Hi all, I've been beavering away in Excel and come up with some...

Hi all,

I've been beavering away in Excel and come up with some interesting numbers, so I thought i'd issue them for comment.

1. Last quarter (Q4 2009), TEX's share of production was 28,300 mcf and 3,369 bbl oil and revenue was AUD$204,000. Using these numbers, TEX's realised gas price was an estimated AUD$2.50 and oil price AUD$40. This compares to the average (AUD equivalent) WT crude price of AUD$80 and HH gas price of $5.00 for the same quarter. Suffice to say, TEX appears to pay a lot in royalties (50% of sales).

2. Production from Snapper 1 declined by 35% in Q1 2009 and has never recovered - in the preceding 12 months, production had only declined by 15%. Its interesting to note Sn2 was recompleted (presumably to the Hackberry A-1 sand) once production suffered a similar decline in production in Q2 2009 - does this mean a recompletion is on the cards for Sn1 some time soon? As far as I am aware, Sn1 is still producing from the 4th Marg Tex (1.8m net pay) and is now only generating $25,000 revenue for TEX per quarter. The next zone is 3rd Marg Tex (5.2m net pay), if this too is gas bearing and the reservoir is of similar quality to the 4th Marg Tex, this zone could potentially produce at an initial rate of 4 - 6 mmscf/d (= 5.2m / 1.8m x 2 mmscf/d), generating AUD$225,000 AUD337,500 revenue for TEX per quarter.

3. Production from Snapper 2 has declined rapidly from (what I assume) the Hackberry A1 Sands production in Q4 2009 was 4,222 bbl oil, down from 8,525 bbl oil in Q2 2009. Based on the production decline to date, I estimate total reserves in this zone are in the order of 45,000 bbl (20,000 bbl already produced) and that production in Q1 2010 will decline to just 2,275 bbl oil (30 bopd). I could be pleasantly surprised, you can tell me I'm wrong on 30 April! The good news, the remaining potential in this well looks very similar to Sn 1, with hydrocarbons in 3rd and 4th Marg Tex, Camarina and Marg Howie).

4. After the reading some information released by TEX last year on East Chalkley, I have come to the conclusion that TEX cant afford not to proceed with PP#3 and PP#4 in the very near future (Q2 2010 if you believe the last quarterly report). TEX's overheads far exceed revenue and they need the extra production $$$. I estimate (based on TEXs production profiles) these wells will deliver 5,000 bbl oil per month each for the first year, generating a combined AUD$400,000 per quarter (double TEXs revenue in Q4 2009).

In summary, if TEX can somehow afford to fund PP#3 (200 300 bopd), PP#4 (200 300 bopd), Beyt-1 Sidetrack (1,500 bopd, a recompletion on Sn1 (4 6 mmscfpd) and a successful refrac of Hwy-71 (1 - 2 mmscf/d), there is significant potential for this stock and we're in for happier days ahead. Given TEXs past ability to convert resources to reserves to production in the past, I have every confidence in them doing so with these opportunities, its just a matter of when and with whos money!

Cheers
Norton