Diversified Oil and Gas Holdings (DVFI)

[Imperial Whazoo]

Thanks man. The PE I talk to is an old codger, years of experience in the oil patch. He is very patient with me. He knows the East Texas oil field pretty well. Most of his experience is in South Texas and West Texas, though.

We chatted about 35 or 40 minutes on Monday. If I listen, he'll tell me all kinds of snippets of info. Like, he told me all about Nitrogen injection technology on Monday. I mean, I generally knew, but he laid out a lot of details.

He wasn't impressed by BIGN's 3D seismic in and of itself, for example, because, as he said, there are lots of examples of this. One thing about it, though, was he agreed with me that it was a great benefit that BIGN owned it outright and didn't have to contract with somebody to control 3D when they needed it. Also, he agreed it was a possible service profit center in the future, if it could gain a track record, allowing BIGN to offer this to other outside companies as an oilfield service. I tried to explain that the source of the thinking in BIGNs case was Russian and that it mattered mostly because of the nueral AI technology portion of BIGNs proprietary 3D. He granted that, but pretty much said that it all came down to the skillset of the interpretive side of it.

His basic comment was that he thought these venture cap guys were really behaving intelligently by creating multiple parallel companies engaged in the same general venture. He told a story or two from his many years about putting your eggs in one basket and how a single major disaster or just about anything unforseen brought the whole thing down. One reason he felt these guys have really deep pockets is that they seem to have no trouble funding Stonebridge, BIGN, Royalle, Tyche, etcetera etcetera. And, a collapse in WW (not to single WW out, just using it to make my point) would be isolated from the rest by the very structure of the way they are operating and the result would not bring down the whole house of cards.

Also, he asked me all kinds of questions about whether I know which company was king of the hill. He thinks that the most money in the long run is going to be made by investing in the entity that sucks the eventual profits out of all the rest. As he put it, "these venture cap guys have got to get their money out via one of them". He said: follow the money. I told him I thought that Royal was the major domo, but that I really didn't know yet and his response was that he thought that we'd see money/emphasis shift fluidly as successes and failures manifested themselves in each of the several entities. And, again, he emphasisized how he thought the way these venture cap guys were doing things indicated they were sharp guys because the way they have it set up, a collapse in one venture doesn't generate a system wide disaster.

Thats kind of the fleshing out of our general discussion. Its really nice to be able to pick his brain.

GLTY

Imperial Whazoo