Ann: Quarterly Activities Summary for Period Ende, page-12

re: Ann: Quarterly Activities Summary for Per... Comment on what tomorrow will bring from HS-1.

I don't think that tomorrow's highly anticipated progress report will provide much more information than the drilling report released on Monday. The report notes that reservoir-quality reservoir sands were encountered with gas shows (a very good thing) but no information about whether these sands were part of the main Elang/Plover reservoir or one of the sands in the lower part of the Flamingo Group (see figure below). Also no information about the nature of the gas shows although I would expect them to be similar to those at Evans Shoal 1 & 2 and possibly Heron 2 (C1 to C4 and possibly C5 as well). Hard to tell the CO2 content from mud gas.

At the time of the report these sands were about to be cored with a 36.5m core (very ambitious). I would that that by tomorrow coring operations would have ceased and the core pulled out (all going well). As the report correctly points out, this core provides a sample of the reservoir rock allowing reservoir properties (and hydrocarbon saturation) to be measured providing calibration to well logs. Unfortunately for us this analysis is almost always performed in labs onshore, not on the drilling rig. So a visual examination of the core is all we should expect.

I don't think that any real conclusions can be drawn about what HS-1 might have until TD is reached and logs run. Even then it will probably require a test to determine the productivity of the reservoir and whether the well has a chance of being a commercial discovery. This is still some time away.

Everything seems positive for now, but a decision whether to participate in the share offer I think, will have to be made on the basis of limited information.

Also on the positive side, the SP is edging up and further good news with help it edge up further allowing shareholders to derisk by selling some of their shares in the event that everything goes pear-shaped.

We will see what tomorrow brings.