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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (108209)	6/28/2007 2:33:54 PM
From: Pogeu Mahone	Respond to of 132070

Author: KissxOfxDeath Number: of 1653 Subject: Notes from Conference Call Date: 28/6/07 16:26 Post New \| Post Reply \| Reply Later \| Create Poll Report this Post \| Recommend it! Recommendations: 30 Notes on Conference Call 28 June 2007 Present: Mark Bruner, Lyle Nelson, John Gustavson, Peter Duda, Rod Wallace Peter Duda apologised for not returning calls yesterday MB: thank you or joining the call. Discuss the announcement yesterday – strategic partners. Address certain misconceptions may have arisen. Want to ensure everyone understands rationale behind the announcement. Comments on context for yesterdays announcement and then take questions. We made the announcement because we have been approached by potential strategic partners and wanted to inform the market that we have started the official process. We believe important to inform the market about the discussion. Falcon began working with BMO to put together a data room to present the assets and opportunities. We have received the PL which was a critical step and culmination of years of hard work and was a great achievement, and reinforces need for large scale drilling plan. And more tangible opportunity to pitch to potential partners. Prior to yesterday already approached on unsolicited basis testament to strength and viability. Now is right time to put in place process to help move forward long term. BMO helps to execute process. Discussions have begun and we will continue .We believe this is the right approach to achieve value for shareholders. More clarification needed. The types of partners would provide support to operation over the long term would be for example oil service companies, long term alliance related to development on Production Licence or major upstream and large field development companies. Or gas processing or infrastructure or companies with end market or power companies. Maybe more than one partner and different results. Following our obligation to disclose to investors. Next like to communicate that the assets - we understand better than any other players and it has taken time and dedication to gain that understanding and to execute the plan. Now in a position to show the information to other potential partners. Put in place a long term development plan to move to production phase. Took longer than the expected but pleased with the status. Requires more than 55 fracs and 10 of them are in BC. 12 for Endrod and 28 in Szolnok this will require considerable resources and will take a year to complete, Simultaneously move from exploration to production and putting in place partners. As moves forward, financing is stable and no change is needed. We have drilled 6 wells and delineated largest field in world and able to move forward. Endrod has produced both oil and gas in Magy1 stimulated. Total sequence with 2 stimulations whole interval – results will influence strategy M4,6 and 7 and in short will help define our plan. Because of the pressure 7 58ths casing has been laid in Mako 4and waiting MAGY 1 results to determine depth and required casing so tubing not necessary. Regarding that, don't know if only Szolnok or further will require casing. H2S entirely manageable wont affect operation. Significant project will 1000s of wells and is a multibillion project – we must be prepared to move forward need to identify suitable partners to assist the company. Tendency to regard each piece of information as info is critical - don't agree. Strategic partners will be interested but because of potential opportunity of whole resource Questions James Somervile Give us idea potential timelines testing when you discuss with partners We are going to be fraccing Magy1 will happen in July and results in August. At that point assess and decide next move. That's what is driving short term. Bring JG why take this approach and not focusing on other operations. Why so important? JG: its important to realise when I started this in 1997/8 this was source field and ensuing years thanks to Falcon and MB in actuality we also found giant BCGA. First the BCGA was confirmed. Now recently it was announced in Endrod natural fracturing provided unstimulated oil and gas. To me fulfilment of dream indeed in kitchen where oil and gas generated. Over the last couple of days have gone through all the wells and HOD1 and Mako1 by MOL and it is very significant in all wells we think we see across the areas in form of oil shows and oil slicks on cuttings and we now think we see a basin wide oil generating zone in the endrod . Assuming correct and fractures naturally created this is very important event and first test in Magy1 the flow we saw in July may change the nature of the programme because everything would be aimed at proving up Endrod reserves. MB: Also wanted to mention that the Scotia report no reserves associated with Endrod. Important to understand in Magy1 because dictate next move. Early stages negotiating strategic partners. Confidentiality agreements signed. I have been contacted by other people since the press release. It is early days and early in the process. Time to find partners. Take months to do that. We have some very