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$UAPC CHART and DD! MASSIVE!
Our Properties. We own interests in the following oil and gas properties in Texas:
The Marcee 1 Interest. We own a 100% working interest and operating interest in the Marcee 1 Tract, which is located in the Eagle Ford Shale
formation on approximately 112 acres of land in Gonzalez County, Texas (“Marcee
8
1 Tract”). We currently have one non-producing well and enough space to further offset wells if it is determined they will be profitable.
The Eagle Ford Shale formation in South Texas runs from the US-Mexico border north of Laredo in a narrow band extending northeast for
several hundred miles to just north of Houston. It is located directly below the Austin Chalk. The average thickness of the Eagle Ford Shale is
about 475 feet. The formation produces both natural gas and oil, but we believe the oil-producing and gas condensate areas are most attractive at
this time.
The Lozano Interest. We own a 100% working interest and operating interest in the Hector Lozano Tract, which is located on approximately
110 acres, located in Frio County, Texas (“Lozano Tract”). The Lozano Tract is a producing asset with three wells with proven reserves. The
production from the Lozano wells is mature and we believe the wells are likely to continue to produce with slow decline for the foreseeable
future. All three wells produced an average of 3.2 barrels of oil per day during 2014. Historically these wells have produced a total of 5-12
barrels of oil per day.
The Lozano Tract lies in the Western Gulf province, an area that covers 116,599 sq. mi., allowing extensive data on several hundred thousand oil
and gas wells. So far, 2,518 significant oil and gas fields comprising 3,883 reservoirs have been discovered in the region.
For the past 20 years, the oil industry has had huge success in the county due to oil-extraction technology that permits horizontal drilling
extending the primary producing formations such as the Olmos B and Olmos D sands, which range in depth from 3,100 feet to 3,600 feet. The
Austin Chalk, Navarro and Anacacho formations are also abundant in the area.
Nearby the Lozano Tract, the untapped reserves in the region have been demonstrated by the Kinder Morgan-operated Yates Oil Field, which
has yielded over 1.4 billion barrels and is expected to produce a further 1 billion barrels. Also nearby are the plays of the Bigfoot (6miles) and
Pearsall fields.
The Western Gulf Province is divided into 48 hydrocarbon plays; 3 plays in the Jurassic, 15 in Cretaceous and 30 plays in Tertiary rocks. All but
3 plays are conventional. The Austin Mid-Dip Oil play was removed from the conventional list and divided into 3 plays (4747, 4748 and 4749)
and the oil was assessed as an unconventional resource.
The Welder Interest. We own a 59.61% working interest in the Welder Tract, which is located on approximately 550 acres, located in Duval
County, Texas. The Welder Tract has 43 wells. The Welder Tract wells are currently producing an average of 8 barrels per day. In February
2014 we sold the acreage of the Welder Tract, but we maintain our interest in the well.
The Walker Smith Interests. We own a 10.43% working interest in the Walker Smith and Walker Smith #21D tracts and a 40.39% working
interest in the Walker Smith #22D Tract (the “Walker Smith Interests”), which are located on approximately 275 acres, located in Wilbarger
County, Texas. The Walker Smith wells did not produce economically significant quantities during 2014.
The Merrick Davis Interests. We own a 62.22% working interest in the Merrick Davis #16 and Merrick Davis #17 tracts and a 19.72%
working interest in the Merrick Davis tract (hereinafter all three tracts will be referred to as “Merrick Davis Interests”), which are located on
approximately 320 acres, located in Shackelford County, Texas. The Merrick Davis Interests have six wells producing an average of 0.6 barrels
per day.
The Bailey, Rogers and Fohn Interests. We own a 65.00% working interest in the Baily, Rogers and Fahn tracts (the “BRF Interests”), which
are located on approximately 1000 acres, located in Medina County, Texas. The wells are currently producing an average of 2.3 barrels per day.
The Gabriel and Rosser Interests. On January 28, 2011, we acquired certain oil and gas interests located in Bastrop County, Texas, (“Gabriel
Interests”) from Gabriel Rosser, LP (“Gabriel”). The Gabriel Interests include Gabriel’s undivided 50.83% working interest and 39.14% revenue
interest in the Gabriel 3, 4, 5, 9,
9
15, Rosser #2 and #4 and Koi #1 wells. At the time of our acquisition of the Gabriel Interests, all wells were not producing. The Gabriel Interests
comprise over 400 acres, with approximately 10 wells that were shut in. As of the date of this report, Rosser 4 is producing about 2 barrels of oil
per day. We are currently equipping Gabriel 3 to produce with pumping unit. Expecting it will have the same level of production as Rosser 4, 2
barrels of oil per day.
The McKenzie State Well Interests. On November 30, 2011, we acquired one hundred percent (100%) of the working interest in the McKenzie
State Well No. 1, located in Pecos County, Texas from McKenzie Oil Corp. (“McKenzie”) in exchange for an aggregate cash sum of $550,000
and 50,000 shares of our common stock. The Company has performed workover procedures on certain wells in the McKenzie and production
has commenced on one well, which is currently producing an average total of 3.4 barrels per day. In addition to the production from this current
zone, several additional horizons (which are productive in the area) have been identified in the McKenzie well, which could be tested and
potentially produced in the future.
