Reply from Gyu Goudy

The Board chose to bring in a cornerstone as we wanted to bring in long term support, something we have not had before. We receive funding over 6 months and Lanstead can not sell one stock for 2 years. We could have taken the previous route of completing an institutional placement but we have always had the problem of these types of Placements being short term investments and selling the stock quickly after receiving their stock. We chose this as we have solid news flow coming up over the next 6 months that would feed such a structure well and maximize funding arrangements for the Company. We also felt that bringing on multiple investors after a consolidation was not the right thing. We are fortunate to have brought in capital when we did as raising funds in the current climate would have probably been impossible.

Unfortunately, the collapse in the oil price has taken its toll on our stock price – It could not have happened at a worse time on the back of our consolidation. We didn’t predict a 40% drop occurring when the Board made the decision to consolidate. It would also appear that Halcon’s 70% drop in their share price is working against as well. We seem to track their stock price as we both reached our 12 month highs and lows at the same time.

The Company is healthy, has strong cash flows, world class oil properties has implemented a range of austerity measures and will survive these tough times in the oil industry. Our upcoming quarterly will be our strongest ever cash flow statement and this should be evident to the market.