sleeping giant., page-5

cheers slura

have started to do some more research after a big xmas.
this post is responding to a couple of doubts raised by Icharus
"Why only raise $5 million and why no announcement about planned drilling just benchtop study and siesmic. Nothing tests a field better than the bit in the ground. At some point you still have to do that and a coring rig is relatively cheap and will provide details about thickness, density, porosity, yield. I know the answer will be we want to find the perfect spot but hey, are we talking about there being a shale field larger than 15,000 acres or aren't we?"

number one- this is NOT a SHALE field, as previously discussed this is horizontal drilling in old fields targeting Mississippian limesone reservoirs.

number two- nothing tests a field better than the bit in the ground. that is a bit short sighted Icharus, there are millions of articles on the net about 3d siesmic, Chesapeake and Sandridge are among the biggest users of this technology, i am more than happy for this study to take place for precisely the reasons mentioned, thickness, density, porosity, yield. If its good enough for the big boys in this new play then RFE should do the same.

number three- why raise only $5 million? RFE still has over $4 million in the bank giving us over $9 million to currently play with.

the 12000 acres we have currently leased is in a NEW play,
an article here explains what the CEO of Sandridge Energy, Tom Ward, thinks of the play.
but being a new play, unlike the Eagle Ford shale, leasing costs are currently under $500/acre.
the original leasing of this land has cost RFE very little, under $6000 so far.
then there is the cost of 3d siesmic, this doesnt come cheap.
this article explains the bonuses of 3d siesmic but also the costs.

12000 acres is approximately 19 square miles, using a cost of $25000-$80000 per square mile this could cost RFE $475000 to $1.52 million is they surveyed the entire 12000 acres.
assuming RFE is going to survey all of the initial acres and using a mid case scenario this will be a expense of approximately $1 million.

then we have the first well cost of $2.5 million

so we have costs of just over 3.5 million to acquire the acres, survey them and drill our first well.

this still leaves us with over $5.5 million operating cash, with on going revenue from EOK sites and money to come in from options at the end of April, i would assume at this point this is all the funds required.

but one paragraph in the recent annoucement mentions a number of proposals have also been received.
"These proposals range from joint venture arrangements
with Company,s active in the play, private funding from United States based groups looking to
participate in the play, to offers of direct equity in the Company from US and UK based
investors. The Company is currently considering all of these proposals."

RFE is currently considering all of these proposals, it appears if the money in the bank is not enough there are already many other possible opportunitys to raise funds.

holders, this announcement was a ripper but it appears as if it will take some time for the market to realise this, 2011 should be a great year but as usual this is only my opinion and DYOR.