Heartland Oil and Gas (fka HTOG)

[jwwakley4]

Production potential of both the Cherokee and Forest City basins is enormous. In 1999, the Petroleum Technology Transfer Council estimated nearly 10 trillion cubic feet of natural gas in eastern Kansas alone. The Forest City Basin is thought to contain approximately 1 trillion cubic feet of natural gas.

The Company is currently producing 300 Mcf/day and plans to expand production to 500 Mcf/day with the completion of a pipeline connection in Palo Pinto County to a low-pressure sales line. Assuming the 500 Mcf/day production level is achieved, this segment could be producing $2.5 million in annual revenues. We value these operations at $10 million, based on our $2.5 million estimate and a peer group average 4.0 times Price/Sales multiple