GRID PETROLEUM CORP. GRPR.OB UPDATED REPORT RIMINI INVESTMENTS RIMINI INVESTMENTS is an employee-owned, boutique service, research and consulting firm. We are not investment dealers or advisors. Our researchers are retained on a contract basis, allowing us to hire the cream of the crop for our services. We are therefore, international in scope with researchers working from Canada, the USA, China, Mexico, India and Europe. TREND MANAGEMENT Rimini Investments provides its clients with top quality research and world-wide trend identification through our various contacts throughout the world. We tend to focus on sectors “in-play”. NIMBLE INVESTMENT Our researchers have a combined 120 years of experience in all types of markets. With a focus on the development of long term, mutually rewarding relationships with clients, our greatest strengths are innovative investment ideas that make money for our clients. GROWTH COMPANIES Rimini Investments is a specialist in growth investing, ranging from natural resource companies, technology companies to “alternative” company investments. Our investments are in companies, both private and public, in North America and throughout the world. We believe that money has no borders. We provide distribution, advice, financing capability, and a superior knowledge of the growth company market sector to institutional investors, private clients, and corporations. We understand how to present a growth company to market. We also understand the importance of the entrepreneur in economic innovation, wealth creation and societal upliftment. Our principals are proud to have underwritten, sponsored and managed financings for many growth companies. Rimini’s capital raising activities can assist companies in all stages of the business cycle utilizing private placements, IPO’s and/or follow-on and secondary financings. Stock Symbol: GRPR.OB “AFFORDABLE DOMESTIC ENERGY BOUNCE PLAY” April 14, 2011 Symbol GRPR.OB 52 Week High $1.68 Avg Trading Volume 160,817 Current Recommendation SPEC BUY 52 Week Low $0.05 Shares Outstanding (000's) 135,091 Current Price $0.072 Daily High Price $0.09 Market Capitalization (000's) $9,726 Fiscal Year End Mar 31 Daily Low Price $0.07 Float (000's) (approx.) 37,900 Dividend Yield (TTM) N/A Previous Close $0.0755 % Float Outstanding 28% RIMINI PPSE Target $1.77 INVESTMENT THESIS AND RECOMMENDATIONS Grid Petroleum Corp. ( the “Company”) has acquired natural gas rights in the Upper Green River Valley in the State of Wyoming, USA. Specifically, Grid’s prospect is located at the giant Jonah Field. Despite only having discovered the technology to extract the gas from the region’s unique geology in 1993, the Green River Valley has become the second largest on shore natural gas producing area in the United States. Since 1993, over 15 companies, many of them “major’s” have become active participants in the area. Grid Petroleum is one of the few juniors with a substantial prospect covering over 2,400 acres. Recent data indicate a high percentage of success in drilling wells in the area. A rebound in natural gas prices coupled with the high rate of success in the area, make the prospect a highly desirable one. Natural gas is widely regarded as cleaner than both coal and oil. And it occurs in abundance in the United States. Because it is clean, domestic and widely available, natural gas has found proponents across the board in consumer groups, government and industry. Natural gas is also looked at as an in-between-step, weaning us off fossil fuels while we develop our “green” or renewable energy technologies. However, oil isn’t going anywhere anytime soon. So Grid has recently acquired valuable oil acreage (about 4,000 acres) in the highly sought after San Joaquin Valley, where its property contains both the Monterey and Kreyenhagen Shale zones. Its proximity to the largest oil fields in the lower 48 states of the continental United States bodes well. As recently as 2009, Occidental Petroleum discovered a mammoth field estimated to contain up to 1 Billion Barrel of Oil Equivalent. Grid Petroleum, a junior exploration company, has already succeeded in attracting experienced and talented management along with substantial shareholder funding to begin drilling once targets are identified. In order to begin the procedure to identify viable targets, a leading oil field services company has been retained to outline the viability and potential of both prospects. EXECUTIVE SUMMARY Grid Petroleum Corp. (the “Company”) was incorporated in the state of Nevada, United States of America on November 15, 2006.. On March 15, 2010, Grid Petroleum executed a Purchase and Sale Agreement with Murrayfield Limited to acquire the assets of the Jonah Field, in the Greater Green River Basin of the Rocky Mountains area in Wyoming, USA referenced in the Letter of Intent dated January 12, 2010. The Company paid $300,000USD