Hi HoldersHave not posted much recently as I have been doing a...

Hi Holders

Have not posted much recently as I have been doing a whole heap of investigation work, spoken to brokers, hedge funds, auditors, drilling experts, even David Prentice, and have come up with some interesting stuff, hope this following info will help a few investors/shareholders out there, personally learnt a lot in the past few weeks.

Be warned folks, this will be a long post, there are 3 topics I would like to discuss, the upcoming yearly accounts, the latest announcement and the possible strategy for RFE going forward.

YEARLY ACCOUNTS

Recently myself and a few others have mentioned the increased value of EOK South and what it will add to our assets. In the recent reserve upgrade announcement, the middle column was in a blue shade, the 2P reserves. This is the best way to value American oil and gas companies (will discuss more on this later).
One line in particular has been bought to my attention from this announcement.
"Based on this latest independent review, this acquisition has already delivered almost US$80 million in proved and probable (2P) PV10 value"

Ok, I thought, great, $80 million in increased assets, well it has been suggested to me this wont be the case.
The total 2P reserves have a net revenue of $A495.77 million total over the life of these reserves, and the current PV10 for these reserves was $A158.7 million.
So what is important in all that, PV10. I have never really known fully what that meant until today.
PV10 means this is a 10% discounted cash flow figure
on a future revenue stream, not a hard asset.

Having gone over the yearly accounts from last year and the half yearly accounts, it has been suggested to me that the value of the EOK South acquisition has already been factored in.
We best see this in the current, non current and total asset section of the half yearly accounts to 31/12/09.

Total current assets increased by $6.5 million approx
Total non-current assets increased by $13.26 million approx
Total assets increased by $19.76 million approx.

$6.08 million of the increased total assets were attributable to cash on hand due to the capital raising that took place in the quarter, which leaves a total $13.69 million, take away the increase in trade and receivables and a generous amount for infrastructure we put in place at other sites during that time and we are left with $12 million.

It has been suggested by an auditor the value of EOK South has been added in already. As PV10 figures are not added into the asset section this would suggest plant, equipment and production assets, i.e. infrastructure, from EOK South has been independently valued at $12 million on our books. So we have purchased EOK South for less than the independently valued infrastructure and we now have a PV10 value of $80million as well.

2 points, EOK South has added massive value to RFE and in the yearly accounts out later this week, the asset increase will probably be minimal, we would have increased our non current assets with the additional infrastructure we have put in place and also the trade and other receivables but we will have a decrease in cash.

The reason I am mentioning all this, please dont be disappointed with the asset figures as EOK was previously added in and the $80 million figure mentioned earlier will not be included.
Hopefully this will ease peoples minds and will stop any potential negative posts.

This is of course if my auditor friend is correct.

Guys, this has ended up being longer than I expected so I will post later on the other 2 subjects.