As you all know, on September 1st, Wildhorse indicated (verbally to me)  they 
did not feel that contractually they had the obligation to deliver 
Crescendo's San Arroyo (Dakota) production to "any pipeline we choose"; i.e., 
Northwest P/L.  

Since this verbal conversation, we have sent a written clarification 
reiterating our position (as well as had numerous verbal discussions) and 
have now nominated Crescendo's October production to be delivered into 
Northwest P/L.  Also since this above conversation, Wildhorse has said they 
will clarify their legal/contractual position and respond back to us.

Numerous calls by Mark Whitt and myself have not been returned....until 
today, during lunch.  Kent Harris of Wildhorse finally returned our calls 
(... probably hoping to catch me at lunch), and he said the following:

"I'm still waiting on our legal review of the contract and hope to have it 
this afternoon"  (its now 5pm; no call).  "While I agree with your 'first 
queue' contractual rights and therefore we have to take all your gas up to 10 
MM/d, I don't agree with your claim to have the right to take the gas to any 
available delivery point".

My response: "Kent, that is the cleanest provision in this contract."  [Then 
I read back Section 3 of the contract..."or any other connection with a 
mainline carrier downstream of the tailgate of the Mesa (San Arroyo) 
Plant..."].

He responded: "That's your opinion; we'll see what my legal counsel says."

I responded that nominations were due tomorrow, we sent our nomination to 
Wildhorse today for delivery into NWPL, and for October and beyond our market 
is on NWPL.  September 1st was when Wildhorse made the delivery point 
location an issue; now its Sept. 26th (the day before nominations are due) 
and we've gotten no other response from Wildhorse after we clarified our 
position numerous times both verbally and in writing!

Again, he said he'd try to get back with me asap.

On the Entrada project, he did say that they have redesigned the proposed 
route (based on our ideas and requests) and feel that the capital required 
for the project will be significantly reduced.  They hope to have a revised 
proposal to Crescendo soon.

[Gerald and I still are not clear where under the contract they are claiming 
the right to send us a proposal/renegotiate, but that's for another meeting.]

Mark Whitt and/or I will follow-up upon any further developments.

Regards,

Dan