for the assets and assumed all liabilities and obligations of Murrayfield Limited. Management immediately hired Schlumberger, a leading oil and gas services company with a world class reputation to prepare a report to evaluate the prospect with favorable results. On April 23, 2010, Grid Petroleum announced that a major shareholder had entered into a funding agreement with the Company to provide up to $5,000,000USD in funding. The agreement contained a provision for a further $2,500,000USD should Grid Petroleum require it. The Company has since drawn down on the financing facility twice. Once for $200,000 in return for issuing 134,420 shares of common stock and a two year warrant to purchase 89,613 shares of common stock at an exercise price of $2.2318 per share. The second draw was for $200,000 in return for issuing 266,667 shares of common stock and a warrant to purchase 266,667 shares of common stock at an exercise price of $1.125 per share. The Jonah Field has been called one of the most important natural gas discoveries on the continent believed to contain up to 10TCF. There are over 15 operators active in the Jonah Field, all of whom have begun operations after 1993. Recent statistics indicate that the success rate of drilling a gas well in the Northern Green River Valley (where the Jonah Field is located) is 97.9%. The gas field is unlike traditional reservoirs in that it is not uniform. The Jonah Field’s gas reserves are stored in independent lenses, rather than one giant reservoir pool. Natural gas prices, recently depressed are making a recovery due to the historic relationship between the price of oil and natural gas. In addition, the recovery of the economy in the United States, the demand for cleaner burning fuels and the Obama Administration’s green initiatives have increased demand for natural gas. Industry is also taking notice having found an unlikely, self proclaimed spokesman in the form of T. Boone Pickens who champions clean, on-shore domestic energy sources. Effective January 20, 2011, Grid Petroleum entered into a Shared Exchange Agreement with Joaquin Basin Resources Inc., a Nevada corporation, and acquired the Kreyenhagen Trend Acreage. The property contains two prolific zones called the Kreyenhagen Shale and the Monterey Shale. Significantly, these two shale formations have been credited with much of the San Joaquin Basin’s 20 billion barrels of proven oil reserves and contain thick (many hundreds of feet) sections of rick, mature oil shale. The USGS estimates that the source rocks have generated an estimated 160 billion barrels of oil, with less than 30% of the resource discovered to date. As recently as 2009, Occidental Petroleum (NYSE:OXY) discovered the largest oil discovery in California in the past 35 years in the San Joaquin valley. Since light oil in the adjacent Kettleman Dome oil fields have proven productive, it is worth while testing the upper Kreyenhagen oil shale zone. Rimini’s valuation model takes into account risks against finding an economically viable discovery, along with risks associated with an exploration stage company listed on the OTCBB, with limited resources and finances. The Rimini Projected Price Per Share Estimate: $1.77. HISTORY AND BACKGROUND Grid Petroleum Corp. (the “Company”) was incorporated in the state of Nevada, United States of America on November 15, 2006. The Company was an exploration stage company until March 2009, and was formed for the purpose of acquiring exploration and development stage mineral properties. The Company’s year-end is March 31. On November 18, 2009, the Company changed its name to Grid Petroleum Corp. in order to reflect the current focus of the Corporation. On January 12, 2010, the Company, entered into a letter of intent to acquire a 100% working interest in four separate oil and gas prospects within Jonah Field region in Wyoming, USA. On March 8, 2010, Kelly Sundberg, CEO announced his resignation and Paul Watts was appointed the new CEO and President. Mr. Watts was also elected to the Board of Directors. The change in management was undertaken as Mr. Watts has considerable experience in the oil and gas sector – the focus of the Company’s operations. On March 10, 2010, GRPR received an initial funding from a European Institutional Investor in the amount of $500,000. On March 15, 2010, Grid Petroleum executed a Purchase and Sale Agreement with Murrayfield Limited to acquire the assets of the Jonah Field, in the Greater Green River Basin of the Rocky Mountains area in Wyoming, USA referenced in the Letter of Intent dated January 12, 2010. The Company paid $300,000USD for the assets and assumed all liabilities and obligations of Murrayfield Limited. The purchase closed on March 17, 2010. Concurrently, Schlumberger, an oil field services giant, was retained to commence updating a technical report on the prospect for analysis and