a very attractive speculative buy, page-6

Joe production and reserve data for conventional reservoirs happens quickly after drilling. Unconventional reservoirs can take months by contrast.

In Neons current case at Paloma our reservoirs are mixed in terms of conventional and non conventional this means the unconventional tests hold up the conventional. This was not helped by the initial debris inflow on PD-1 when testing the two deepest reservoirs.

This week onwards will see PD-2 testing commence. The new McDonald sandstone being conventional and deppest should be tested quickly. The Fruitvale which follows will take longer though how much longer is hard to say given the compromised testing in PD-1. If all goes well with testing I would guess 3 months testing at PD-2. Zone results could be released as we move up the various formations.

The cores taken are already being analysed which helps greatly with resource estimates.

I would expect some upgrade to the current "contingent resource estimate" in the next 4-6 weeks prior to any reserve estimate being made available. Generally with a positive upgrade (what I am expecting) the total resource may or may not increase but what does happen is some of the current 2C figure is reassigned as 1C and likewise some of the 3C reserve becomes 2C. So the mid case can improve quite dramatically.

Depending on how far they wish to extrpolate the combined PD-1/PD-2 results 3C could also improve significantly.

Production testing will then give enough data for a 1P/2P/3P reserve estimate over the immediate area of drilling.

P-3 flows and reserves should happen quickly, perhaps by early September.

According to the quarterly Neon is hoping for reserve certification within the next 6 months.