Lightstream Resources Ltd. LSTMF

RE: Redeployed capital

[Wellsitter]

Every situation ought to have a yin and a yang. You don't sound pessimistic. Calm and reasonable debate from all perspectives is always in fashion in my house. You'll note that i haven't tried to counter your assertion that the management seems scattered and thrashing. They've done nothing to indicate otherwise, at least publicly. Maybe they do have a grand, albeit unpublicized, plan that is being perfectly executed.

I won't dispute either the 5% increase in costs this year so far. However, taken in the context of the 30 - 50% hair-cut most of the suppliers have taken since 2008, it's pretty reasonable and in the case of service and drilling rigs, is likely all due to wage pressure. The industry is going to have a hell of a time mobilizing the 200 service and drilling rigs that are supposed to be going to work in the next 90 days.

I will take issue however, with your assertion that only the state of the art equipment can drill sideways. The main requirement is horse-power (no mules) and a skilled directional dude. Mud-motors are a rental item that can go on any rig with a set of traveling blocks and a decent mud pump (also a rental item if necessary). So the truth is, anything that can stand upright and turn to the right is capable of delivering a horizontal well-bore. With over 450 rigs standing idle in Alberta alone at present, it won't be hard to find one either. PBN will face the same limiting factor as Cenovus and that will principally be the inability to staff the equipment.

As for planning, PBN has swallowed several other juniors who, for the most part, appear to have had existing plans in place. Perhaps a simple continuation and execution of those plans is all that PBN management has in mind for the 2010 season.