fundamentals,eagle ford,permian basin, page-35

just back to EFS for a moment,

per Terrace last Qtrly (end July '12) and for which a Oct'12 update is due end of Nov I think...

Remember we have 10% WI paying 11.1% costs (I believe) - so 1/3 of Terrace numbers

Cutlass

In November 2011, the Company entered into an agreement, through a wholly-owned subsidiary, to earn a 25% working interest and an 18.75% net revenue interest in certain leases covering 3,395 net acres in Dimmit and LaSalle counties, Texas for $376,508 and a commitment to participate in a two well drilling program. In February 2012, the Company acquired an additional 5% working interest and 3.75% net revenue interest for an additional $233,254.

In order to earn the net revenue interests (22.5% in aggregate), the Company agreed to pay 33.33% of all costs, including acreage leases, prospect fees, site preparation and drilling, until the completion of two wells, and thereafter 30% of all costs relating to the lease payments, prospect fees and infrastructure costs covering 1,342 net acres (the “Dimmit County Acreage”). The Company advanced the sum of $2,133,019 in March 2012 representing the operator’s estimate of the Company’s share of costs to drill, evaluate and case both the vertical and horizontal extensions of a prospective well. This phase of work was completed in July 2012. The Company subsequently advanced the sum of $260,139 to fund the initial phase of well completion. The Company estimates that its share of completion costs will be approximately $1,500,000. In order to secure its interests in all of the Dimmit County Acreage, the Company must participate in the development of one additional well at an estimated cost of $2.7 million. Work on this well is currently scheduled for the second quarter of the Company’s 2014 fiscal year.

After the drilling and technical evaluation of the first well on the Dimmit County Acreage, the Company had the right to exercise its option to earn a 22.5% net revenue interest in the remaining 2,053 acres (the “LaSalle County Acreage”) at a cost of $813,460, representing the operator’s estimate of the Company’s share of lease payments. The Company exercised its right under the agreement and made the payment in June 2012. The Company was obligated to fund 33.33% of the cost of an initial well on the La Salle County acreage. In June 2012, the Company advanced the additional sum of $1,453,000 representing the operator’s estimate of the Company’s share of the drilling, evaluation and casing costs of the vertical extension of the prospective well. To July 31, 2012, the Company’s share of costs incurred was $1,019,275. The balance of the funds advanced will be applied against subsequent costs incurred. Upon completion of this development phase the Company will secure its interest in all of the La Salle Acreage. The project operator, with the Company’s assistance, intends to evaluate various prospective productive formations which were intercepted before establishing a completion schedule.


Will be interested to read what they say for the Qtr just ended.