Howard, not sure why you don't want to refute rigman; if you have research that has a more positive view of the opportunity than the RPS Energy report from which I think rigman is quoting, seems like sharing that research and its source would be very helpful to other members of the Board -- and the pps!!

Right now, most of us are staring at the 2% "Chance of Success" for Bellevue; that is why the market cap is at $10M instead of the $3.3B that Mr. Bendall talks about.

So, if more favorable information is available -- even if the 2% went to only 10% -- that could impact stock price dramatically.

Hope you will reconsider your decision not to share.

I guess time will tell the easiness of the conditions.

The one which most concerns me relates to EEGC collateral, which Sure Capital must evaluate (at EEGC expense), and which must be acceptable to financial institutions (likely that means buyers of the notes).

The specified collateral is basically all of the assets of EEGC. It is important that they get a high valuation, as the July 9 PR states that the notes to be issued by Sure will be 'principal protected,' likely by that collateral.

There is no indication that Sure will put their own assets behind these notes (does anyone have evidence to the contrary).

As a positive perspective, the July 2 PR states that the Agreement is based upon the WHK Denison/RPS Energy valuation of $3.3B, much discussed in this forum (still over $2B for Bellevue/Thunderbolt alone). Presumably, Sure Capital read this work before signing the Agreement -- the RPS Energy report is available on the EEGC website -- so additional evaluation required should be nominal, as Sure Capital will already have taken the 2% discussion into consideration.

This evaluation will then be 'market tested' (condition related to collateral acceptable to financial institutions) as Sure Capital looks to find investors for the 'principal protected' notes; since they are being marketed that way, investors will need to believe the RPS Energy report satisfies.

It is worth observing that equity investors are not satisfied by the report, that is why the market cap is $10M; will note investors be more satisfied?

The key issues for shareholders -- and likely Sure -- is state of play today in terms of EEGC debts owed and perhaps secured by EEGC assets, to Hunt and others.

I don't know where truth lies on this one. Earnest says that he is quoting information signed off in June, 2010 by EEGC management -- if there is a source for more recent information on the status of the EEGC/Hunt relationship, legal and business, you would be doing a great service to summarize that information and provide a supporting link for more detailed review.

Important point from your quote from the Sure Capital web page is the following:

EEGC has considered using Terra Insights Services.

From the final report of SEL 13/98, page 121:

Crazyjogger --

What would you expect me to learn in contacting the Director of Sure Capital, that I cannot learn from publicly available information, including what roger wilco posted.

Put another way: what is there specifically in what I have posted, that you believe a Director of Sure Capital would ask me to modify? With respect to Sure Capital's position, all I have done is to quote from the Agreement between Sure Capital and EEGC (Exhibit 10 of the 8-K), and the July 9 PR.

I have said that I have full faith in Sure Capital's willingness to execute against the Agreement they have signed -- once EEGC fulfills its preceding obligations under that Agreement -- what more can anyone want? If you think they are willing to issue notes OUTSIDE of EEGC's fulfillment of the agreement, then YOU should contact them and advise us, that would be GREAT news.

Meanwhile, all of us are hopeful that EEGC management will meet the conditions of the Agreement, else why go to all the effort of setting it up??

I do think it is fair to point out for newcomers that we have gotten to this point (press releases, initial good steps) before (SmartWin; Mr. Bendall's LOC, which may still play out in the RO); I don't need to point this out to the Director, I am sure Sure Capital has done DD.

No argument with what you are saying.

Malcolm and his team believe in what they are doing.

But I don't think they are helping their credibility with some of the PRs. I don't understand the headline of the July 9 PR, "Sure Capital Issues..Notes," when that factually hasn't happened as disclosed in the body of the PR.

I see no need to contact the Director of Sure, as suggested by crazyjogger in 16287. I am confident that Sure WILL find investors, if EEGC can meet the conditions of the Agreement spelled out in the 8-K, Exhibit 10, so that Sure can issue the 'principal protected' notes described in the July 9 PR, but they haven't yet.

We all hope that EEGC will fulfill the conditions, and Sure will find investors for the notes. This is an wildcat/exploratory opportunity with very interesting -- exciting -- geology to support it. The fact that $50M was spent without a well being drilled is likely causing some hesitancey by prospective funders; note that two years ago SmartWin was willing to put up $45M for half of the company.

