Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from David Heikkinen - Tudor, Pickering, Holt
David Heikkinen - Tudor, Pickering, Holt
Thinking about the transactions in East Texas first versus North Louisiana, any thoughts about further deep right sales or a mark of value of this sale versus what you have in North Louisiana.
Tom Ward
I’m not sure what the market would be like in North Louisiana right now as some other wells are being drilled very close to that acreage. I can’t say that it’s going to be better or worse then East Texas. We felt comfortable with knowing that in our capital raise that we would use the capital that we have to drill West Texas Overthrust versus our [inaudible] acreage so that’s why we moved forward with the sale of East Texas.
David Heikkinen - Tudor, Pickering, Holt
Why East Texas versus North Louisiana just because of wells being closer to your acreage in North Louisiana or it’s a better option.
Tom Ward
I think that there is maybe more development around the wells in East Texas and there are still more unknowns and maybe more upside in Louisiana site.
David Heikkinen - Tudor, Pickering, Holt
The midstream letter of intent any thoughts around timing of getting everything signed and closed.
Tom Ward
We’re still holding to the close in the second quarter.
David Heikkinen - Tudor, Pickering, Holt
On the Piñon field and your Warwick well results coming in at $2.2 million how much better can that get or is that an optimal level now?
Tom Ward
I think it’s pretty optimal.
Matt Grubb
That same question was asked to me last quarter and didn’t think it could get any better. At that point we were at $2.4 million. We kind of finished ’08 at $2.8 million and at the height of that activity last summer it was about $3.3 million so its come down 34% since the high. A lot of that cost savings, the $1.1 million from $3.3 to $2.2 million about half of it’s from a high pressure pumping services and steel in our costs. The rest of its spread over about 70 different items on our AFE.
I think we’re getting to the point we’re probably bottoming out and we are continuing to negotiate pretty hard with our service providers to lock in some of these costs on a longer term basis. I’m a little surprised its gotten this low but I think we’re certainly very pleased with it and we’ll try to do better but I’m just not hopeful that we can.
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