csiro contribution

The upcoming fraccing of the Blanche 1 well will cost GRK $300 000 - $400 000. CSIRO will oversee the stimulation, and will be responsible for the interpretation of the results, but will not contribute financially

I spoke earlier with Alan Knights, the Executive Director of Greenrock, and he believed the stimulation would be representative for 3 reasons.

1) He said the main reason was that Geodynamics had demonstrated horizontal fraccing, and believes GRK will have similar geology.

2) Secondly, the cores from Blanche 1 exhibited horizontal fractures, though he stressed that this could also be attributed to the unloading of pressure as the cores were removed.

3) Holes drilled by BHP indicated the same fracturing, indicating that if it is due to natural horizontal faults, it is probably a widespead phenomenom

These assumptions make sense, and are likely, but cannot be guaranteed. Until a suitable rig can be sourced, shallow demonstration must suffice.

It is likely the expenditure of $300 000-$400 000, and successful demonstration of fracturing, will add multiples of that cost to the market cap, and lead to further SP increases.

Current cash stands around $1.8 million, with an extra $1.5 million to be refunded by the World Bank. As such, the company is financed for the stimulation only, and further progress will need to be financed, hopefully by a pro-rata distribution.

When asked what the next step would be after a successful demonstration, Mr Knights responded that a well design will need to be made, then a suitable rig found. Final depth for the initial test well will be 5km, through solid granite, and he said target temperature is actually expected to be 190C - 200C. The company is aware that there are huge lead-times on rigs, and he said the most realistic approach would be ask GDY if they can use the lightning rig. I have tried to contact the GDY CEO, but he is busy until tomorrow.

So that is where it stands at the moment. He said that an onshore JV partner was being sought for financing only, as GRK will source the expertise elsewhere.

According to Mr Knights (and I have not heard this anywhere else, and have not confirmed it), PTR will also be trying to use GDYs rig, so this may become an issue also.

Basically, upcoming frac can be viewed as representative, to a degree, and decent results should see GRK move up to a market cap closer to GHT and PTR. GRKOA, as ever, are good value leverage to these events.