Ann: Chorbane Permit Extension and Drilling Updat, page-6

re: Ann: Chorbane Permit Extension and Drilli... With all due respect Osi, a change of opinion from: 'They have the money in place and the site prepared, it will be drilled imminently, regardless of the political situation' back in Jan/Feb to: 'Won't be drilled until after the July election at the earliest, or possibly even not until next year' is a massively material re-evaluation of the timing and the risks associated this exploration well. Such a change of stance by one so well informed is not to be taken lightly.

The only new item in today's announcement, and certainly a big positive for the project, was the news that the government has actually extended the Chorbane license for another 12 months. That was not necessarily going to happen under present circumstances. But it has happened, so now one very serious risk has been eliminated. Which is why the share price recovered from recent lows yesterday and today.

If you are concerned about disingenuosity though, you should be a little worried by the way that this potentially serious risk remained unmentioned until after the problem had been solved, and by the continued portrayal of the past three months' delays as a mere traffic management problem - some sort of safety and health issue.

I don't think the delays are just a traffic management problem. The real problem is that there has been a revolution, the government has been deposed, and there is no longer a central authority that is powerful enough to enforce the law at a local level.

Hopefully there will be such a central authority in place once the elections are over, but that remains to be seen.

As for the other additional risks associated with this project, you can estimate the probability of success of a commercial outcome for this oil exploration well, which is pretty favourable, and has not changed at all in the past year, but you cannot predict the likelihood of a favourable outcome for the coming election, and you have no way of knowing what other unspoken issues remain to be resolved or how likely they are to be resolved in your favour. All you can do is believe, and guess and hope.

Don't get me wrong: it's a fantastic project. But right now, it's in the wrong country.



C is for country all dripping with risk,
D is the drunkard who gave it a kiss..