The quarterly report provided a little bit of assurance on a few...

The quarterly report provided a little bit of assurance on a few things (cashflow) but takes away from others (forecast capex spend commitments).

Cashflow from SM71 - $1.1m per month = $3.3m per quarter
Cashflow from Lightning - $1.0m per quarter
Total operating cashflows $4.3m per quarter from production
Staff and head office costs should be now $0.5m per quarter leaving net of c$3.8m for steady state finance repayments etc excluding any contribution from GC21.

What does this mean? If we manage to get down to a no capex environment...we should be relatively safe to be able to pay down the $2.5m amortising loan due each quarter.

Clearly there is a bit of capex to be spent yet but it's already committed (we all knew that). However, i think we are fairly safe for now....even though the rights issue will be very undersubscribed. I kind of like it that way. Management will need to treat this scarce cash very carefully.

The big unknown for me is still the Hilcorp program. I doubt Hilcorp want to drill these in the current environment and neither will we....hopefully they can get delayed at the very least.

If we can get to $40 oil, hedge GC21 with a collar, we will be looking a lot better. Short term, oil looks a tough business...thank god GC21 isn't coming online this quarter. 6 months should look very different IMO.

There is a bit of upside to natural gas if oil production in the US does fall off a cliff. It was already forecast to fall c5 bcf per day...i wonder if the current environment will make things worse? A doubling of gas prices would be great for Lightning. Still wouldn't pay for that capex sunk though!!