interested people. Data room is ready and it took a long time to put together . Question: The other reason is the financial situation. Raised money a year ago – how is the time line financing for the company to continue appraising? MB: I think the financial position was $100m end of march. We have less than that now but adequate working capital to do what we want to do. Always have adequate working capital. Depending what happens here, money will be a factor how slow or fast we go. Now have substantial working capital MICAHEL Q Expected production of each of your projects. Early days – we have essentially 6 wells drilled and we are going to be selecting 5 out of the 6 to complete and this will take a substantial period of time and too early to answer until we have tested different zones have to start at the bottom. I'd love to be able to answer but wont have the information. Can tell you we really didn't realise that we were going to have to do as many fracs as we thought – will take time. Reserve size 51-101 report from Scotia and this is a resource evaluation. Volumetric calculations porosity and other things. We have some ideas. Something not even mentioned in the previous report is a big deal. How much cash per month? Not drilling any wells at the moment. No drilling operation. And limited completion programme. Burn rates are not high. Working capital is in good shape. Depending what happens let the resources determine the next course of action. Good shape. $100m end of March. What have now? Cant answer the question – policy of the company proper working capital and we have that. No issue in the short term. To get very aggressive would be difficult spend a lot of money to do that. We feel that based on the information we find will determine how fast or slow. Types of financing. Strategic partner and one of the nice things – big resources – 50 frac to do – have to bring expertise AND money. We believe get better value with partner than if we went to the market to raise money. Sourness There is an issue – it is not an insurmountable issue – we have a fraction of 1% in deeper section and what that requires is - because of that it requires us to use tubing and packers to test each of our zones. In the future we will have lead time to order the proper casing and it takes a lot of lead time to get this casing. In future we won't have the issue. In mako4 not going to deepen until have the right casing .This is not the first time run into h2s and had to use tubing and packers to test with. This takes more time to do and is more expensive. Not a problem in terms of production and it wont be problem in the new wells that we drill - more time and more expense Q – Jan von Holsbeg Sense of extensive nature of oil containing zone – how big is the resource MB – Hi there - thickness of endrod m6m7m4and magy1 – how thick it is. One interesting thing is that it is a marl. It is about 40% limestone 20% dolomite and has sand and is uniform rob – 685m mako6 580 m7. thicken up in the centre of the basin maybe 1000m. Less in the margin. Magy1 300m . trying to ascertain how much is fractured marl. Net pay – just on magy1 indicate how much is pay. Mb – like to mention will be putting out a press release to summarise this. Explaining why the 50 fracs and why needed sand where QW – Gordon Nichols Macquarie credit line – area working in - anyone on borders MB – deal with Macquarie is – still chatting with them – it was estimating need to be producing for certain period to access the line of credit - with the pay zones it will take a substantial period of time – if produce stop fraccing - making deal with Macquarie until completion programme is finished The only other company that is on our borders is MOL- - and they have some property to the west south and north. In deeper parts – most of deposit is on our property – confidence because of seismic. When endrod and Szolnok – percentage of what is there. Even in upper section we have majority of what is prospective Ian McQueen Update Mako6 – BC, H2S how affect produce from 6 existing wells MB – we will announce at appropriate time so no comment. What happens here in terms of testing is that (test wells not production wells) because h2s need tubing and packers to test the different zones. If didn't have to would be much quicker. Also have to … want to understand production be it condensate - we have got to test each zone to determine what its productive rates are – ain any particular section in BC you would pull the plugs out. Whatever portion wants to produce. Going to run a permanent H2s resistant packer to produce - to put online. Using tubers and packers. Not necessary for mako4 because long string casing h2s resistant and completion can be quicker. Once testing is finished and we understand what each zone will contribute can do multiple fractures all at once time and not be kept to each sequence when we go to exploitation phase. All of our strategic partners will want that type of testing programme so that they understand when we go to exploitation what depths and drilling issue. This is a process takes time and will take a more time because of the minor amounts of h2s Paul Ballantyne First potential partner you mentioned – service company – contractors to service companies Are you now deprioritising the Szolnok and if so what is the thinking – any issues conversion exploration to production licence MB – no any issues- now have the pl in hand. Service providers we have used Halliburton and Schlumberger and one of the real important things is that in Mako10? 