Coyle - Balusek Lease - Colorado County

LOCATION

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 depths of the 18,000’ Wilcox Formation to the shallow 1800’ Miocene.

GEOLOGY

The target pays for the Coyle/Balusek exploratory well are the established field pays the Yegua Formation Y-2 sand and the 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 (see Yegua Map). 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 combination of these geological tools makes for a relatively low risk test.

The initial well is designed to test prospective seismic amplitudes as seen on the three dimentional seismic data sets provided on the attached maps. The subject well will intersect “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 MBO and 225 MMCFG out of the down dip (or stratigraphically separated) Lomak #1 Gold well.

If this well is successful, the estimated reserve potential from both sands is 1 BCF and 100,000 BO.