Lucero Energy Corp Com V.PSH

Well Development

[metzgf]

Let's see if I understand how this works. Let's assume that they start out to drill a well to a depth of 6500 feet. As they drill, they take core samples on the way down. Let's assume they find indications of oil at 3500 feet and 4500 feet and find gas at 6000 feet. Now they can't work all three of these areas at once so they encase the entire depth of the well. Then they go in and perorate at the 6000 foot level and start drawing off the gas. Now I assume they would move out a specified distance from the well and drill an offset well to a depth of 4500 feet. They would encase this offset well the entire depth of the well and then perforate at the 4500 foot level and begin to draw off oil from this location. Then they would move to another location and drill another offset well to a depth of 3500 feet, encase it, perforate at the 3500 foot level and then draw off oil from the location. Of course, sucess would depend on whether or not the offset wells also hit the oil bearing areas of the original well. Maybe someone who really understands this process could tell me if this is what actually happens. Thanks.