Northamerican Energy (NNYR)

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Investor Newsletter News


April 27, 2009: This Partnership/Investor Newsletter is designed to help keep our investors and partners informed on the kinds of things we’re currently working on, and how these things might interact with Northamerican Energy’s goals and plans for the future.

Specific announcements and news releases may be posted as newsworthy events occur, but in the time periods between those releases our Investor Newsletter will fill in the gaps and continue to keep you, our partner/investors, informed.


Northamerican Energy MLP(I): The daily reports I get from our field operations continue to report that our workover rigs are performing well, our monthly production is stabilizing and continues to improve on the wells we've worked over to date.

As our quarterly reports to our investor/partners indicated this is a long slow process, a process that throwing lots of $'s at will not alleviate. We anticipate that we will achieve the production levels indicated in that report by the 3-4th quarter of 2009 and would ask that you be patient in the interim.

Current oil prices oil seem to be holding at $50+ bbl, even considering a glut in the current oil inventory reports and all the experts we've seen say that prices will rebound because of the depletion of major worldwide oil fields. as we previously menbtioned the 2008 rate of depletion of 9.1% was much worse than expected and given that when the world economy recovers everyone expects a strong bounce back in the price of oil. In other words, no one believes that these low oil prices are going to last!

We are optimistic that oil prices will return to the $75 bbl level in the near future, as will natural gas prices this winter, and that the Partnership's annual income will meet, or exceed, all expectations in the coming quarters as production improves, workovers are completed, and additional production is brought online.

Acquisition of New Leases and Wells: As mentioned previously the Pecos County filing of the assignment, conveyance and bill of sale of both Sunrise's assets, and the existing leases were conveyed from Northamerican Energy Group to Northamerican Energy Master Limited Partnership and copies of the filings conveying those interests were included in the last quarterly report.

The leases and associated wells will continue to be worked over, re-equipped and put on production and the initial results on the wells that are already basically completed seem to be much better than anticipated, especially as it relates to the natural gas production.

Should these results continue we anticipate that these leases will return their purchase price in one year, or so, all of which fully corresponds with our business plan.

We will continue to analyze these opportunities and continue to negotiate the acquisition of additional leases/wells for both Partnerships as an ongoing basis and these acquisitions will be announced, and reported to our partners, as agreements are finalized.

As mentioned previously all of the leases we plan on acquiring for our Partnerships are properties that are in a mature, existing field, and were developed and operated until they became inactive in the past 10-15 years when oil and gas prices did not support their continuing operation.

These leases, and their wells, are low-cost, low-risk, primary production properties in need of workovers using a number of workover procedures. After completion we are certain they will return investment, and the workover costs, quickly resulting in positive cash flow for the Limited Partnerships within 6 months after completion.

Current Production - Partnership I: The natural gas we're producing and bringing on line as workovers are completed runs almost 1400 BTU's instead of 1000 BTU's per MCF which means that the Partnership receives a premium of almost 40% over and above the quoted price per MCF as outlined in Southern Union Gas settlement statements.

Sunrise's workover rig, which is working on the wells that are part of the Sunrise acquisition, and BE Burton's workover rig, which is currently working over the the wells on our other leases gives use of 2 workover rigs to use to work our leases as we continue to expand and grow.

These workovers are progressing each week and we continue to try to put 3-4 new wells to add to the existing production each month.

Other Items of Interest: An announcement in January 9, 2009 Houston Chronicle has affirmed our business model when it announced that Quantum Energy Partners, a Houston-based private equity firm, is investing more than $100 million in a new firm that will focus on buying existing oil and gas production in Texas and Oklahoma, and then working over these leases to increase the output using enhanced recovery methods.

Next, on April 27th we executed the Farmout Agreement (Agreement) with Pinnacle Mining for drilling new wells on both the Breen and Benoit leases. This Agreement requires the drilling, or re-entering, of additional earning wells within 90 days of completion of each well on both leases.

As part of that Agreement a production payment of $100,000 on each earning well will be paid out to the Partnership out of 25% of the Working Interest, or 18.75% of the net revenue interests, after payout. This $100,000 production payment is to be paid in addition to any overrides, or royalty interests, the Partnership may have after assigning the 75% Working Interests to Pinnacle. Copies of the Agreement will be forwarded to the Partnership along with the Quarterly Report this week. .

Partnership II Information: Current oil prices, coupled with the fact that we offer our investor/partners ownership in proven production allows us to offer returns far greater that they might be able to generate in the current stock market.

In addition 20-30% (depending on the investors tax bracket) of that return is effectively sheltered by the oil and gas depletion allowance (IRS Publication 535-Section 10).

Due to the popularity and success of our current investment program we have decided to expand our program and offer our Partners the opportunity to purchase 1/2 unit and make up to 10%, or more as oil prices increase, on a $30,000 investment, all on the same terms and conditions as the full $60,000 units.

These investors will be given the option to increase their income by purchasing another 1/2 unit at a later time.

Please contact us if your are interested in obtaining a Private Placement Memorandum package.

In closing we are excited about the new partner relationships we have developed over these past few months as we continue to have lots of new, and exciting opportunities made available to us and hope that these Partnership Investor Newsletters will help you to keep current on what’s happening in our company, and aid you in better understanding what we’re attempting to accomplish.

I pray that you, and your families, are having a blessed spring and please free to call me if you have any additional questions.

Jon Ginder - President & CEO

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