Disclosure: Patersons Securities was Joint Lead Manager to the...

Disclosure: Patersons Securities was Joint Lead Manager to the $14m Placement
completed in June 2010. It was paid a fee for this service.

The Initial Production (IP) rate of 1,202bopd and 0.782mmscf/d compared
favorable to results in the region, with Swifts wells flowing at 1,134bopd
and 775bopd.
?h The well is being produced on a restricted basis through a 16/64" choke,
which makes comparison with our modeled unrestricted type-curve
difficult. The announced production rate is encouraging and inline with our
expectations however it will be important to monitor the ongoing
performance of the well. By way of comparison, AUT has achieved an
overall 30-day average of 940boepd (on a 12:1 basis), however its more
recent restricted wells Luna #1H and May #1H achieved 30-day averages
of 888boepd and 722boepd, respectively. We would expect the results at
AUT's acreage to be higher given the high productivity of this area of the
shale.

Impact
?h Production to date from the well equates to revenue of ~US$1.8m at
US$90/bbl (the average over the period) and US$7.60/mscf (allowing for
calorific uplift), of which TXN has a 61.6% NRI.
?h Application of restricted flow rates is commonplace with major operators
reporting early positive signs for higher EUR's.
?h TXN stands to benefit from the successful appraisal of a total of 4,516 net
acres of Eagle Ford across its 2 focus areas. We currently risk the
Leighton/Sutton and Mosman/Rockingham projects at 30% and 20%
respectively, suggesting ~4 times upside from the successful appraisal of
its Eagle Ford shale and full de-risking with time.
?h We maintain our BUY recommendation with a price target of
$1.05/sh. TXN is underpinned by reserves and production from its
Leighton Olmos project area, with a further 7 development wells planned
for 2011. TXN has a busy drilling schedule across its Olmos acreage with 7
wells planned, 3 additional exploration prospects and one additional Eagle
Ford shale. Looking ahead, key catalysts will include the completion of the
fracc and production results from MR#1 and the results of Olmos
development wells plus further exploration drilling. The market appears to
be heavily risking the acreage which has been significantly de-risked
following the recent well results.

Disclosure: Patersons Securities was Joint Lead Manager to the $14m Placement
completed in June 2010. It was paid a fee for this service.