The overall objective of this project is to demonstrate that development program based on advanced reservoir management methods can significantly improve oil recovery. The demonstration plan includes developing a control area using standard reservoir management techniques and comparing the performance of the control area with an area developed using advanced reservoir management methods. specific goals to attain the objective are (1) to demonstrate that development drilling program and pressure maintenance program, based on advanced reservoir management methods , can significantly improve oil recovery compared with existing technology applications, and (2) to transfer the advanced methodologies to oil and gas producers in the Permian Basin and elsewhere in the US oil and gas industry. This is the second quarterly progress report on the project. Results obtained to date are summarized.