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tezzdoggy,

I'll have a go, despite the fact that I'm only recently back in having doubled up yesterday at 5.9c for an average in the low 5's, I've still got a history with this company that goes back longer than most.

Sure, the SPP (which I'm not entitled to by the way as I was not a holder back in September last year) is certainly a factor here. Firstly, there will be those who either directly or through Patto's are happy to sell now for 6c and buy in again at 5.5c (while taking the risk that they don't get all that they apply for). Also, there will be others who just simply believe a stock cannot get too far ahead of an impending issue and are basing their trades on this belief - i.e. every time it starts to get away they sell their trading parcels believing it's going to fall back towards the issue price. It's a bit of a self-fulfilling prophecy but that's how some traders are.

Another significant factor is one that I have talked about before - the Australian market is relatively unfamiliar with unconventional plays and therefore doesn't really understand them in the same way as, for instance, North American markets do. In this case, you have a market that is saying "surely 300 bopd this far from infrastructure is just not economical". But think about it - at $100 oil that is approaching $10m per year in revenue. Take away costs and you are still looking at a payback for this well of somewhere in the order of three years - which is nothing to scoff at. One of the things that the market does not understand is that unconvential "horizontal" plays like this one have very different economics to conventional plays.

For example, if CTP decides to go "full Bakken" on Surprise, they will look to try to achieve three horizontals from each pad. The economics then become very different to what we presently have with S1H1 - eg say the vertical leg costs $3m and each horizontal costs $4m then you have drilling costs of $15m for each pad. But, you now have three producing legs (hopefully with the full 700m of horizontal) and even if each only produces at the rate that we are currently getting from the 400-odd metres of contact that we have now then we are fast approaching 1000 bopd. This now has a pay back period of something closer to 18 months and starts to look more like the sort of results the Australian market is familiar with.

Central has the added problem that the market still does not see a clear path to market and is unsure how or when the cash will start to be realised. This is one reason why valuations based on PE are not getting any traction - the market simply is unsure how long it will be before the company will have an "E" that will allow a valid PE ratio to be calculated.

My opinion is that real revenue may not be generated for 12 months or more depending on how the company decides to approach this. They may decide that for the sake of appearances they will truck the 300bopd (about 4 tanker loads I think) as soon as possible so that they can claim to be a producer. This would not be a bad approach but it may not be the best outcome for the long term. I favour a delay in commencing production aimed at increasing flow but that won't satisfy some.

I also like to think about valuing the company from a reserves basis. One of the things the EPT will do is help us achieve a reserves certification for Surprise. Let's assume things go well and we get our P50 number of 10mmbo. Let's say this is worth $20/b in the ground - that's a reserve valuation of $200m or getting up towards 20c per share. Even if there is only half that, we are still worth more than 6c a share and that's only one well in one lead in the vast acerage. Don't forget that the P50 for this formation across the Amadeus is more than 1 Billion barrels and the liklihood of that has now increased because S1 has proven that moveable oil exists.

Another issue is funding. I strongly oppose a JV now as I think Central is too close to "launch" and any offer now would be opportunistic and below real value. That said we need more money so I think another cap raising should be done (following a modest pause after the SPP is completed). $20m would be my target and I would use it for some more seismic first (I know many of you will not like that idea) then look to drill. I favour this approach because if we can increase production and get more success under our belt, then project financing becomes more likely and does away with the need to either accept a low-ball JV offer through desperation, or to continually pass the hat around for more moeny to drill.

There are probably many other theories as to why the price is languishing and I'd be happy to hear them.

Cheers

Badfish