Battalion Oil Corp (BATL) 2007 Q2 法說會逐字稿

Good day ladies and gentlemen and welcome the RAM Energy Resources Second Quarter 2007 Conference Call. My name is Jende and I will be your coordinator for today.

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In our call today, we may make statements that are other than historical fact. Information in this presentation and all such statements that reflect management's plans or expectations, including capital spending, derivatives positions and industry conditions are forward-looking statements within the meaning of the Securities and Exchange Act of 1934. The Company cautions that such forward-looking statements are necessarily based on certain assumptions, which are subject to risks and uncertainties, which could cause actual results to differ materially from those indicated today.

Further information on these risk factors are included in the Company's filings with the Securities and Exchange Commission and is enumerated at the conclusion of the webcast presentation slides. The management of RAM encourages you to review the disclosures in both documents.

I would now like to turn the presentation over to your host for today's call, Mr. Robert Phaneuf, Vice President Corporate Development of RAM Energy Resources Incorporated. Please proceed, sir.

Thanks Jende, and let me add my welcome to the call. I'll be brief. From the RAM side today, we have Larry Lee, our Chairman and CEO and Mr. John Cox, our Senior Vice President, Secretary and Treasurer as well as myself. And so without further ado or preamble, let me turn the call over to Larry.

Thank you, Bob, and welcome all of you to our call today. I think we had a real solid quarter. We're very pleased with how our operational activities are kind of starting to bear fruit. If you look at our first quarter production, we produced 337,000 barrels, or just slightly over 2 Bcf equivalents, that's up almost 8% sequentially from our first quarter. We did post a 900-plus thousand dollar income for the quarter and that compares to a loss a year ago of 3.1 million.

The drilling activities are picking up quite nicely for us. We did drill 16 development wells in the second quarter and we've also participated in five exploratory gross wells, almost one net exploratory well. And these wells have subsequently -- looked like they're all going to end up being completed wells. So we're pleased with the drilling activity that's going on there.

One area that we're particularly pleased with is our Barnett Shale area. We did complete the Ashe 1H -- C 1H and the T.L. Dickenson 1-H. The Ashe well was completed and had first sales on June 12th, so we did get a little bit of benefit from that well in the second quarter and the T.L. Dickenson, that well had its first sales on June 2nd. And so we got a little bit of a bump in our second quarter numbers as a result of that.

These two wells, both of them, have been the best wells that we have drilled in the play so far. I think that our operating partners, Devon and EOG, just continue to get better at understanding how to ring benefit and value out of this play. I think their completion techniques continue to improve and we're getting better results.

We are pleased to report that the Dethloff 1H well was spud on July the 19th. That's the second well that EOG has spud as operator. And they tell us that the other wells we've proposed are in the drilling queue, so I'm encouraged by that. I think that it's a result of the work we did last year on our seismic program, getting ourselves in a position to begin to propose these wells to EOG.

I'd say also on the EOG, I listened to their call recently and I know they were -- have been more encouraged with their results that they've been getting off of their Western area wells out in Western Jack County and even in the tier two area. And I think that that's very positive for us because we're clearly in a much better part of the play with our acreage that we have with EOG.

A quick review of our mid-year Barnett Shale activity as we now have, at June 30th, nine approved undeveloped locations on the books. That's versus five that we had at year-end. We've got 15 probable, seven possible and of course the Dethloff well is currently drilling. So we've got a good inventory in our Barnett and we're continuing to work our seismic.

We are shooting in our North Bridgeport area and we'll be continuing to propose wells to EOG. So we're excited about the outlook for our Barnett activities. In the Arkoma Basin, we participated with Chesapeake in the Weyerhaeuser 8-22. That well was completed and went to first sales on May the 10th. The Weyerhaeuser 10-22 was completed and the first sales on that well was 5/28 -- May 28th.

So those wells did contribute a little bit of production to us in our second quarter and these wells are really -- a lot of the reason that, our gas sales, are up so nicely in Q2. At the end of the quarter, just to kind of give everybody a perspective on that, those four wells were generating about 376 BOE equivalent to our interest at that time.