(Maybe someone knows explicitly why that fell apart -- I have not seen it published by the company or SmartWin. Maybe they decided they wanted a bigger percentage?? Or, they learned something which caused them to back out, don't know.

There IS funding out there, for the right percentage of profits. Just a mere matter of finding it. Finding an oil company for a JV seems to make the most sense to me -- but that might require a management change. As a statement of fact, the current management has been unable to get cash in the coffers for drilling since the RPS Energy report came out in Octoer, 2008 -- almost two years ago (hopefully this will change this month with the RO, per management's stated intent).

Meanwhile, ten months and ticking on the Bellevue lease.

At the risk of being repetitious and redundant on the 2%, I will attempt to clear it up using materials found on EEGC's website. If someone has better sources, please post the information and source.

Anyway, page 2 of the RPS Energy report, referred to as Competent Persons Report Part 1 in the Project Update tab of the EEGC website, says the following: "The Risk Factor for Prospective Resources (my note: Bellevue (2%), Thunderbolt (0.72%), etc.) means the chance or probability of discovering hydrocarbons (my note: doesn't distinguish between oil or natural gas) in a sufficient quantity for them to be tested to the surface."

There is a somewhat longer definition in the Final Report on 13/98 presented by EEGC to MRT, also on the website. It says on page 61 (note: Chance of Success is the same as Risk per the tables):

Sure Capital has agreed to offer notes, once certain conditions are met, including satisfactory evaluation of collateral, which is defined in the Agreement to be all the assets of EEGC.

The July 9 PR makes it clear that the notes offered by Sure will be 'principal protected,' I am guessing by the collateral put up by EEGC.

You say there is more than meets the eye -- could be true, if for example Sure Capital is willing to accept one set of collateral put up by EEGC, but offers different collateral to note buyers. But, as pointed out by roger wilco, the management structure of Sure is substantial, and so unlikely to make such a deal, as that would imply risk for Sure, which seems to operate as a facilitator between gulf region investors and projects requiring capital rather than as a provider of capital at risk.

The stock market today seems to value EEGC's assets at $20M in round figures (take away liabilities and you get stock market value). Do not think that collateral is worth $180M to an investor, or that 11% collateral (20/180) would be considered adequate principal protection by investors. And this of course assumes that none of the assets are already pledged to others.

Note that 'additional securities' could be added to the collateral, per the Agreement, but not sure where they would come from. Perhaps the new Directors, who seemed to have significant assets?? Do they believe enough to put up additional collateral?

A few things (some are repeats, but don't appear to have sunk in):

- Per page 2 of Part I of the RPS Energy report found on the EEGC website, and frequently quoted by EEGC, the "Risk Factor for Prospective Resources (2% for Bellevue. 0.72% for Thunderbolt) means the chance or probability of discovering hydrodcarbons in a sufficient quantity for them to be tested to the surface."

Net: bigger percentages are better than smaller percentages, at least for longs which I assume you are.

- Despite the headline of the July 9 PR, no-one has given EEGC any money as yet. The detail of that PR says that Sure Capital has 'agreed to issue the (principally protected) notes...(which will be) available to any investor.'

Net: No notes until an investor is found.

- And if the recent 8-K is 'proof in the pudding,' then it is equally fair to say that the 'devil is in the details.'

In particular, it is worth reading Exhibit 10 of the 8-K; this exhibit is the actual agreement between Sure and EEGC, and states the collateral for the financing (all assets of EEGC plus any 'additional securities required' -- source??) must be acceptable to financial institutions (Section 3.2.1 (1) a).

Another interesting point is that Sure will evaluate the collateral, the costs of such evaluation being borne by EEGC (Section 2.1).

Net: Sure has to do its due diligence and potential investors will do their due diligence, all of which is likely to take some time.

Howard has suggested that the notes have been 'pre-sold,' if so it is not clear why such sale was not announced. Sale of even one $20M note would significantly enhance pps.

- As another interesting point, Exhibit 10, 3.2.1 (3) a suggests that in addition to interest, Sure will receive an undetermined percentage of gross profit. If high, that percentage will certainly entice investors, but hurt the stock; and vice-versa. Will be interesting to see what that percentage turns out to be.

Howard, you are saying 'not to worry about the ...bonds (sic) they were sold before they were constructed.'

You may be right -- but not based on publicly available information (or, please direct us to the source).

