qtr ann oyt, page-38

Well written SB,

I do have to enquire as to your thoughts on the fact that while they haven't kept up with expected production forecast from beginning last year (2000BOPD) they have infact changed Tack, and are going for maximum shareholder value in a different way:

-Get contract drilling out of the way to free up rigs (downside is less rigs to keep wells open, thus fewer wells and less production)
-Acquire more rigs and leases rather than spend everything on production
-Find someone else to manage production in standard business
-Acquire licenses for targets which could not be targetted using conventional business model (don't forget, if successfuly, big if, they will add production AND reserves)
-Acquire more leases while oil price is depressed and production numbers aren't good as to get best prices

As they have in all of these except one (gulf deal) stated their intention prior to the quarterly report, I don't see why you would be concerned now, rather than back then.

TBH I am happier that they are lower production now, whilst oil price is lower, and be in a better position next year when oil is back on the up.

Just to give you an idea, 2000 BOPD at current prices = 77million per annum,

2000 BOPD at beginning this years prices = 93million per annum..

Will they get to 2000BOPD next year? I don't know, but I'd bet Gulf, if they sign on, will be pretty sure they are able to otherwise they wouldn't get their moneys worth.