getting out of a hole 101, page-33

Hi Patience, I take your point, thanks for the clarification.

Several have suggested that RFE should or should have JV'd some or all of the acreage to reduce the need to drive so hard on the HBP strategy. At the end of the day, scaling up the development of this acreage will take funds, whether going alone and obtaining funds via a combination of debt and equity, or JV'ing. Either approach will see dilution - going alone will result in higher debt and probably more equity issued at some point. JV'ing will dilute the company's WI by whatever proportion is farmed out (which would probably not be a small %, more likely something like 30-50%). There are other pros and cons of each approach.

As stated a few days ago I remain comfortable with going it alone pursuing the HBP strategy - the results will come and imo the accumulators know it.

By the way I think at level its ironic that the company is being judged harshly for being ahead of schedule!

As for cashflow, the company has an average 70% WI overall still I think so actually the spend on 13 wells would be 70% x $39M which is about $27M, but it depends on whether the 13 wells scheduled for this quarter are operated or non operated where the WI could be a lot lower.

They stated in the quarterly that they would conserve cashflow, and are pursuing the RBL BB upgrade, so my understanding is they know they are ahead of schedule so they can afford to take the foot off the pedal a bit and let further production growth from recent wells kick in and do its job.

Having said that, Knackered imo they cant just keep borrowing even of the BB is increased, there will certainly be a certain gearing ratio that they have to maintain. The key question is can they hold off issuing some more capital at a low SP - i dont know. What I do know is oilers have a habit of raising equity sooner than expected, so I am prepard for the possibility of another raising this quarter.

Cheers, Sharks.

PS: Nice to see a bounce in the SP today.