Speculation is flying everywhere of 0.5 tcf to 3 tcf with...

Speculation is flying everywhere of 0.5 tcf to 3 tcf with rationales everwhere. At this point, it is impossible for reserve estimates, instead only that either minor, medium or major gas and/or liquids have been discovered.

Directors today sent out a special message: "To help clarify the significance of gas shows and log indications reported in the Drilling Status Report of 9 November, 2006, we refer shareholders to the Company's ASX announcement of 23 December 2005, the Notice of Shareholders Meeting and the supporting materials, including the Independent Geological Report.

I believe that Directors were projecting the message to keep speculation in perspective with the overall picture and as each piece of information comes in, to assess it relation to the overall picture.

Accordingly, I have reviewed these and believe the following key points need to be kept in mind at this stage:

1. The acreage lies in the norther part of the prolific Paradox Basin and contains essentially the same prospective sedimentary section that has produced over 500 million barrels of oil and 1.2 trillion cubic feet (TCF) of gas. It lies on a producing trend that extends from the large Aneth Field to the south to the Great Ciso Field to the north. This is a key producing region and this prospect represents a key structure in this line of producing fields.

2. To the north of Golden Eagle about 16 km is the Greater Cisco Field. It is producing oil and gas from 259 active wells. As of June 03, it had produced 1.9 million barrels of oil and 24.3 BCF of gas.

3. To the south of Golden Eagle is the Lisbon Field 65 km. Lisbon is the largest gas field in the Paradox Basis. It has produced more that 0.76 TCF of gas and some 52 million barrels of oil (54 degrees API gravity) since 1961. Current annual production is more than 13 BCF gas and 36,000 bbl from 24 active wells. Ultimate recovery is estimated to be over 1 TCF.

4. The Golden Eagle prospect is the only documented geological structure in the Paradox Basis that is similar in terms of its structural style and size to the Lisbon Field. The Lisbon Field .... net pay in the Leadville Reservoir is more than 104 metres thick. Net pay to gross ratio is 68% and average reservoir porosity is 6%. Recoveries per well are more than 5 MMBE.

5. The prime reservoir targets are in the Ismay, Desert Creek and Barker Creek formations. Each is underlain by a black, euxinic, laterally extensive shale with potential source rock qualities (the Alkali Gulch, chimney Rock, Gothic and Hovenweep Shales). Barker Creek is expected to be a primary reservoir target.

6. The Nov 13 report makes it clear that there are gas shows inn Upper and Lower Ismay, Desert Creek, alkah and Barker Creek. But the really interest result is the MAJOR GAS INTERVAL in Alkali Gulch - a key source rock. It is is this which I believe has significantly expanded the potential of the find.

7. The significance of Alkali can be further guaged from another comment in the Dec 23 05 reporting: The primary hydrocarbon soruce rocks are expected to be the organically rich Hovenweep, Gothic and Chimney Rock shales, with potential source in in the Alkali Gulch section as well. In reading the report, Alkali Gulch appears to be secondary at that point. But it is the only zone to be reported as providing a MAJOR GAS INTERVAL.

8. The 24 October report makes it clear that by the time the well hit 11,950 feet or 3,642 metres - 700 feet of Barket Creek remained above the Alkali Gulch member - Directors were declaring that production of gas will be obtained from Upper Ismay 9,742-9,746, Barker Creek 9,930-9,960, Barker Creek 10,714-10,765 and Barker Creek 11,016-11,030. And Directors were projecting a quick connection to the gas transmission pipeline which crosses the Golden Eage lease 10KM from the well site.

9. Next stop is Leadville Limestone, which directors keep reminding us hosts the Lisbon Oil and Gas Fieldd, 80 km to the South (in another document the company says 65 km south). The Leadville Limestone hosts the Lisbon Oil and Gas Field which has produced 54 million barrels of oil and 750 BCF gas. The net pay in Lisbon Leadville is 104 metres thick. Net pay to gross ratio is 68% and the average reservoir porosity is 6%.

10. The Dec 2305 report says about the Mississipian Leadville that it should be low in primary porosity but potentially with secondary porosity as a result of exposure, fracturing and hot fluid movements associated with the basement faulting.

11. The Dec 2305 report goes on to say about the Golden Eagle structure that the Missipian closure as mapped is about 2000 hectares with about 300 metres of vertical 3 way closure. The trap is generated by juxtaposing Alkali Gulch shales and slat against Mississipian Carbonates. The fault juxtaposes a thick section of potential source rocks against the Mississipian carbonates in a downward dip, which should be optimum for oil and gas migration into the trap.

12. At 190 feet per 24 hour day, 3 to 4 days to find out.

13. Leadville is now in the Nov 13 report estimated to be 197 metres thick. The Dec 2305 report estimated it to be 244 metres thick with 122 metres of reservoir with 6-8% porosity.

14. And don't forget we are reminded in the Dec 2305 report that Gulf Seismosaur well (Sec. 20, T.21S, R.20E, Grand County Utah) ...wherever that is .... was drilled in 1997 to test the Missiissipian Leadville formation and encountered gas and oil shows from 4160 metres to 4170 metres before failing under high pressure water flow from Barker Creek Formation.

SO KEEP YOU FINGERS CROSSED AND YOUR FEET DRY.

AND AS DIRECTORS SAID IN OCT 24 REPORT: Full assessment of production capacity of reported gas shows will follow drill stem testing at the completion of the well.

WE ARE A WAY OFF YET. BUT THE BIG ONE IS NOW.