The McKinney Interests. We own a 7.04% working interest in the McKinney #3B, #5B, #6B and #11B tracts and a 5.40% working interest in
the McKinney #4B tract (hereinafter all tracts will be referred to as the “McKinney Interests”). Each tract has one wellbore and our working
interest is for the wellbores on each tract. The wellbores are located in Navarro County, Texas. These wells are currently producing an average
total of 0.25 barrels per day.
Company Reserve Estimates. Our proved reserve information as of December 31, 2014 and 2013 was estimated by Mire and Associates, Inc.
(“Mire”), independent petroleum engineers. In accordance with SEC guidelines contained in Item 1202(a)(8) of SEC Regulation S-K and Mire’s
estimates of future net revenues from our properties, the PV-10 and standardized measure thereof were determined to be economically
producible under existing economic conditions. These guidelines require the use of the 12-month average price for each product, calculated as
the unweighted arithmetic average of the first-day-of-the-month price for the period January 1, 2014 through December 31, 2014, except where
such guidelines permit alternate treatment, including the use of fixed and determinable contractual price escalations.
The technical persons at Mire are responsible for preparing the reserves estimates presented herein and ensuring that they meets the requirements
regarding qualifications, independence, objectivity, and confidentiality set forth in the Standards Pertaining to the Estimating and Auditing of Oil
and Gas Reserves Information promulgated by the Society of Petroleum Engineers.
Mire is an independent petroleum engineering firm specializing in the technical and financial evaluation of oil and gas assets. Mire’s report was
prepared under the direction of Kurt Mire, principal consultant and owner of Mire. Mr. Mire earned a B.S. degree in Petroleum Engineering from
the University of Louisiana at Lafayette and has more than 25 years of experience in production engineering, field operations and management,
reservoir engineering, acquisitions and divestments. Mire and its employees have no interest in our Company or in our properties, were not
employed by our Company on a contingent fee basis and were objective in determining our reserves.
Additional information regarding our oil and gas properties and reserve information can be found in Note 14 to the audited financial statements
for the years ended December 31, 2014 and 2013, attached hereto.
Our Acreage and Wells. We own mineral interests leases on the following productive wells, developed acreage and undeveloped acreage in
Texas. Other properties outside of Texas have been excluded from this table. Productive wells are producing wells and wells mechanically
capable of production. A gross well is a well in which a working interest is owned. The number of gross wells is the total number of wells in
which a working interest is owned. The number of net wells is the sum of the fractional working interests owned in g
Our Properties. We own interests in the following oil and gas properties in Texas:
The Marcee 1 Interest. We own a 100% working interest and operating interest in the Marcee 1 Tract, which is located in the Eagle Ford Shale
formation on approximately 112 acres of land in Gonzalez County, Texas (“Marcee
8
1 Tract”). We currently have one non-producing well and enough space to further offset wells if it is determined they will be profitable.
The Eagle Ford Shale formation in South Texas runs from the US-Mexico border north of Laredo in a narrow band extending northeast for
several hundred miles to just north of Houston. It is located directly below the Austin Chalk. The average thickness of the Eagle Ford Shale is
about 475 feet. The formation produces both natural gas and oil, but we believe the oil-producing and gas condensate areas are most attractive at
this time.
The Lozano Interest. We own a 100% working interest and operating interest in the Hector Lozano Tract, which is located on approximately
110 acres, located in Frio County, Texas (“Lozano Tract”). The Lozano Tract is a producing asset with three wells with proven reserves. The
production from the Lozano wells is mature and we believe the wells are likely to continue to produce with slow decline for the foreseeable
future. All three wells produced an average of 3.2 barrels of oil per day during 2014. Historically these wells have produced a total of 5-12
barrels of oil per day.
The Lozano Tract lies in the Western Gulf province, an area that covers 116,599 sq. mi., allowing extensive data on several hundred thousand oil
and gas wells. So far, 2,518 significant oil and gas fields comprising 3,883 reservoirs have been discovered in the region.
For the past 20 years, the oil industry has had huge success in the county due to oil-extraction technology that permits horizontal drilling
extending the primary producing formations such as the Olmos B and Olmos D sands, which range in depth from 3,100 feet to 3,600 feet. The
Austin Chalk, Navarro and Anacacho formations are also abundant in the area.
Nearby the Lozano Tract, the untapped reserves in the region have been demonstrated by the Kinder Morgan-operated Yates Oil Field, which
has yielded over 1.4 billion barrels and is expected to produce a further 1 billion barrels. Also nearby are the plays of the Bigfoot (6miles) and
Pearsall fields.
The Western Gulf Province is divided into 48 hydrocarbon plays; 3 plays in the Jurassic, 15 in Cretaceous and 30 plays in Tertiary rocks. All but
3 plays are conventional. The Austin Mid-Dip Oil play was removed from the conventional list and divided into 3 plays (4747, 4748 and 4749)
and the oil was assessed as an unconventional resource.
