INTERVIEW WITH MIKE SANDY, EXECUTIVE DIRECTOR OF BURLESON ENERGY LIMITED (BUR)

“Market Update”

http://www.brr.com.au/event/51457

THURSDAY, SEPTEMBER 11, 2008, 1:55 PM.

            BRR    Good afternoon and welcome to Boardroomradio. Today, we’re speaking with Mr. Michael Sandy, Executive Director of Burleson Energy Limited. Thanks

10                    for joining us today, Michael.

            BUR    Thanks, Eddie.

            BRR    Michael, we see ever since release date an update on your current activities in the underlying messages that Burleson is really entering a different phase

15                    of its development. However, you’ve also had some good progress with your current project, in particular the chalk wells. Could you give us some update on this?

            BUR    Yes, sure Eddie. Things has been going very well operationally over the last few months for us, but, yes, just getting back to how the company was

20                    originated. The original plan of the company was to drill some chalk wells and build the business in cash flow and reserves and so on. To a certain extent, we’ve got there and that we’ve drilled… just finishing our 5th well. Now the current well is looking really good in that it was drilled within budget and within time and intersect a lot of gas that’s actually flowed up in the initial flow

25                    back right to the very healthy rate of over 12.5 million cubic feet a day which is very good rate. That’s encouraging, it’s not necessarily we’ll get those rates when we start putting it to sales, but hopefully somewhere around that.

                        In terms of the finances of the company, we’ve got about $2.8 million in the

30                    bank with the seismic instalment due to be paid this month, and we got monthly income of about A$250,000 from the three wells on production, and we got one blocked well and that’s being worked to be cleared. We expect that would come on and probably provide in the vicinity of $50,000 per month initially when it comes back online. But, the big boost should come from the

35                    Marlin #2 well which I just described and that’s looking pretty healthy. So the idea was really to build the chalk well so that we have a good supply of cash to do other projects.

            BRR    Mike, obviously looking to do this other projects, is this part of the new phase

40                    that builds and is going to be entering into and as part of its development?

            BUR    Indeed yes, and the first of these and the most important is this new 3D project. We actually, Eddie, we made a release on that on the 15th of July, which is on our website. But in brief, it’s a project there involving nearly 120 square miles of area that’s got 2D seismic over it, and some evidence of

45                    structures and prospects, but no 3D and so it’s a bit of a rare herd in that area. It’s not too far from our existing acreage but as we’re getting lease options at the moment we know that identifying the actual area that we’re looking at until we’ve got the leasing a little bit more secure. Based on 3D areas around there, this project will deliver a large number and maybe at more than 50 low risked, low cost targets at four different reservoir levels, and in the shallower levels anybody if familiar with that area would be aware of the Frio sandstone there. The seismic generates direct harder carbon indicator, so these prospects are showing up by bright spots with GI Joes as

5                      they’re known. So that makes the identification prospects so much easier and reduces the risk considerably. Looking to start drilling in that project in early 2009….. and the other thing that we’ve moved on to in this cost environment obviously one of the implications of higher oil prices has been higher drilling cost and equipment costs, etc., etc. So to reduce those costs and risks we’ve

10                    commenced a process farming out some of our equity interest in all our projects, and we’re approaching companies in Australia and the US to do so.

            BRR    Michael, just lastly, what are the plans for those and with its current acreage there, is there a plan to invest in some new projects there?

15        BUR    Eddie, at a sort of an area we’d been looking at for quite some time so it’s not particularly new but I supposed it’s new in terms of the announcement. You know, one of the options we got big acreage position in four different counties and will be five soon, in Texas, and that’s an extensive area and you know, we’ve picked up mostly acreage in the initial four just to initially go for the

20                    chalk, but rather than going off and doing new projects which, of course, will involve more cost, we’ve been looking inward at these areas, and have come up with quite a few different projects so we can do in there our existing acreage and most of these will be at quite low cost. One of them we’ve been talking about for a while but AKG, our operator in Austin, have been looking

25                    at well re-entries and they’ve come up with a large number of plugged and abandoned wells in which oil and/or gas have been left behind or missed by logging, etc., and what AKG is doing, in particular the geophysicist have been looking through these candidates and high grading the best prospects because there’s a lot of them and obviously leasing and all of the other things

30                    need to be looked at as well, but that’s very exciting relatively low cost, low hanging fruit type project.

                        The other thing that we’ve been aware of for a while is that in the Wilcox Formation, which is in relatively shallow depths in our chalk acreage, they do

35                    have gas bearing coal. So, we do have coal that emit methane potential in our areas and AKG reviewing the available data with the aim of looking at setting up a coal seam methane drilling project.

                        Lastly, it’s a little bit of a long shot, but it’s quite a lot of fracture shallow

40                    developments, within the US and Texas in particular, and two large US independents are working in the same region as us but this is Apache and Anardarko, but Burleson is targeting fracture Eagleford Shale, which actually does underlie the Austin Chalk in most of Burleson’s acreage. So, there’s another potential play that’ll be deep and probably more expensive but there

45                    would be potential for getting farm-in partners into those sort of areas.

                        So, all in al, we’re really are, as you indicated, Eddie, moving into a new phase in the company’s development turning the cash flow and reserves that we’ve forgot in the Chalk into lower risks but hopefully still higher reward project that involve less cost to Burleson.

            BRR    Mike, we certainly did…. thank you for taking your time out today to update

5                      the listeners, it definitely sounds promising. We thank you for your time today and look forward to speaking to you soon.

            BUR    Thanks, Eddie.

            BRR    That was Mike Sandy, Executive Director of Burleson Energy Limited. If you

10                    have any questions about this broadcast or any other broadcast, please feel free to contact us on brr@brr.com.au. I’m Eddie (Inaudible) (00:06:56) and thanks for listening to Boardroomradio.

INTERVIEW CONCLUDED

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