Little White Lake Prospect

1
Little White Lake Prospect

• Vermillion Parish, Louisiana

2
Executive Summary

• History
• Little White Lake (LWL) prospects 1,038 acres
  are located in Vermillion Parish approximately 60
  miles south of Lafayette, LA in shallow
  near-shore waters. The LWL-field is operated by
  Key Operating and Production Company (Key) of
  Lafayette, LA who is certified by the State as an
  Oil and Gas Operator.
• The first well (Key No. 1 SL 16995) was spudded
  on December 29, 2003 on State Lease 16995. The
  well encountered five commercial gas sands, was
  completed, and commenced production on July 15,
  2004 after installation of processing equipment,
  oil and water tanks, and pipeline for the gas
• .
• A gas development well, Key No. 2 SL 16995 was
  drilled to access the gas discovered by the No.1
  well and commenced production from the Polaris-A
  sand on February 8, 2005.
• The Key No. 3 well was drilled in late 2005 and
  after several interruptions, due to hurricane
  related shut down, commenced production from the
  Polaris-B sand on December 15, 2005.
• Production and storage facilities damaged in the
  Hurricanes of 2005 are fully repaired and in
  place.
• Current production from the three wells are 3
  mill MCF/D and 190 bbl/day of associated
  condensate.

3
Executive Summary

• The Seller
• Matrix Capital Funding, LLC will sell 5.7
  Working Interest in the Little White Lake Project
  for 1,500,000 cash..
• The last sale of interest in the Project was to
  Texhoma (a public company) in April of 2006 at a
  price of 4 mill in cash and stock for a 8 or
  500,000 per 1 net working interest.
• Prospects and Geology
• The LWL-prospects consist of an upthrown oil
  prospect that has Proven Undeveloped Oil and Gas
  reserves. Additionally, gas was identified in
  four separate reservoirs, three of which contain
  Proven Undeveloped reserves.
• The 13,500 ft Godchaux sand is a prospect
  upthrown in relation to a fault that is
  estimated to contain 2.1 mill barrels of
  recoverable oil
• .
• The downthrown prospects consist of three
  Proven Undeveloped (PUD) gas bearing reservoirs
  and one exploratory sand. The shallow exploratory
  sand is the 13,300 sand horizon, which was
  identified after reviewing the 3-dimensional
  seismic data acquired from Shell Oil Company. The
  PUD sands are the 13,500, the 13,600 and the
  13,700 sands.
• Cash flow and Reserves
• The Reserve Report by Robert Lamb reflect Proven
  Producing Reserves of 14.6 BCF of gas, Proven
  Undeveloped Reserves of 10.97 BCF of gas and
  2.35 mill bbl of oil, and Possible Reserves of 35
  BCF of gas. (report enclosed)?

4
Executive Summary

• Based on these reserves a cash flow forecast has
  been prepared and was limited to six years. The
  price assumptions of the cash flow model are
  based on NYMEX futures price of gas for the next
  two years and 7.00/MCF thereafter and 55.00/BBL
  for the condensate and oil. Bear in mind that the
  gas is of high calorific value and the oil of
  premium quality.
• The assumptions are that, in addition to the
  three current production wells, at least one oil
  development well will be drilled. The cash flow
  forecast uses a capital investment of 3.5
  million for a completed oil well to be drilled in
  the third quarter of 2007 and commencing
  production at the beginning of the fourth quarter
  at 300 BBL/D.
• Whilst gas and oil production are naturally going
  to decline, a payout of less than 36 months is
  expected with a cash flow of 100,000 plus per
  month net to interest, whilst funding two wells.
• Deep Gas Prospect
• A potential deep gas prospect is available on
  the lease. The well is estimated to cost 6.5
  million, but there are no drilling scheduled at
  this time. However, if this gas target of some
  35 BCF proves to exist, this could result in a
  major development and would represent a
  substantial value to the Purchaser.
• Conclusion
• This is a rare opportunity to acquire a
  non-operated interest in a cash flow producing
  oil and gas field that provides upside in both
  reserves and commodity pricing in combination
  with protection against downside due to the
  multiple reservoirs present on the property.

5
Reserve ReportLittle White LakeVermillion
Parish, LouisianaPrepared by Robert R. Lamb

• Enclosed are several maps of the Little White
  Lake portion of Intracoastal City Field. All, but
  one, are mapped on oil and gas producing sands.
  These maps show the areas that are now producing
  as well as areas in which possible future oil and
  gas production might be found. Subsurface and
  seismic data have been integrated.
• All reserve figures are estimates in both
  producing as well as possible producing sands. At
  this time, three wells have been completed
• Key No. 1 S.L. 16995 produces gas from Discorbis
  A sand and Discorbis B sand
• Key No. 2 S.L. 16995 produces gas from the
  Polaris A sand
• Key No. 3 S.L. 16995 produces gas from Discorbis
  A sand and Discorbis C sand
• The enclosed maps show water levels and possible
  producing areas in crosshatch. Reserves are
  estimated in both areas.
• Operc sands have been lumped together as one
  entity.

6
Lease Area and Location
7
Drilling Program

• In order to capture the reserves indicated,
  following wells have been or are scheduled to be
  drilled
• Completed
• !. Operc Polaris sand test
  12,500 depth
• 2. Discorbis sand test
  13,650 depth
• Scheduled
• 3. Godchaux sand test (oil well)
  13,500 depth
• Scheduled for drilling 3rd Quarter 2007
• 4. K Zone sand test
  14,600 depth
• Date pending
• 5. Planulina sand test
  15,500 depth
• Date pending
• All, but Planulina sand, are no-pipe tests.

8
Reserve Report

• Sands Proven/Producing
• 
  PUD POD
• Gas Oil Gas Oil Gas
• Operc 250,000 bbl 2.97 BCF
• Polaris 6.3 BCF
• Discorbis 8.3 BCF 4.5 BCF
• K-zone 3.5 BCF Godchaux 2,100,000
  bbl
• Planulina 35 BCF
  
• TOTAL 14.6 BCF 2,350,000 bbl 10.97 BCF
  35 BCF
• Reserve value
• Oil 71.4 mill
• Gas 285.3 mill
• Total 356.7 mill
• Based on