But if right, why wasn't that also announced today, would have certainly propelled the shares forward which would increase likelihood of successful RO completion (in addition to Mr. Bendall's intent). Instead, today's PR said the notes would be 'available to any investor,' which is a logical impossibility if they have already been sold.

What is your basis for saying finance package is 'fine.'

Depends upon nature of 'principal protection' and the 'structured strong return.' I am not aware of those facts being public -- perhaps you can share the details with this board so we can all share the optimism.

Frankly, you could be right and I hope you are -- but the press releases themselves offer insufficient detail to reach a conclusion one way or the other.

The only source for optimism is the fact that a company is working on finding us money -- in return for likely large fees and relatively small expenses, that is, profit. Still need someone to actually invest the money.

Sure's interest has moved pps substantially in the last week after several previous weeks of decline -- but IMO, cash in coffers is necessary to reach .10 per share; there have been too many (financing) PRs over the years which have not reached fruition.

Not sure your definition of 'late,' the PR came out during the noon hour in New York, and there were stock trades in the PM, with the stock moving from .036 to .035. Are you expecting major upward movement on Tuesday without additional news?

IMO, stock won't move until there is cash in the coffers, either from sale of a note or from successful cash completion of the RO so the rig can be bought.

One caveat: could be some shorter term upside if the nature of the notes' 'principal protection' and 'strong structured return' is publicized, and the market assesses that buyers are likely without too much negative impact on EEGC P&L/dilution. Or more details are presented on the flare gas technology sufficient to cause belief in this potential revenue stream.

Maybe we are on a PR per week, that would be good!

Re the notes:

- Good to see the financing structure continue to evolve. However, a bit surprised at 9 notes of $20M each, when there are to be four annual disbursements of $45M each. Why not 8 of $22.5M each?

- Despite the PR headline, Sure Fund has NOT yet issued these notes, but per the first sentence of the PR has 'agreed to issue.' Not sure why there is a discrepancy.

- The PR says they 'will be available to any investor,' so it sounds like none have been bought as yet. Announcement of the actual sale of the first note will undoubtedly cause the pps to jump.

- Likelihood of anyone buying will be a function of the nature of the 'principal protection' and the size/nature of the 'strong structured return'; anyone know their details?

With respect to the flare gas technology:

- EEGC has only a 'first option' on this technology for certain regions; even that was news, as I don't recall seeing it in any SEC filings. Just a PR last August that Mr. Bendall was going to give the rights (sounds like that didn't happen, just first option). Anybody know the terms of the option, or where its existence was previously published?

- There is a fundamental conflict of interest between Mr. Bendall -- who apparently owns this technology -- and EEGC, which would like to commercialize it. If EEGC is going to spend $300M commercializing, they should have a level of commercial participation worldwide, not just in North and South America. Indeed, I would suggest they should own it with royalty payments to Mr. Bendall, assuming there is a patent.

- If there is a desire on behalf of Mr. Bendall and management to get the pps to move well above .07 in advance of the July 30 close of the RO, publication of relevant flare gas technology patent numbers and/or comments by industry experts as to why the technology is unique/exciting could create the appropriate excitement. For now, $300M to commercialize is a huge number, indicating significant complexity with a multiple year activity by a company which has not shown that level of technical sophistication to date.

- For me, better that Mr. Bendall sell the flare gas technology to someone else and use the funds to complete the RO and buy the Sure Fund notes so drilling can begin... The key word here is FOCUS.

Interesting that yesterday's volume was relatively high, in advance of today's news. Overall, pps only went up 15%, indicating that investors continue to await 'meat on the bones,' IMO sale of the first Sure Fund note and/or successful cash completion of the RO.

What you say makes sense, IF this were a done deal.

Unfortunately, IMO the PR's statement of 'conditional upon completion of pre-requisite documentation' understates what needs to be done.

The 8-K lists remaining requirements, including such things as 'Completion of a counter evaluation of pledged assets,' and 'Completion of proposal for financing deal with a Gulf based oil company' (although not explicitly stated, I am guessing that acceptance of said proposal is understood to be part of the requirement -- we have already noted that English is not Sure Capital's first language).

I think at least the second item will take time.

I do agree that there is more 'reality' to this PR than Mr. Bendall's LOC announced a year ago, as at least a real company is named.

I hope everything is completed soon; but at this point, I'd personally be satisfied if July's only additional accomplishment was $8.0 in cash to subscribe the rest of the RO, so the rig can be ordered.

