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Sept 2012 Annual

During the financial year, the Company undertook a 3D seismic survey to identify faults and fracture potential which is necessary for productive wells. Three test well locations were selected and drilled with short horizontals (approximately 5,000 feet in length) into the lower part of Bench A. The wells were fracture stimulated with approximately 20 frac stages.
All three wells flowed oil, and have eliminated a key uncertainty regarding the prospectivity of the acreage, proving that the Wolfcamp in Fiesta is in the “oil window”. This means, from a technical standpoint, that the thermal maturity of the hydrocarbon bearing interval is such that it is likely to produce predominantly oil, rather than gas and Natural Gas Liquids (NGLs).
These three test wells flowed at initial rates of between 50 and 300 boepd.