Well, that's quite a list of achievements for a well that is not...

Well, that's quite a list of achievements for a well that is not commercial, cash neutral maybe,
but not commercial. Glad they didn't list their problems over the last 3 months in getting to this stage.

The way forward would seem pretty clear to me ;

1. 77H during water recovery is EXPECTED to flow approx 0.7mmscfgd and 40 bopd. I think this is the
BEST you could expect here. The well is damaged-- incorrect casing, fractures too closely spaced,
poor pressure etc--I doubt whether they can get close to 90% of the water out ever. It will flow like a
3rd rater. Factor in 40% decline rates and Oilex's 45% share and you have a well that delivers 65 boepd
to Oilex.  They will net about 35% of this after tax, royalties, admin etc so about 20 boepd. Cash neutral
indeed but 15 years to pay back our share of this well.



This is a graph for you Joatmon, if you fail to understand decline rates. The Marcellus shale which we
now liken ourselves to after references to the EFS early in the piece and the Montney shale in Canada more recently shows about a 40% decline rate after 1 year. Wet wells decline even more rapidly. The Marcellus
shales showed about 450 mmscfg recovered in the 1st year or about 1.2mmscfgd declining to approx 250
mmscfg after 2 years or 0.68mmscfgd. Still declining further every year thereafter, down to about 100mmscfg
after 5 years or 0.27 mmscfgd. That's still ok in the Marcellus where total well costs come in at about $6m--
after about 2 years you have $3m back@ $4mscfg in the US. Probably about 5 years to recover the cost of
the well and 15 years thereafter generating about $1m per year gross revenue. About a 20% ROI over the
long haul at $4mscfg. The decline rates of 77H {if no further improvement on figures given} would see us
cash neutral from the start but 15 years just to recover our share of the cost of this well @$8mscfg.

"Range Resources “cracked the code” in the Marcellus with Well #4 when it achieved a flow rate of 3.2 MMscf/d"

Mmm, so what are we up to now to crack the code? Well 2 after the dismal failure that was 76H. Will well 3
in 78H crack the code or do we need another go with 79H? Therein lies the big elephant in the room and even
if they manage to crack the code by getting it all together with 78H, there still remains the unanswered question
of ultimate EUR and the commerciality of the entire Cambay field.

Who knows, maybe they can eventually get there, maybe the Cambay is a good basin conducive to horizontal
fracturing, maybe it is commercial.

The Tails are now offering 20/1 leverage against historical averages of between 5-10 times, and with good
reason. It will be a "white knuckle" ride to get a definitive result on 78H prior to SEP15. We will not get a result
from this 2nd rate production test until early December. Then allow time for the dust to settle, the inevitable
CR, government approvals, forward contacts and equipment and where do we see 78H spudding, let alone
getting results from a production test? It took 1 year previously from the budget being approved and long
lead items ordered on 10/4/13 for 77H to spud on 7/3/14. That whole process from 10/4/13 until now and
still no production test. Best case scenario for 78H would be spud around June 2014 {6 months v 1 year
to get their act together} 1 month to reach TD and with an absolute trouble free run, production test around
SEP/OCT 15.

The tails for mine are toast if previous time-lines are any indication, happy to have got @0.005 in the end.
The only way this can change is if 77H surprises on the up-side {which is highly unlikely for mine, the well is
damaged and will perform like a 3rd rater as all compromised wells do} AND they can actually spud 78H
well before June 2015, allowing some down-time for even a few problems down the track to arrive at a
TRUE production test.

For whatever insane reason, I am still interested in this play. I will buy the heads once all the dust has
settled and the CR is out of the way and we are definitely about 1 month from spud. Then sell them
before a production test is/can be initiated. They have proven they can drill to TD, complete fracture
operations successfully etc but not arrive at a true PT or confirm commerciality of the Cambay Field.
Present management inspires little confidence that 78H will be the one that cracks the code. I wouldn't
touch the tails with a 20 foot barge pole.

GLTAH