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[QUOTE]Originally posted by jagman925: [QB] No speculation; all facts: Fortunately for the Company, the large natural gas well we completed last year on our Devon farmout (which we call the Neal Heirs #1) confirmed to our engineers that we own part of an oil field with two to four Million barrels of oil recoverable which are proved. As we announced in our press release dated April 16, 2012, we presently own 690 acres in this field and are working to lease the remaining 1,500 acres covering the field. Since we own approximately 32% of the field we can extrapolate there are 704,000 barrels of recoverable reserves of oil. The Neal Heirs #1 alone arguably should recover 115,000 barrels of oil from the existing well bore valued at over $12,000,000. The cost to recomplete the well bore in the oil bearing sands is less than $225,000. Not a bad trade off. For a minimal additional investment of approximately $2,800,000 in six (6) additional wells in this field the Company could produce another 700,000 barrels of oil. The Proved Developed Producing value of these six (6) wells would approach approximately $15,000,000 discounted at 10% (known as ďPV(10)Ē). This alone should be worth well over $0.50 per share. Although this is a simplistic analogy, I think you can see where I am going with this type of discussion. To put this in prospective, when we drilled the Neal Heirs #1 last year we spent about $2,700,000 in order to book proved natural gas reserves with a PV(10) value of about $2,900,000 when natural gas was about $5.50/MCF. PV(10) is a net of cost number so you can see that it was a good well. But I think you can clearly see how much better oil is than natural gas with respect to return on investment in the current price environment. This is one of the reasons why we are refocusing on oil instead of natural gas. And donít think we donít own acreage in Colfax County that will be productive for oil. We do! Itís just we were focused on the natural gas found on the property and it takes time to reprocess the data we have for oil. We are moving as fast as we can to do the scientific work necessary to let you know what we think we own. It will be worth the wait. Second, the four deep gas wells which we own and are already drilled, are producing from their lowest open zones. The major zones the wells were drilled to produce have yet to be opened for production. What this means is when natural gas prices recover, we will have very good production from wells that we already own. While itís not economically feasible, nor sound management practice to open these other zones at the current price of natural gas, these wells are valuable and will continue to be so down the road. Natural gas sold at a high of around $5.00 in the past two years. We believe it is in the best interest of this company to wait and open the other zones when gas prices rise again. The same analogy clearly applies to our large gas reserves in Colfax County, New Mexico. [/QB][/QUOTE]
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