Ann: Placement and SPP to raise up to A$10.175 million, page-36

In response to Alejandro post 17 March.
Thanks for those nice numbers and statistics Alejandro. Unfortunately there is another way of looking at this stock. It involves a little reality and operational understanding.

The only flaw in your numbers is ATS failed to prove in their 6 well drilling program that they could economically get the stuff out of the ground on a consistently economic basis. It cost them $78 Million to achieve 67% of what they aimed for not $66 Million for 100%. This poor outcome spun the economics on its head in a negative sense whilst blowing most of their cash. Only 80 of the intended 120 fracking stages were completed at the cost of $13 Million (inc Infra) per well on average. I believe it is very misleading to quote oil productivity performance based on a 1000ft per lateral drill basis. Absolute productivity is the only way to measure the success and this was not achieved on 4 of the 6 wells.The industry knows this and has rated them accordingly.

Along with the abandonment of their Portugal project (could not sell it) and the massive dilution of the stock by means of capital raising at very low levels have seen its stock price deteriorate from 50 cents to 5 cents in 2-3 years. If it costs on average $15+ Million to drill a well properly, the total capital value (at present) of the stock is only the cost of four wells. Any company committing to a partnership will want a big slice of the action.

I know this is a speculative stock however I believe management should at least be accountable for some of the poor performance to date. : Poor drilling execution and deviation from planned operational procedures during drilling (their independent assessors words) despite 2020 technology and an enormous amount of historical data being available. The total write off of the Portugal asset because the Portugal government and the people of Portugal did not want to develop the resource (environmental objections) in the first place. Mm!!

Encanna only got the numbers to work at $100+ per barrel in 2014. Then got out when the price of oil sunk because IMO they new the economics failed on their costs at the lower oil prices. ATS believed they could drill at around $10-11 Million/well plus $1 Million for above ground infrastructure per well with the historic knowledge and better 2020 technology at their access. They believe their economics would stack up in a $60+ per barrel world.

The jury is still out as to whether ATS can get the 20 fracking wells done at an economic value. Two out of every six wells done correctly does not prove their concept. To prove that they can drill 7200ft vertical and 7200ft lateral with 20 fracking stages completed on a very consistent basis at $10-12 Million including infrastructure costs IMO is the only way this stock is going to be seriously rerated. Unless we have a $100+ per barrel oil price again (highly unlikely). Forget all the rhetoric about the resource (sure it's there alright). If they can't get the drilling done operationally correct and the costing economically sound the resource might as well be on the MOON. Along the way management might have to take real haircut with regards to remuneration as well. These will be tough cash precious times ahead. The company has not exactly set the world on fire. Covid has had little to do with this stocks demise.

Euroz had a futuristic value of $1ish on this stock just over two years ago. A lot has changed since. Reading and getting to understand the operational performance to date and any future challenges yourself is so important before investing in any entity. A throw away few words on HC with a few likes does not qualify as research. I stress these are purely my opinions and I am open to being challenged by all means. I am concerned as to how enough funds are to be generated to drill enough wells to prove the concept.

Alejandro your research is appreciated despite my different slant on the topic. Can you tell me, what do you mean by "their need to develop Port facilities for export" you referred to?

Cheers