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Monoco Petroleum, Inc. La Jolla Prospect McMullen County, Texas

Monoco Petroleum, Inc. La Jolla Prospect McMullen County, Texas. May 2008. Release and Hold harmless :

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Monoco Petroleum, Inc. La Jolla Prospect McMullen County, Texas

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  1. Monoco Petroleum, Inc. La Jolla Prospect McMullen County, Texas May 2008

  2. Release and Hold harmless: Any party viewing this Power Point agrees to hold MPI harmless from representations regarding Prospect representations made herein. The viewer agrees to do their own due diligence and warrant that they are knowledgeable in evaluating oil and gas Prospects and that they will not rely on MPI for its evaluation decisions of any kind.

  3. MONOCO PETROLEUM, INC.La Jolla Prospect McMullen Co., TX • Play Type: An extension of reefal producing field discovered in 1982 by the Clifton Wheeler Kilroy #1. 3-D demonstrates strikingly similar seismic character at the Prospect Location. • 16,800’ to penetrate reef, 17,500’ to see entire Sligo • Lower Cretaceous Sligo Reef facies Multiple Locations • Reserve Potential High Side 400 BCF • Risked Reserves 7 BCF 31% POS • Terms: 1/3 for 1/4 Carry thru hook-up on the 1st well Up front costs $950,000 to 89% W.I. 74.5% NRI • $6.67 MM DHC $1.7 Completion Costs Total: $8.4MM • Pipeline on Lease Short Distance Access to Processing Plant • Operations: Available

  4. La Jolla ProspectComparison of A Proposed Location and Wheeler #1 3 Miles La Jolla Wheeler #1 32 BCF FlatSpots (Sag)at 3-D seismic shows a seismic thickening & “pull down” of a 2nd peak in the upper Sligo section and in the prospect areapossibly indicating Ф development & HCs. This seismic anomaly is not seen in the other wells in the area.

  5. Prospect Attributes • Primary objective is the Sligo Fm (L. Cretaceous) • The prospect also has a large Edwards Fm anomaly • The 3-D shoot: 48 fold @ 18,000 ft. • Prospect enhanced by High Resolution Color Inversion • “Flat Spot” seismic anomaly unique to La Jolla & Wheeler #1 • Anticipated accumulation size: 30 Bcf/well • Upside potential: Multiple Wells 300 - 400 BCF • Estimated initial production rate: 10 – 15 MMCFD • Overpressured, minor amounts of H2S (100ppm) • 8% CO2 anticpated

  6. MPI’s High Resolution seismic Data Cube Has Generated Multiple Reefal Drilling Targets. . shelf edge, atolls, back reef, Bioherms & fore-reef High Resolution Color Inversion Time Slice (not to scale)

  7. Similarity of Modern Day Reef System to Carbonate Features of Previous Slide

  8. Isolated Highlight of Cretaceous Rocks La Jolla has SIGNIFICANT Reserve POTENTIAL! This Feature Produced32 BCF

  9. 30+ Ft Bypassed Pay? Across the perforated interval & within the anhydrite layered zone, Sw has a direct relationship to the porosity (Ф), such that in each flow unit, as Ф increases, Sw decreases. This occurs where Sw is a function of pore type, and well above any gas-water interface. Ths is confirmed by a H20 free completion & several months of H20 free production. Below the anhydrite layered zone, the lowest Sw occurs @16,700 ft in the highest Ф flow unit in the entire well. This is still in the free gas column – a separate accumulation below the anhydrite rich facies. The base of the gas column may occur @ 16,730 ft where Ф remains in the 6-8% range but Sw registers 89%. This appears to be the top of the transition zone where both gas & H20 are mobile. TOP SLIGO Perforated Pay Anhydrite Layers Unperforated Pay by Log Analysis Moveable Water By Log Analysis

  10. 5,000 lbs. of pressure when the casing collapsed

  11. Rudist Grainstone Facies in Slab Core From Nearby Well

  12. Dip Line Across a La Jolla Prop Loc

  13. Internal Amplitude Evaluation Amplitude Dim-out of More Porous Rocks vs. Stronger Amplitudes of Denser Rocks Wheeler #2 La Jolla Acreage Wheeler #1

  14. Possible Areal Drainage Calculated Reservoir Thickness * Wheeler #1 536 ac. (Green) 288 Ft. La Jolla 844 ac.(Purple) 462 Ft. (* Isopach T/ Sligo to Flat Spot)

  15. Pipeline Map Pipelines thru and near the Prospect Leaseblock leading to a sour gas processing plant

  16. AFE Drill & Complete 17,000 Ft. Test Well DHC $6.65MM Complete $1.74MM TOTAL $8.4MM

  17. Independent Risk Analysis by a Houston O&G Company

  18. Comments Re. H2S, CO2 & H2O • Corrosive gas quantities are quite low, ranging from 40-120 ppm • When combined w/ water, temperature & pressure considerations, this becomes more than a nuisance. • Extreme care should be taken to use optimum quality tubulars. • Had this been done @ the Wheeler #1, the casing likely would not have collapsed.

  19. Drilling and Completion Considerations • The key to a successful Sligo test is to hit the target within a 150 ft. radius of the defined site coordinates. • This will require real time direction information and LWD data. • In conjunction with an effective acid frac, this will make all the difference between a good or a marginal well. • Casing & Tubing must be high end anti-corrosive • Overpressure & H2S require key decisions related to drilling safety , casing & intermediate string placement.

  20. Thank You ! For Further Information Contact David C. Montoya Monoco Petroleum Inc. (281) 358 - 5400

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