proactive investor presentation - report

Hi guys

First off let me stress that I have not held this stock very long and I’m by no means fully conversant with the technical jargon. 2nd this is written following a Cascade or 5 consumed during the State of Origin. There were a number of other existing shareholders at the presentation, so if any of them are HC members (and I’m guessing a few were) please feel free to correct any omissions or errors, or add any impressions to this. Just don’t shoot the messenger!

Presentation was by Rick De Boer, GDN’s chief geologist. It was predominantly a re-statement of the technical info that has been released up to now, with perhaps a few extra slides I have not seen previously, but they are pretty esoteric. Not sure how to scan them and post them on HC???

First bit of new info: “Testing and fracture stimulation of Paradox Basin to commence on 25th of June 2009” That’s tomorrow gang!

His other comments I picked up on (in no particular order)
• The last 1,000 ft of drilling to Leadville proved too difficult and would have been too expensive.

• Total gas pay zones: The previous assessment from a London based company was 210 ft whereas the current US based co assessment is 95 ft. “My belief is the real figure is somewhere in the middle of those two figures”.

• Ongoing operational costs during the drilling phase run to between US$80k – 100k, per day, however operating costs during the “completion phase” are considerably less than that.

• The porosity may actually be better than had previously been thought. “The consultants are saying it is not what they would call tight”.

• Assuming well is commercial they are targeting production to commence late August. The drill rig IS still on site at PB2.

• He would not be drawn on the specific amount of the Weatherford settlement but he characterised it as “a substantial settlement” I could not help noticing he seemed pretty pleased. He did confirm it was sufficient to complete the testing/fracturing and well completion program.

• Asked about connection to the Williams pipeline, he confirmed that cost is paid by others not GDN and that verbal approval has been gained for this already.

• Asked what the likely timeframe for receiving the revised reserves report from RPS he said he’d be pushing them to get at least the initial volumes by next week.

• Asked about the recent drop in the Share Price, his view was it was a result of substantial day trader activity.

• Asked about future well permits, he said they are planning to start permit processing within a month.
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Economics Slide Data

Drilling and completion costs/well
Recoverable Reserves 7-15 Bcf
Drilling costs $US 7 m
Completion costs $US 1.5 m
Total 8.5 m

Cost per Mcf $0.56 to $1.21

Indicative economics/well
Gas Pricing (USD) $5.15 mmBTU

Heating adjustment
1115Btu/mcf $5.74

Gas gathering, taxes
& transport $1.40

Net $4.34

At 4mmcf/d well pays itself off in 1.4 years (22% ROR)
At 2mmcf/d well pays itself of in 2.7 years (10.5 ROR)
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So there you have it. If I may add one personal observation, for a "marketing presentation" it was fairly low on rhetoric and apparent spin. Comments welcome!

Cheers