Natural Gas Systems Discusses Extraction from Mature Fields (NGSY)

| About: Evolution Petroleum (NGSY)

Natural Gas Systems, Inc. (NGSY) develops incremental oil and gas reserves in areas of identified and found oil and gas properties -- in other words, it redevelops existing mature properties. Excerpt from The Wall Street Transcript's 4/10/06 interview with CEO Robert Herlin:

TWST: What's changing about customers and markets, competition, what are those dynamics and what will benefit Natural Gas Systems?

Mr. Herlin: The oil and gas business has always been an extremely competitive business. There are hundreds, if not thousands of people in the same space and so what we have to do is identify what is our particular niche. What is our area of competency? And how can we compete effectively? We focus on an area that we believe is a market niche with less competition, going into very old fields and redeveloping them. We focus on properties that most companies would not consider to be attractive because of low margins or upside.

We believe that making a small margin on a lot of opportunities, lots of wells, is perfectly fine. Taking a well from five barrels to 10 barrels a day for us is very attractive. Drilling a well for a quarter million dollars that will produce 40 barrels of oil equivalent per day for us makes economic sense, but it is not attractive to many other companies. So in that sense, there is a niche that we think has been underserved in the market.