--Directional/Horizontal Wells
       In Phase 2 of this project, Strata Production Company is demonstrating that it is possible to drill deviated/horizontal wells to develop reserves in areas not accessible by vertical drilling (Well Locations). Strata drilled NDP Well #36, the first directional/horizontal well in the NDP, in 2001 (NDP Well #36). A second directional/horizontal well, NDP Well #33, was drilled and completed in 2002 (NDP Well #33). Continued evaluation of results, including the additional 3-D seismic tests in Phase 2, are guiding the locations of future directional/horizontal wells (New Wells).

        --Additional 3-D Seismic Tests
       The 3-D seismic survey for the north end of the NDP incorporated receivers located on the shore and into selected areas of the playa lakes to record data from beneath mined areas. In the fourth quarter of 2002, a total of 9.5 square miles was shot, with 4371 receivers and 1191 source points (Eighth Annual). We believe that this is the first 3-D seismic survey designed to model the Delaware formation where surface and subsurface constraints, including voids created by underground potash mining, has been attempted. The lower Delaware sands were successfully imaged, and the new survey has refined the original interpretation of the NDP reservoir. Analysis of the 3-D seismic data has identified a target in the NE/4 of Section 12 for the next deviated/horizontal well. Drilling of the NDP Well #34 began in March 2005 from the NDP Well #19 location.

        --Characterization & Simulation
       A reservoir simulation was performed to estimate the drainage area of NDP Well #36 (Seventh Annual). The simulator was populated with structure, permeability, and porosity derived from actual well data where available and with a simple nearest neighbor geostatistical calculation for interwell data. A plot of actual production versus simulator production (Simulated Production) indicated the reservoir area attributable to NDP Well #36 is approximately 130 acres. The reservoir simulation model is proving to be good match to the actual production. The actual produced gas volume appears higher than predicted and, after comparing the field volumes to the actual sales volumes, the field volumes are 20 to 30% too high. Sales volumes plus fuel gas used in production facilities are much closer to the predicted gas volumes.

        --Gas Processing & Injection
       The economics of processing gas at the NDP to recover liquids and reinject lean gas for pressure maintenance were evaluated (Eighth Annual). Based on this analysis, the best economic course is to continue to sell the gas outright. The additional capital cost required to install processing and injection facilities is not justified given the estimated future profit. However, if a processing and reinjection system had been installed near the beginning of the NDP project some 10 years ago, the increased oil and gas production volumes would have made better economic sense. To date, the NDP has produced in excess of 1.25 million BO and 7.2 BCFG. These volumes, together with increased oil recoveries from pressure maintenance, may have allowed a more rapid return and ultimately a higher multiple on the gas processing and injection facilities.

        --Production and Reserves
       A production database for the NDP was updated through August 1, 2004. These data were added to the history of each well to update the decline curves and to project ultimate recoveries as well as to assess the effects of interference and production strategies. The eight wells that are part of the DOE Class III project (NDP Wells #12, 23, 24, 25, 29, 33, 36, and 38) have produced 365,410 BO, 2.28 BCFG, and 1,610,403 BW as of July 1, 2004. Reserves associated with the project are summarized in the following table:

        --Technology Transfer Activities
       Technology Transfer of the data and results from the NDP project have been a major component of the project. Interest in this project has been high and the application of results from the project has been useful in other Delaware fields. All of the technology transfer activities to date in Phase 1 and Phase 2 of the project are listed in the major section in Technology Transfer (Technology Transfer). Strata Production Co. provided details of the NDP deviated/horizontal wells at a PTTC workshop in Midland, TX in May 2005. A Summary of this presentation is available, and details of the workshop are available from the Southwest Region of the PTTC. A final workshop that will summarize all the results obtained during the project is being panned for later in 2005.