Question-and-Answer Session
Operator
Your first question comes from the line of Neil Denman with Dell, Mann Rose & Company.
Neil Denman – Dell, Mann, Rose & Company
Good afternoon, guys. Or morning I should say.
Group
Good morning.
Neil Denman – Dell, Mann, Rose & Company
I would like to say -- I’m just wondering now, I guess, on what you’re seeing now, sort of service cause, rate cause, as far as you seem to be in a pretty good cash position – does that make? – you have to see, I guess is what I’m asking – more results before you would decide, let’s say, add a few more rigs in Bur – in different regions. And as far as adding rigs in some of those around that, would you decide to lock those in here at these rates for a longer period or are you still going to continue sort of on a day-rate basis.
Jim Sigmon
Well, we plan on a day-rate basis. We think that the rigs have pretty much flattened out as far as the cost and escalation that we saw last year, early on, that they were increasing rapidly. We think, Neil, that they’re going our way right now. Now, we know that with oil prices going up and with gas prices staying up that the activity levels will increase for everybody which may make them tight again. But at the present time – I mean, that’s all I can address, where I’m at today – we’ll just continue with what we’re doing.
Now, you mentioned about how fast can we ramp up on activity, we just lack a little more production and a little more information. We’re excited, as you can tell by our Pearsall well, the first indications are very good, but we just have the one vertical well that’s been producing for a few months and this is our first horizontal well, so we need just a little bit more time on that before we ramp up activity following on Pearsall.
In addition, in the Fort Trinidad area – you can tell we’re already excited, we’re bringing in a second rig – so we’ve got a little bit of indications there but before we bring in a third rig we’d like to get some production on-line for a little bit.
Neil Denman – Dell, Mann, Rose & Company
I think you’ve kind of answered my next question, Jim. It sounds like still the cut backs in a lot of your plans this year obviously and intentionally are somewhat flexible depending on how some of these results play out the next couple to few months. Is that fair to say?
- To read the full transcript on Seeking Alpha, click here »
