Mr. Clifford: Saratoga Resources is a small, publicly traded company on the Bulletin Board. We do have desires to go on Nasdaq or the NYSE Euronext - in fact, we've had applications to do so before filing Chapter 11 in March 2009 - and are in communication with both those major exchanges. As a corporation, we have a goal to become a billion-dollar corporation. Right now we are a junior company, with our assets based in state waters of Louisiana, all in-state waters, 0 feet to 20 feet of waterbed. The company itself has been a public company for about 15-plus years and previously had assets in East Texas and South Texas, including the Barnett Shale. We had about 400 producing wells in the Barnett and then made an acquisition of a company in Louisiana in the middle of 2008. And by buying that company, we also bought the people and the assets, which we thought were vastly underdeveloped and underevaluated, and that proved to be the case. When we acquired the assets, the net production to the company was about 2,300 barrels of oil equivalent a day. It's about 70% oil versus gas, and we've grown that up to somewhere about 3,000 BOE per day today. Going forward, our goal is to increase production near term to 4,500 BOE per day net to the company. We think we can do that by year-end 2010. And beyond that, we want to take it to 6,000 by developing the resources through drilling.
TWST: Would you describe for us the competitive landscape and how you see Saratoga positioned in that landscape?
Mr. Clifford: We're in a fairly unique niche environment, being the bay environment. People ask me, "Are your assets onshore, offshore?" I'd say yes, because our preserve is a large part onshore, on dry land, and the wells, particularly in Grand Bay, are in the channels, which need dredging sometimes. Our offshore structures, of which we have about six platforms all-in, stand in anything up to about 20 feet of water depth. There are only a couple of handfuls of players that are doing similar to us. A lot of the operations require boats and marine operations, such as towing, barging and diving. Our neighbors are Hilcorp, which is a private company; Helis, also private; Swift; Cox Operating and Texas Independent Petroleum. We like where we are. We see the "transition zone," as we call it, or bay environment, as an unique environment because while it's not a particularly low-cost operating environment, it's a very underexploited environment. As McMoRan has recently shown further west in South Marsh Island, and specifically at Davy Jones and Blackbeard, there is tremendous remaining potential on the Gulf of Mexico shelf, and we have assets adjacent to them. In fact, we have joint operations with McMoRan in Vermilion 16, but it's never historically had a lot of attention. For example, with Grand Bay, which we are exploiting, that field was discovered in 1938 by Gulf Oil, and 70 years later it is still going strong, still producing about 1,000 BOE per day. And we think we can get at least another 40 years, 50 years of life out of it because we have so much behind-pipe and undeveloped potential.
Other than that, competitively, the competition we see is competing for available dollars in the financial markets. It's a pretty good environment right now. Oil is in favor versus gas, as some of the shale plays might prove to be uneconomic or the abundance of gas in some of those plays will keep gas prices soft. We see ourselves as being a little bit below the radar screen in terms of not being in the Marcellus, not being in the Haynesville or the Eagle Ford. And we do have long life reserves. So we think we have plenty of growth potential within our own assets without being too hungry or having to compete for acquisitions. The only competitiveness we see is around the fringes, where some smaller companies are coming in and trying to corner shoot us or something like that. But other than that, it's competition for monies in the marketplace.
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