development appraisal of the property. On April 5, 2010, 18,002,000 common shares previously issued to the Company’s former CEO, Kelly Sundberg, were returned to treasury. On April 23, 2010, Grid Petroleum announced that a major shareholder had entered into a funding agreement with the Company to provide up to $5,000,000USD in funding. The agreement contained a provision for a further $2,500,000USD should Grid Petroleum require it. On May 14, 2010, Grid Petroleum drew down $200,000 from the funding line to fund operational expenses and issued 134,420 shares of common stock and a two year warrant to purchase 89,613 shares of common stock at an exercise price of $2.2318 per share. The Company also received an Initial Technical View on the SE Jonah Field. On September 16, 2010 Grid Petroleum drew $200,000 shares from its financing facility to fund operating expenses. The Company issued the investor 266,667 shares of common stock and a warrant to purchase 266,667 shares of common stock at an exercise price of $1.125 per share. On December 3, 2010 Paul Watts resigned in all capacities in which he served as an officer of the Company. On December 6, 2010, Robert Hoar was appointed as the President of the Company. On December 3, 2010, Mr. Tim DeHerrera was appointed as our Chairman and as a member of the Company’s Board of Directors. On January 6, 2011, Robert Hoar stepped aside as President and assumed the role of Exploration and Development of Resource Properties of the Company. Concurrently, James Powell was appointed President of the Company. Effective January 20, 2011, Grid Petroleum entered into a Shared Exchange Agreement with Joaquin Basin Resources Inc., a Nevada corporation. Pursuant to the provisions of the Agreement, we agreed to issue to the Selling Shareholders (i) 62,000,000 shares of our common stock and (ii) 2,076,324 shares of our convertible preferred stock, in exchange for the transfer and delivery to us by the Selling Shareholders of the 62,000,000 shares of common issued by the Seller, which are all of the issued and outstanding securities of the Seller. As result of the transaction contemplated by the Agreement, the Seller will become our wholly owned subsidiary. MINERAL CLAIMS JONAH FIELD LEASES On March 15, 2010, Grid Petroleum executed a Purchase and Sale Agreement with Murrayfield Limited to acquire the Murrayfield’s assets in the S.E. Jonah Field, in the Greater Green River Basin of the Rocky Mountains area in Wyoming, USA. The Greater Green River Valley is the second most prolific gas production region in North America, believed to contain over 30TCF (trillion cubic feet) of natural gas. The Jonah Field has been called one of the most important natural gas discoveries on the continent believed to contain up to 10TCF. The field has a productive area of 21,000 acres. The Greater Green River Valley is home to such established companies as: • EnCana – the largest producer in the area • Yates • Ultra • BP • Chevron/Texaco • And Exxon – a new entrant There are over 15 operators active in the Jonah Field, all of whom have begun operations after 1993. The Company paid $300,000USD for the assets and assumed all liabilities and obligations of Murrayfield Limited. As well, the seller retained a royalty component. The claims can be summarized as follows: LANDS Title Document Lands Encumbrances Seller's Interest United States Department All Township 28N Range Lessor Royalty 12.50% of the Interior Bureau of 110 West Land Management Oil and Section 6 – Lots 1-7; Overriding royalty 5.00% Gas Lease #WYW158664 S2NE; SENW; E2SW; retained by Seller dated August 1, 2004 and N2SE issued to Desert Mining, Section 7 Lots 1 – 4; Inc. E2W2 Section 17 N2 Section 19 Lots 3 & 4; E2SW Section 30 Lots 1 – 4; E2W2; SE United States Department All Township 28N Range 12.50% of the Interior Bureau of 110 West Lessor Royalty Land Management Oil and Section 28 SW Gas Lease #WYW158665 Section 29 S2 Overriding royalty 5.00% dated August 1, 2004 and Section 31 Lots 1 - 4; retained by Seller issued to Desert Mining, S2NE; E2W2; SE Inc. United States Department All Township 27N Range Lessor Royalty 12.50% of the Interior Bureau of 107 West Land Management Oil and Section 5 Lots 1 – 4; Overriding royalty 5.00% Gas Lease #WYW159734 S2N2; S2 retained by Seller dated February 1, 2004 and issued to Desert Mining, Inc. United States Department All Township 27N Range Lessor Royalty 12.50% of the Interior Bureau of 107 West Land Management Oil and Overriding royalty 5.00% Gas Lease #WYW159737 Section 8 N2; N2SE; retained by Seller dated February 1, 2004 SESE and issued to Desert Mining, Inc. History and Geology Jonah Field is located in Sublette County, Wyoming, USA. Hydrocarbon presence in the area is historically documented since the early 1900’s. However, extraction proved uneconomic until 1993. Most drillers in the beginning hadn’t recognized that