pb lease question, page-7

Hi Daruma

IMO I think you've hit the nail on the head here and these are my thoughts as well.

If we have our hands tied with this legal issue hanging over our head and are pretty much out of cash then this next horri won't go even close to generating the required cash flow to sustain any sort of drilling program because, as SG has stated in the brief yesterday - their focus is going to be on horries!

There's no way in a pink fit we're ever going to retain all the land come April! I think we'll lose all the Iron County land as there's no mention of any type of drilling in this area at all in the near future as it’s never even been discussed in any plan since the PB was acquired.

This is from the brief yesterday -

"To date, we have drilled four vertical wells, which retains by production 640 acres of our 8,800 acres. Based on the State of Texas guidelines and leaseholds conditions each vertical well holds 160 acres. A horizontal well falls under different guidelines and the amount of acreage held by production depends on the lateral length of the well. We expect that our first horizontal well will hold somewhere between 240 to 320 acres. Permitting a well does not hold any acreage. It is only held by actual producing wells."

So, by my calculations we will have drilled 960 acres out of the 8800 - how the bloody hell are they going to drill the rest by April????

We've drilled approx 12-14% (or will have) and stand to lose a sizeable amount of what’s left if they don't get a move on and get some significant funding and the only way I see them being able to pull this off is buy giving up the 25% to whoever it is, get a JV with some decent funding and start sticking holes in the ground very bloody quickly!

75% of 8800 acres is way better than S.F.A. of virtually nothing! .......... IMO the SP isn’t going anywhere fast unless we get this mess sorted – and pronto!!