Chomp, page-142

welcome to the share register newbies. I hope you are here for the long term and not just to make 50% over the next week or so. Read up on Jaws. That is a much bigger resource than WE, and I believe has the potential to turn STX into another Santos. But it has caused us a lot of pain. WE has been on our horizon only for the last 18 months or so, so it is a relative newcomer to our portfolio. I originally got into STX on the basis of the SCB back in 2014 @ 10.1, and then I have been buying in more over the last 5 years at prices ranging between 14c and 8.4c - so you can imagine how happy I am with STX now.

At the time I didn't appreciate how difficult the technical challenges at Jaws were going to be, but since then we've had a change of management, who have engaged the world's best expertise in Halliburton. We've had our setbacks and disappointments - the last one as recently as Jan this year with a sudden spike in gas pressure that blocked the hole and needed cleaning out. But as a result of that, we've learnt a lot about how to important it is to gradually depressurise the coals at 5000m depth, and what the critical desorption pressure of the groundwater is at which gas starts to bubble out of the coal seams. Now it is steady dewatering to increase the size of the drawdown cone and to engage more of the hugely extensive deep coal formations into the gas production phase. We have accomplished some world firsts with our deep directional drilling. We have had to change our pumping technology.

And another recent setback was when we had our reversal of a decision to grant us an R&D tax refund - this is being challenged by management which will take a while to resolve, but the CBA continues to support us in terms of a loan facility that was extended to STX on the basis of being granted this R&D tax incentive. The SCB/Jaws still remains my hope to turn STX into an oil & gas major in Australia. It has the potential to solve the eastern states gas shortage problem, but will require a lot of careful management and still a huge amount of capital to bring it into full production. The great benefit of this likely discovery in WE is that it can be brought into production fairly quickly with much lower capital costs and generate revenue that can be reinvested into the SCB/Jaws development. Don't expect any dividend income from STX any time soon, but do expect multiple gains in the share price if WE proves up all the way down to the target depth of this hole. And we could get more positive news from Jaws any time soon, which will really put a rocket under the sp - then expect another capital raising to finance more development at Jaws. Remember, Jaws is only a pilot hole, to test the theory of producing gas from very deep coal beds under high ground water pressure. to Fully dewater the vast area of flat laying deep coal beds will require a big number of expensive production wells to be drilled over time.

That's my understanding of the current situation anyway - I hope that helps you newbies understand what you've got yourself into, and you're prepared to stick around for some very significant gains in the future - but there will no doubt be setbacks as we learn more about overcoming the technical challenges in the SCB.