Ann: Half Year Accounts , page-27

Have read the report a few times and compared it to some other industry players of simular size.
My take on the report for those who may agree or disagree is

There is not one additional comment in the directors report about operations. Rerun of announcements without updates. Its as down beat as you will ever see from a company in the hottest oil spot in the world right now.
Is the acreage auction on the 22nd going to be a trigger for a change in sentiment.

The net loss has dropped dramatically and there is a small trading profit on sales.
A good sign considering the PB is nearly all expense in this quarter and the loss included a $561,800 write down on oil and gas properties.

Dugas blow out costs and possible further expense to the company now looks minimal.
A major uncertainty for JV negotiations with the company is replaced with a new 3% royalty claim on the PB acerage. This new claim from AKW ownership appears to be connected to EXTEX and the previous 25% claim. They wouldn`t be chasing this if the land had limited value. Companies previous call on Dugas proved correct. Now for this claim.

Additional projects at Fausse point and Bowtie West, Napoleonville are also underway.

No new developments on 3D seismic, Project partnering or the companies 1st horizontal well. Slightly more upbeat on additional acerage. More than one party, some focus on land besides the auction.

Someone got an extra $125,000 of convertable notes after issue. How did they convince the company to do this. Who was it?

The company had $910,000 of borrowings. In the Dec qtr report it stated $1,832,000. Maybe cash call from JV partners was included in Qtr report. Still the company has been able to reduce borrowings.

A big increase in trade and other payables to $3,146,000 reflects the expansion of development of the PB. The movement of $7,747,000 of development costs to Production costs shows a positive change in mindset from expense to an asset. I believe this is a big move as it has different conditions for depreciation etc. The company believes it is now a producer.

Massive share issues in the half. If GGP was not operating and focussing in the PB I believe the SP would be much different with the same half yearly report. Without the PB I believe the hot money would be converting into a profit at a much faster rate as the company is dependant on either more shareholders funds or income from its assets.
To date it appears to have held back the income but SRH 1 still does not add up. It has a nodding donkey in place, there is talk about a new gas pump and now there is talk about more fracture stimulation. This is from a well that produced 1293 barrels of oil in 4 days. If it was owned by EOG, Pioneer , AKK,AZZ, or SSN I am sure the champayne corks would still be popping for a recoed verticle producer for the region. It could be the key to GGP.
I am sure we will have to wait until after the additional acerage has been announced to see what SRH 1 can do.

Overall the cards are being played very close to the chest by SG in a real oil hot spot where secrets are hard to hide.

Its what is not in the report that has my most interest. The company has been able to fund its way to a much bigger position without oil flowing and has a seat at the big table. Its total monthly admin costs of $200k wouldn`t be enough to employ some of the players we are sitting with
so we will just have to wait as see what cards SG plays.

After the end of next week, the 23rd we will see the 1st card with the University land auction. Not long now.

Good luck all.

This is not investment advice, just a view from my seat.