BNKUS's internally generated models show that a Sycamore/ Caney well with a theoretical initial production rate of 450 BOPD would be expected to produce over 650,000 bbls of oil and yield a rate of return greater than 150 percent (based on 3 years of future strip pricing followed by Sproule's forward curve pricing). In addition, this modeling also estimates that an initial production rate of only 150 BOPD, recovering 180,000 bbls of oil, would provide a 10% rate of return. These models are based on the results to date of testing the Barnes 6-2H well and the Nickel Hill 1-26 well and also incorporate the anticipated effect of the potential future optimizations referred to above. Since these zones are present over BNKUS's entire acreage position with average to above average calculated net pays (from publically available data), based on this modeling, Sycamore/ Caney well development, if successful, would provide significant reserve additions.Provided required capital is available, BNKUS also plans to drill Woodford shale wells in 2013 that will target oily areas of the field that have a high oil to gas ratio. Internal modeling by BNKUS shows that these oily areas should generate a 50% rate of return based on the same pricing assumptions as utilized above. BNKUS's partner and offset operator, XTO, appears to be focusing its Woodford activities in similar areas and has recently applied for a 55 acre spacing (11 wells per section) in a section where BNKUS has a non-operated interest. It should be noted that BNKUS's reserve report assumes a 160 acre spacing scenario (4 wells per section) for its current third party reserve estimate.
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