Jonah is not a typical reservoir. The gas was trapped in hard rock requiring extremely high pressure to release the gas. First attempts involved a proposal to detonate nuclear devices under the surface in hopes of releasing the gas. In 1993 McMurry Oil tried fracture technology. It was a resounding success. Once the geology was understood, foam frac technology was deployed at Jonah, and out of the first 450 wells drilled, only one proved to be dry. Since then, its been widely reported that 97.9% of the wells drilled in the Green River Valley have succeeded. And Jonah Field has grown to provide 1.5% of the USA’s natural gas production. The gas field is unlike traditional reservoirs in that it is not uniform. The Jonah Field’s gas reserves are stored in independent lenses, rather than one giant reservoir pool. Therefore, if one lens is drilled, other lenses are not affected by drilling. Implications of this type of geology are two-fold: 1. Depleting one lens does not impact the rest of the field 2. More drilling is necessary to find lenses since they are not a contiguous body A direct result of this realization was that estimates for the field keep increasing. At first, it was thought the field contained 3TCF of natural gas. The estimate is now over 10TCF and keeps growing. It was thought that 450 wells would be necessary to drain the field. The estimate is now 3,100. Because of the lens dispersion, wells are being drilled closer and closer together. It was thought 40-acre well spacing would be sufficient. The estimate is now 5-acre well spacing. And the field has an incredible 97.9% success rate. The field has grown quickly due to its production history and its probability of success in drilling: A 1986 satellite photo: Jonah Natural Gas Field, upper Green River valley, Wyoming, 1986 Compare this to the activity, since the rediscovery of the well in 1993. A recent satellite image dramatically shows the activity increase in the area: Jonah Natural Gas Field, upper Green River valley, Wyoming, 2003 In 2006, a further 3243 wells were drilled. Grid Petroleum Corp.’s S.E. Jonah Field prospect comprises 2,477.68 acres. THE MARKET FOR NATURAL GAS The demand for natural gas has historically been driven by two primary factors: industrial use and consumer use. Recently, due to concerns for the environment and energy self reliance on the North American continent, natural gas has emerged as the fuel of choice for transportation by vocal energy proponents like T. Boone Pickens. Recent prices for natural gas are at historic lows, but have started rebounding: We expect the price of natural gas to rise over the long run, but to level off during the summer months and have used a conservative valuation of $4USD per BTU in our PPPSE calculations. Historically, oil and natural gas prices tend to trade at a ratio of 6:1 on the high end to 12:1 on the low end. Recently, the ratio has increased to 21:1 reflecting the higher price of oil and the lower price of natural gas. This divergence is primarily due to the scarcity of oil, and the primacy of oil as a transportation fuel coupled with the relative abundance of natural gas. Exacerbating the ratio, natural gas demand in the industrial sector had declined with the decline in the world wide economy. Consumer use for natural gas also decreased as consumers economized on heating bills, and were treated to milder than usual weather. Additionally, natural gas as a transportation fuel in the United States doesn’t enjoy the market share it enjoys in other parts of the world. However, all these factors have changed in the past year or so. The recent price increase is due to several factors, both economic and demand related. • Nissan is now actively marketing a natural gas only car. • Lower than expected storage inventories as reported in April 2010 • A rebound in the auto manufacturing sector (a heavy user of natural gas for energy) • A rebound in the steel manufacturing sector (a heavy user of natural gas in its manufacturing process) • A rebound in the energy sector itself (user of natural gas for processing, refining and even pipeline operations) • Electricity generation • A switching of public preference to lower polluting fuels such as natural gas as a replacement for coal in energy production • Vocal advocates for cleaner energy such as environmentalists, businessmen like T. Boone Pickens and governments like the Obama Administration THE KREYENHAGEN TREND ACREAGE SAN JOAQUIN BASIN CALIFORNIA Grid Petroleum acquired the Kreyenhagen Trend Acreage through Nations Petroleum, a private Canadian company primarily re-focused in Canada and the UK, on shallow heavy oil that requires significant steam infrastructure for the production of oil. The San Joaquin basin lies between the San Andreas fault to the west, and the Sierra Nevada to the east. The southern boundary of the basin occurs near White Wolf