This is something that I'm very pleased to report to the market and this is subsequent to June 30th. In fact, we inked this transaction this week. We amended our credit facility with Guggenheim and our lending group. We increased our borrowing base from $140 million to $150 million. At the same time, we increased our revolver, which is our cheapest cost of borrowed capital, from $50 million to $100 million.

And we then borrowed $40 million under the revised and raised revolver and paid down $40 million on our Term B loan. Our old interest rates on our revolver were fixed at two over LIBOR, and now it works on the grid that goes down to as low as 1.25 and goes only as high as two, and under our current borrowings we are paying 1.75 over LIBOR.

On our Term B loan, the old loan, we were paying LIBOR plus five and a half and it could have flexed up to LIBOR plus six based on leverage, but under the new amended facility, it is fixed at LIBOR plus five. By running the numbers, which all of you can do very quickly, this will save us, going forward, about $1.8 million a year in interest costs.

I think with all the turmoil that's been in the credit markets recently I think this is a very strong statement by our lenders and their faith in both the assets that they're loaning against and the Company's ability to execute our business plan.

Going to page six, we did participate in 39 wells in the first half of the year. We continue to have a 94% success rate, much in line with our historical rate. If you look at page seven, this is sequentially. Our oil production was up about 3%, our natural gas liquids up about 6%, our dry gas production up about 18% and therefore our overall production did climb by almost 8% on the second quarter versus the first quarter.

One thing I would point out in this time period, when it seems to be a lot of people are worried about natural gas prices, two thirds of our current production is in the form of oil and natural gas liquids. And the prices for those have continued to be extremely strong as we've moved into the third quarter, and we are benefiting from our commodity mix as we move forward in the year.

Compared to the same quarter a year ago, our oil production is down about 8%, our NGL production is up 16% and our gas production is up 21%. So year-over-year we're up about two. I would say that our second quarter of this year we were hampered by the rather torrential rains that occurred in North Texas.

This created a difficult situation for us. We had a lot of power outages in North Texas as a result of the storms and the flooding and it just made it more difficult for our field crews to get out to the various wells and do all the work that they do on a regular basis.

So we're expecting our oil volumes to come up in the third quarter as we're finally drying out, I'm sure most of you know, we're having a nice heat wave, so all of that water is going away, it won't be a problem for us going into the second half of the year.

If you look at realized prices, our second quarter, our oil prices were lower in the second quarter versus the same quarter in '06. They certainly have gone up significantly since we moved into Q3 and looking forward to what our realized prices will be for the third quarter. NGL prices were quite strong compared to the same period a year ago and our gas prices were also higher than the same time a year ago. So on a net-net, BOE equivalent price, we were down slightly, 3%, not a great deal.

Oil and gas sales, on slide number ten. We had 17.9 million in the second quarter of '07, versus 18 million of oil and gas sales in the second quarter a year ago. Of course last year, we had a $3.1 million loss, largely as a result of mark-to-market issues on our hedge position, and this year we were able to book a $902,000 profit, about $0.02 per share and our non-GAAP cash flow for the quarter was $6 million. So in the quarter, we were essentially able to fund out of cash flow our non-acquisition capital expenditures for the quarter.

Our CapEx program for the year still stands at $36 million and we're expecting that to accelerate with the picked up pace of drilling in the Barnett as we had anticipated in the second half of the year. So we're not making any adjustments at this point in time to our CapEx program for the second half of the year.

Once again, talking about liquidity. I think this is very important in this credit environment that we have. We currently have $60 million worth of immediately available liquidity to us, and with that combined with our cash flow, we really feel like we can continue to execute on our CapEx program and move forward aggressively in those areas.

The Barnett area, this is an area that we've talked about a lot, this is an area that holds a lot of potential for us and we're now pleased that we've got 11 producing wells in nine PUDs. We began this year with nine producers and only five PUDs, so we're starting to see the transformation of probable and possible locations into the proved category and it's -- we're expecting that to continue as we move forward.

In the EOG area, as we said, we did drill the Ashe C 1H. It initially produced at a 2.55 MMcfe per day. That well was currently producing about 1.1 million and is still recovering load. I think that EOG continues to improve their completion techniques, and I think that's a result of that -- the reason that we're getting the better result, out of this recent Ashe well.

