Plan of Operation
Colorado.
We expect that the development of our Colorado properties will include the following activities: (i) the tie-in of two wells drilled, cased and completed to date, and the completion and tie-in of three wells drilled and cased to date in the Buckskin Mesa Prospect (four wells drilled and cased during fiscal year 2007; one well drilled and cased during the first quarter ended December 31, 2007; and two of the five drilled wells completed during the second quarter); (ii) the drilling of a minimum of 13 commitment wells in our greater than 20,000 net acre Buckskin Mesa Prospect leasehold block surrounding the discovery wells for the Powell Park Field near Meeker, Colorado in the northern Piceance Basin; and (iii) the recompletion and tie-in of the six shut-in gas wells in the Powell Park Field acquired by us from a third party operator.
We anticipate that the development of the Colorado assets will require $41.0 million to $60.0 million in connection with the Buckskin Mesa Project, to include expenditures for seismic data acquisition, lease and asset acquisition, drilling, completion, lease operation, and installation of production facilities.
We are currently attempting to rationalize the Colorado asset base to raise capital and reduce our working interest and the associated development costs attributable to such retained interest.
Australia.
We plan to explore and develop portions of our 7.0 million net acre position in the Beetaloo Basin project area located in the Northern Territory, Australia. Because we have obtained extensions on our drilling requirements related to these properties, we do not currently have drilling commitments in Australia in 2008. During calendar year 2009, we plan to drill eight wells in the exploration permit blocks. We anticipate that costs related to seismic acquisition, development of operational infrastructure, and the drilling and completion of wells over the next sixteen months will approximate $45 million. As a means of reducing this exposure, selected portions of the project portfolio will be made available for farm-out to industry for cash and payment of expenses related to drilling and completion of one or more wells in each prospect.
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