Ann: Conventional Prospectivity Review Complete & Icewine2 Update, page-186

Okay, I think this is a great conversation to have and I'm going to throw my hat into the ring for what it's worth. Open to discussion on my thoughts also...

I tend to think the odds are far greater than 50/50 for flow rates for IW2V. Why would PB and DW throw so much more money into further acreage if they weren't damn confident? Wouldn't it be prudent to pop a side-shoot into Alpha and then Farm that out, ensuring enough funds for future wells? Or at least 2 bites at the cherry...

Yes, I understand they purchased more acreage for the upside potential, of course, but we didn't just add a few acres but we backed up the truck! Plus PB wouldn't have wasted 6-7 years of his life for it to come down to something of a 50/50 1 drill scenario. I'm sorry, I just don't buy that at all. Yes, oil is one of the ultimate risky investments, but IW2V will be flow testing for 30 days, yes across different intervals, but a good deal of time to adjust and tweak and find ways to get those pores to remain open. They have also been researching and pre-drill flow-testing in labs for perhaps a year if not more to try and understand the mechanics of the play and get it right before testing starts. Yes, real word can behave differently, but I trust PB and all the experts contracted by them to come up with the goods.

Also, DW has also been in the business game long enough to understand that you don't put all your eggs in the one basket (if the flow isn't as good as hoped). IMO we will not go into flow testing leaving 4M or so in the kitty for after. Absolutely not! My thoughts are DW will do one of either two things before or during IW2.

1) When the SP rises (I'm sure it will when drilling starts, raise enough for 88E to fund the drill for Alpha on its own. I believe the funding here will come from institutions, just like the 11M, perhaps from the same Coys as that raise. There won't be an offer to us shareholders which could decrease the SP a tad (albeit only a little while drilling is underway anyway and excitement kicks in).

2) A Farm Out for Alpha only will be in place.

I'm leaning towards the Farm Out and hopefully something to the tune to fund 5-6 wells for the unconventional and if needed, further fine tuning etc. Shore up the acreage enough to off-load. Alpha should be an easy sell. Oil company's understand conventional, we have 2D and 3D (3D across "some" of Alpha at least) with added info from IW1 already drilled and data across the North Slope from conventional oil in the same sequence. A JV on favourable terms to 88E shouldn't be too difficult, especially with oil Coys now starting to think about expanding operations with higher POO and thoughts of this trending upwards.

Me personally, I'm still hoping we will see a side-shoot into Alpha this year. I understand 2018 is mentioned for this, but that wasn't a definite. I don't believe there's any reason stopping them from revisiting straight after the IW2V flow tests. Otherwise why hasn't a driller been mentioned to the market yet? Are they still throwing this in the ring? With a JV partner? Wouldn't this significantly cream the curve all things going well, which is what DW wants?

Of course there is always the possibility of the Alaskan government providing us with a no or low interest loan to fund things, a distinct possibility also....

Anyway, that's my 2c worth guys. DYOR and all that...