fault. The Stockton fault, which occurs along the north edge of the Stockton arch, separates the San Joaquin basin from the Sacramento basin to the north (Bartow, 1991). Grid Petroleum has acquired a property located on the North West flank of the San Joaquin Basin, and encompasses 4,000 acres. The Company has acquired a 50% Working Interest with a 39% Net Revenue Interest. The property contains two prolific zones called the Kreyenhagen Shale and the Monterey Shale. Significantly, these two shale formations have been credited with much of the San Joaquin Basin’s 20 billion barrels of proven oil reserves and contain thick (many hundreds of feet) sections of rick, mature oil shale. The USGS estimates that the source rocks have generated an estimated 160 billion barrels of oil, with less than 30% of the resource discovered to date. In fact, many of the United State’s first, and most prolific oil fields have been discovered in the vicinity: Coalinga Oil Field, Lost Hills Oil Field, Cymric, McKittrick, North Belridge, South Belridge, Elk Hills, Buena Vista and Kettleman Hills. In fact, Occidental Petroleum’s (OXY) majority interest in the giant Elk Hills field has been touted by OXY as a key factor in the company’s position as the largest natural gas producer and second largest oil producer in California.Grid’s property is located on the NW flank of the San Joaquin Basin, adjacent to the tectonically active San Andreas Fault. And most significantly, as recently as 2009, OXY discovered the largest oil discovery in California in the past 35 years in the San Joaquin valley, estimated at up to 1 Billion Barrel Oil Equivalent. They are currently producing at 32,000 boepd. History and Geology The Kreyenhagen oilfield was discovered in the 1890’s. It consists mainly of biosiliceous shale, but includes the Point of Rocks Sandstone Member, a deep-water turbidite sandstone facies. The formation is thin or absent in the Tejon depocenter and ranges between 400 and 800ft (152 to 305m) thick in the Southern and Northern Buttonwillow depocenters. According to the USGS, on the basis of Rock-Eval/TOC data for 210 samples (69 conventional and sidewall cores and 141 cuttings) averaged among 21 wells, the Kreyenhagen Formation source rock has original total organic carbon and original hydrogen index as much as 4.7 weight percent (0.7 to 4.7 weight percent range) and 578 mg HC/g TOC (25 to 578 mg HC/g TO C range), respectively. Average values among the wells indicate very good quantities. Geochemical oil-oil and oil-source rock correlations indicate the Kreyenhagen Formation is second only to the Antelope shale as a source rock with respect to the amount of oil generated in the San Joaquin Basin. The Kreyenhagen Formation covers an area in the subsurface as much as 50 miles (80 km) wide. Grid’s property has exposure to the prolific oil sands that underpin production from the nearby one billion barrel Coalinga Field and five hundred million barrel Kettlemen Hills Field. Fairly extensive exploration and development has been conducted offshore, but until recently, very little exploration has been done onshore. Preliminary analysis of the logs from neighboring wells indicates up to 200 feet of potential oil pay. California’s active tectonic forces enhance the shale reservoirs by fracturing the shale. Yet despite the enormous amounts of oil already discovered and captured from California for the past century, tremendous upside remains. New technology makes drilling (both vertical and horizontal), testing (both multi fracs and large volume acid treatments) and marketing – due to progressive infrastructure and competitor willingness to cooperate to exploit the area’s shale plays more viable even with a smaller target area. The Kreyenhagen Field Administrative Area (KFA) covers approximately 800 acres and is estimated to contain up to 50 million barrels in place of approximately 15 degree API crude oil in a shallow sandstone reservoir. The KFA has historically been permitted to exploit the heavy oil accumulation. Because plenty of the heavy oil still exists, no steam enhancement has been attempted on the field. Since light oil in the adjacent Kettleman Dome oil fields have proven productive, it is worth while testing the upper Kreyenhagen oil shale zone. Since this has not been proven in Kreyenhagen, we do not include it in our calculations to derive the PPPSE. The Kreyenhagen Trend Oil Seep at the Kreyenhagen Shale Kreyenhagen Trend Acreage THE MARKET FOR OIL Grid Petroleum is positioning itself to become a player in the domestic energy markets, both in natural gas and oil. It can be correctly stated that oil is a global commodity. The United States imports nearly 58 percent of all petroleum, but only 45 percent is used to produce gasoline. Although it’s been argued that commuter and leisure driving accounts for the rise in the price of oil, we feel that