letter to company re gog

Not happy with the potential purchase of GOG shares at 51 cents each. Sent the following off to DLS headquarters and will await a response. Probably wont see it as they only respond when they want my vote lol lol.

Cobby

Good morning

I am a current shareholder with ***,*** shares in Drillsearch.

I have serious concerns over the recent announcement to take out an option to purchase Great Artesian Oil & Gas shares from BPT.

Surely the company is not serious about entering into the purchase of the 29,000,000 shares in GOG at 51 cents each?

These shares are trading at 29 cents at the moment which is way below the exercise price of 51 cents. The market has set the price at 29 cents and the company is considering paying 22 cents a share above this price. For the life of me I can’t see the logic in that. If the company wants Great Artesian Oil & Gas that bad why aren’t you purchasing shares on market or looking towards a takeover at a price closer to the 29 cents as the price of oil heads down towards $50 a barrel?

If after due diligence you decide to exercise the option to purchase Great Artesian Oil & Gas shares, where will the money come from for the purchase or do you intend to further dilute shareholder value by issuing more shares in Drillsearch? I would like to refer to the Chairman’s address from 30 November 06 where the following comment was made, which indicates that a large amount of cash is to be used for the current development program.

"While our development programme will add to the company’s revenue, profitability and reserve position, it will place significant demands on our cash. We expect the south/west Queensland projects, obviously dominated by the Cooper Oil Project to require capital expenditure during calendar 2007 of $15.1 million. This will be funded by our loan facility and net operating revenue."

As can be seen from the above comment considerable cash will be used during 2007 leaving little for the exercise of the call option at the extremely high price of 51 cents. The current share price of Drillsearch has been under pressure for some time and many shareholders are sitting on paper losses after purchasing at higher prices. I really don’t think the current price of 14 cents a share reflects the true value of the company but with the announcement of the call option in Great Artesian Oil & Gas I can understand why Drillsearch’s share price has not moved into the 20’s by now.

I look forward to a response from the company on this issue.

Many thanks and kind regards