Price target unchanged @$1.44 - reserve based facility...

Price target unchanged @$1.44 - reserve based facility announcement "shortly"

Key points:

"RFE has released revised independently certified reserves (after royalty net) for its Mississippi Lime asset as at Dec 31, 2012:

·         1P – 2.6mmbboe from 12 net well locations - a 136% inc. from Jun 30 (1.1mmboe)

·         2P – 3.5mmbboe from 17 net well locations - a 65% inc. from Jun 30 (2.1mmboe)

·         3P – 9.6mmbboe from 41 net well locations - a  49% inc. from Jun 30 (6.5mmbboe)

·         1C – 49mmbboe net from 207 net well locations (not reassessed)

·         TOTAL 58.5mmbboe net from 248 net well locations

The proven producing, 1 and 2P reserves numbers are material as they will provide RFE with access to reserves based lending facilities; we expect announcement shortly.

RFE has 75,000 net acres; thus at 3 wells per 640 acre pooling unit, this could result in RFE drilling +300net wells.

This does not take into account the potential for downspacing (Range resources are planning at 5 wells per unit) nor the underlying Woodford shale development.

Average liquids content is assessed at 77% vs the average of 80% oil achieved across RFE’s wells to date – this is a testament to the oily nature of RFE’s lease position being located east of the Nemaha Ridge.

Investment Thesis

RFE is showing steady inc. to development pace and efficiency at its  Big River Mississippi Lime asset.  RFE is in a strong financial position which will improve with growing associated production/cash flow and  capital efficiencies through lower capex and spud to first cash receipts. Beyond which, upside to the RFE story lies with improved resource recovery through development spacing and Woodford oil shale development.  Buy"