Ann: Kennedy Operations Update , page-76

Texasoil,

you could be right about the reason for the SP dragging its feet (though I was feeling that it had done quite well) but I do feel personally that the jvps have a little wall to climb to restore investor confidence. Once we have replication of results and first-time decent flows from the new wells, that confidence should return. That is when we may see professional longer-term investors buying for eventual income and future capital appreciation. Possibly complete rot but that's my feeling. And that's possibly why the management are hanging back - they need to retain credibility. Besides which, only results will produce a re-rating. Hot air will only produce volatility.

As to strategy, I like the way that the management have marshalled the company's resources so that they can be confident of financing our share of the next round of drilling after the free-carry wells are drilled. Of the jvps, ADI seems to me to be in the soundest position to meet those potential obligations.

There was a lot of confidence in that last news release such as the categorical statement that the Kennedy flows could be rateably extrapolated for longer completions. I was pretty impressed what the frac team managed to do with Kennedy and they seem to be equally so. Frankly, I'd have been pleased with 500bbls - I thought that I was looking at the wrong company release when I saw 1,132 especially as that was the 3rd frac of the bottom 600ft.

It's been a very long haul but perhaps now is the time. The difference is that there is now experience and technology (and Hilcorp's money).