This initial drilling phase may be adjusted as mutually agreed between the Company and Apollo.
(i)Roja and Madera are operated by OXY USA Inc., and Lynch is operated by Mewbourne Oil Company.
Operational updates regarding the properties listed above will be provided to the market as appropriate, and the current status of each is provided below:
-- Lennox: the Lennox State Unit 32 #2H well has been drilled and is producing from the 2nd Bone Spring Sand, while the Lennox State Unit 32 #4H has been permitted and is planned for Q4 2013;-- Copperline: the Caza Ridge 14 State #4H well is in the final completion phase. It has been fracture stimulated and is being produced to recover frac fluids and hydrocarbons to establish an initial producing rate, which will be disclosed in due course.;-- Gateway: the Gateway 2 State #1H Bone Spring well is drilling ahead at 8,641 feet;-- West Copperline: the West Copperline 29 Fed #1H horizontal Bone Spring test well is currently planned for September 2013;-- Forehand Ranch: the Forehand Ranch 27 State #3 vertical well is currently planned for Q3 2013, and will test the Ramsey Sand at approximately 2,500 feet;-- Mad River: the Mad River 13 State #1H horizontal (Bone Spring or Brushy Canyon) test well is currently planned for Q4 2013;-- Roja: the Madera 17 Fed #1H Lower Brushy Canyon well has been fracture stimulated, was shut in for a period and placed on rod pump and is in the final completion phase;-- Madera: the Madera 35 Fed #1H 3rd Bone Spring well has reached its intended total measured depth and is being prepared for fracture stimulation;-- Lynch: the Company is pushing for a Bone Spring development well to be commenced in Q4 2013.
W. Michael Ford, Chief Executive Officer commented:
"We are very pleased with operations on the various wells we have drilling, producing or being completed in the Bone Spring play. We have recently been successful in enhancing some of our historical production in Wharton County, Texas, through workover operations. These operations coupled with bringing new Bone Spring wells online in the very near future, and continuing to do so throughout the remainder of 2013, should begin to be reflected by improved production and cash flow figures in the next quarter.
"Our current financial numbers are still being skewed from the sale of the San Jacinto property, which results in a negative impact on the comparative figures from 2012, that may continue through the end of Q3 (2013), which is when San Jacinto was sold last year. Despite this, the Company is on track to replace and surpass losses from San Jacinto in very short order and continue this upward trend with the Company's current sustained drilling program continuing to boost production and cash flows and enhance reserves and shareholder value into the foreseeable future.
"Along these lines, we are happy to be drilling at Gateway and finalizing the completions on the OXY operated Madera wells and at Copperline on the Company operated Caza Ridge 14 State #4 well. We are excited to get these wells online and producing in the very near future. The Caza Ridge well appears to be a very good well, and we look forward to updating the market once initial rates for oil and natural gas are established. Also, our recent lease acquisition has improved the Company's acreage position in the Bone Spring play and has increased our net position in the play to approximately 4,700 acres with an estimated 270 drilling locations."