Ann: Operations Update, page-99

Tried posting a photo file perhaps that was why I have a blank post.

Anyway I was going to upload a phase envelope for volatile oil showwing it on its travels from reservoir to wellbore completion to wellhead to separator to show simply what you describe and 88E describe as gas in reservoir that turns to oil.

Capiliary pressures inside the rock do funny thinks coupled with wettability of the rock. I always go for the drinking straw in a glass example, inside a clear drinking straw water will be higher than glass water level. Capiliary forces.

Volatile oil within the reservoir is gas as described by Paul Basinski, that will work wonders for getting it moving within the rock. Gas is very easy to move. When the pressure and temperature lowers as it leaves reservoir and into completion it start to condense into oil (volatile oil worth more than brent crude). Once it is oil and in the pipe then the job is done. Pipes are designed to allow flow so nothing stopping it getting to surface.

Everything points to the water in the pores/propped open fracks requiring to be moved as advised by 88E when winter caught them out. Remember this reservoir has been flowing and still can even with heavy water in the way, once water evacuated quickly with nitrogen lift, do we really think this cracked open shale will retain gas? the gas always wants to expand and we have given it a route to do its job.

My personal belief is this well will flow with fantastic results. I'm guessing all the people buying options believed or consulted experts prior to investing $17million US.

Dave Wall put all Paul Basinskis data to experts for analysis prior to the joint venture deal.

Gas is our friend and one of the things driving out our oil.

Regarding your gas hydrates, this is expected where you have pressure drops, gas condensate is a product that has a retail value. All good.