Ladies and Gentlemen,Like the rest of the share market, PYM is...

Ladies and Gentlemen,

Like the rest of the share market, PYM is travelling a lot lower than a time before. Although I am currently not a holder but I follow PYM reports as was intending on jumping back in at some stage in the near future.

Upon reading the latest quarterly report I have some concerns that I’d like to share with current shareholders and potential shareholders. Looking at ‘Page 8’ of the quarterly report we see operating cash flows. My concern is not in the exploration and production components as I accept this is the stage the company is at. My concern is more with the increasing administration costs and falling revenue components.

We have operating revenues of $360,000 for latest quarter, yet administrative costs of $491,000. Now just to clarify these amounts do not taking into account the $2.5mil costs for exploration and production, merely the administrative component of running the business.

I could certainly understand these results in the early days of a company however PYM has been operating for over 18 months now. I would have expected from the business plan of producing from low risk wells that the administrative components would be self-sufficient after 18 months and that the capital raising would only contribute to exploration and production.

Compare the latest quarterly result to those released fifteen months ago and twelve months ago:

September 2006 quarterly report – $330,000 (revenue) & $228,000 (administrative costs)

January 2007 quarterly report - $452,000 (revenue) & $379,000 (administrative costs)

January 2008 quarterly report - $360,000 (revenue) & $491,000 (administrative costs)

In both the two earlier reports the revenues far outweighed the administrative costs and the company was self sufficient aside from drilling and exploration. Since then the revenues have dropped 25% since twelve months ago and administrative costs have doubled in fifteen months.

It is worth also noting that the price of oil between October 2006 and January 2007 was between $50 & $60 per barrel. The price of oil is now over $90 per barrel so therefore PYM should be far exceeding the previous revenue amounts just on the same production. Why aren’t they? What about all the drilling, casing and producing wells that were to or have been built over the past fifteen months, where is the income from this? There has been close to $10M spent on doing these functions however the revenue has dropped. Over fifteen months I certainly would have expected at least a couple of wells to be producing to raise revenues

This is not meant to bag the stock, as it was my intention to re-enter at some stage. I am merely raising some important questions to those with more experience before I do re-purchase. From an accounting point of view it does raise some important questions. Cucucu do you have any thoughts, can you help me out? I’d suggest that the current share price may well be reflecting these concerns.

I am the Iceman!