it’s industrial use of petroleum that affects the price of oil and also, industrial output. In effect then, the oil price is largely dependent on industrial expansion and contraction. As industry expands globally, we expect the price of oil to rise. American industry uses petroleum to produce synthetic fibers used in textile mills making carpeting, polyester and nylon; the synthetic rubber in tires; plastic; drugs; detergent; deodorant; fertilizer; pesticides; paint; eyeglasses; heart valves; crayons; bubble gum, and petroleum jelly. China now accounts for 8 percent of consumption (due to its industrial expansion) and only 4 percent of production. The United States accounts for 25 percent of world oil consumption, but only 10 percent of production. Incrementally, however, demand in China will rise by 25.8 percent, while the increase in demand in the United States is estimated at 14.6 percent. As industrial demand for petroleum products and consumer demand for industrial products begins to expand due to growing economies and government stimulus programs, we feel the price of oil will rise. Fueling the oil price increase bonfire is the world-wide doubt among experts as to the veracity of the oil reserve estimates put out by many oil producing nations in the Middle East. The uncertainty of supply coupled with the almost sure rise in demand will likely cause an increase in the price of oil. MANAGEMENT Tim DeHerrera – Chairman Mr. DeHerrera was President of Bonfire Productions Inc. from September 2009 until May 2010. Mr. DeHerrera was President and Chairman of the Intervision Network Corporation from January 2008 until January 2010. Intervision Network was a technology business in IPTV broadcasting and related live Internet-based multimedia transmission technologies, including a global content delivery network. Mr. DeHerrera is currently, the President and a director of Force Energy Corp., an oil and gas exploration company. Prior to that, from January 2005, Mr. DeHerrera was President and Chairman of the Board of Directors of Future Quest Incorporated, an oil and gas exploration company. James Powell – President From September 2006 to the present, Mr. Powell has been the owner and operator of JP Commercial, a commercial real estate company located in San Diego, California, and which specializes in the sale and acquisition of investment properties, which properties include multifamily, retail, and commercial office buildings. Mr. Powell is a fully licensed real estate broker in California. From June 2002 through September 2006, Mr. Powell worked for CB Richaerd Ellis, Inc. in San Diego, California, where his duties included responsibility for bringing in new transactions involving the sale and acquisition of multi-family investment properties. Robert Hoar – Executive Vice President From 2009 to the present, Robert Hoar has been Exploration Manager for Solimar Energy, LLC and is responsible for the technical evaluation and development of five production and exploration assets in California. Mr. Hoar was Chief Geoscientist for Nations Petroleum from 2004 to 2009 and, as such, responsible for evaluation and ranking of exploration properties in California’s San Joaquin and Sacramento basins. Mr. Hoar has a B.A. in Geology from Hamilton College and an M.S. in Geology from University of Vermont. From May 2006 until December 2007, Mr. DeHerrera was President of Atlantis Technology Group, a technology based company. RISK FACTORS and MITIGATING FACTORS Specific to Jonah Field 1. The origins and structure of the Jonah Field are not completely understood yet as it is a young field. However, recent occurrences of step out drilling and interpretation of 3D seismic imaging performed by participants active in the area are contributing to the knowledge base very quickly. 2. The lens formation of gas pockets in the Jonah Field are found in hard rock and increase the difficulty of locating the pockets as compared to a uniform reservoir. However, because each lens is self contained, the extraction of gas from one lens does not impede the rest of the reserve on the claim. In fact, every new lens discovered increases reserves. 3. Many more wells have to be drilled in order to extract the gas. However, the wells only take an average of twenty days to drill. Specific to the Kreyenhagen Trend Property 1. Mature field, with heavy oil However, the field is prolific, and economically viable due to the price of oil and the need for domestic energy source. 2. As the popularity of the field increases, so does competition However, more than one participant has called for more competition to help delineate the size of the resource – OXY discovered the largest field discovered in the past 35 years in California as recently as 2009. Also, competition leads to innovation and talent and technology are easily transferable. Specific to Grid Petroleum 1. Drilling will cost more than Grid Petroleum has available in cash. However, a shareholder has recently signed an non-toxic financing agreement with the company ensuring enough to get started. 