1.) We began with the belief in our ability, little cash and 10 square miles of 3-D seismic in Victoria County, Texas for the exploration and development of the Frio and Miocene formations. Through subsurface mapping and 3-D seismic evaluation, our geo science professionals identified six prospects. Due to budget constraints we began by developing prospects and selling to other oil and gas companies for them to develop. We are pleased to announce the successful drilling, completion and commercial success of the first four prospects drilled (2 remaining). The 100% success rate is a tribute to the many oil and gas professionals working on the project. The information gained form theses successful wells will be utilized in the further interpretation of the data and development of the Gulf Coast Frio and Miocene trend.

2.) Local knowledge and a great deal of detective work lead us to our next project which consisted of several wells with little or no production. The field had been under several operators with little to no documentation of past procedures. Through log analysis, subsurface geological mapping and superior engineering skills we were able to re-establish production from some of the old proven productive zones and made a completion in a new productive sand. We were presented with an un-solicited offer and subsequently sold the field.

3.) Our next acquisition was 70 square miles of 3-D seismic data in a historically prolific trend in South Texas for exploitation drilling of the shallow pay sands and to verify potential deeper objective with the potential for significant reserves.

4.) We are pleased to announce the addition of Dr Barbara Radovich to our organization.
Dr. Barbara J. Radovich has 28 years of worldwide experience in 2D and 3D seismic and well log sequence stratigraphy of clastics and carbonates, fluvial to deepwater settings, and regional basin to reservoir scales of investigation. She is a proven oil-finder, having developed new deep water interpretation criteria leading to major discoveries in the deepwater offshore Nigeria for which she received Texaco’s highest research award. She is a recognized speaker on the integration of 3D seismic attribute and visualization techniques within a framework of sequence stratigraphic architectures, especially in shelf margin to deepwater settings. Her experience covers over 40 areas around the world including West and East Africa, South America, Mediterranean, Gulf of Mexico, North Sea and Southeast Asia. Presently she works as an independent; her previous corporate affiliations are Texaco, Pennzoil, and Exxon Production Research.

5.) Dr. Radovich reports the preliminary review of the above mentioned 70 square miles of 3-D seismic indicates favorable conditions are occurring for the potential trapping of hydrocarbons.

6.) We are pleased to announce that Mr. Rich Purtell has joined our organization.
Mr. Purtell has over 40 years of experience in the oil and gas industry. His career began with Chevron Oil Company. During his tenure with Chevron he was involved in exploration on a worldwide basis. He joined ARCO Oil and Gas Company in 1981 working in the Plano, Texas Research Facility where he was Manager and Director of Geophysical Operations in support of both domestic and international exploration. Mr. Purtell was responsible for project implementation, technical development, budget and contract negotiations and awards for domestic exploration operations as well as support functions for ARCO International. He was active in environmental and government affairs as related to geophysical and exploration activity in the U.S. In 1993 ARCO founded Vastar Resources, Inc. Mr. Purtell was assigned to Vastar where he was a significant contributor to the fledgling company’s numerous exploration successes. He was responsible for the development and implementation of all 3-D seismic projects conducted by Vastar. He is well known and respected in the industry for his broad base of knowledge in the oil and gas industry. As a recognized contributor to the industry he as been invited to serve on many industry steering committees related to the technical, environmental and governmental aspects of the petroleum industry.

7.) Dr. Radovich has been evaluating our 70 square miles of 3-D seismic data; she has identified six anomalies at approximately 10,000 feet deep which have a history of producing hydrocarbons on trend and in the immediate area. Estimated reserves from the six anomalies identified is between 100 and 150 BCF, in addition 2 deep anomalies have been identified with the potential to produce over 200 BCF each. This project is pending lease availability and financing.

8.) Due to our relationship with Dr. Radovich we have been invited to participate in the acquisition and evaluation of approximately 680 square miles of offshore 3-D seismic data. We have entered into negotiations for this exceptional acquisition opportunity and expect to have an agreement late 2006

We have an alliance with an industry partner to acquire and develop approximately 5,000 acres in South Texas. A third party engineering report has been commissioned and we are waiting on the results prior to commencing development.

9.) Due to local knowledge, our relationships with industry partners we were offered an excellent opportunity in the Frio Miocene in Lavaca County, Texas. We evaluated well logs and surrounding field data, log analysis indicated that several sands in the Frio and Miocene should be productive. We acquired the 3-D seismic data and identified several seismic anomalies with the same seismic signatures that is a proven producer within a 10 mile radius. An area was identified and as part of the acquisition cost of a 654 acre lease we were required to plug for abandonment 4 wells from a previous operator. Two wells had re-completion opportunities as both wells sanded up due to improper completion and production techniques. The No. 8 well has damage which made it cost prohibitive to attempt a re-completion, the well was plugged as required.

We were able to re-enter the No. 5 well, repair formation damage and complete the well with sustained production sufficient to extract the estimated reserves of 205,432 MCFG or about 1.1 million net dollars at $7.00 gas from this previously damaged sand.

We drilled the No. 10 well and placed on line late June 2007. The estimated reserves for the No. 10 well is 2.0 BCF or approximately $10,870,000.00 net @ $7.00 MCFG

The field has three additional in field drilling locations identified with estimated reserves of 4 BCF.

11.) Dr. Radovich has been working the Offshore 3-D seismic data and has identified a feature in shallow waters of the Gulf Of Mexico, initial evaluation of the feature suggests reserves could approach .5TCF. We are hopeful to have sufficient financing to attend the Offshore lease auction in August of 2007. Assuming we are the successful bidder operations could commence as soon as 2nd or 3rd quarter 2008.