rbs morgans, page-21

Come, come lads...a few of you are getting spooked by the shadows!

Nick Burns is a class analyst and he knows ESG extremely well and I thought this report was a cracker...particularly his review of the STO position. A very clever analysis backed up by numbers as to how STO can acquire ESG and be cash flow positive on the transaction!

Now...on the subject of flow rates, this is exactly what was contained in the body of the report:

"Whilst we are disappointed material progress on demonstrating high gas flows hasn't eventuated to date, the company assures investors the production pilots are behaving as expected and higher gas flows are expected in future."

Now, let's get inside the entrails of this statement:

The preamable is that ESG has had to deal with an incredible water problem caused by the deluge in January...call it an act of God, it is something which has slowed progress and there's not a damn thing we can do about it.

...the key point is this: we have a company that is gung ho in getting MOU's signed up. This requires detailed disclosure to the other parties before they will put ink on paper. In short, they need to be convinced that ESG can deliver.

What we do know is that two experienced groups have had a peep inside the ESG tent (and flow analysis) and have gone ahead with MOU's...one of which we are hoping will move to a GSA pretty soon and the other by the end of the year!

Isn't that indepenedent third party corroboration at a level far greater than perhaps what Nick Burns was informd?

Then we have the "egg-flung-dung" scenario that could be heading DC's way if he has been bull-dusting the marketplace and cannot then deliver on flow rates.

Have a re-read of what Nick said..."the company assures investors the production pilots are behaving as expected and higher gas flows are expected in future"

Now here is an industry leading expert saying "trust me, I know...everything is okay and I'm out there selling".

I mean if it isn't, this guy will be working at McDonald's...and surely he knows it.

I'm backing him all the way! You guys make your choice.