jow got it right, page-2

galoc development costs I think we will all find that US$40 million is just the cost of the appraisal drilling at Glaoc and not the full field development.

Why I say this is because if you look at the budgeted costs for other offshore fields they reveal that the US $40 millon supposedly needed to develop Galoc is steal.

For example Cliff Head is a 14 mmbls field and is budgeted to cost A$240 million to develop.

Basker/Manta/Gummy, a much simpler field development using a shuttle tanker and an FPSO, A$130-A$150 million.

AED has budgeted over A$ 100 million for a two well development at Puffin, also a 14 mmbl field.

The TAP JV (Tui/Amokura/Pateke) offshore NZ is budgeted to also cost over US$150 million. It is a 20-30 mmbl field with four development wells.

And so on.

SoI think we all need to think a little harder about how much Galoc is going to cost to develop particularly in a part of the world where there is little established local infrastructure, equipment or expertise.

Rig costs are going to be high as the developers not only have to pay the actual drilling cost but the cost of getting a rig to the location. And basic rig costs have sky rocketed in the last 12 months or so.

We don't know yet what sort of development plan the Galoc Team have in mind but I have seen drawings on the Nido white board of horizontal drilling into the thin Galoc reservoirs and lots of laterals. That sort of drilling doesn't come cheap. Magnolia for example, coming up in the Timor Sea, is a pretty straight forward vertical well and it is going to cost an estimated US$8 million.

So you can see US $40 million is not going to go very far at all.

Nido now has to fess up and tell the market who is putting up the funds, if it is not Vitol and what the money is going to be used for. Don't be surprised if all it covers is an initial field appraisal program.