Hi Mike,

Having disagreements is a good thing, means you get to see mutiple views. The better informed we are, the better investors we are and the more money we make. :)

My gut tells me QEC is going to need between $250M to $500M to really exploit this play. I'm thinking their share of the wells once we're in Production are going to cost about 1.5M each, so about $6M/well in total. Lets assume this PP gets us around $100M-150M + the $50M we have in the bank, it still leaves us short. We either slow way down on the pace of production drilling or get more cash.

QEC is a great company, we've got great support, so we'll always be able to go back to the market to get more as long as it's for growth and expansion. There is going to be a "hump" year, probably in year 2 of production where we're going to have to get that cash somehow. Having a couple hundred wells in the ground already producing cash flow gives me little to be worried about with respect to being able to cover an LOC even if it does get called for some crazy reason.

Personally, I did a bit of trading around Oilexco but thankfully was out when it finally bit the bullet. It's a terrible story, but it's also a different case. I don't see a problem funding our drilling in part via PP and using a LOC as well. Trying to do the whole thing via one or the other is where I have an issue, and in Oilexco's case, caused them to crash. So far I haven't heard anything about the banks being involved. Without them being involved, I'll expect another PP next year sometime, diluting us another 10-15%.

Overall, you've got to remember this is one of the best problems to have, many other companies wish they had our problems. In the bigger scope of things we're going to make money, it's just the greed side starting to take hold a bit.

Brym