Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Noel Parks – Ladenburg Thalmann.
Noel Parks – Ladenburg Thalmann & Co.
Just a housekeeping item, at the point we’re at now, sort of mid quarter, what’s the current production [inaudible] company?
Patrick McKinney
Noel we’re still in that range of first quarter production in the 1235 BOE range.
Noel Parks – Ladenburg Thalmann & Co.
You mentioned renegotiation of the pulling unit contracts and I was wondering if you could just tell me a little bit about that. Was that easy or difficult, and sort of the attitude of the suppliers and also what you think the costs trends look like for the rest of the year into maybe the first half of next calendar year?
Patrick McKinney
I think that we have a unique relationship with our pulling unit partner in the panhandle as we've had a relationship with them for quite some time and we were able to negotiate a reduction in rates and actually go through and work out a deal where we’re able to manage the workflow a little bit better. I think in general obviously what we’re seeing is rates are being stacked I think drilling costs are going to be soft for the next quarter or two at least of our type of projects with the rigs that we are looking at.
We haven’t really seen a big reduction or an indication of softening of other services but I think that electricity costs are coming down just a lot of general commodity related costs are going to come down in this quarter for us, but yes I think it’s still too early to tell exactly what the impact of the service industry is going to be.
Noel Parks – Ladenburg Thalmann & Co.
Okay and at Panhandle where you're talking about how the oil cut varies in different parts of the field at least 4% to 10% could you talk a little bit about how different areas of the field are responding and what’s the nature of the differences and maybe a sense of whether you think the field as a whole oil cuts is going increase pretty uniformly or whether it’s going to be more in certain areas of the field?
Patrick McKinney
Sure, Noel well as everyone's aware we started injection out here and it wasn’t a full field injection so certain parts of the field have received more injection than others. With the results of our surveillance work I think we’ve really, really isolated the key zones out there in the field and in some cases those are starting to respond.
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