Ann: Drilling Update Sugarloaf Shale Gas Project,, page-21

re: Ann: Drilling Update Sugarloaf Shale Gas ... Chand,

EKA has been active in buying in acreage (PdeA & Brioche) and has people out there. It has a technical team based in Houston conducting studies: not only looking at the Austin chalk in PdeA but also "shallower horizons" there. Its team has been out in Brioche and is looking to deliver a plan of initial well drilling locations. EKA is also looking to secure some form of acreage pooling with an operator out in Brioche to dilute the initial drilling costs and risks as it did in Black Jack Springs.

I'd be cautious in criticising the level of overhead expenditure until it is a little more clear as to of what the overhead expenditure is comprised.

Some of the costs might be capitalised as "exploration and evaluation" costs but I very much doubt that all are, even if some are.