The Mako Trough is considered a "Tight Gas Play" which essentially means the gas is trapped in small pockets of rock with low permeability.

In a "Conventional” reservoir, the permeability of the rock is enough that the gas can escape from the high pressure formation, to the low pressure well. In an "unconventional well", this process must be assisted by creating artificial permeability. This is done by a process called Fracturing (fracing), which is the process of pumping massive amounts of fluid downhole under high pressure to "open" the rock pores. At that point propents, such as properly sized engineered sand, are pumped down to "prop" the pores open. If all goes well, the formation will then start to produce on its own.

An unconventional well is way more complex and expensive than a traditional well, therefore the payout:risk ratio needs to be adjusted accordingly.

If you are new to this stock, I would recommend reading both the Macquarie and BMO analyst reports, as well as the most recent Scotia resource estimate report.

Macquarie: http://www.2shared.com/file/4262133/...

BMO: http://www.falconoilandgas.com/pdf/B...

Scotia Report: No link, maybe someone else can help here

(thanks to Phil @ http://makotrough.blogspot.com/ for the links.

SILVERHOUND