The Welder Interest. We own a 59.61% working interest in the Welder Tract, which is located on approximately 550 acres, located in Duval
County, Texas. The Welder Tract has 43 wells. The Welder Tract wells are currently producing an average of 8 barrels per day. In February
2014 we sold the acreage of the Welder Tract, but we maintain our interest in the well.
The Walker Smith Interests. We own a 10.43% working interest in the Walker Smith and Walker Smith #21D tracts and a 40.39% working
interest in the Walker Smith #22D Tract (the “Walker Smith Interests”), which are located on approximately 275 acres, located in Wilbarger
County, Texas. The Walker Smith wells did not produce economically significant quantities during 2014.
The Merrick Davis Interests. We own a 62.22% working interest in the Merrick Davis #16 and Merrick Davis #17 tracts and a 19.72%
working interest in the Merrick Davis tract (hereinafter all three tracts will be referred to as “Merrick Davis Interests”), which are located on
approximately 320 acres, located in Shackelford County, Texas. The Merrick Davis Interests have six wells producing an average of 0.6 barrels
per day.
The Bailey, Rogers and Fohn Interests. We own a 65.00% working interest in the Baily, Rogers and Fahn tracts (the “BRF Interests”), which
are located on approximately 1000 acres, located in Medina County, Texas. The wells are currently producing an average of 2.3 barrels per day.
The Gabriel and Rosser Interests. On January 28, 2011, we acquired certain oil and gas interests located in Bastrop County, Texas, (“Gabriel
Interests”) from Gabriel Rosser, LP (“Gabriel”). The Gabriel Interests include Gabriel’s undivided 50.83% working interest and 39.14% revenue
interest in the Gabriel 3, 4, 5, 9,
9
15, Rosser #2 and #4 and Koi #1 wells. At the time of our acquisition of the Gabriel Interests, all wells were not producing. The Gabriel Interests
comprise over 400 acres, with approximately 10 wells that were shut in. As of the date of this report, Rosser 4 is producing about 2 barrels of oil
per day. We are currently equipping Gabriel 3 to produce with pumping unit. Expecting it will have the same level of production as Rosser 4, 2
barrels of oil per day.
The McKenzie State Well Interests. On November 30, 2011, we acquired one hundred percent (100%) of the working interest in the McKenzie
State Well No. 1, located in Pecos County, Texas from McKenzie Oil Corp. (“McKenzie”) in exchange for an aggregate cash sum of $550,000
and 50,000 shares of our common stock. The Company has performed workover procedures on certain wells in the McKenzie and production
has commenced on one well, which is currently producing an average total of 3.4 barrels per day. In addition to the production from this current
zone, several additional horizons (which are productive in the area) have been identified in the McKenzie well, which could be tested and
potentially produced in the future.
The McKinney Interests. We own a 7.04% working interest in the McKinney #3B, #5B, #6B and #11B tracts and a 5.40% working interest in
the McKinney #4B tract (hereinafter all tracts will be referred to as the “McKinney Interests”). Each tract has one wellbore and our working
interest is for the wellbores on each tract. The wellbores are located in Navarro County, Texas. These wells are currently producing an average
total of 0.25 barrels per day.
Company Reserve Estimates. Our proved reserve information as of December 31, 2014 and 2013 was estimated by Mire and Associates, Inc.
(“Mire”), independent petroleum engineers. In accordance with SEC guidelines contained in Item 1202(a)(8) of SEC Regulation S-K and Mire’s
estimates of future net revenues from our properties, the PV-10 and standardized measure thereof were determined to be economically
producible under existing economic conditions. These guidelines require the use of the 12-month average price for each product, calculated as
the unweighted arithmetic average of the first-day-of-the-month price for the period January 1, 2014 through December 31, 2014, except where
such guidelines permit alternate treatment, including the use of fixed and determinable contractual price escalations.
The technical persons at Mire are responsible for preparing the reserves estimates presented herein and ensuring that they meets the requirements
regarding qualifications, independence, objectivity, and confidentiality set forth in the Standards Pertaining to the Estimating and Auditing of Oil
and Gas Reserves Information promulgated by the Society of Petroleum Engineers.
Mire is an independent petroleum engineering firm specializing in the technical and financial evaluation of oil and gas assets. Mire’s report was
prepared under the direction of Kurt Mire, principal consultant and owner of Mire. Mr. Mire earned a B.S. degree in Petroleum Engineering from
the University of Louisiana at Lafayette and has more than 25 years of experience in production engineering, field operations and management,
reservoir engineering, acquisitions and divestments. Mire and its employees have no interest in our Company or in our properties, were not
employed by our Company on a contingent fee basis and were objective in determining our reserves.
Additional information regarding our oil and gas properties and reserve information can be found in Note 14 to the audited financial statements
for the years ended December 31, 2014 and 2013, attached hereto.
Our Acreage and Wells. We own mineral interests leases on the following productive wells, developed acreage and undeveloped acreage in
Texas. Other properties outside of Texas have been excluded from this table. Productive wells are producing wells and wells mechanically
capable of production. A gross well is a well in which a working interest is owned. The number of gross wells is the total number of wells in
which a working interest is owned. The number of net wells is the sum of the fractional working interests owned in g
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