21000 horse power on location and more ever used in Europe and one of the things we found no problem fraccing these wells. Also no issues with access to the service providers. When I was chair of ultra the service co deals with H integrated services and very confident that the particular time when we absolutely demonstrated potential of fracs comfortable that some kinds of arrangement can be made with the service companies at this time. At this point lower part of the list and making a deal- on curve of interest more like gas marketers and upstream majors and large independents and certainly they feel comfortable with where are with the frac jobs going forward. John Tunburry When can we expect firm announcement on flow rates and what is worst case for announcement. MB Magy1 – those two frac jobs 300m in July – that's what we expect – results in august. Important understand we have 50 frac jobs to do. That's will take some time – we have modelled 50 intervals have good chance of being economical – probability of large of fracs failing is small. One thing to mention – you have to start tat the bottom and work your way up We drilled Mako4 to do the Szolnok and what has happened ins that we hit overpressure quite early and based on 3d seismic and we feel 300-400m to get through Szolnok set 7 58 casing. One of the things that happened is that we got oil discovery in magy1 and want to see what it does whether stop or drill endrod – that has put Szolnok programme back Could go m6 and skip 15 levels and jump up – I don't think make a lot of sense to do that. Unfortunate thing may need some patience see what happens in Szolnok. Some possibilities… Q: Waiting for flow rates for some time – expectation have some flow rates. Wont have results Frac July and results in august. Q: At least august? My hope sooner – some of my engineers told me not to give absolute dates. Sooner rather than later. Darron Preston Q: Mystified on mako6 - we are still cleaning up the frac fluid - off the radar – why backburner? Not on the backburner – working on every day – history on mako6 – we frac the mako6 had to be ready for H2S delay because s1 well. We had some significant gas almost immediately – 20% of our load back. h2s entry into borehole and had to kill the well. So the situation in order to get ready to flow the well with tubing and the packer for 5 weeks. We had to have plugging and one of the things we mentioned in the press release had some obstruction that we are dealing with - that's where are - until we resolve not prepared to comment. When press release on M6 – as soon as resolve as to what we are doing Jim Gerald Can you get JG discuss thickness Endrod Cannot give exact thickness – Hungarian scientist done best -100m of thickness – varies across the basin – its literally in last two days the talk with the scientist – requires more looking - prospect 10 years into – exactly what looking for originally - we know where the giant field got its oil from – not prepared to give you numbers- not my numbers - - something really will press release in the near future Delays h2s JG – this is in contrast – not type like Caspian 7% - this is due to minor pyrites minor inclusion iron sulphide in deeper in Triassic dolomites formed in the basement and from that the h2s in segregated – Hungarian scientists and will say that this is a question no doubt – we do not expect any surprises and consequently falcon has to be prepared deal with and is vexing and irritating and annoying but it can be handled and most equipment and so on is available and can handle this at the surface. MB – over in magy1 what we are producing would go into the plant to MOL – more of a casing problem than a pipeline problem. Follow up to scotia report – engineering plan We have a good group at falcon want to let everyone know working with John and its very interesting before John sold this to falcon John had talked to strategic investors and familiar with a lot of these people and had worked a lot of this process. JG understands better than anyone. Working in the data room with falcon and strategic investor - already know will be working with us. JG – at present time we are trying our best to find talent (?) from other fields in the world. This type of marl in endrod so we model from that – we are then trying to come up with the most likely to result – charged to find out cost and what expect – the management will go forward with the fracs – if indeed prediction are true then falcon has wonderful problem decide should let flow and provide cash flow to test other zones – wonderful problem to have. MB – lot of people might want to know probability of finding a partner – any trouble finding a partner? JG – defer on one point - bank of Montreal but assuming the confidentiality agreement – absolutely confident - no doubt giant business opportunity for many types of customers talking about – and up to point we made a deal – talking to major cos and electricity cos- looking for operator – JG could not do it. So such possible strategic deals should now be available particular as