Guy...CXPO.ob is selling for less than 2X forward cashflow of $8. Hard to find a stock selling that cheap. Should be in the 3 to 5 range, which is $24 to $40! In order to impress, they need to show some improvement in Production. Hopefully they can get some of their new wells hooked up in time to increase Q4 results. They appear to have several significant wells that could add several thousand mmcfe/d:
Madisonville Area (approximate 78% WI)
In September we sidetracked the Johnston #2 well due to a mechanical problem in the original wellbore. We will frac this well in November with production expected to commence in early December. Also, the operator of the capacity-constrained sour gas processing plant in the field notified us that the construction had been completed and that full processing capacity had commenced in late-October. During the third quarter, production from our Fuhlberg #1 well averaged a gross curtailed rate of 3,000 Mcfe/day.
Fort Worth Barnett Shale, Johnson and Tarrant Counties, Texas
During the third quarter 2007, the operator of our 12.5% working interest in the prolific Fort Worth Barnett Shale play in Johnson and Tarrant Counties commenced the drilling of wells on existing acreage and continued to build on our acreage position. We have acquired approximately 4,400 gross acres to date and will continue to accumulate additional acreage in the area. The operator of this project successfully drilled 4 of 4 wells in Johnson County during the third quarter, and has one currently in progress. The successful wells were drilled to depths between 10,000 and 11,400 feet. One well tested at 1,100 Mcfe per day, and was awaiting hookup, while the other three were being completed and fraced. All four of these wells should be placed on production by the end of November. Three more wells are scheduled to be drilled before the end of the year, with another 10-12 wells planned for 2008.
South Texas
We participated in five non-operated wells within the Lobo/Perdido Trend of South Texas in the third quarter of 2007, all in Zapata County, three of which were successful, one was determined to be uneconomical and one is still in process. The Gonzales #1 (CXP 15% WI) was determined to be uneconomical in the Lobo and plugging operations are underway. The Ramirez #1 (CXP 30% WI) was successfully drilled to a total depth of 9,800 feet, and 100’ of probable net gas was found in multiple zones. This well was put on production in early October at a rate of approximately 1,400 Mcf/d with additional zones to be added. The Garcia #1 (CXP 25% WI) was successfully drilled to a depth of 9,662 feet, and 60’ of probable net gas was found in multiple zones. Production from the Garcia commenced on 9/26/07 at an initial rate of approximately 1,900 Mcfe per day. The Vielmann-Ramirez #1 (CXP 20% WI) was drilled to a total depth of 11,100 feet and began flowing to sales on 10/16/07 at a rate of approximately 2,900 Mcf/d with additional zones to be added. The Fernando Cuellar #A-1 (CXP 20% WI) was drilled to a total depth of 9,450 feet and began flowing to sales on 10/22/07 at a rate of approximately 1,200 Mcf/d with additional zones to be added. The Guevara A-1 (CXP 20% WI) was spud on October 8th and was drilled to a total depth of 8,700 feet. We expect to participate in three to four additional wells in this program in 2007.
We also have a 75% working interest in the Cabernet and Merlot prospects in nearby Matagorda County, Texas. We own approximately 900 gross acres covering both prospects.
West Cameron 432
We participated for a 15% non-operated WI in a new field discovery with the drilling of the West Cameron 432 #1. The well was drilled to a total depth of 9,360 feet, encountered 200’ of apparent net gas in multiple zones, was completed and fraced, and is awaiting hookup. We expect that offshore facilities and a pipeline will be installed with initial production to commence in early Q1’08 at a gross rate of approximately 10,000 Mcf/d.
Sabine Lake
We participated for a 15% non-operated WI in a new field discovery with the drilling of the SL 19095 #1 in Cameron Parish, Louisiana. The well was perforated in several zones between 12,850 and 13,376 feet and tested at combined gross rates of 10,000 Mcf/d and 425 barrels of condensate per day. That well is expected to commence production in early Q1’08.
Liberty County, Texas
Crimson participated in the drilling of four non-operated wells in the Felicia area of Liberty County, Texas in the third quarter, as a result of the acquisition of the STGC Properties. The KMG #3 (CXP 9.7% WI) was drilled and completed in the Cook Mountain formation and commenced production in July at an approximate rate of 3,400 mcfpd and 1,000 Bopd. The Cimarex Kate Dishman #7 (CXP 7.8% WI) was drilled and completed in the EY-1 sand and is awaiting production facilities. The Edge Barrett #2 (CXP 20%WI) was drilled to the Wilcox 12,700’ sand where Crimson elected not to participate in a completion attempt. The Cimarex Willis Estate #5 well (CXP 28% WI) was drilled to 11,500 feet.
Other
During the third quarter, the Company also participated in a 3.55% WI in the Chesapeake Olivarez #2 well in Hidalgo County, Texas. The well was completed in the Mid Vicksburg and tested at an initial rate of 8,200 mcf and 155 bbls per day.
The Company is also participating for a 42.5% non-operated WI in the Tri-C operated Jackson Williams #3 well in Jackson County, Texas. It is currently drilling below 13,250 feet toward a 14,000 foot objective.
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