Indeed, great news would be if well before the end of July, Mr. Bendall (perhaps together with other directors) announced that $8.0M was in an escrow account so that everyone (including Sure Capital) would know they were ready to buy all remaining RO shares with cash.

gbd, You are right about Mr. Bendall and other directors INTENT to fully subscribe, as opposed to COMMITMENT to fully subscribe.

However, a couple of the press releases this spring had omitted Mr. Bendall's intent/commitment -- which had been in PRs last summer and fall -- and I considered it significant that the intent was restated, so I am giving the benefit of the doubt as opposed to entering into a semantic argument. We all hope it happens!

In a separate post, Huffmajo asks why the debt to equity conversion happened, since the objective of the RO is to raise cash.

Mr. Bendall has not said why he 'purchased' his initial RO shares this way -- although it is a good investment strategy, since the company does not have the funds to repay the debt unless it strikes oil, in which case the stock will be worth far more than $.07.

Since he hasn't said, one can only speculate. My speculation (other ideas?) is that he desired to put up cash, as he knows the company needs it, but the $50M personal LOC he disclosed a year ago was after all not available, at least not for this purpose, or at the moment.

By converting, however, he was able to keep his options open for the second round of the RO, which says that whoever fully subscribed in the first round, can buy as many shares as desired in the second round (over subscription allocated pro-rata, may we have that problem). And the $8M of RO still available, is a lot more than the $1.2M converted. Certainly, we would forgive the initial conversion if the cash happens now.

And, it is important to EEGC that when Mr. Bendall and the directors fullfill their intent, it is done so with cash. This will enable the rig to be bought (although I'd prefer rig rental to preserve cash), and strengthen the company's bargaining position with Sure Capital, as the final terms have yet to be agreed (at least at the time of the 8-K).

You are correct about the 17M shares, but EarnestDD is also correct about the $58K in cash raised.

To bridge the gap -- almost all of the RO shares subscribed in the first round were done via a conversion of debt to equity, not with the cash which is desperately needed by the company (anyone disagree so far, say so and why).

The good news is that Mr. Bendall and the other directors have committed in the most recent PR to fully subscribing the remaining RO shares. We are all hoping (or at least I am, again any disagreements, speak up -- I seem to be viewed as a 'basher,' so perhaps there is a difference in opinion here) that this is in CASH -- which would give the company $8.0M, and enable purchase of the committed rig as well as strengthen EEGC's bargaining position with Sure Capital.

Should this cash be committed by Mr. Bendall and the directors, I believe the shares would go up significantly, perhaps even beyond the offering price of .07/share. So, we all hope for successful conclusion of the RO, IMO with CASH (again, disagreement welcome, but with factual arguments, not emotion).

IMO -- and not previously discussed, that I can recall -- lack of cash significantly hurt EEGC the last time it got to this point (third party availability of significant cash, subject to agreement of terms), with SmartWin negotiations.

I'm not recalling what the company's PR says, but the most important document is the 8-K filed with the SEC, which is admittedly conservative but also very direct regarding the status of the Sure Capital deal. Quoting from the beginning paragraph, 1.0.1, previously posted by Mr. Haftel: "Additional funding conditions and repayment terms remain to be agreed."

We all look forward to successful, and non-dilutive (at least not too dilutive, hopefully we all agree that some is inevitable and acceptable), conclusion of negotiation.

Agree -- stock will go up dramatically when there is hard evidence of available money at a reasonable price, that is without too much dilution.

Hopefully, the current negotiations with Sure Capital will be swiftly and profitably concluded.

Indeed, I believe that if the RO is completed through cash acquisition of the remaining shares, the stock will move upward at least nicely -- plus (and perhaps because), such completion will enable a stronger negotiating position with Sure Capital.

Hopefully, no-one cares what language SureCapital speaks, so long as they are able to offer dollars to drill on reasonable terms.

I will say, however, that I do have experience negotiating business in the middle east, and it is generally not a quick process -- if you want a good deal. 'Leverage' is well understood. On the other hand, bad deals can be done quickly.

That is another reason why it is important for the remaining RO shares to be bought with cash. GEFCO has been clear that cash is required for the rig to be prepped and shipped. Given lead times for shipping, 'Australianizing,' and operations versus the remaining time for Bellevue to be completed, EEGC would not be in a good negotiating position if the gulf funding had to be completed prior to purchasing the rig.

