operational report, page-12

Cloak,

Some facts

1. I've not moved to sell recommedation yet - I'm on none from hold with a negative outlook pending the Q1 report.

2. I don't do anything other than trade stocks direct(buy what I can afford to buy and max the other way is a zero holding), no CFD or any other such instruments and don't short stocks.

3. Sales revenue of $30M is not enough, once you've taken off the cost of those sales!! or are you simply wanting to ignore that? The Q1 report will show just how much free cash-flow is being generated while exploration expenditure is at near zero.

If your not drilling any wells this year then you're going to lose the 1000 acres at Southern Star which require continual drilling. Which would mean a nice loss for shareholders.

A 10% coupon on the loan notes is far too rich, just like the $590,000 loan to the CEO that you didn't put in your list.

Robinson well will take over 2 years to reach payback, if it were to maintain current rates of production for all that time which is extremely unlikely. It's a C- well.

4. Debt to be repaid this year $30M where's that coming from? Yes they can roll-over the loan notes pay another 10%+ rate of interest etc on it, that leaves $16M to find.

Current production level's won't be enough to fund that, not when you've large salary's and bonuses to pay plus other expenses.

5. If you think the whole of NS or BS are currently viable, then I think you might want to go and see a doctor. Yes Cozart 19 has been a really good well thus far, the rest haven't. No rush to try Debnam .... hmm wonder why???

At the moment there backed in a corner bigtime.

LOTM