This is great info - MD letter copied from another forum in...

This is great info - MD letter copied from another forum in response to a shareholder's email -

Seems there is a lack of understanding in the market about the value of the deal on the remote Kyrgyzstan acreage. Please read the attached explanatory note which will clear up these issues. A run today was preceded by an unsubstantiated rise during the last tow weeks on NO news - I guess there is some larger investor that wanted to see the rise (to 6 cents) only to take it down.
We still have the assets, the announcement has been endorsed by many oil & gas experienced brokers....

Dear Shareholder
Thank you for your email.
While the company is concerned with the market reaction to the
announcement, the facts appear to be misunderstood.
Given the fact that the projects in the Kyrgyz Republic are frontier in nature,
exploration and possible development is high risk and also carry potentially
high development costs. While the company is enthusiastic about the potential
for the acreage, there remains a high risk profile. By bringing in funding, it
allows the company to continue to aggressively explore the projects without the
impediment of limited capital.
What the HoA means is that the projects will be explored aggressively without
contribution of funding by the company. This is carried through to production
of oil. You will note that the HoA isolates the on ground component of
exploration. This means that there is a minimum commitment to exploration via
seismic and drilling, without being diluted by other costs, some of which can be
extremely high. Given the fact that there is unprecedented demand for seismic
survey teams and drill rigs globally, there may be a need to mobilize this
equipment from countries remote to the Kyrgyz Republic. If this is the case, it
could potentially cost millions of dollars, dramatically reducing the amount of
work in the field, which is the whole point of exploration By cocooning the on
ground component and with the JV partner responsible for costs associated
with mobilization, demobilization, as well as operating and administration costs
(plus a sliding operator抯 fee), maximum benefit is delivered to the projects
themselves, not eroded in incidental costs.
While some investors feel that 15% free carried interest in the projects is not
significant, may I give you a couple of examples.
If there is a significant oil discovery made, development costs could be extreme,
with construction of pipelines, possibly as far away as China, adding massive
capital costs. MHL is protected from these costs via its free carry.
An example of a 85/15 regime is he oil and gas industry in Indonesia which is
amongst the largest in South East Asia. Under government regulations, foreign
companies are only entitled to own 15% of oil production, with the remainder
owned by the Indonesian government. Costs and taxes are in the 15%. Despite
this, many of the largest oil companies in the world successfully and very
profitably produce oil in Indonesia, despite having to carry all exploration and
development costs through to production.
Monitor Energy Ltd, has a very experienced technical and management team
that is focussed on doing smart business, not business as usual and as such will
conserve its capital for new projects, in line with our capabilities and capacity,
with near(er) term production, some of which are under review at present.
Sincerely yours,
Jon W Roestenburg B.Sc., GBQ, MLM,