rbs morgans, page-13

Thanks for sending through TWB.

It does mention ESG as being taken off their high conviction list after meeting with management "and being
slightly disappointed by their update on flow rates and drilling."

No insight into why they arrived at this conclusion. Perhaps it's because ESG won't provide updated flow rate data or provided the December 2009 figures, or the fact that two pilots will be coming on line in coming months (perhaps a little behing schedule??). We all know how tightly ESG hold this info. I suspect, being brokers, they've probably been given an indication that ESG won't be raising capital anytime soon so there's greener pastures for them elsewhere short term (my speculation only).

It's not all doom and gllom: "We still see significant upside from a Santos bid but just think they need to do some more work proving up the commercial value of the gas." Which, if the last OB is any indication, should be happening as we speak.

Intuitively I'm inclined to think they've arrived at the same conclusion as most of us on here "give us the damn flow rates", and I believe the reason ESG haven't is simply they have HAD water issues that slowed them down, and which are now resolved.

I cannot believe ESG management have passed along market sensitive info to a broker to disseminate to clients to trade on in research notes like this. It would be running a very fine line (particularly for the broker).

JT