disappointing result, page-9

re: directors ramp future Well put Graham and Stoss. This was a better result than the quarterly would have led us to believe and considerably better than the recent months comments on HC would have you believe.

Putting on my accountants hat(has'nt been needed for years) I closely scrutinised the half year financials and came away pleased that the company is in good shape. I particularly like the trend in income.

It seems that the additional costs that have upset the market ie write offs at China and accellerated depreciation are not understood by the market. These costs are regular occurences for oil/gas companies engaged in exploration and production. It is common across most of Aussies oilers. Look at what HDR has had to write off in its efforts to go forward.

Similarly,poor reporting is not something PSA has a monopoly on.

It was interesting to read on page 14 of the report that compliance with IFRS beginning 1/1/05 could avoid the WC depreciation scenario. With independent reserves auditors being overly cautious now days it has led to a significant jump in the practise of early depreciation of productive assets. This creates a great cash flow benefit to the effected company but upsets the Inland Revenue people as they at least see their tax defferred.

In future depreciation is to be tied to actual field decline, not audited reserve figures.(It will be interesting to see how this works in practise)

The other thing that was interesting was the commentary on Beibu Gulf. I quote " the jv is presently reviewing development economics for the 12.8.1 and 12.8.2 oil fields and the exploration potential of the area in the vicinity of the 6.12.1 oil discovery".....is it just me or does there appear to be some possibility of life at Beibu Gulf after all?