As you can see on that map, the Dethloff 1H is where they're going to currently be drilling and then we both have the Ramsey and the Brown 2H also proposed. So we're anxious to get these wells drilled as they move even further east in Wise County, and we think that we'll move even into better looking quality of rock as we move in that direction.

We're continuing to work on our North Bridgeport [chute], which is shown there in the yellow, kind of the north area, so that we can have a seismic level to us there. So we're moving ahead with that seismic program in the Barnett.

But Devon -- this Dickenson well that we drilled came in at over 4 million a day and is still producing just about 2.7 million a day. This has been a very good well geologically and as we look at the rock, it doesn't really look that much different from the rock quality that we have in the other wells in this [Rawle Burress] area. It just seems to me that Devon also is continuing to improve their completion techniques.

I do look at their webcast, and I think if you listen to them, the VP of Operations for Devon in that area, he will tell you that they're continuing to learn more about that play every day. It's an area that is very -- receives a tremendous amount of focus by Devon and I think we'll be the beneficiaries of that.

We don't have spud date yet for the next Devon well, but they have verbally told us that they intend to come in and drill the next two wells on this play back-to-back. So we're very pleased to hear that and look forward to them actually doing that.

If you look at 16, it just kind of shows you quickly where the producing wells now exist in this Rawle Burress Lease and the PUDs that we were able to book. We were able to book the two offsets to the T.L. Dickenson as a result of those -- of that well being drilled and becoming a producer. So we expect, as we drill additional wells in this play, we'll be able to book some additional proved undeveloped locations here as well, maybe another two or three possibly.

In summary, I think what we've got is a very predictable, stable cash flow base with a lot of oil, a lot of NGLs in it in this pricing environment. We continue to have a compelling valuation versus the peer groups. The management and the technical team I think is showing their skills. We've got -- continue to have this large inventory of growth opportunities.

We have high operating control over most of our assets, and we continue to be able to create value through the acquisitions and drill bits. And of course, management has a substantial ownership in this company and is going to try to really push and move forward with it.

A couple of real quick highlights I'd point out. In the second quarter we were able to reduce our operating costs by about $0.04 on a BOE basis. I would point out everyone to page 20 in the appendix, which updates the market on our hedge position. And one thing I'd like to point out is that if you looked at our gas hedges, all of our floors, except for the third quarter of '08 start with a seven and one of them is $8.

So we've got very nice floor prices under our natural gas and we've got very attractive collars on our oil prices as well as we go forward. So we've got a nice amount of our production hedged at very attractive prices -- in this environment.

With that, I'll turn it back over to Bob for organizing Q&A.

Thanks, Larry. Well, Jende, I think we're ready for the Q&A now, so if you'll introduce that?

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Your first question is from the line of Leo Mariani of RBC Capital.

Good morning.

Hey. Good morning, guys.

Good morning, Leo.

Hey, a couple of quick ones for you here. Can you give us a little bit more detail on the producing rates of the four Weyerhaeuser wells that you guys did up there with Chesapeake?

The -- Leo, the 8 and 10 both came in well over 3 million a day and those rates are still holding up in the two plus million a day range.

The last well, the Weyerhaeuser 9-22, we completed that well at about 1.9 million a day and it's, I think, currently producing about 1.4 million, 1.5 million a day and that's the most recent information we have.

That's a very complex faulted area. So a lot of times you'll have these wells and they'll be in different fault blocks in that Jack formation. So we've had the 5 and the 6 are both very good wells, the 8 and the 10 are probably the best two wells we've had in the play so far, and the 9 looks like it's going to be a real solid well, kind of down the middle.

The 7 that was drilled and we elected not to participate in the completion because we thought it was tight, Chesapeake went ahead and completed it, and in fact it didn't really produce in commercial quantities. So you kind of have to look at each one of these and pick them. But that's about how they're doing right now. They're still contributing nicely to us as we move into the third quarter.

Okay. Can you give us just a quick run down of what your interests are in these wells?

Leo, our interest on these is about 12.25%, I think it is, is the working interest. What we're hoping is we own about 30% interest in an offset block, and so what we're hoping is that the -- as we continue to find and define this [Jack fort] play that we may be able to get over into the section where we have a larger interest.

