presentation: it's about oil, page-11

Im watching TXN with a veiw to buying and am big time in another Eagleford stock.

But I see it totally different to a few in here at present and will probably get called a down ramper. Especially with a view to buying at some stage. But its not price alone thats stopping me buying so even if it dropped to 15c i wouldnt buy right now, at 5-10c id probably do so on a small scale.

This stock has tremendous upside, but imo, not yet and not from this price. Why? Well compare it to the other eagleford players. I will use ADI, becasue i dont hold it so cant be accused of cross promoting. Its got a Joint venture organised with drilling and fraccins started. It has about 4600ish net acres after the farm in, using its 10% interst in a much bigger parcel of acerage. But this is the crucial thing. Its partnered up with hilcorp who are competent driller and tis wells are being drilled and are funded.

TXN has a lot of work ahead of it to find a very competent operator for its horizontals and it needs to do it soon. TXN either needs to do a CR of about $20M to fund 3 wells and have some cash so that cash flow and the left over CR dollars can advance there 4 th well and then team up with a competent operator. Or. They need to do a farmin. To do the farmin of 12000 Eagleford acres at say 50% will leave TXN with about 6000 acres and locations for about 60-100 wells. They will need to do one well per 640 acre spacing to keep thier leases. So they have to get scooting to offset what are becoming more and more expensive re-leasing fees. So within the next two - three years they need to be able to fund about 9 wells. ie have $45M to $60M capital to fund these wells on thier net 6000 acres.

Now compare that to ADI. they have the deal done, they have Kowalick well about to be fixed, Kennedy producing around 400bocpd, Weston about say 300pocpd, Morgan IP's where 2000bocpd, and Easly 1000ish. The latter to will drop a lot they are only ips. ADI has 10 % in all these and 10 % in Morgan which will flow to sales very soon. at say 1000 bocpd. This gives it currnet flows of about 500+ bocpd + a lot of gas.

So they have secured plenty of thier lease area, and they have 4 wells flowig to sales and 2 about two. They have just done a CR for $5M. and have around $10M alltogether.
They with cash and cash flow can now happily continue to drill, soon when cash flow comes in after cost recovery from hilcorp.

ADI has 120M shares plus the new ones just issued , i think its 140M now. Similar to TXN. ADI is priced at 30c. It has its partenr ready to continue drilling and its cash ready to do so. And THE MOST IMPORTANT part which is the competent operator.

On the flip side TXN is dearer, but has insufficient cash to drill one well and no partner. It has three times the acerage, but will lose half in a farm in if thats the direction it takes, leaving it with 150% the net acerage of ADI.


It has tremendous upside, if it joins with a competent operator. You can probably pick up a dodgey one for 30% of your interest and they will stuff 1 in 3 wells at a cost of $6M+ per well, and they drill and frac slower, ruining your NPV of each well. But for a good operator they will want 50%, if your in a good powerful bargaining position.

When i read if statements in its presentation it worries me. They dont sound certain of getting a drilling program, and they should.

Hence right now, as unpoular as this is, i am entitled to voice my opinion, i think TXN it is way over priced. When it secures a GOOD partenr a price of this magnitude may eventuate after a well or two flow.