xxxxxxxxThanks for your email.As we have stated in our recent...

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Thanks for your email.

As we have stated in our recent ASX announcements and in our presentation to shareholders at the AGM (and our road show late last year) we are very busy at all three of our East Oklahoma project areas.

We remain committed to the targets set out in our ASX announcement of November 24, 2009 albeit that we are slightly behind schedule at present (as Im sure your aware the cold weather in the mid west of the United States has seen significant snow falls in this part of Oklahoma and this has impacted a little on the pace of development).

On the specifics for each project area I can provide the following brief points.

At EOK South we are laying gas gathering and water disposal lines in recently permitted right of ways to enable production to be established in wells that are not currently connected to our infrastructure in this area. This is going well (although as outlined above the snow has impacted us a little). We believe we are on track to have this work completed during the March quarter.

At EOK Central we are working to improve on and refine our completion techniques (in wells already drilled) and as soon as its practical do so drilling will recommence. Work is also underway on the construction of our compressor station and production facilities at EOK Central. We should have production established from this project area in the first half of calendar 2010.

At EOK North (as you know) we drilled three new wells with very encouraging results. The locations of these wells were chosen to test the extent and thickness of the shale in an area that is a substantial distance away from other production in the area. We are reviewing the logs of these wells (and waiting for the results of completion tests at EOK Central) before we complete and test these wells. Drilling will recommence at EOK North when this phase of work is finished.

With regard to your comment about 800 plus wells, I would point out the following (which was set out in our presentation to shareholders at the AGM).


Approx 140 wells by June 30, 2010 (we have close to 100 already drilled).

Approx 400 wells by June 30, 2011 (260 in that year)

Approx 690 wells by June 30, 2012 (290 in that year)

Approx 820 wells by June 30, 2013 (130 in that year)


This is a busy schedule but we are confident that overall we can meet the targets outlined in our presentation to shareholders at the AGM..

As you follow our progress you will note surges of drilling activity followed by periods were activity is focused on development (pipeline and gathering system construction etc) and review of results its not all about drilling, continued success requires our attention to all areas of development.

To get a better understanding of typical development timelines you could look at the history of the development of other successful shales in the United States (Barnett, Marcellus, Haynesville, Antrim etc).

A review of the successful operators in these plays will show that the same systematic approach to development we have adopted is the key to success.


I hope this helps.


Regards


David Prentice | Managing Director