WT77 --

You are saying the lower the risk, the better the chance of finding oil? So, 2% means there is only a 2% chance that oil will NOT be found?

I think you are wrong.

In the RPS report, risk = Chance of Success, where chance of success is clearly defined as "chance or probability of discovering hydrocarbons in a sufficient quantity for them to be tested to the surface."

For me, the higher the Chance of Success, the more likely EEGC is to find oil. 2% is NOT a good number.

If you have some other citation which supports your view, please provide.

Agreed, that's what I said -- although confusing, looks like I left out the 'and' between 220 and 139 in my post 15956.

I would also note that while those are the 'mean estimates,' they are substantially higher than the 'best' estimate.

Your precise quotation, however, does bring up an interesting point, as these are the 'unrisked' estimates.

What would be interesting is to multiply the mean (and best)estimates (unrisked) by the chance of success (giving the 'expected' number of barrels) by the $5 per barrel figure used by EEGC in its various calculations, and see how it comes out.

"All papers in place" is a broad term, but the 8-K is a bit more specific.

What I see below suggests that a lot of work is still to be done; that is why I am hoping Mr. Bendall pays cash for the remaining shares so EEGC can 'start the clock' on getting the rig to Tasmania. MRT's one year clock has started on Bellevue.

Part of section 1.0.1 of the 8-K, from Howard's earlier posting:

My reading of the 2008 RPS Energy report, Table 1, suggests 2% for both Bellevue Upper Unit and Bellevue Lower Unit, with 'mean estimates' of 220 139 million barrels, respectively.

This Table is reproduced in the Final SEL 13/98 Report, Table 11, posted on the EEGC website where I also see 2% for both.

OK, you (and likely others) want the RPS Report link so you can do your own DD. Fair enough; fortunately, I can help.

Go to http://www.empireenergy.com/projectupdate.php and scroll down, you will find a link to the Competent Persons Report, prepared by RPS Energy in October, 2008 -- the most recent of which I am aware based on my EEGC website research.

When you go to Part 1, Table 1 of that report (page 2), you will find 2% Chance of Success for Bellevue, where COS is more simply defined as "chance or probability of discovering hydrocarbons in a sufficient quantity for them to be tested to the surface."

For those interested, Thunderbolt is shown as 0.72% COS, or one third the COS of Bellevue.

I hope this answers your question. I have to believe this is the most recent information; does anyone doubt that if more recent, particularly more favorable, information existed, it would be on the EEGC website?

I would put in $180M, if there was a 2% chance, with the appropriate return!

To personalize: would you pay $1 for a 2% chance to win $100?? I would!

And in fact, all current shareholders -- which includes myself, with hundreds of thousands of shares at risk -- are in fact doing just that by continuing to hold.

This would suggest that Sure Capital and/or the JV partner will want a healthy percentage of profis -- which I am sure almost all of us would be willing to give, to get drilling going.

As a reminder -- the Chinese deal would have given up half the company for $45M, and that was when the company had a much higher market cap than it does today. So, the key question for shareholder value is the specific terms of the financing and JV deals. My reading of the 8K seems to indicate those terms are yet to be concluded; for sure, they haven't been disclosed.

CrazyJogger925, please consider the following facts.

Any contradictions should be based on facts -- provide links and/or citations as I have done, not the emotion shown in your post (moderators -- thanks for removing, but I am still providing this clarification as I may not have adequately documented my belief that 2% is the most recently independently developed estimation of chance of success).

To restate: the 2% comes from the 2008 RPS Energy Report, as quoted by EEGC in its September, 2009 final report to MRT on SEL 13/98 as posted on the EEGC website, page 73.

If you disagree with mine and others' interpretation of the 2%, please indicate why, as I suggested in my posting.

This same EEGC report, page 5, also quotes the RPS Energy Report -- and follow-on WHK Denizen Competent Persons Report -- in stating that there are 669 Billion barrels of 'undiscovered prospective oil and gas resource.'

I believe these are the most recent RPS Energy and WHK Denizen reports, since the March 5, 2010 EEGC Press Release refers to 668 Billon barrels (note: I can't explain the 1B discrepancy, let's assume rounding error).

Net: I think 2% is the most updated percentage for Chance of Success, but if you are aware of more recent work done, please provide the link.

I have not read the actual RPS Report, fair comment.

And it is certainly possible I am misunderstanding this percentage -- perhaps the more oil industry knowledgeable members on this board can correct.

