Notes from AGM

Was at the AGM… my notes, in no particular order:

- SA govt application due mid Dec, decision mid Jan. Had a number of meetings with ministers and officials. 4 successful applications will each get 6mio. Not sure how soon after Jan decision cash would be released, subject to government processing etc
- Number of independent reports completed on their project now, all the analysis in these reports supports their belief that this will be commercial and they have a substantial resource
- Current configuration will be sufficient to get to commercial rates and prove to market they can do this, then have D&G certify to 2C reserves. 2C reserve of 100 BCF is enough in size to support economic development
- Focus will be to further build around Klebb. Klebb wells pumping at 1400 bwpd, they indicated that this is a comfortable pumping rate (ie don’t feel the need to move to 5th gear) as achieving consistent reduction in reservoir pressure.
- Have additional rod pumps ready, will switch out the jet pumps and put in rod pumps with ability to have downhole gas/water separation. Currently using a rod pump on K1 and that is performing stably (K1 is producing lower bwpd than K2/K3)
- Once they hit that desired gas flow rate, that is material news and will release to market immediately, even though will need another 6-8 weeks of stable flow to get D&G certification etc.
- When talking about the reservoir, said saturation and permeability are at or above the rates that have been previously mentioned in presentations
-Re-frac of K1 in the additional zones only after commercial flow rates achieved.
-Chris Thompson indicated they had a number of manufacture engineers come out and look at K4 ESP equipment, have had some results and reduced down hole temperature by 10%, seeing improvements and pumping away.
-Re appointment of Tony – MC and DW talked about the positive impact he is having and his ability to tap into industry resources and expertise going to be important going forward
-Couple of comments made indirectly about being to insular in the past made me think that this might be a contributing reason why DW is gone. Changed their approach and now very much pro-actively engaging others in the industry
- Recognise that help is required to develop this resource and will do this via a farm in “too large to do on our own”. However all the advice says to do the farm in only after commercial rates have been achieved. Farm in for the PRL and also for PEL 96 both options.
- Suggested that a farm in interest will come from not just other CB players but well beyond. Mentioned that there is concern from the QLD players around their ability to supply the LNG trains. MC believes there is lots of development capital to be tapped into, they know it is there, just want to get to commercial rates first.
- Nothing really new in this but they talked about the gas shortage and focused on Adelaide, mentioned the Pelican Plant needing access to 15-25PJ at year, currently doesn’t have that.
- On the rights issue, MC was pretty candid in his comments. “Everyone’s portfolio is down, we are 12 months behind, SH are tired etc, he hates nothing more than getting up today without any tangible results.” If he had someone coming to him looking for a strategic interest at this point great, but these things take time (longer than 30-60 days) so advice they had was this was the fairest and quickest way to do it. All personally re-invested in this rights issue, not doing this for validation of earlier investments, they are all genuinely confident.

4.5mio a small top up to achieve some short terms goals. I think they mentioned they will now have funding through to Q2 2017 in place.

The focus is very much on reliable consistent pumping at a comfortable rate. If they can maintain this, lots of confidence that the results will come.

My wild prediction: 8 weeks until commercial breakthrough.