Chesapeake has permitted with the Corporation Commission for three more wells in this play, but I think sort of our geological guys, talking to theirs, they think they're going to wait and probably come up and do that sometime in early Fall, early or mid Fall. I think they want to watch these wells produce for a little while, and then come back in later this year and drill some additional wells in this play.

Okay. Great. Could you maybe give us a quick update on how things have gone with the Permian acquisition you guys did a little while ago in terms of what you saw when you got out in the field and kind of any activity over there right now?

Yes, Leo, it's -- we felt like we had a real good solid set of assets out there and when we bought it, it was producing about 280 barrels a day equivalent. We now have that up to a little over 300 barrels a day. We're still looking at some, kind of what I would call, replumbing. All of this that we've done so far is just sort of classical petroleum engineering.

Just trying to do a couple of things as far as handling the production and looking at the injection pattern on that one field in Texas, which is a water-flood. The two fields we've got in the Mexico are on primary production, the one field we've got in Texas is a water-flood. So we've been able to do a little bit to improve that.

We are in the process of trying to evaluate do we have any potential further upholds or deeper horizon and that process is ongoing, but we don't have anything to really identify yet on that.

Okay. Just a last question for you guys. Do you have kind of a maybe ball park sort of an estimate if you can kind of quantify what you saw in the second quarter in terms of reduction in oil volumes due to the flooding up there North Texas?

Leo, my best guess is that that's probably cost us 100 barrels a day throughout the quarter. We really were fighting that quite frankly almost all quarter long because of the severe rains. It did affect us also a little bit in the month of July, we had the, I think, we had the highest rainfall total in North Texas that they've ever recorded. That's kind of behind us and we're starting to see that stuff pick up as we are moving into August. We're getting some of that to recover.

Okay. Great. Thanks a lot, guys.

Thanks, Leo.

Your next question is from the line of Richard Rossi of Ferris, Baker Watts.

Good morning, everybody.

Hi, Rich.

Just a couple of things. I heard that you gave us the Dickenson production currently. What about that Ashe well?

It's about -- hang on, I had it -- I said it --.

I'm sorry, I missed it.

It's about 1.1 and it's still cleaning up. Yes, about 1.1 a day, equivalent a day, is what it's currently producing, and then the Dickenson's about 2.78 million a day.

I got that one right. What are the Barnett wells costing now?

The Ashe well we drilled for about $2.5 million. We [AFEed] it for three, but EOG was able to get it completed at 2.5 million. The Devon well was, AFEed, a little just -- slightly over 3 million, and I think they spent right at 3 million on that well.

Everybody's talking about that, drilling costs have come down some, not tremendously, but some, and that they're expecting pressure [treating] costs to begin to sort of come down. Certainly it's not going up anymore.

Always good to hear. G&A costs, obviously did a scale up here in staffing and everything, I guess your costs are up 500,000 or so versus the first quarter. Is that a new level, a new plateau? Is that likely to go much higher in terms of scaling up your staffing?

I think we're pretty much there. We have hired, in this first half of the year, we've hired two additional petroleum engineers that brought on staff, and we've recently hired an assistant controller to further beef up our accounting activities, but I think that's pretty much it for the time being. We don't really have -- I don't think we have any additional open positions I can think of at this moment, Rich.

Okay. And just one final thing. Any thoughts, initial thoughts, obviously CapEx in '08 will, I presume it's going to be materially higher. But any thoughts on a general plan? Are you still looking at EOG with proposing one well a month is that the plan or -- ?

Well Rich, I would say this. We -- as a result of what we've been doing with EOG, we're starting to have some conversations with them that I think I'll have a little more color on that probably towards the end of this quarter or -- the good news is, we're talking about it finally.

We finally got their attention and we said guys, we've got to drill these wells. And they told me exactly what I thought, well, we're all focused on protecting our lease term acreage. And we said, well we know that, so let's work out accommodation that makes sense for both of us. So I'm encouraged with that, but I don't really have as much color on what '08 would look like as I would like.

It sounds like it's moving forward though.

Well that's the main thing, Rich. It's just engaging in conversation and that sort of thing --.

