patterson summary

Still calling a sale of $US1+ see below

"Low Gas Prices Lead to Lower Reserves Outcome

Investment Highlights

· The highlight for the March 2009 quarter was the preparation and subsequent provision of an updated reserves report providing some insight into the assets. The reserves figures were adversely affected by the current US gas prices with a total 2P figure of 225bcf. On the positive side the figure was comprised of a large 1P reserve (139bcf) and the report supported commerciality of Clear Creek at $4.04/mcf and was stress tested at $US2.50/mcf.

· Field operations focussed on sales process. Due to recent weather conditions and gas venting due to well testing requirements, little sales revenue was achieved during the quarter.

· Debt facilities under re-negotiation. We anticipate MAE are looking to roll over debt to facilitate an extended sales process.

· Sales Process Commenced. MAE has declared the data room open and are confident of considerable interest in the assets. Due to the low gas prices and commissioning issues production is not at a sustainable level, leaving any investment in MAE a play on the outcome of the sales process. Hence, there is a lack of transparency from our perspective, with the outcome hard to predict in the current market. As such we maintain our HOLD recommendation and simply highlight some facts:

o MAE have recently certified reserves of 139bcf of 1P and 225bcf of 2P, economic at $US2.50/mcf and highlighted the long term value of the assets with the 3rd party recoverable resource estimate of 2.4-4.3 tcf.

o Previous transactions in the US have averaged around US$2.5/mcf with the most
recent adjacent sale well above this figure. While it is not possible to predict the price, a value of US$2.2/mcf for proven plus 50% for probable reserves would imply a value of ~US$1/sh.

o Limited production and an expiring debt position of $50m increases the investment risk.