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This was emailed to me a short time ago. It may help a few out.






Several folks have been sending me emails asking very similar questions. Confusion has run amuck!

One person in particular summed it all up with the following simple list.

1. What are the “Insiders” and “big fish” been doing for the past few weeks?

2. After a $5m capital raise why would you guys need more money?

3. Isn’t income from the field going to pay for future wells?

4. Why would I participate in the SPP when I can purchase share on the market at a cheaper price?



I hope that my answers will settle this confusion down a bit. If not I think my email box may implode!

Let me address the trader concern first. - The ASX identifies all traders after 3 days of a buy or sell. It’s a matter of public record. If there are big fish they sure are not dealing with any kind of volume trades and they are not on the trading list. Same goes for the “insiders”. With the share price at this level any kind of serious money to be made would require very large share block purchases. Our daily volume over the last few weeks does not support the insider or big fish theory. Anyway, the “insiders” have millions of shares in lockup from the IPO that they can’t even trade yet. They are also based here in the United States and therefore by ASX rules are not allowed to participate in this offer.

Now for the revenue question - $5m drills about 30 wells or so. The 12 wells we have already drilled to date will come on line in a single sequence beginning in May and concluding in June. Newer wells will be connected along the way. Here is how the revenue to capital account works. Gas sales from each well will start this month. The operator will initially take 60-90 days to turn those sales into cash payments back to Austin. We are projecting that income from the gas and oil sales will begin to offset drilling and operating costs for new wells drilled around September or October. A bit of a cushion in our capital account seemed like the best way for all involved. Hence the SPP.

Making sense of the SPP - Think of this offer in a different way and maybe you can better understand the value here. The share price drop today was expected but it will not last very long. The letter announcement made today has created some confusion because it lacked a few details. This is contributing to the market reaction today. The SPP may not seem logical today, but indications are that coming production from Park City will make the $.31 price a nice value prior to the closing of the SPP offer at the end of May. The purchase window will be from May 14 to May 30 via the SPP. You will get your official mailer with all the details next week. You will have plenty of time to watch the performance of the company and evaluate the offer accordingly.

Timing – although an order form will be a part of your packet, most people will elect to utilize the electronic process. This will give each shareholder until May 30 to evaluate things and make a decision.