stairway to heaven

Full value at Paloma is going to be a series of steps up.

Yesterday was the formation of our base which adds to our producing NSA field.

The value of a discovery(s) changes as particular milestones are reached. Likewise the risking equation moves from as low as 5% probability of success to 100%. This also changes the value in a positive manner.

Similarly value may be added for additional areas as yet unassessed or undrilled.

All of these value add features are present at Paloma.

Heres a quick summary of some of the value add steps as I see them (not necessarily in order).

1/ Initial contingent resourses defined largely as a result of PD-1 data. (ie yesterdays announcement)

2/ Possible additional contingent reserves from P-3.

3/ Areal extent of PD-1 reserves potentially extend to PD-2. Possibly a doubling of resrves.

4/ Production flows established in some zones (increases $ value assigned to field.

5/ First commercial production begins (further increases $ value assigned to field.

6/ So far the western area has only been penetrated to about 40% of its 4km length. There is considerable scope for areal extension in the western zone alone if geology remains similar through the entire zone. Likely to be more Paloma Deep type wells.

7/ Eastern Lease boundary so far untouched. No pre drill targets at this stage. With a similar size to the wertern acreage there is potential for much more resource yet again.

Steps 1-5 are effectively a work in progress, with some completing soon and the later maybe up to 6 months off.

Steps 6 and 7 possibly won't be tackled until Paloma production is cash flow positive for more Paloma development.

Value will be further added with each well that goes into production in recognition of the cash flow Neon gains.