Coyle-Balusek

Colorado County

The 320 acre Coyle/Balusek lease lies in Southwestern Colorado County approximately ten miles west of the town site of Garwood, Texas. The prospect area is located in the prolific Provident City Field which has production from the depths of the 18,000’ Wilcox Formation to the shallow 1800’ Miocene.

The target pays for the Coyle/Balusek exploratory well are the established field pays in the Yegua Formation Y-2 sand and 3400’ Frio sand. The Y-2 has produced over 4 million barrels of oil (MBO) in the Provident City Field area and 84 MBO in a single producer on the adjacent Gold lease. The secondary target is the shallow 3400’ Frio Formation sand which is historically a gas pay. Control for the prospect is from previous well data and recent Three-Dimensional Seismic.

The initial well was designed to test prospective seismic amplitudes seen on three dimentional seismic data. The well intersected “bright spot” events at depths of 0.93 ms (3450’) in the Frio Formation and another at 1.524 ms (5950’) in the Yegua.

The Frio bright spot is analogous to the Frio channel that produced 420 MMCF in the offsetting Lomak #2 Kallina well at a depth of 3828’. The Yegua amplitude ties directly to the productive Y-2 sand which has produced over 84 million barrels of oil (MBO) and 2.25 billion cubic feet (Bcf) of gas out of the down dip (or stratigraphically separated) Lomak #1 Gold well.

The estimated reserve potential from both sands is 1 Bcf of gas and 100,000 BO.

The Coyle-Balusek #1 was drilled in July, 2008 and began gas production in September. At present this well is producing over 2.7 million cubic feet (MMcf) of gas per month.