Stella Field 500-800 MCFGD 1-3 BCF - Ops & WI

Owner Retiring - The 503 acre portion of the Stella Field has two wells KF Stewart #1 & #2. You take over operations and also A/R of 150K with investors. Reserves are estimated between 1-3 billion cubic feet of gas. Last production was between 500,000-800,000 cubic feet of gas per day and 5-10 BOPD from the KF Stewart #2. It was shut in because it produced 800-1000 barrels of water a day and the water was trucked to a nearby SWD well costing more than the gas sales. We converted the KF Stewart #1 to a SWD to address the saltwater but went over budget due to the KF Stewart's 2 7/8" tubing had to be replaced. We replaced the tubing and sent an AFE to the investors to put on pumping unit (to save compressor costs) and only 25% consented. There is pay behind pipe and the easiest way to bring the gas back to production is to put it on a 228 or 320 pumping unit at a minimal cost to sell gas. Hunt drilled the wells in 2005 producing 33.7 BCF and 450,000 bbls oil. 75% NRI lease. We keep a small ORR. Bond $50k.