is this palta, page-44

Does anybody know what conditions the majority of the Cypress leases were signed under? Were leases mainly signed with a 3 year primary term with a 2 year option, or another arrangement?

Holding acreage By Production (HBP) can be really make or break scenarios for some large projects. For example, TXN now has really no option but to offload it’s EFS project because of the company’s inability to finance enough wells to HBP it’s acreage.

With STX getting in on the Eagleford JV project in April 2011 (when it already had 8,000 gross acres), and with 1 well drilled and into production to date, it seems that the entire project could be facing an uphill battle further down the track with achieving HBP status.

Obviously things will ramp up substantially if things look rosy, but I believe that 38,600 acres will require the JV to drill 60+ gross wells to be fully HBP (considering the JV will not own 100% interests in all of it’s wells), and that’s a big task considering ramped up development (if things look good) is still a long time away. These wells take a fair while to drill and fracture stimulate, so personally I’m having doubts in this regard.

All IMO, and further down the track. But definitely worthy of much consideration I reckon.