mr lincoln augustus shares thoughts on sapex

his is Mr Lincoln Augustus, first second cousin of Holymagiman.

Dear most esteemed people,

I would like to share the thoughts of our family on Sapex with you. Sapex has three kettles on the fire at the moment, they being

1. Oil exploration
2. Coal seam gas exploration
3. UCG with LNC

1. I feel that the oil play offers the most scope for growth at the moment, albeit at a speculative level, provided that Sapex keeps on track with its agenda. Sapex has completed the seismic survey, and , as stated in its report yesterday, will be analysing data before commencing a drilling programme in December 2008.

While Santos has previously drilled unsuccessfully in the 80s, one has to realise that Santos was basing its surveys on outmoded techniques and could thus very easily have been off target in its drillinng. That will be determined when Sapex does its own drilling, hopefully successfully.

While the Cooper Basin and the Arckaringa basins are geographically adjacent, physically they are a long distance apart. However, they have much in similarity in geology and the Arckaringa Basin is shallower.

So I expect this to be the first report that will affect the share price of Sapex.

2. Coal bed methane is being explored in JV with ESG. ESG have a very experienced crew recruited from Origin.

While a lot has been made about MPO recruiting the BHP team, little has been said about ESG recruiting of people from the Origin team.

As we have pointed out earlier, in another posting, the top 20 shareholders in SXP is filled with directors from ESG. They must have some confidence in SXP to put their money where their mouth is, and that is why Uncle Tobias told Holymagiman to buy his five shares in SXP with his ears pinned back. Hopefully, he will make some money and repay me what he owes me.

This drilling programme is commencing soon, and we may or may not get positive results before the oil drilling starts. However, I think that we will see the good results of the CBM drilling programme only early next year,as there may be a fair bit of de-watering to do before gas flows can be quantified.

3. To me, the UCG programme with LNC is furthest down the track and SXP's price will hopefully be a lot higher by the time that programme starts and UCG comes into play.

While Holymagiman has his jiggery stixs to predict prices, we would request that we are not asked questions as to what the share price will be next week or by year's end. Suffice to say that we are happy that Holymaiman has bought his five shares.

Mr Lincoln Augustus