But to start the specific discusion: the 2% for Bellevue comes from "Final Report on SEL 13/98" as posted in pdf format on the EEGC website: Chance of Success (COS) for Bellevue, page 73, Table 11, row 1, and the quoted source for this information is the RPS Energy report.

To save all of you from having to read the definition of COS, it is defined at the bottom of page 73:

Re:

Financing progress is certainly positive. Look forward to hearing the terms (debt versus equity; if equity, how much dilution).

Glad to see Mr. Bendall again reconfirming his intent to purchase all available shares. Let's hope he does that with cash, rather than converting debt, so EEGC can buy the rig without waiting for receipt of the first $45M, which seems to still require an additional agreement with a Gulf based firm as well as agreement on repayment terms.

Hi, Big gttom

With respect to your comment:

Howard --

As to whether shareholders think it is a good gamble, shareholders have spoken: less than 1% of the available shares were purchased with cash in the first round. That includes company management and directors!!

95% of ths shares subscribed were through self-serving debt conversion.

In the current second round, everyone who contributed the full amount in the first round, can offer to buy as much as they want; if over subscribed, shares are allocated pro-rata.

Hopefully, someone (hello, Mr. Bendall) will put in Real Cash in fully subscribing the RO so EEGC can buy/rent a rig and get drilling, hopefully without the additional (and likely highly dilutive) financing referred to in the most recent PR.

Seem like excellent points, although rigman has to speak to the technical points and whether these rigs meet Australian certification requirements.

So, why has EEGC elected to purchase a brand new GEFCO rig?

We know EEGC is 'cash poor,' with a huge cost of capital. How cash poor we will know better in early August when we see how Mr. Bendall 'pays' for his shares.

EEGC is required to drill, AND COMPLETE, Bellevue in less than eleven months from now per the lease as previously quoted in this forum

As I suggested three months ago, having someone else do the drilling is faster operationally (as you have stated with more eloquence and oil exploration experience than I), and more prudent with limited cash (I do have the start-up company experience to discuss cash management ).

Note:

- If EEGC finds oil, it will be able to get significantly less expensive financing to buy a rig and accessories, and hire a crew, than it can now. And EEGC shareholders on this board are confident that the initial wells will result in commercial discovery.

- If it doesn't find oil with the initial couple of wells, doesn't matter.

So, other than 'because management has so decided,' I am not really clear as to why rig ownership is deemed a good idea at this stage of EEGC's existence. What has changed since the company wanted to rent the Hunt rig two years ago -- other than the time of lease ending is sooner, cash is less available (again, pending how the RO comes out; note SmartWin had an option on half the company at $.25 or more per share, as I recall), and the amount of territory available to drill is less. These factors seem to tilt more toward contracting the drilling rather than owning.

Without assessing blame, just trying to find a rationale -- after the SmartWin and Hunt experiences, perhaps it is difficult for EEGC to get a contract with a driller, maybe that is why they are looking to buy a rig and staff it?

But, they then have to ship, outfit, certify and man it while working against the clock with limited dollars.

So far, EEGC is publicly committed to a purchase -- it has announced the rig and provider, and had its CEO pictured next to it. While the company does not owe the shareholders an explanation as a result of discussion in this forum, I suspect the question would arise at a shareholders meeting.

You are right, it was my interpretation that the PR said funding in addition to the RO would be required to begin drilling.

I think we can agree that it says such additional financing would be sufficient to begin drilling; looks like a matter of interpretation as to whether such financing is necessary.

As others more experienced than I on this board have suggested, time will tell.

I hope I am wrong and you are right.

With the RO ending July 30, we should know soon enough whether Mr. Bendall is buying his shares with much needed cash or debt to equity conversion. Hopefully, cash -- indeed, does someone know how much the company owns Mr. Bendall, and under what terms (eg is there already a conversion option, and at what pps)? Likely in the financials, but I haven't read them lately.

It was good news that Mr. Bendall said he would subscribe to any shares available.

It was bad news, IMO, that he said (as I read it) that successful negotiations with additional investors would be necessary to restart drilling.

Note that $4.3 with SmartWin was supposed to be enough to drill. With $8M+ still open on the RO, this would suggest that Mr. Bendall's subscription would be in the form of debt to equity conversion (how much more is owed to him?), which as I have previously noted is apparently self-serving (company can't repay the debt unless they strike oil, at which time the stock will be well north of .07/share, in which case other investors would have been better off repaying him).

