Ann: June 2016 Quarterly & Appendix 5B-STX.AX, page-206

These were Psi81's 3 possibilities,... reposted from Psi81's 3 possibilities...

...."I'm actually pretty optimistic after seeing that chart - full marks to DB for providing it. It looks like plenty of CSG pilots I've seen previously where they've initially struggled to get gas to flow, but once they've sorted their pumps out they've hit desorption pressure and got good gas rates.

I think that assuming that what they've reported about the reservoir saturation, gas content and permeability is correct, their forecast showing the imminent onset of gas production and the sharp ramp up to commercial rates is realistic.

I see three possible outcomes from here:

1. If the pump reliability and performance is maintained as they suggest, this should make gas by the end of January, and should quickly shoot up to far higher than the 250 Mscfd they told ADL is required for 2P.

2. If pump performance is maintained but we see no gas, it suggests there is a problem with the reservoir and this is unlikely to work IMO. Either the water isn't coming from the coals or there is just no gas in the coals and the little bit of gas we've seen was a small conventional accumulation.

3. If we don't see gas and they give us more excuses about pumps failing etc, then the play might still work but I'll really question whether STX have the technical and financial ability to do it. Two years of trying is long enough.

So basically the next 3 months are crunch time. Given the recent SP drop to a more modest market cap and the fact they've just announced a CR so they should be fully funded for the next 3-6 months, I'm prepared to take a position in STX. Not as big a position as I would take if they already had commercial gas flows, but I figure the downside is now only 8c a share, while the upside is at least several times that. I think this is roughly a 50-50 chance of success now so the risk vs reward equation is now positive.

If there's no gas by the end of January then I'll be out until they can announce commercial gas.

But for now, as I once heard somebody say... pure spec!"....