2013 market context and nen, page-4

BPAA,

I'm not making excuses for the lengthy proving up exercise at Paloma as it is taking way longer than anybody expected but I suspect your comments re Twiggy are misguided in the extreme. Believe me Twiggy has an extremely chequered past and previous twiggy ventures would seem to make our Paloma experience look like a dream run. I have nothing against the man and I'm not without my own failures so this is not an attempt to discredit him but since you raise him as an example it may pay to read up a little on the guy, especially Anaconda Nickel !

There is plenty of interesting information available and I see there was a little discussion on him last year which provides some insight. Look here as an example.

So when you say "Would Twiggy have achieved different results with the issues that have faced us ?? 100% yes he would of", the different results that you are "100%" sure of may not necessarily be the type of results that we want either.

Paloma may or may not payoff. Too soon to say. Certainly it isn't a simple contentional play which means it can be a slow and difficult process sometimes involving trial and error to figure out how much oil can actually be extracted and how best to do this. Please remember that horrizontal drilling and subsequent fracking is a very expensive business and as such you want to know as much as you can about the geology of the well as you can before committing the funds to a specific well design. I've seen companies sink $20mil into fracked horrizontal wells and come up with nothing due to orientation, water, periability and other issues. While we may hate the time they are taking I suspect we would hate it even more if they were blowing tens of millions on hurried attempts to get started on production wells.

Our Paloma wells are relatively cheap test wells. Its likely that field development will require a combination of different well designs for the various zones and those designs will be much more complex than the test well designs. While I want to know that Paloma is going to be a commercially producing asset as much as everybody else does, I also want to know that they have done their homework and that we aren't going to blow huge amounts of money on wells that never pay for themselves.