energy situation has sharpened Jamie Somerville Looking at chart - volatile – strategic partners – retention of part interest – indication and what fair market valuation is at this time – regardless of coming results MB – difficult q because test not done but my belief that with the Szolnok – previous 51-101 and what know now and value is considerably higher than now and I feel very comfortable deal with a strategic partner- several deals with several partners- doesn't need to be one – any kind of deal will require capital not only finish what started but also drilling infrastructure etc and don't think with 50 fracs to do once JG models the potential of those frac jobs – comfortably find people to do a deal with. Some certainly some obvious things that should be thinking about and who they might be - this part of the world - right place at the right time and right deposit change the complexion of Europe if it works out in the way we believe it will – there are people who already interested. Operatorship I am not going to rule out a strategic partner - not saying we have to have that – could have several operations and we can still operate – there is flexibility cut many type of transactions beneficial to shareholders – confident going to do very well. KoD

To: Knighty Tin who wrote (108209)	6/29/2007 8:27:38 AM
From: Pogeu Mahone	Read Replies (2) \| Respond to of 132070

$20 lottery game unlikely to break even By Bruce Mohl, Globe Staff \| June 29, 2007 State Treasurer Timothy Cahill said yesterday that the lottery's $20 sweepstakes game is unlikely to break even, one of the rare instances when a game failed to pay for itself. "We were really trying to a hit a home run," said Cahill, whose office, which oversees the lottery, launched the game in response to pressure from lawmakers to increase revenue before the fiscal year ends June 30. "We may not have been realistic trying to sell 4 million tickets, but this is far from a failure." Lottery officials estimate 30 percent of the 4 million tickets printed for the game have been sold. Cahill said he expected the sales figure to climb over the next couple days to 1.5 million, or nearly 38 percent of the total. The lottery needs to sell 2 million tickets to cover the tab for the $40 million in prizes. Cahill said the lottery may not reach that goal but could still end up selling more tickets for a single sweepstakes game than any other state. Sweepstakes, sometimes called raffles, are delayed-gratification games. Players buy a ticket and hold on to it until a drawing is held. The lottery's Star Spangled Sweepstakes ticket went on sale May 1 and sales officially end tomorrow night , although Cahill said ticket sales at some retailers and lottery offices will continue through Tuesday. The prize drawing is Wednesday, July 4. The lottery has pledged to pay out all the prize money even if all the tickets aren't sold. The game offers a $20 million top award, 10 $1 million prizes, and 40 prizes of $250,000 each. All prizes will be paid in lump sums rather than in installment payments. Cahill said the odds of winning one of the 51 prizes in the sweepstakes would be 49,000 to 1 if 2 million tickets are ultimately sold. "In this business, those are tremendously good odds," Cahill said. The odds of winning $250,000 in the lottery's $10 Red Sox instant game are 6 million to 1. The lottery is one of the major sources of revenue for state aid to cities and towns. Last year, the lottery had its best year ever, with overall sales of $4.52 billion. State lawmakers this year set a target of a 2 percent increase in sales, but with just two days left in the fiscal year, sales are down 1.5 percent. Even with the slight downturn, the lottery's overall profit, which goes to cities and towns, should still exceed $900 million Cahill said the lottery rushed out the sweepstakes game in a bid to bolster revenues and close the revenue gap. But officials at some stores selling lottery tickets have said consumers were uncomfortable with a game that required them to wait weeks until they found out if they were a winner. Senator Michael W. Morrissey, a Democrat from Quincy who heads a legislative committee overseeing lottery operations, said he applauds lottery officials for trying something new. "Every once in awhile you have to take a risk," Morrissey said. "In the end, I don't think this was the answer." Cahill said lottery officials were overly optimistic about sales, expecting a state with 6.4 million residents to buy 4 million tickets. He also said the $300,000 budget for promoting the sweepstakes game was probably too small. "It's new, it's different, and it's delayed gratification," Cahill said, explaining the marketing hurdles associated with the new game. But Cahill said the state could set the record for sweepstakes sales if it sells more than 1.5 million tickets. The treasurer said a New York raffle earlier this year sold 1.5 million tickets using a $3 million promotional budget. A spokesman for the New York lottery pointed out that his state's raffle lasted only 23 days, not two months. Cahill said the $20 sweepstakes helped boost overall sales at the lottery and is worth trying again. "We're looking at doing two per year," he said. Bruce Mohl can be reached at mohl@globe.com. © Copyright 2007 The New York Times Company