need some direction, page-2

the Q4 report tells us they had A$2.9m at the start of Q1, after accrued costs carried over from Q4. They've also said costs in Q1 should be minimal, being largely internal admin and development cost - which will have been only the pilot development work and maybe some consulting costs for evaluation work, with all drilling and fraccing ruled out by weather.

Admin costs in Q4 were A$500k, and safe to assume they'd not spend another $500k on the other costs.

So we should still have $1.9m left maybe a bit more at the start of this quarter.

Total exploration and development costs in Q4 were A$5.4m, so we'd manage only a fifth of that before running out of cash. Initial pilot program revs were expected to give around break-even over costs for that program, so no extra from there.

Q4 drilled TB08, TB09 drilled logged and cased, SJB03 drilled logged and cased, perfed and DST performed and flow testing on TB04, fracced and cleaned up after plug problems. TB02 was worked over and flow tested. So three wells drilled and cased after testing, one fracced and cleaned up and one work-over.

So by my estimation we will get the pilot going and just maybe get one further well drilled with the money we have for Q2. What may surprise is that our chinese friends were happy to delay billing on about A$4.5m worth of work last quarter, so if they do that again we just might get a lot more work done, as much as last quarter, before we have cashflow problems. And then there are always the friendly chinese banks who seem to be very happy to provide working capital for regionally important projects.

So not sure we are going to see a capital raise in a hurry.

The suggested 2011 program is 3 new wells at Sanjiaobei and frac TB08 and TB09, TB03 and TB06 at Linxing all for expanded pilot production. At Linxing the exciting bit is they think TB03 and TB06 may contain zones similar to the very high producing TB07 so stimulation of those wells could be a very big deal. Also a further two new wells are planned at Linxing, north of TB06.

They won't get all that done in Q2, but I'd be hopeful we get a lot of the fraccing and stim work done, for the pilot development, and that one or both of TB03 or 06 proves to be a big time gass-er. All that may well be possible before any capital raising.

Maybe wishful thinking on my part, but I can't see why that's not all very possible.