The JV Partner is fully committed and funding is in escrow. There is no walking form the JV until after the $41 million is spent (end of 2012). The market is reacting to the news that Rosetta released yesterday whereby they announced stabilized test rates of 154 boe/d and 104 boe/d on their first two HZ Bakken wells. The market did not think this was positive as they were looking for initial production rates of 250 bbls/d.
The disconnect here is that a stabilized rate of 154 boe/d means just that the rate of oil coming out of the formation and up the well bore has stabilized at 154 joe/d so that the oil level in the vertical portion of the well is constant.
This is very positive as it means that the majority of the decline in well production has taken place. In other words the well probably had an initial production rate of probably over double the stabilized rate, which is right in line with what was proposed as commercial in their August presentation.
I believe the market is not comparing comparable information and is assuming that IP rates and stabilized test production rates are the same; THEY ARE NOT.
The unknown part of the production disclosure that ROSE provided yesterday was how long the stabilized production test was at 154 boe/d.
We do know that they were flow testing the well in Nov. and were awaiting stabilized rates before releasing results, so one can assume that this well has been flowing for about a month.
Bottom line is that if Primary can produce a 154 joe/d stabilized producing well for approx $4 million well cost, that would be a good commercially viable well.
What is going on in the market is news that was not interpreted as positive and with the state of nervousness in the overall markets has caused a large amount of investors to sell their stock. On the positive side, there were over 2 million shares bought by investors who can understand what the information released by ROSE really means
Primary has not changed one bit, we have over $20 million in cash and a $41 million fully funded drilling program with an experience JV Partner onside.
Regards
Mike
Hold yer' horses... and your shares :-)