2. Any investment in the Company should be considered highly speculative as it is an exploration company listed on the OTCBB. However, the Jonah Field prospect offers good odds of success since it boasts a success rate among established participants of 97.9%. The Kreyhagen Shale property is in one of the most prolific oil production zones in the United States, in the same vicinity where Occidental Petroleum (OXY) recently found the largest field discovered in the past 35 years in all of California. 3. A drop in the price of oil or gas could make any discovery worth that much less However, most experts agree oil and gas prices in the long run trend much higher than where they are today. RIMINI PROJECTION MODEL For the Jonah Field: Natural Gas The Rimini model for Projected Price Per Share Estimate proforma DCF assumptions: 1. Each well costs an average of $4.5 million* 2. Funds necessary to drill wells are issued for equity priced at $0.35 per share 3. Funds are drawn down within the first two years (est $6 million) 4. The wells drilled each contain 10 BCFE reserves* 5. A maximum of 29 wells drilled with 292BCF recoverable reserves** 6. Each well has an economic life of 25 years 7. Price of gas stablilizes at an average of $4.50*** 8. Probability of success is 69% per well**** 9. Cash flows discounted at 16.8% to account for higher startup risk * A 2003 Ultra Petroleum report indicates their wells in the vicinity cost $4.1 million to drill, a 1.9-year payback, a 40-year economic life and reserves of 10 BCFE ** Schlumberger March 2010 report, using base case P(50) *** Average of short term estimates from ConocoPhilips, the Conference Board of Canada and Encana, the largest player in the Jonah Field agree to $5 per BTU stabilization. Rimini uses $4.50 as a more conservative measure. **** Rimini estimate based on a 70% chance of finding the lens and a 97.9% chance of drilling into gas reserve The Model anticipates losses for the near term future, is predicated on an equity raise to finance exploration, assumes only cashflows inherent in this project. The implication is, once the Company achieves positive cashflow, other projects it may take on are not factored in as they could add or take away from the results equally. The PPPSE (projected price per share estimate) target reflects prices paid for exploration companies by majors. In our valuation, we considered: • A stabilization of gas prices using industry guidance and the traditional oil:natural gas ratio • An expectation that drill results will be slightly poorer, but close to existing participants in the area • Use of existing infrastructure to transport any extracted gas Price Per Share Estimate: NPV SUMMARY Price of Gas $5 NPV $89,471,464 Cost of Well $4,500,000 Est I/O 180,091,078 Rev $/yr $1,800,000 PPSE $0.50 Life 30 Prob 69% RIMINI PROJECTION MODEL For the Kreyhagen Shale: Oil and Natural Gas The Rimini model for Projected Price Per Share Estimate proforma DCF assumptions: 1. Each well costs an average of $3.5 million* 2. Funds necessary to drill wells are issued for equity priced at $0.35 per share 3. Funds are drawn down within the first two years (est $6 million) 4. The wells drilled each contain 3 million barrels** 5. A maximum of 15 wells drilled with 292BCF recoverable reserves** 6. Each well has an economic life of 30 years 7. Price of at an average of $70.00*** 8. Probability of success is 35% per well**** 9. Cash flows discounted at 16.8% to account for higher startup risk * Estimate made by comparing USGS studies, with comparisons of neighboring fields and data released by exploration companies in the area ** Estimate provided by Solimar Energy – a participant in the field *** Conventionally held estimates are much higher, but Rimini chooses to use $70/b as a conservative measure. **** Rimini estimate based on history of strikes in the Kreyhagen and Monterey shales The Model anticipates losses for the near term future, is predicated on an equity raise to finance exploration, assumes only cashflows inherent in this project. The implication is, once the Company achieves positive cashflow, other projects it may take on are not factored in as they could add or take away from the results equally. The PPPSE (projected price per share estimate) target reflects prices paid for exploration companies by majors. In our valuation, we considered: • A stabilization of traditionally volatile oil prices driven by geopolitical, stimulus spending and expanding economies • Use of existing infrastructure to transport any oil found • Any natural gas found on the property will be used equally in process of drilling for oil and for resale NPV SUMMARY Price of Oil $70 NPV $228,733,893 Cost of Well $3,500,000 Est I/O 180,091,078 Rev $/yr $7,000,000 PPSE $1.27 Life 30 Prob 35% We therefore estimate the Projected Price Per Share Estimate at: $0.50 + $1.27 = $1.77 ADDITIONAL MAPS Top Lance Formation, Northern Green River Valley Structural Cross Section showing Sustained Gas Shows Cretaceous and Tertiary Stratigraphic Column, N. Green River Basin Source: Jonah Field: A Shallow Sweet Spot in the Basin-Centered Gas Accumulation of the Northern Green River Basin, Wyoming. Kent A. Bowker, Chevron USA Production Company, Houston, and John W. Robinson, Snyder Oil Corporation, Denver. CONCLUSIONS Grid Petroleum is positioning itself to become a player in the domestic energy markets, both in natural gas and oil. Grid Petroleum Corp.’s SE Jonah Field prospect sits in the second largest natural gas producing shale zones on the continental United States, with production expanding exponentially since the technology to extract the gas became available in 1993. Schlumberger, a leading oil field services company has estimated probable reserves (P(50)) at 292 Billion Cubic Feet. The Green River Valley supplies over 1.5% of the on-shore natural gas output for the United States. Grid Petroleum Corp. has experienced management and has secured financing on favorable terms in amounts substantial to begin drilling. The historic success rate for drilling in the area is 97.9%. The recently acquired Kreyenhagen Shale property sits among historically prolific oil and gas production. Recent developments in drilling, seismic and extraction technologies have enhanced historic yields. As the yields have increased, so has exploration in the area, leading to Occidental Petroleum’s mammoth discovery in 2009, estimated at up to 1 Billion Barrels of Oil Equivalent. Both properties are situated in areas where improved technologies improve the chances of extraction and exploitation of the minerals, close to existing infrastructure and easy access to market. Given the speculative nature of oil and gas production in general and exploration companies in particular, we note that investors interested in these ventures, with the appetite for risk, will find Grid Petroleum Corp. positioned exceptionally well for a junior, and an attractive opportunity. A conservative set of assumptions applied with a healthy risk discount using the Rimini Projected Price Per Share Estimate method yielded and estimated price per share for Grid Petroleum at $1.77. APPENDIX 1: NPV CALCULATIONS Assumptions: Price of Gas 4.5 Mcf 400,000 Cost of Well - 4,500,000 Rev $/yr 1,800,000 Life 30 Prob 69% 29 wells Projected Cashflows discounted @ 16.80%: Year 1 2 3 4 5 # Wells 1 2 4 7 12 Net Rev 2,700,000 900,000 1,800,000 900,000 900,000 Net Rev @ P(69) 3,258,000 2,016,000 4,032,000 4,806,000 7,596,000 NPV $89,471,464.01 Est I/O 180,091,078 PPSE $0.50 6 7 8 9 10 11-30 20 29 29 29 29 0 11,700,000 52,200,000 52,200,000 52,200,000 11,160,000 4,482,000 36,018,000 36,018,000 36,018,000 448,863,892 NPV SUMMARY Price of Gas $5 NPV $89,471,464 Cost of Well $4,500,000 Est I/O 180,091,078 Rev $/yr $1,800,000 PPSE $0.50 Life 30 Prob 69% 29 wells APPENDIX 1: NPV CALCULATIONS Assumptions: Price of Oil 70.0 Barrels - Pesimistic 10,000,000 Barrels - Mid Level 44,000,000 Barrels - Optimistic 160,000,000 Cost of Well - 3,500,000 Rev $/yr 7,000,000 Life 30 Prob 35% 15 wells Projected Cashflows discounted @ 16.80%: Year 1 2 3 4 5 # Wells 1 2 4 7 12 Net Rev 2,700,000 900,000 1,800,000 900,000 900,000 Net Rev @ P(69) 3,258,000 2,016,000 4,032,000 4,806,000 7,596,000 NPV $89,471,464.01 Est I/O 180,091,078 PPSE $0.50 6 7 8 9 10 11-30 20 29 29 29 29 0 11,700,000 52,200,000 52,200,000 52,200,000 11,160,000 4,482,000 36,018,000 36,018,000 36,018,000 448,863,892 NPV SUMMARY Price of Gas $5 NPV $89,471,464 Cost of Well $4,500,000 Est I/O 180,091,078 Rev $/yr $1,800,000 PPSE $0.50 Life 30 Prob 69% 29 wells SOURCES/REFERENCES 1. www.gridpetroleum.com 2. Evaluation of S.E. Jonah Prospect, T27N R107W, Sublette County Wyoming, by Schlumberger 3. ULTRA PETROLEUM CORPORATION GREEN RIVER BASIN PROPERTY DESCRIPTION 4. www.nrcan.gc.ca 5. www.skytruth.mediatools.com 6. Finch, R.W., W.W. Aud and J.W. Robinson, 1997, Evolution of completion and fracture stimulation practices in Jonah field, Sublette County, Wyoming: Rocky Mountain Assoc. of Geologists Guidebook of Oil-field Technologies in the Rocky Mountains, in press. 7. Law, B.E., and C.W. Spencer, eds., 1989, Geology of tight gas reservoirs in the Pinedale anticline area, Wyoming , and at the multiwell experiment site, Colorado: US Geological Survey Bulletin 1886. 8. Peters, Kenneth E., and Magoon, Leslie B., and Valin, Zenon C., and Lillis, Paul G, Source-Rock Geochemistry of the San Joaquin Basin Province, California from Petroleum Systems and Geologic Assessment of Oil and Gs in the San Joaquin Basin Province, California. 9. 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