Thanks for your note and your support on Hot Copper.
One of the problems that we encounter is that because we give regular updates to the market and we tell the story "warts and all" the market therefore sees all of the stuff ups. For instance the frac plugs that we use regularly get stuck but most companies don't bother to tell their shareholders the gory details. So in one sense we are a victim of our open and honest policy.
In terms of the operational problems.
The Defender pump problems really stem from the amount of gas that is in the oil. This was not known before we started to produce and was a pleasant surprise because the key risk in this area was going to be the maturity of the Niobrara and that is now not a problem. I'm actually confident that this project willl be economic but clearly we have to sort out how to get the fluid to the surface, the jet pump is likely to fix this.
The service industry certainly is streched in places and for instance the wireline crew that we had on the two Roosevelt wells were less that satisfactory and we will not use that company or their product again. But on the other hand the frac pumping shortfall that we saw last year has disappeared and now we have frac crews calling us for work. This means prices have come down and the delays have essentially disappeared.
In terms of Gretel it is a matter of getting the fish out of the hole and the frac valves drilled out, up until that point the jury is certainly out. The other problem that we have is that no one has every drilled a Bakken well in this area and therefore there is no history to judge what we should be seeing in terms of an oil cut. You will note that our releases don't try to interpret the results for the market. I think that it is a mistake to do so, essentially because in the resource business there are always things that we dont know until we actually get done.
The workover on Australia II has been very poor and that rig has not performed, but workover rigs are hard to source and so we have had to sort of stuck that up, however the worst is over and getting the tubing in the hole is the end of that job.
We are expecting though that the Gretel drill out will go more to plan particularily that the stuck plug and gun is in the vertical part of the hole and therefore it should be much easy to pull on.
I'm not a huge fan of BRR the few interviews that I have listened to always seem to be very "wooden" but I will give it some thought. The IPAA presentation will be webcast so you will be able to hear that one, the details will be out later this week.
regadrds
Terry Barr
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