Ann: June 2018 Quarterly Activities & Cash Flow Report, page-3

I think there is more to Sacgasco than we are being told but I don't think current management is going to lead us out of the wilderness until they acknowledge the need for better promotion, get somebody in to do a reserves assessment and try to get a pot of cash to fund drilling programs that will really make a difference. An independent consultant's look at what they might have in the deep zones at Dempsey would be useful for example. The company says it is leading the way in the evaluation of the older sediments of the Basin without saying how it is doing that. In any event who would believe the company!

The revenue in the June quarter is the same as that for the March quarter so all those workovers they were supposed to undertake didn't amount to much. Makes me wonder what the company means when it says "Field activities are continuing to significantly grow natural gas production" when it is not showing up in renveue.

I remember once asking why the company didn't put out more details on their 27 wells where they were located which ones were producing and what zones they were producing from and what potential they had for a workover only to be told that they couldn't see how such details wouldn't be of much use to investors and that if they were really keen they could research the DOGA website. I just don't understand the attitude. It makes people doubt there claims. The company says detailing its leases may lead to loss of competitive advantage and consequent reduced value to SGC shareholders. Difficult to see how value to shareholders can be reduced anymore than it has.

The company says leases over mapped high potential prospects continue to be maintained and acquired but when was the last time an announcement of a new lease acquisition was made?
The comment that Sacgasco is one of the leading natural gas operators in California's Sacramento Basin is a bit hard to believe!

The Dempsey well is producing 1 million scf of gas from the shallow Kione formation on the Dempsey lease. You have to wonder why they aren't drilling more shallow infill wells into the Kione. Six more Kione wells that each produced 1 million scf a day or more and investors might sit up and take notice.

I appreciate that the management operates on very small budget to keep the dilution to a minimum and they don't pay themselves anything near peer group salaries. Moreover GJ has been masterful in managing the various JV interests and farm in deals but at some point they need to either continue as a junior eking out a small living or as I said before get some money and frac the Dempsey deeps and drill some more shallow wells targeting the Kione.

The other thing is I know from personal experience from being on the Board of a small explorer that had acreage in Texas you can't oversight an operation from Australia no matter how good your local people are they just never have the same interest or enthusiasm or your priority if they also work for others. There has to Aussie boots on the ground IMO.

Something has to change at Sacgasco if they are going to recover from here. I have written off my investment. Looks like they are going to have to raise more cash in the second half.

The Alvares well might deliver but who knows anymore. Sorry to be so negative but I am really disappointed with the way this has gone.