Fresh EME Thread......

Bull,

Eagle - looks like a 13.4mmbbls oil pool, good logs and oil shows supported this hypothesis from all data gathered to date. We still need a viable production leg to depth and flow tested to know the potential is there. Currently the most low risk in the EME portfolio. Could flow up to 300-500bopd of light oil, they know the oil is there and there is reserve potential with the upgrade of 90ft additional vertical pay. Not an easy well to drill so far. Some partners are having a rethink. Some of the partners are willing to chase the additional expense of another lateral well from the eexisting vertical well (much cheaper than a full well). Time scale to drilling is best said as "unknown" Hopefully first half of 07. Partners will have to decide who is getting involved and at what interest (they may have done this already behind the scenes). With a P10 of up to 34mmbbls still potentially a company maker.

SL,

Looks very good in the Austin and some potential at the Hosston. there is a company in Australia that is appraising a 50m gas interval and they think its possibly 6Tcf recoverable, so our 50m in the Hosston has potential for sure, but could be tight. You need good porosity and premeability for the well to sustain flow and have good reserves. The Austin looks sweet, very good potential for a reaonable find there, if they frac the Hosston (which has been suggested) it may improve the permeability at least and we could get a result from both. I would be fairly confident on the Austin to bring in some sort of result with the Hosston a grey area. If both flows it will be a day of vertical. The Hosston is the big hitter for SL, it could be the difference between a 40bcf + 10mmb oil or condensate to a 2tcf + find and that makes all the difference to our 6% wi. Hoping its commercial at the Austin, if its Austin only then its not company transforming at a 6% wi. Austin and Hosston comes home then potentially company transforming at 6%, at that stage EME should appraise once or twice and then sell off imo.

Glantal

Poor well on the first effort, from memory the area is some 500 sq kms +, absolutely bloodly massive in otherwords. The anticline is highly fractured so if you drill on the wrong side of the fault you get nout, drilling slightly updip you might get a beauty. there is anotther Australian company drilled a dry hole on their large anticline, but got gas shows, they are still bullish that they will find commercial gas updip on their structure (also large, one of the largest anticlines onshore Oz). The Neus Bergland permit could have gas trapped somewhere, its coal rich, the source of the gas in the Southern Gas Basin of the North Sea is the Westphalian C coal measures. There is plenty of gas source rock there its just about drilling in the right spot. The new seismic will give a better interpretation of what's down there. Again drilling will hopefully be some time in H1 07, but it will take some time to get all the data put together to chose a good drilling location, not something to be rushed. With a structure that size upside is massive, a dry well lowers the prospectivity of the immediate area, but this is one big area and if commercial gas is trapped it could be on a mammoth scale at 50% wi to a £20m company.

Margarita,

Looks like an MRP stunt, lots of small targets are they really worth the hassle? Well if some of these start to come in then you will see a reasonable increase in production and will mean cash flow to a current explorer. The management will be looking forward to becoming a fully fledged E&P company. The shallow targets will be seen as relatively low risk in exploration terms, due to the fact that the Frio sands are prolific producers in Texas. You can get both oil and condensate in these shallow plays. Due to the shallow drill and the small reservoir size flow won't be massive, but if they get a string of +ve results it will gradually build up. The big attraction to Margarita is the 3 and possibly more prospects at the deeper horizons, these if successful could add US$15-80m to EME and flow potential is also much higher. Clearly short-term six wells between now and the end of Feb, with 3 deeper wells later in the year. The Feb campaign could run close to Eagle re-entry and SL testing, we'll be informed in the mean time.

Overall EME could build up some production from the shallow wells adding to their underlying value supporting the current market cap. Any production would be useful at this point. Margarita could be a company transforming project at depth, Eagle could be a company transforming project if they get the blighter to flow, Sugarloaf could be a company transforming project if the Hosston flows or reasonable from the Austin, Glantal could dwarf all others if they hit the right spot. All very speculative with some now known to have potential net pay (SL and Eagle), the rest are all wild card fun and games. Not for the widows nor orphans, just serious long-term investors looking for the potential of 2-40bagger if they are prepared to sit it out until EME brings home some serious bacon. Currently we're looking through the butchers window and the Bacon is in sight, we just can't touch it or smell it yet. If we get our hands on a big slab of Bacon be prepared for some vertical. ;o)

Regards,
Ed.