Robert Burr   President & CEO

We have various engineers, geophysicist, geologists around the country who know we are in the business of developing oil and gas reserves by drilling wells. Our network of people around the country find and bring us potential product. Next, our geologists review the material to determine if it has enough merit to proceed with our investigation. At that time, based on the area, we will recruit a top-notch geologist. We will find an independent, third-party unaffiliated expert to review what is being presented to us. His job is to come to us with the facts.

If seismic data is involved, he will bring in a third-party unaffiliated geophysicist. Based on these initial independent reviews, we will then either pass or proceed to the next step.

Once we have established that it is indeed a bonafied prospect, we do an onsite review of the acreage for environmental concerns. We want to know if the prospect is in the wetlands. We want to know the costs associated with drilling the well... Is it sitting on the side of a cliff?... How far back do we have to build the road, etc. All of these things will impact the economics of the venture, so they must be known at the outset.

The final step in making our determination, is to send our land man to the court house in the county the well is in, to do what we call a "stand-up"... he does due diligence on the property to make sure there are no liens against it, and that it is exactly what was presented it to us by the Prospector.

2. Detailed topographical, geological and pay (Isopatch) maps showing the lease and ALL the (known) wells in the area and reference to the nearest bigger geographic place. These maps should include well spots and name of wells previously drilled to the target zones with net pay values contoured on the map.

3. Outline (summary) of prospective formations and of proposed drilling program.

4. Production curves from all wells in the immediate area that produce from the objective zones showing typical decline. Alternatively, this information can also be a detailed list of monthly or annual production of a nearby well AND an indication of expected per well recoverable reserves.

5. An AFE for the proposed wells.

6. A pro forma sheet of cash flow versus cost and of anticipated annual production of a new well allowing us to identify the payout point and projected returns over ten years.

7. Log strips of existing producing wells in the area from target zones.

8. Basis for determination of reserves for well. Are the reserves based on volumetric calculations, analogy to existing wells, or other manner? Also include assumptions used to calculate reserves such as reservoir pressures, reservoir quality parameters (such as porosity's, saturation's, etc.), abandonment pressures, sales line pressures in area, etc.

9. Documentation for gas and oil prices used in economics. What is the basis for the prices such as Henry Hub for gas and WTI-Nymex for oil? Using these index prices as a starting point, what differentials are applied to get price received at the lease?

10. A discussion of sales line pressures in area and expected compression needs, if any, to market the gas. Costs for compression need to be included in analysis as a deduction to gas price received or an increase in LOEs.