new oil discovery, page-13

Exploration Notes to the recent release

1. They have cased the well - this is an expensive proceedure (~$1 MM) so this is not done for hype and only done when the companies believe they have a commercial producer.

2. The well will be flow tested and put on production with a work over rig. There should be an announcement of timing but it would be in the new year (they will probably drill Airacobra first and do the workover of hopefully both at the same time).

3. Murta formation - the upper oil zone in Fury produces to the west at VPE's Mirage field (and in many other areas). The unknown here is flow rate since the Murta has variable permeability. Anything over 100 bopd would be very economic - 30-100 would still make money but be more dependent on oil price.

4. Permian Oil - the thinner oil zone announced in the Permian should be tested too and if the rate is higher they may drain this zone and then turn production over to the Murta. Most of the Permian hydrocarbons are gas but as with a lot of basins in the world, oil is found at the basin edges when dispaced by the later generated gas (I will not bore readers with the physics).

5. Reserves - I would not expect either company to release reserve numbers until the flow test is done. This would also be the time to announce an appraisal well if it was thought that the field needed more drainage wells.

In summary it looks like MHL has a very good chance of generating some revenue.