Ann: Managing Directors AGM Presentation, page-2

This post isnot investment advice and readers should use official ASX releases from GalileeEnergy rather than the foregoing before making investment decisions.

I have alwaysfound that it was well and truly worthwhile to take the trouble to attend theAGM of a company where I have a not insignificant investment.

The GalileeEnergy AGM was no exception.

I spoke atlength with the new senior staff that Galilee has now appointed and I assurereaders that Galilee is assembling a team of exceptional people.

As I looked atthe front table, I saw an assembly of many of the best brains in the CSGindustry.

As far as Iknow 2 of them are qualified to do reserve certification in their own right.

Those who knowme will remember that I don’t mince my words at AGM’s if I am not happy withthings.

Couldn’t faultthis one and the additional explanation as the AGM report was presented gave amuch better insight into the document.

Went away verycomfortable.

In this post Ihave tried to present the meeting from my perspective for the benefit of those who could not attend.

Did a lot of research and modeling in advance.

My current (Personal) strategy is to disregard market fluctuations and to hold until the Galileeboard is happy with the transactional price.

General

Low salinitywater -minimal treatment cost.

In discussionwith local towns to supply their water needs.

IMO

They are using the gas from the pilot right now to generatepower.

The co-production water that is pumped from the wells inorder to produce the gas (Apart from a few pipes Etc.) is eagerly awaited bythe surrounding landholders for irrigation and could even result in a modestrevenue stream rather than being a cost to production.

The ESP’s (Electric Submersible Pumps) are pumping water withlow solids content and that they are likely to lave a much longer life betweenworkovers which are a significant contributor to operating costs. Lower OPEX/GJbetter margins.

TheGlenaras Pilot

All wells arenow near maximum drawdown.

Water ratesare back on decline and the aggregate gas rate for the pilot is rapidlyrecovering to pre-shut in levels.

IMO

Put simply. the last increase in pump size on 15L has shutthe gate on large flows of water that were entering the pilot area and the pilotis now well and truly on track for 2P reserve certification.

I prefaced a question with “I have been doing a few rough calculationson the back of a cigarette packet” which triggered a few smiles from the fronttable, and went on to say that my calcs showed that about 1.75 PJ/Sq. KM fromGlenaras Pilot was well into the profit zone and related to a (Looking it up nowagain) 2P certification of less than 454 PJ for Glenaras.

“Is the Glenaras pilot target still 500 PJ?”. “Nods of approval on the numbers and a simple Yes to the 500 PJ”.

IMO Don’t be surprised if they better 500 PJ.

The more observant readers will have noted that my lastfrivolous post “The Driller’s Melbourne Cup tip” had number on the trackcoefficient that was similar to the 1,75 PJ I quoted above.

I also pointed out that if applied across the board that thiswould mean we were good for 200 TJ/day for 30 years and asked whether the ideawas to put in a 200 TJ pipeline to market.

The simple answer was “Yes”.

My comment, (Respecting Jemena’s prerogativeon their final FID decision).

Cash Needed

Not an IMO but a simple fact, Not an issue, plentyto do everything in the foreseeable future

Risk ofSomeone making an early Transactional offer to buy us out at 500 PJ 2P Certificationsand shareholders not realising the real value of the company?

The CEO madeit quite clear that that would be a pity and reiterated that the shareholderbase was well and truely strong enough to prevent such an occurrence.

IMO

I have posedthis takeover risk and mitigation before question before with another O&Gjunior and history shows that it was very timely.

In this case Iam confident that the final transactional offer will be for a lot more than 500PJ of 2P reserves out of the substantial 2,508 2C number but wouldn’t be surprisedto see a bit of early low-ball tire kicking as usual.

We need to remember that compared with many other O&G juniors Galilee has a relatively small number of shares.

Best Regards to all.

OGP