Sent these on aug 4th


Thanks in adavance for any response.

According to the news release on July 22, and subsequent articles about the project in various regional newspapers, it was reported that no economically viable hydrocarbons were found in the St. Georges group. To quote Mr. Mercer from his telegram interview, ""We drilled the well and it came up dry, the St. George's group part," said company vice-president Kirby Mercer."

Now the July 25 news release says that once the rig is finished at Garden Hill, it will be returned to Shoal Point. To quote this news release,"Early indications, however, are encouraging, pertaining both to the Green Point shale and the St. George's group platform sequence."

Having been on vacation in Newfoundland, before and after the halt and subsequent news releases, I am totally confused with the different points of view regarding the bottom of this well.

So here are my questions:

1. Why state on July 21 that the hole was dry and then on july 25 state the above quote. Was the first release premature due to a leak and now with further analysis of logging of this part of the hole, opinions are changing. Does this also mean that you may drill deeper or sidetrack from the previous wellbore into the St. Georges group again?

2. According to a news release by PDIP, they claim that there were two possible theories as to the direction that the drilling should follow and that the operator chose the alternative to their preference. Does this mean that the partners will attempt this second route, and if so, will a private placement/reverse split/farmin etc be necessary to raise money for this venture?

Thank you for your time and I look forward to your response,
Sincerly,
Michael

Response

Michael:

There should be no confusion. The July 25 News Release said exactly what we meant to say and gives an accurate account of the way we are proceeding. We are following up on the information provided by the well and this work is ongoing. The July 25 Release did not say that the rig "will be returned to Shoal Point ". It said that the contract "makes a provision for the rig to return ". If this provision is exercised or not depends, in the first place, on how the current interpretation work turns out. This is in no way contradictory to what Kirby Mercer is quoted as having said.



There are always a number of ways to interpret a dataset, especially one in a complex area like Shoal Point. The three participants in the well all agreed to drill the chosen interpretation . It is now the task of the group to take the information from the well and integrate it with all of the other data and decide which interpretation, if any, is worth pursuing. It would not be useful for me to speculate on the financing of a future operation which is still under development.



Steve.

2nd email and response

Thanks for the reponse Mr. Millan, but I am still confused as to the change of heart on the St. Georges group from July 21 to the release on July 25. I understand that there is a lot of potential in the Green Point Shales which will require further study in order to determine the economic viability of that play. But, I am still befuddled as to the St. Georges Group Platform being dry on July 21 and encouraging on the 25th. To again quote your news release 'Early indications, however, are encouraging, pertaining both to the Green Point shale and the St. George's Group platform sequence.'
I hope you are trying to provide optimism for the possibility of still discovering oil in this geological region because the July 21 release really took the winds out the sails for this market.


Secondly, you stated that the partners were in agreement as to the direction of drilling. This excerpt from your partners website seem to refute that statement.

Additionally, previous studies of Shoal Point indicated two substantially different interpretations of the seismic data available. The Company favoured the interpretation not used by the operator for the 2K-39-Z well and, on this basis, intend to complete additional seismic analysis of Shoal Point. It will also complete further research and analysis of the other identified lead within the license.

http://www.enegioil.com/support/uplo...

Michael

Response

Michael:

I really do not think that I can go any further on this topic. It is a waste of my time which would be better spent running an oil company than tilting at windmills.

Steve.


Any comments

Mike