Success and growth of George N. Mitchell Drilling Company, Inc. is what 2004 was all about. The increase in the Illinois Basin posted price per barrel of oil from $27.80 in 2003 to $37.50 in 2004 was helpful. The higher price kept our four workover rigs busy all year, and we also saw a dramatic increase in the number of new wells drilled. Instead of working two drilling rigs full time and one part time, we were able to keep three rotaries busy all year.

This increased amount of activity naturally has helped us generate more revenue and has allowed us to improve on our equipment. The areas which have needed and have seen the most improvement have been in the purchasing of new or rebuilt generators, newly rebuilt or remanufactured engines, and new drill collars and drill pipe. All of this equipment is a very integral part of the uninterrupted success of drilling a well. This results in less time on a well for the Operator and Contractor both, and that means lower costs.

We have been able to replace some trucks which move our workover rigs to and from locations and have added two new crew houses that are the work/office areas at the job site for the company representatives.

The future activity is continuing to look bright for both drilling of new wells and workover of old wells. Companies from outside the Illinois Basin are continuously contacting Mitchell Drilling searching for information and assistance relating to drilling problems and requesting clarification of costs associated with drilling. The new companies bring with them fresh ideas on how to prospect for oil in this Basin and bring inventive technology which we need and are happy to assimilate into our services. This technology will hopefully find additional reserves of oil that can facilitate in solving our country’s energy needs. It will also increase the level of activity at Mitchell Drilling.

The technology that has caused the most increase in oil-related activity has been with directional or horizontal drilling. This past year Mitchell Drilling worked with different Operators in drilling several directional and horizontal wells. Some of these projects were very successful and proved it can be done in the Basin and can end with positive economic results.

Mitchell Drilling has also been very fortunate to be involved in partnerships with a few companies in the development of projects where oil and gas were found. When these opportunities arise, there is a synergy that exists between the Operator and Contractor (Mitchell). It seems there is greater comfort and security for the Operator knowing the service company has a vested interest in the project.

At this time in the oil industry, it is good to be located in the Illinois Basin because it is oil rich. The prices are good and should be so for a few years, and the business activity should follow suit. Therefore, we are proud of our history, experienced from the years of service to this Basin and looking forward with anticipation to the future years of growth and prosperity this business and this company has to offer.

Chris Mitchell
President