share price, page-5

Lilly10

You state that:

"We now know that they are going to drill - just a matter of where and when, and would be finalizing their work program for 2013-2014"

I am intrigued. How do you know this? Please enlighten me.

Having done my due diligence I have come to the conclusion
that a) they have no intention of drilling b) no longer have
enough funds to drill and c) have little hope of attracting
further funds.

The final nail in the coffin for conclusion a) comes from the following insert in their last annual report

"Depending on the results of the re-processing and re-interpretation, Quest may elect to acquire further seismic
across the other leads on the block to further define the structure sizes and potential of all drill targets and reduce the risk.

Drilling of Prabu-1

The Company is pursuing a policy of reviewing and de-risking the various leads before committing funds to drilling.
Subject to the review of the reprocessed and interpreted seismic lines the Company may elect to shoot seismic over
the current leads or immediately move to drill."

What a turn around from their announcement in March last
year when they said that they would be spudding Prabu-1
in June last year - yes 17 months ago. Looks to me as if
the above insertion is just a rathole to escape into.

I arrive at conclusion b) from the last quarterly cash
flow report which stated that at the end of Sept they
had $4m in funds which (from memory) included a $1.5m
security deposit which they can't use if they drill and
a proposed expenditure of $0.5m this quarter. This leaves
$2m both to drill and keep the Co going for at least another
6 months. i.e. $1m to drill. I don't know what it costs to
drill in Sumatra but I expect this is not enough.

If they try to raise more money without some very positive
results I expect they will have big problems. The companies
market capitalisation is now only $6m and having frittered
away the last capital raising,which was for ear marked for
drilling, my belief is that there will be few who will be prepared to gamble more.