Right direction. All right. That's it for me. Thanks a lot.

Your next question comes from the line of Ron Mills of Johnson Rice.

Good morning, Larry.

Good morning, Ron.

A question, any update at all on the Wolfcamp or are we still kind of four to six weeks away from having all of the zones fraced and evaluated?

We fraced them all that we're going to frac in these verticals and we're still testing them, we're still getting some frac fluids out of them, we are getting gas out of both of them. We're getting better gas out of one of them than we've got out of the other one, but we're not yet ready to really declare it one way or the other.

We are going to drill a vertical -- a horizontal well sometime in the second half of this year. And I think once we get that figured out, Ron, we'll probably try to have some kind of an update to the market about what we see in the Wolfcamp and how we're going to go forward on that.

Okay. And with the new debt facilities, can you walk through how much is outstanding on both the two different facilities that are out now?

Yes. There's 50 million outstanding on the term B loan. And there's 69 million on the revolver.

And that borrowing base is 100 and --?

That borrowing base is 100.

And the term B?

Is -- well the term B is 50 at [this point].

Okay. And then what's -- what was increased to $150 million of --?

Well we --.

The combination of the revolver and the term B is 150. Got you.

Yes, before it was 50 revolver and 90 term. Now it's 100 revolver, 50 term.

Got you. Got you.

And remember Ron, we've still have that $29 million in cash also.

Right. Okay. And can you just -- I missed the name of the company. Who were you talking about was drilling western Jack County that they're pretty pleased with?

EOG.

Okay.

And EOG's talked about how their previous estimates out there, I think, were 1 Bcf, and that their actual results have been better than they had in their Western acreage and that I think they're continuing to accelerate their activity out there.

Okay. And then can you just walk through what the new interpretation was on the share count issue that caused the restatement?

Yes, actually I wanted to cover that at the end, it just slipped past me. When we did our reverse merger with Tremisis, we knew that RAM from an accounting standpoint would be considered the acquiring entity, which is the way that we accounted for it in the merger. When we looked into the accounting pronouncement about how you account for share count on a reverse merger, there was no preferred method at that time.

Half of the blank check companies had done it the way we initially accounted for it. In other words, we had Tremisis's historical share count for years '06 and '04 -- excuse me, '05 and '04 and then put the new shares in for '06. Half the check -- blank check companies had done it that way, and half had taken the shares that they were issuing in the merger and pro formaed them back as if they had been outstanding for the previous years.

Since that time, the accounting profession has now come out with the preferred method to handle, because all of the sudden there are more of these blank check companies that have been coming to market and doing transactions and so they have given guidance and that's what we've basically done. We've restated, it only affects earnings per share and so that's really what it was. We feel like its pretty much of a technical issue and --

I agree. I was just curious what the reason behind it was.

Yes, they've now come out with a guidance and so we're trying to make sure we comply with that guidance.

Okay. That's it for me. Thanks, guys.

Thanks, Ron.

Your next question is from the line of Mark Lear of Sidoti.

Hi, good morning, guys.

Hi, Mark.

I was just curious, how many of these Electra wells have you -- do you guys have down so far in the first half and what's your plan going forward for the rest of the year there?

Mark, we had 14 in the first quarter, we were able to get it up to 16 in the second quarter, and in July we were back to our normal count of six a month.

Okay. What was the reason for the delay in the second? It was just the flooding and all that?

Yes. I mean, you try dragging those rigs around in hip deep mud, it's difficult. So that's what really -- it also affected us -- we had the winter issue in the first quarter, which is why we didn't drill -- we only drilled 14, and we were only two down from our target in the second quarter, but it was basically weather related.

Right. Right.

But we're back on target, we did spud in six of them in the month of July.

Okay. And I was just curious, is there any ability to create additional PUDs beyond the 200 or so you had at year-end '06?

Well Mark, I'd point you back to last year. When we began 2006, we had, I think, 202 or 204, just slightly over 200 PUDs identified going into the beginning of the 2006 year. We drilled 78 wells in that field in 2006, I think, wasn't it Bob?

78 or 79.

