In Wharton County, Texas, the Company also reported that it has reached its target depth of 11,500 feet on its "3-D Bright Spot" test of the Yegua formation. This wellbore is a "side-track" from the original well following the abandonment of the lower portion of the original well at the end of June, as previously disclosed. Following various surveys to measure critical properties in the lower portion of this sidetrack, the Company and its partners have elected to install casing in the well. The Company expects to begin efforts to test the well for productive capacity within the next two weeks. If successful, and allowing for the installation of production facilities and pipeline connections, the Company expects to have the well producing in September. The Company has a 5 percent interest in this prospect and, exclusive of land costs, estimates having spent approximately $220,000 to date on drilling this well. As previously disclosed, and while still not confirmed, a large portion of these drilling costs may be recoverable from insurance coverage held by the operator of the well for the benefit of all the working interest owners. Basic expects to incur an additional $25,000 to install production facilities and place this well on production.
Basic has not yet finalized its estimate of initial production rates, or impacts on the Company's revenues and reserves for either well.
"There is something exciting about having the very first oil from a new well flowing into a tank on location," said Ray Singleton, president of Basic. "And, it is extremely encouraging to make such positive progress on both wells in the same week. We look forward to announcing production levels and the impacts on revenues and reserves once these wells are actually on production. The Lynn #1 and the Wharton County well are the first wells in what is anticipated to be a level of drilling activity that for this Company has been unprecedented in the last twenty years. With widely dispersed exposure, our efforts over the next several weeks and months will search for both natural gas and oil and involve both exploration and development drilling activities in North Dakota, Montana, Colorado, Texas and Canada. Based on the initial results provided by these first two efforts, we are encouraged by the significance the total exploration program could have on the Company's reserves and future revenues."
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