E-mail reply received to Questions and comments I raised with...

E-mail reply received to Questions and comments I raised with Kenny.

Thank you for the feedback. We now know that we have a great well with two oil reservoirs and that both are heavily saturated with oil. The Benbrook sand is virgin, meaning that initial production rates will most likely be above our higher end projections. The Armostrong sand will probably match the original projections that were made within the first market announcement. The two reservoirs together represent an estimated 240,000 recoverable barrels of oil. With this knowledge we will most likely bypass the flow tests and go straight to production. It?s there and it?s big!



With that said let me take the time and explain what?s next. We still have some work to do at the well site location prior to retrieving the oil that?s in the ground. Unlike our shallow wells we can?t simply drive the portable rig off and then bring the well online. We will complete the installation of production casing sometime this morning and then the entire rig platform, rig, circulation systems and all other support infrastructure will begin to be taken apart and moved out of the location. That step should take about three days and then we will bring in the work over/completion rig.







While the current equipment is being removed from location the operator, reservoir engineers and the geologic team will start the process of bringing the appropriate sized production infrastructure for the location. I?d expect that the team will have developed the more formal timeline sometime early next week. Next announcements to the market will be driven by each of these key major milestones; Production casing completed, removal of all current drilling equipment, workover rig arrival, storage tank battery installation, heater treater, etc. etc..



The hard part is now over mate. We know we have a good solid well with considerable reserves. I?d guess that we will have it on production to sales sometime between three to four weeks depending on the weather. After taking the initial risk here is what we now know:



? We know we have a lot of oil

? That the operator now has their 15th successful well out of 16

? We will be a part of the next two wells they drill this year

? The service companies available in the area are the best we have seen in quite some time

? Austin Exploration and Aus-Tex Exploration have now officially been re-born and the market doubters have been squashed

? We can now move forward on additional projects

? And most importantly, we are very grateful to our shareholders for hanging on while we arrived here. Still much work to be done and don?t forget about PEL105 my friend!



I?d anticipate that shortly after this first well is on production we will begin the process of setting a date to drill the second of the three planned wells for the Natchez Mississippi area. What we now call ?the Armostrong?



Here is one more picture of test guys while they were at our well. I just love this stuff!







Cheers,

Kenny Hill

512-423-2547