So, the question becomes the level of dilution required to fund. With a current market cap of $7M, if someone paid .024 for shares the raising of $10M would be approximatel 70% dilutive -- and likely a new investor would want a better price.

The SEC filing is by its nature a conservative document; if there is any chance that Mr. Bendall (an insider) will buy all of the available shares, then it must so state.

So far, near as I can tell, he has bought none; he has only made a self-serving conversion of debt to equity at a time when the company needs cash. In case it is not clear: self-serving because the only way the company can pay back the debt, is if it stikes oil -- and if it does, then the pps will go well over .07. Net: other shareholders would be better off if the debt were not converted, as conversion causes dilution without providing cash.

I simply stated that the 40% plus reduction in pps since the end of the first round says the market does not believes the company's RO will be successful, which by definition means Mr. Bendall will not meet his commitment to buy all unsubscribed shares at the offering price.

Anyway, this is an argument which will be answered in time. I hope you are right and he does meet his commitment; but I must ask in return, why is he not repeating his commitment in the PRs, which is where he initially made the commitment.

The only shareholders who can participate in the second round, are those who fully subscribed in the first round (so, those who contributed the $58K in cash and converted the $1.2M in debt, IF that represented all their subscribable shares, which were 50% of what they owned on the record date (Dec 2008?)).

Second round participants can then say how many shares they want; if the total requested is less than the 116M still available, everyone gets what they want. In the delightful instance that the total is more than 116M, they are allocated pro-rata according to request.

This second round concept was set up from the very beginning, an intelligent decision by the company.

In terms of Mr. Bendall's role:

- The company has announced that all Directors took up their full allotment; Mr. Bendall is a director, so he took up his full allotment.

- He is therefore eligible to offer to buy as many shares as he wants; specifically, 116M for $8M.

- However, in the most recent EEGC press release, his quotation did not include a reaffirmation of his intent to buy all unsubscribed shares, but instead the PR spoke about ongoing talks to find investors.

Those two facts cause me to believe that the $50M LOC so loudly trumpeted last summer as the financial basis to buy all unsubscribed shares, which would be enough in $ terms to meet the spending requirements of the new lease, does not currently exist.

Per the PR, the second round (oversubscription period) will not resume until the registration statement is declared effective by the SEC; not sure what has to happen for that to occur, perhaps someone can comment. I would speculate that the halt in the second round was caused by the company's failure to file financial statements in a timely manner; as they are now filed, hopefully the SEC will move quickly.

Net: As a long, I HOPE Mr. Bendall will meet his commitment, but the evidence I see is not encouraging. The precipitous drop in PPS since first round results were announced suggests that the overall market is assuming RO failure, with any possible subsequent financing -- if available at all -- resulting in severe dilution (current market cap is less than $6M).

The other thing is, owning a rig -- with appropriate modifications -- is a lot more expensive (and takes longer to be ready -- important with the lease restrictions) for the first couple of wells than renting one.

I suggested rent versus buy a couple of months ago, upon initial discussion of GEFCO, and certain board members suggested I was 'not with the program.'

But, EEGC seems to have no money. $58K in the first round (against a 9.3M target -- reduced to $8.0M by the self-serving conversion of debt to equity).

I believe drilling WILL happen -- the issue is the level of dilution of shareholders required to finance it, unless Mr. Bendall makes good on his commitment -- in the original RO and the request for extension, plus multiple EEGC press releases -- to fund all otherwise unsubscribed shares at .07/share.

The market price, however -- down 50% in a month -- says that the market does not believe that will happen.

Mr. Haftel, we all appreciate your positive view of the (EEGC) world. But, time to state an opinion: do you believe the CEO of EEGC will buy all otherwise outstanding RO shares at .07/share, as part of the (extended) second round?

For those that believe he will do so, fantastic buying opportunity right now; I am just observing that the price of the shares suggest that the market is not expecting it.

I thought the license was explicit about Bellevue in the first year, Thunderbolt in the second year (probably because EEGC stipulated the priority) -- but I'm sure someone on the board can clarify.

Actually, I do say that perhaps Malcolm will meet the commitment:

"... or, the commitment will be met AND, for the first time, the company is saying it needs more than the RO amount to begin drilling"

Key point here is that under all alternatives, we are facing additional dilution; in the event the RO commitment is not made -- to me looking likely -- the dilution will be even more signficant.