p.s. re p.s., page-42

I have reviewed their October Wells from the ND website and it appears that more wells were down for October 11 than September 11 (including the 19.22% Henderson Well which only produced for 7 days, and another 4 wells produced for 7 or less days compared to 2 in September 11, excluding new wells). This is a normal part of the production process.

I addition they have the following Helis Wells in the Grail field coming up:
Frac to Complete (from last production report)
19894 Gabbert 4-2/11H (SEA 7.16%)
20226 Moberg 4-20/21H (SEA 6.48%)
Waiting Frac (from last production report):
20780 Henderson 1-28/33H (SEA 6.62%)
Drilling (from last production report):
21052 Moberg 15-22/15H (SEA 7.15%)
21054 Veeder 1-27/34H (SEA 2.42%)

Plus another 35% wells as per last production report from Helis and Hess in the Bakken. As per the ND oil & gas website this is the performance (oil BBLS and oil runs only, not sure what oil runs means) of the last 3 wells drilled by Helis in Grail Field:

19323 Thompson 1-29/32H (SEA 4.80%) - The best well I have seen for SEA Wells, paid in less than 3 months.
Monthly Production Data
Pool Date Days BBLS Oil Runs
BAKKEN 10-2011 31 28300 28821
BAKKEN 9-2011 29 33013 32458
BAKKEN 8-2011 30 46808 47182

19680 Johnson 1-4/9H (SEA 7.16%)
Monthly Production Data
Pool Date Days BBLS Oil Runs
BAKKEN 10-2011 31 20375 19846
BAKKEN 9-2011 30 34126 33610

In addition the Gabbert 3-3/10H Well as per last production update had it producing from 7/10/11:
19898 Gabbert 3-3/10H (SEA 7.16%)
NDIC File No: 19898 API No: 33-053-03354-00-00 CTB No: 119898 Well Type: ON CONFIDENTIAL STATUS
Location: LOT 3 3-149-95 Footages: 300 FNL 1550 FWL Latitude: 47.759837 Longitude: -102.827700
Current Operator: HELIS OIL & GAS COMPANY, L.L.C.
Current Well Name: GABBERT 3-3/10H Field: GRAIL
Monthly Sales Data:
Date Oil Runs MCF Sold
10-2011 38639 14418
(As this well is on confidential and normally we get nothing until it comes off confidential, for some reason it is showing the oil runs and MCF sold for Oct 11 and no more information until Jan 12 when comes off confidental. But comparing the oil runs to the above wells you would think that it will be pretty decent).

If these newer wells perform in a similar fashion (and please note there is no guarantee they will but produce they should) they whould help us maintain or even increase production taking into acocunt declines. Of course some wells do not produce for periods of time so monthly amounts could fluctuate. Also our $75 hedging is finishing this month for 4,000BBLS per month (which we should have done by today).

In regards to the May Jon Wells they are Vertical Wells and cost a lot less to drill, I think around $500k to $600k. They generally produce a higher amount of gas to oil for example:

The May Jon #2 in first Month of Production in Nov 10 produced 1,200 Barrels of Oil and with gas 2,063BOE (the monthly total) and the May Jon #4 in first month Nov 10 907 Barrels of Oil and with gas 1,555BOE (the monthly total). It gradually then seems to settle around 1/3rd oil and 2/3rds gas. So 1.5 wells could bring an additional 75BOPED to 100BOPED for the first month and then declining from there. Then we have the 100% May Jon well in December 11.

So you would think production is looking ok while we await the newer plays.

This is from my research via the oil and gas websites so as always should wait for offical company announcements but from what I see I do not think production is the issue.

Also I would like to point out production is not decreasing but is increasing (just not hit previous targets):

For June 2011 year we produced 719BOPED
For September 2011 quarter we had net production of 885BOPED for the quarter (oil price $US79.55)
So far for the December 11 quarter in October 2011 we have net production of 983BOPED

The average for the first 4 months of this financial year is therefore around 910BOPED or a 26% increase on 2011 and we have not even drilled a well over 10% yet.

Lets see what November 11 brings.