Ann: Release of Escrow, page-23

Unfortunately the market doesn't care what the official decline rates are. Have you tried to calculate capex spend cycle based on their current history? It's surprisingly to say the least.

Take the following

Current production circa 4,200 boepd
Guided circa $30m spend needed to maintain production (Freeman said $25-35m on a web call recently)

Q1 capex spend was $16.5m. Wells drilled during the quarter were Pisces #3 (circa 200 boepd) and Gemini #5,6,7 (totalling 300boepd)
Q2 capex spend was $10.4m. Wells drilled during the quarter were Gemini #8,9 (totalling 185 boepd) and Leo #4 (announcement on 1/9 implies this is net 300 boepd as Leo #4 is a 50% interest only)
Q3 capex spend is likely to be around $3m only (it was mostly brought forward pre June). Wells drilled include Pisces #4,5. Announcement on 1/9 implies these total 415 boepd**

** note I based these figures on all the announcements as best I could. Some things I had to back calculate but all look ballpark right (to me at least)

So total 3 quarters of spend is $16.5m + $10.4m + $3m (projected) = $30m which generated 1,400 boepd.

If management are saying they need $25-35m per year to maintain production, then the above implies they're saying they need another 1,400 boepd of new production annually to offset declines. Which on 4,200 equals 33% of new production needed per year. That's materially higher the official rate of circa 20%

Note also that what $30m was able to buy last year, will probably need $35m next year with industry wide cost inflation.

But there's another reason on top of that as well. As much as the maintenance capex forecast is, it could still be a little light on.

You may recall around Christmas time and new years they had trouble getting some big wells back online right as the end of the calendar year ticked over and thus missed their production goal of 4,500 if I remember correctly, only hit 3,800. But by around mid Jan they patched things up and got to 4,300 after bringing the wells back online. So if you ignore this anomaly, they had effectively 4,300 as production rate at 1 January. This was the rate for all wells online that were drilled and paid for up to 31 December, basically the same as current production rate today if I understand it correctly.

This suggests that the expected $30m capex for the first 3 quarters of this calendar year generated NO net uplift in production rate. So is it going to be $40m on an annualised basis? Note however the battery and pipeline upgrade was done mid year - but I think that was about $4m if I remember correctly...

Personally I would rather trust current metrics over decline rates estimated at the time the reserves were booked.

Please everyone do your own research. I am just trying to help.