italia, page-5

Soothsayer,

I too would like to see the Italian blocks drilled.

I contacted KEY in January about the Borsano permit as their drilling program indicated they were to obtain a seismic towards the end of 2007. The response I got was that they had found additional information in the public domain and from the previous owner of Borsano which they were analysing to see if further seismic was required.

From posters on this site, the indication is that the wheels of regulation move very slowly in Italy hence gaining permission to drill takes time, once drilling is done if any commercial deposits are found it then takes time to gain permission to turn the discoveries into commercial drilling, etc. Thus chewing up capital whilst waiting on a return. I understand that Ellyard got burnt and frustrated this way in West Africa, so wishes to avoid unnecessary delays with KEY.

My view is that KEY are keen to get the runs on the board (and money in the back) from Tanzania, and possibly Suriname. Then put some of that money into expanding exploration/commercialisation of Tanzania with the remainder into exploring/drilling the Borsano permit. I expect one well to be drilled in Borsano in the next 3 to 6 months with further drilling once the dollars start to flow from Tanzania (or once the options are converted in the next 12 months, expiry date is 31/3/09).

With the offshore Italian permits, KEY has indicated that they are exploring farmin opportunities, thus letting others pay for the initial drilling programs in Lampuseda, Elba and/or Sardinia. The offshore prospects are more expensive and higher risk than Borsano.

The above program, if it works, enables KEY to avoid any additional capital raisings as it allows for exploration to be self-funded from previously made discoveries and farmins.

Remember the initial investors in KEY did not retain a large position when KEY was floating, instead preferring to allow others into the IPO, they sold over 70% into the float. So I am sure the directors, etc would prefer that their holdings are not diluted overly much from their current position.