agm results, page-11

Well done angers. Great catching up with again mate. And great having the opportunity to talk in depth with Max De Vietri and in particular with Mark Fenton (lot of good geo knowledge).

I made a lot of notes during the agm and summarised them over a couple of beers on the plane back. So I'm just going to run thru them in point form. I'm positive I'll repeat most of what you've posted, but here goes..... Appologies for the long post - having another couple of beers as I type.

First of all, I came out of the agm feeling very positive about baraka's future. They've got some great key staff that are there for a reason and seem very motivated and determined.

It was a good turn out too - about 30-40 people, including Max's Dad who's not-out at 95.

1. Obviously you know they're at 1671m on 22nd Nov

2. Mark commented to me before the presentation that he expects the deeper target to hold a lot more than the shallow target

3. An AVO anomoly (amplitude versus offset in the 2D seismic) was observed on the secondary target, but nothing seen on the primary

4. They're not running LWD/MWD (logging/measure while drilling) on Heron, but are "sniffing" the cuttings to measure gas readings and taking samples of return mud to test for residual oil as they go

5. Nothing was seen in the shallow gas target at 1000m

6. If Heron is a catagoric success then the next step will be testing, 3D seismic and then 3-4 appraisal wells

7. The Heron South prospect is the largest in Block 20 and will definitely be drilled if Heron is a success (oil or even a gas discovery could lead to this). It may still be drilled if Heron is not a success, but it will depend on the reason why it isn't successful (ie. geology will play an important part in the decision).

8. Heron South is in a National Park and will take longer for permits, but that shouldn't be a problem. All of it is onshore in Block 20, so nothing is shared with the offshore Block as per Heron. Heron South is a purely structural play type instead of a folded fault bounded structure as per Heron, so the results of Heron will tell us if we should or shouldn't drill it.

9. IHS (http://energy.ihs.com) are a global source of info for oil/gas industry and have commented recently that Heron is one of the five most significant oil/gas wells being drilled in the world at the moment

10. In Heron the deeper target is a better defined closure with less faults (simpler) than the shallow target

11. Autruche definitely wouldn't have held hydrocarbons - it was simply drilled in an invalid position. Was definitely a promising sign that they had so many oil shows. Was definitely oil and not a light gas condensate similar to Faucon drilled by Hardman (which is what I was a little worried about, but because it was so recent - 1989 - not likely they couldn't distinguish the make-up of the hydrocarbons).

12. The source kitchen for the onshore basin at Heron is the same as that in Morrocco which has proved to be a "fantastic" source of oil/gas

13. The delay in drilling a week or so ago was a result of the BOP's not fitting well enough (out of tolerance by mere millimetres when it fitted to the drill casing). When 209mmbbls of oil is pushing up out of the ground, we're going to need the BOP's to be working well by the way!.. :)

14. Expecting to hit the shallower target next week with log results the following week, and then the lower target between christmas and new years with log results a week later (so be prepared to waste your holidays sitting on the computer)

15. Mark didn't want to give anything away, but seemed very interested in the lower target.

16. Mark was very happy with the lithology that they're drilling thru - it's matching very nicely with what they expected and the sequences are starting to look a bit thicker than expected (not a bad thing, but may in fact mean that the targets will be deeper than expected). They can and will drill deeper than planned if they need to in order to hit the lower target.

17. We've got a drilling engineer on site who visits Heron every 2 days and is a great source for info flow. He's getting along really well with the Chinese now (he's ex-Chevron)

18. Regarding Mali - we'll recover US$9m and are carried for a further US$10m (which gives us about A$25 cash in the bank with no expenditure for some time).

19. The fact that we didn't complete the A$35m cap raising earlier hasn't changed anything and won't impact on any plans for acquisitions, because they weren't anticipating to have the Mali farm-out reimbursement at that stage

20. Max is very very happy with ENI and Sonatrach - couldn't have hoped for better partners - they've bought into our acreage right in the centre of the source kitchen in Mali for a reason.....and the geology in Mali is almost identical to the geology where ENI and Sonatrach are producing a lot of oil/gas and doing really well at it.

21. The Mali farm out will carry us thru to the seismic stage which is expected to start in late 2007/2008 (and will only need 2D seismic because the targets are so large)

22. One of the gas prospects in Block 4 Mali is 65km x 16km and could contain up to 7 tcf of gas and will underpin a 300 well development, a gas processing facility, 1200km pipeline and offtake infrastructure on the Mauritania coast

23. An alliance between a number of like minded and similar sized companies is progressing well and a MOU (memorandum of understanding) may be signed and announced over the coming weeks. This will be the primary focus for acquisitions over the next 12 mths and will target projects out of reach of Baraka on their own

24. We'll still be targetting production acquisitions on our own and Max & Mark in particular are very determined to make this happen

25. Will definitely be two years before the first well spuds in Mali, but given that it will be a five well campaign targetting elephants, I'm positive we'll be closer to $1 than 20c at that time (imho)

And finally, towards the end there I was chatting to a few of the staff and commented that I was a long term holder and felt that we were either going to make our money on Baraka either in a months time with a success at Heron or in a few years with Mali. Happy to say that they were absolutely positive that wouldn't be the case. They don't feel there'll be a quiet period after Heron in the event that it's not successful. Next year's going to be filled with a lot of action on the acquisitions front. Even buying into an asset that nets Baraka 1,000 or 2,000 bopd would underpin a shareprice of around 60c with oil prices over $50.

One of the good things about Max is that he's keen to progress things as much as possible without diluting the company with too many capital raisings. He said they won't be going down hardman's path, who went from under 300m shares on issue when they discovered Chinguetti, to over 700m shares by the time it was in production.

Sorry again for the long post. Reminiscent of some of 618's great hardman posts if you ever followed them.

Cheers,
Butcherano.