again, why, and why appraisal. Happy for any comments back on this…..just some thoughts…..

What: appraisal, you only do this if you’ve made a discovery and now want to prove up that resource. Appears on the face of it SM believes it’s a “technical discovery” based upon petrophysical data. So is now looking to prove that resource.

Timing: likely wants to do this ASAP, why?

Probably 4 good reasons

1) Elections in July. President will want some great economic news to announce in the run up. Electricity and economy are not great……announcing a gas/ oil discovery up to the election could be the Ace he needs to win

2) 35c options: the 35c options expire worthless in July. If they can get the SP up there by then, it gives them more $ in the bank to pay for Baobab without dilution. The run up to appraisal (probably end March/ start April SPUD) might be enough, if lab results etc help momentum

3) Cash: if appraisal goes well, and they call discovery etc, then SP could reach $1…..perfect for the next CR to fund another 3-4 wells

4) Farm-in: A good appraisal will also entice a Farm-in on great terms…..giving more cash to fund additional seismic and 3D etc etc

Summary: Having the rig warm stacked, rainy season ending around April…..gives enough time for: lab results, technical discovery, resource upgrade etc to give momentum before Appraisal M2 spud……April, then sufficient time to drill and announce discovery for election and options exercising, then CR and Farm-in.

Assumptions:

• “Technical discovery” has been achieved through petrophysics from M1 & M1ST
• We get timeline and plan for drilling by the end of this month……perhaps even some lab results by mid/ end
• April means logistics are easier when rainy season has ended….ie trucking in Fuel etc
• The mud, tubing, maintenance, field services etc can all be lined up in time for April spud