Once cement is set and the proper regulatory procedures are met, we plan to go to total depth. We are hoping to get there a few days after drilling resumes. We have very high hopes for the success of the E1-C. We have data supporting our optimism. A well, drilled on a nearby lease, to a similar depth targeting the same zone generated results far above our conservative estimate after stimulation. While our project can certainly generate positive cash flow even at our conservative estimate of daily production, results approaching those levels should be wildly pleasing to the partnership.
Meanwhile, prices continue to put a damper on everyone's outlook. Prices are low due to a real and perceived oversupply of oil worldwide. This oversupply has been largely due to the historic achievements of drillers in Texas, especially in the Eagle Ford Shale and Permian Basin. However, production from the Bakken cannot be discounted. These success stories are certainly evident in the real numbers. Not since 1973, has America been so energy self-sufficient and production levels as well as inventories are now equal to what they were in the 1920's--the heyday of American Energy. This very real increase in production, built on advances in hydraulic fracturing technology (Fracking), is further bolstered by an expectation that shifts in US-Iranaian relations will bring millions more barrels on to an already oversupplied market. There are two sides to every story.
Demand for oil, and energy in general, worldwide continues to grow at a substantial pace. The media is fond of fanning the flames of gloom and doom with continuing stories portraying a slowdown in Chinese economic growth as a sign that demand is about to collapse. Sure, China isn't growing at 15% annually as it once did, but a nearly 7% current growth rate isn't exactly a collapse. China is also embarking on a massive stimulation campaign which should result in bolstered economic activity.
The US Economy is also not doing too bad. Growth, while slower than anyone would want, continues to improve at a steady pace. Employment has been mostly stronger and lower gasoline prices are providing a few extra dollars in most American's pockets which should translate in to a good Christmas season. Europe continues to struggle, but overall, their demand and growth are steady. So, there is certainly reason to believe that demand will continue to keep up with or exceed production growth.
This is especially true as we see an historic decline in rig activity. Rig counts are down some 65%. This won't change anytime soon as company after company announces even deeper cuts to CapEx spending already down some 20% industry wide. The net effect of these moves will mean reduced production going forward. We already see signs that production, especially from the all important Eagle Ford Shale & Permian Basin is beginning to slow. Reductions in CapEx, rig counts and concomitant production are the seeds of a rally that may just now be peeking through. We expect prices to rebound late this year or by the Spring of next year. We had hoped for an earlier return to normal pricing, but speculation in derivative markets and political developments have kept a lid on prices. We do not expect nor do we need prices to rise back to the $100 level. We believe that $65-70/bbl is more than sufficient to attract investment dollars and sell barrels at a profit.