Increasing its capital spending to $35 million allows the Company to increase its participation in Bakken and Three Forks drilling in fiscal 2012. Approximately 65% of the Company's $35,000,000 drilling budget is earmarked for the Bakken and Three Forks project.
About 20 Bakken and Three Forks wells are currently scheduled for fiscal 2012. Individual wells are expected to cost about $10 million, and the Company's average working interest in the wells is estimated to be approximately 12%. The Company's actual working interest in individual wells will range from very small up to 20%.
As previously reported, the Company expects to finance its 2012 drilling budget from existing working capital, cash flow and $7 million to $12 million of debt financing. The increased drilling budget is expected to require fiscal 2012 debt financing toward the upper end of the range.
Marlis E. Smith, Jr., Chief Executive Officer, stated, "We have great opportunity across our entire oil drilling portfolio. In addition to increased Bakken drilling activity, we are beginning to see more Three Forks well proposals. For 2012, we expect to double the number of Bakken and Three Forks wells in which the Company owns an interest. We are optimistic about oil prices and we are working to accelerate realization of the value of our oil drilling projects."
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