further news, page-68

I think you going down the right path -- other than I believe the Net to AKK for its 1P is $22M (no need to take 30% of that as it should already be reflective of the NRI for AKK).

The difference is our 1P is dominated by the PUD piece - 93.5% is Proven Un Developed.

Put on your bankers hat now.

I have $2M in hard asset (1P PDP - Proven Developed Producing). As an AKK mgr I would be saying to the lender and look we are 4 wells "behind pipe" - (some would call it PDNP - Proven Developed Non Producing) about to come onstream which raises our PDP immediately and likely gives further PUDs.

If for arguments sake I say each of those is also worth $2M (which they are not as for example the Currington well we only have about 4%-5% NRI from what I've been able to discover) then we have closer to $10M in hard asset.

As a banker how do you look at a loan - usually LTV (Loan to Value ratio) and ability to repay (so interest coverage and income) which is not much different to a mortgage process. These might be light covenants or quite stringent - depends on flexibility (and probably interest rate because of risk).

So at 75% LTV I would not be surprised to see a first tranche available of between $6M - $7.5M, assuming we are OK on the cash flow ratios required.

As Birch grows 1P so too grows the ability to grow into the facility (estimated at $40M)

Note the PUD locations of 25. So at 30% of $9M/well that says $72.5M required to develop.

This is the sharp end of the business cycle - metrics matter.