The increase in management fees is due to the significant increase in cash flows, which directly affects the management fees paid to the Manager. The depletion, amortization and site restoration charge increased when comparing the first quarter of 2001 to the same period in 2000. The increase is the result of higher production. This drilling, combined with debottlenecking in the gas gathering system and a reconfiguration of the area compression should result in a modest production uplift in the second quarter. In southwest Saskatchewan, NAL drilled one horizontal well in each of the Alida, Nottingham and Rosebank properties.
Planning is ongoing for follow-up drilling in the second quarter.
Many of these wells are expected to be drilled with multiple laterals as a means of increasing the opportunity to achieve higher production and enhanced recovery rates. This program will continue into the second quarter of 2001. Planning is ongoing for what is expected to be a highly active balance of 2001. In addition to the drilling planned for Saskatchewan and House Mountain, drilling operations are expected to commence in the Joffre D-2 field with up to seven wells planned. The acid fracturing program at House Mountain will resume, which has proven very successful in previous applications, in the second quarter of 2001.