Yes, 78 or 79 wells in that field, which would have taken the PUDs down to about 121 or 22. Well when we did our reserve analysis and everything at the end of '06, we were able to book additional PUDs and brought that number back up to 200.

We'll continue to do that same thing as we go into the end of the year this year. We'll look at the field and see if there's some more additional locations. I don't know whether we'll be able to add or not, but I -- there's probably still a few more out there, just don't know how many.

That's helpful. Thanks a lot, guys.

Your next question is from the line of Barry Sahgal of Gilford Securities.

Good morning, Larry. Good morning, Bob. How are you?

Hi, Barry.

Hi, Barry.

I wanted to ask a high-level question. You've grown the company by a strategy of both acquisitions and drill bit. Could you give us a sense of what's happening in the acquisition market today, and what your thinking is with regard, Larry, on bolt-on acquisitions and some of your areas of expertise, particularly given the high oil price?

Barry, we will continue to pursue what we've described as this tuck-in or bolt-on or however you want to describe them acquisitions in and around areas that we're currently in or in areas that we want to reenter, like the Layton acquisition that we made in West Texas and Southeast New Mexico.

I think that with the current landscape of the MLPs we have butted heads with a couple of those on deals that we were pursuing, and I can't pay what they can pay. And I know that. Or I should say, I won't pay what they pay. Maybe that's a better way of saying it.

But we do still see and we do still have deal flow on acquisitions in and around our area and in places that we would like to be. So we don't see a slowdown really in the deal flow and we'll continue to pursue acquisitions. I mean that's been how we've grown this company in the past, and I think we'll continue to grow it that way in the future as well.

Okay. Second question, Larry, are you at liberty to talk further about your activities or interest in West Texas?

Not really. I mean we're still pursuing additional bolt-on opportunities in West Texas, I mean that's no secret. I mean, we're doing it in North Texas. We're doing it in West Texas. We're doing it in Oklahoma. We're doing it in several places where we're trying to increase the asset base.

Barry, one of the great things to me about -- that exists today is this hedging market and the ability to take out so much of the commodity risk in acquisitions. So I think that's one of the things that has -- that will continue to keep the acquisition market fairly active and deals happening. You can just eliminate so much of the risk and then you've got basically the time to evaluate the upside.

So it's like that Layton deal. I mean we've already bumped it up over 300 barrels a day. We really haven't looked at any of the behind-pipe opportunities or not -- uphold opportunities or the deeper horizons. That's just basic petroleum engineering. And I think that's one of the things that the team that exists here is very good at.

Terrific. Thank you very much, Larry and Bob.

Thanks, Barry.

Thanks, Barry.

Your next question is from the line of [Jeff Markley] of [Helios].

Hey guys, how are you doing?

Hi, Jeff.

Hi, Jeff.

Just had a couple of quick questions for you. You said the next two dozen wells are going to be drilled back-to-back. Does that 120 days requirement after completion of the previous well still exist for these next two wells?

Well 120 days is their contractual requirement. They can drill faster than that if they want to. And what they've indicated to us is that they -- when they come back to the drill the next well, because of the results on the Dickenson, and the fact that we've got all of the midstream assets in market -- and we basically complete those wells into the sales line. And so they've indicated that their plan is to -- when they come back, they're going to drill two wells back-to-back, which we're very pleased with.

Okay. So it's a -- should be within the 120 days?

Yes. In other words, the next well they have to spud is -- would be required to be within the 120 days.

Okay. Good. And then my other question is, is what you're going to do unlock value going forward here, it doesn't seem like the market has given you a whole lot of credit for any Barnett upside. You're not getting any credit for your gathering business, and you don't get any credit for any possible sale or MLP possibilities with some of your more mature properties.

I guess you guys have gone public very recently, what's the point of being a public company if you're not getting credit for your assets? Larry, you're obviously the largest holder and I'm sure that's something that you think about. I mean, why type of things can you do going forward to get the market to recognize the value here that its obviously not recognizing?

I think Bob and I are going to have to get on the Southwest Airlines to Texas and American Airlines to places like Chicago and Boston and New York and tell the story. I know that there are some institutions that would like to take the position in the Company, but because of our size we don't yet qualify to meet their requirements and we're trying to tell the market what these assets are worth.

