Ann: Funding Update, page-69

Well Shel I would put it down as follows:

1. Mgmt is supposed to generate confidence for investors. Yes I've been more than a little critical of senior execs but they are responsible for ASX releases (and how many have typos) and the level of detail, transparency and coverage of important issues is .... well pitiful. I mean GG is a very pleasant person to talk with about the company but clearly can't divulge material information.

2. Yes the POO is problemmatic for shale E&P companies. However that's why they have hedgiing as part of their normal business (onsidering most are up to their eyeballs in debt). and why I keep making a point of it - hopefully it is asked at AGM

3. No one will shut producing wells in. What they will do is stop D&C + acreage acquisition, particularly in high cost areas -- for example the TMS (where HK is active). They will also take a long hard look and how their drilling matches up to lease expiry. Its about not losing valuable acreage now.

4. The small % of WI is simply due to pooling. The return to the company is still in the exact same % to cost if they had 100%. For simple math if well costs $10M and you have 100% WI with standard 75% NRI then if you produce 100MBoe which you sell for $100BOE then you have $10M gross rev and $7.5M NRI. Now if you only had 10% WI and 7.5% NRI you only spend $1M and you receive 10MBoe gross and 7.5MBoe to your NRI which you sell for $100BOE for $1M gross and $0.75M NRI.

In both instances your net interest return is $0.75c for each dollar spent. I don't see that as a problem and in fact some companies have a business model where they look for 5% or so WI is as many wells as possible to spread their risk.

Breaking news as I read the WSJ in LA, BHP Billiton has just done a deal to sell $50M of ultralight oil (re condensate) from Texas (read EFS) to foreign buyers WITHOUT FORMAL GOV'T APPROVAL in a move that is likely to be the first of many such moves as energy companies look for new markets.

BHP is selling 650,000 Bbls to Vitrol SA (Swiss based). US Commerce Dep't supposedly "encouraging" companies to pursue independent exports without permitting in a process called "self-classification".

Guess that's one way to fight back to Saudi discounting product that is sold into US markets.