neon's future, page-2

Stapleman,

Paloma if successful provides Neon with several options from farm-ins, field sale, company merger,t/o etc.

I think a farm in is a very real possibility given that has been mentioned as an option by the company. Ideally it would not just be about the money but would target a major with local drill and recovery knowledge. Oxy would be obvious for Paloma but so would Aera(Shell/Mobil jv) as would others like Veneco and Berry.

A field sale would be less likely but would certainly provide funds to develop the likes of Paris Valley, NSA Nearfield and Edison.

A company merger seems unlikely as well but given Neon state in various presentations that they are looking at other CA opportunities a corporate play might be possible.

The t/o scenario could be a consideration for Oxy in particular. As number one acreage holder at Paloma to take over the second largest holder would be attractive. Whether they want the rest of our portfolio would be dependent on how it fits with them stategically.

Oxy's reactive presence to our wells and their similtaneous test of the Lower Stevens formation shows strong interest in our results to date.

Oxy similarly are likely to be interested in the latest Vietnam 3-D seismic which by all accounts is very high quality, which (imo) could lead to a resource upgrade perhaps similar to PVD this week.

For me right now its about completing the Lower Stevens test flows.

The sp is under pressure now as a result of the CR/SPP and imo the fact Paloma has taken so long many have lost interest in this project and are not counting it in their value considerations for Neon.

A good revitalization will be confirmed stabilised commercial flows at LS in PD-2 and the resource/reserve implications that would infer.