I agree with you, Jeff, it's frustrating. It's probably -- It's more frustrating for me than anyone else. The values that this Company has are nowhere reflected in the stock price. It's just a complete disconnect, and we've just got to get out and tell the story and get more focus on Barnett activities. I think we see that these wells get drilled, we continue to have good results, hopefully the market will begin to recognize that and give us some credit for it.

Yes. Right. Well --.

I was just going to add that when we had the offering earlier this year, we basically had a game plan of with what we expected to see in the Barnett and what we hope to see. But as of that time, there's only been a handful of Devon wells and one EOG well that had been drilled on the property.

And so, a lot of what we're talking about was putting our seismic inventory to work and proposing wells and the things that we were going to do and what we expected to come of it. And so at that point, it was really just a plan. And now here we are halfway through the year, we've gotten another EOG well drilled, actually the two of them now, another Devon well drilled. And you can see how that inventory is being pushed down into kind of real drilling, and so, the execution is beginning.

And for some people, maybe that track record isn't long enough yet, but certainly, relative to where we were six months ago at the beginning of the year, when we were just talking about it, there's been a lot that has come to fruition and to those people that are looking closely, I think, we are beginning to get credit for that, certainly not full credit, but as Larry said, I think our responsibility is to get out there and make sure people know that we are executing on the game plan and that it is coming to fruition.

EOG is drilling the wells. Devon is drilling the wells, and they're coming in just as we had hoped relative to the evidence -- the other wells out there in terms of comparability. So hopefully what we can do is to keep adding to that where people can then begin to more easily make the leap to say, okay, well you've got this many drilling locations to drill in the future and it seems to be going down that road, we'll give you a little bit more credit for that.

Jeff, one thing I've learned about this business, I've been in it for so long, the oil and gas business is a marathon, its not a sprint. And you just -- sometimes when you think you want to give up and do something different, you've just got to keep trudging ahead, and I think that's kind of where we are on telling our story. I'm frustrated that the market doesn't seem to be getting it, so we're going to figure out how to tell it more often and tell it in a different fashion and hopefully the people will start paying attention.

I did notice that [Mark] upgraded us today from neutral to a buy given what happened with the stock recently. So we'll just continue to execute on the business plan and create value. That's what we do here.

Yes. Okay. Well I appreciate it guys. Nice quarter.

Thanks, Jeff.

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And your next question is from the line of [Gary Nuschler] of Jefferies & Company.

Thanks. Good morning. Most questions have been asked. What did you say the Weyerhaeuser 8 and 10 were producing at right now?

They're both producing north of 2 million. I don't have that, Gary, right in front of me, but they're both producing north of 2 million a day.

Okay. And the only other question I had was, how many of -- you drilled three wells in that acreage this year in the Arkoma. How many --?

We drilled five.

Five this year?

Yes, we've drilled five this year.

And two last year?

We drilled --.

Started --

We started the 5-22 in the fourth quarter of last year and it completed in the first quarter. The six was spud early in the first quarter and it completed in the first quarter.

In fact, I've got that here, just a second.

Yes. The 5-22 was drilled in the fourth quarter and went into production in the first quarter of the year. The 6-22 was drilled, spud about the first of the year and went on production in February of -- on February 6th.

Those 5 and the 6 were drilled and went on production essentially in the first quarter, then the seven we drilled, and that's the well that was tight and we didn't participate in the completion. Then we came back and drilled the 8 and the 10, and then now we've drilled the nine.

And as I said, Chesapeake has permitted three more wells in that section, but I think we're going to wait to drill those as we move into the Fall.

Great. So -- okay. So three more wells in the back half of the year?

Yes. That's what we've - that's what Chesapeake's currently planning.

Okay. That's all I had, guys. Thanks.

Thank you, Gary.

(OPERATOR INSTRUCTIONS)

And there are no questions. I will turn the call over back to Mr. Larry Lee for closing remarks.

Well I just want to thank everyone for joining us this morning, and I appreciate you guys paying attention to us and we'll look forward to seeing you as soon as we can. Thanks, everyone.

Thank you for your participation in today's conference. This concludes the presentation and you may now disconnect. Good day.