Implementation of the work program of Budget Period 2 of the East Binger Unit (''EBU'') DOE Project is progressing and nearing completion. Two of three planned horizontal wells have been drilled and completed. The third horizontal well will be replaced by two vertical wells, both of which will be drilled in early 2004. Based on costs and performances of all new wells, it is believed that, in the setting of the East Binger Unit, the benefits of horizontal wells do not justify the additional cost. In addition to the drilling of new wells, the project also includes conversions of producing wells to injection service. Four wells have now been converted, and injection in the pilot area has doubled. A fifth planned conversion has been removed from the project. Overall response to the various projects continues to be very favorable. Gas injection into the pilot area has increased from 4.0 MMscf/d prior to development to 8.0 MMscf/d in November, while gas production has decreased from 4.1 MMscf/d to 3.0 MMscf/d. The nitrogen content of produced gas has dropped from 58% to 45%. This has reduced the nitrogen recycle within the pilot area from 60% to under 20%. Meanwhile, pilot area oil production has increased, from 300 bpd prior to development to over 425 bpd in November 2003. This is down from 600 bopd in September because EBU 63-2H has begun to level off and other wells were temporarily down. This incremental rate will increase with the addition of the two vertical wells.