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Golden #2

Golden #2. 2652 FM 407, Suite 250 Bartonville, TX. 76226. Increased Density Wells. Definition An increased density well is a well designed to recover minerals NOT currently being drained by an existing well due to factors such as porosity, geologic formations and conditions underground.

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Golden #2

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  1. Golden #2 2652 FM 407, Suite 250 Bartonville, TX. 76226

  2. Increased Density Wells • Definition • An increased density well is a well designed to recover minerals NOT currently being drained by an existing well due to factors such as porosity, geologic formations and conditions underground. • Example Formation • James Lime

  3. James Lime Formation • The James Lime rock is a very tight formation with no permeability. Permeability is the ability for gas and oil to flow to the wellbore. There is micro-fracturing within the rock itself. • Horizontal applications are utilized to connect the micro-fracturing within the rock to porosity pockets, which in effect is creating permeability. • Any gas or oil not directly penetrated by the original wellbore will remain untouched!

  4. James Lime Formation

  5. Golden #1 • Online Nov. 2002 • Three horizontal legs • Produced to date • 1.06 BCF of gas • 1,718 BBL of condensate • Paid back 152.07% of investment • Currently returning 36.82% annualized return

  6. Golden #1 • Looking down into the James-Lime formation from above, the micro-fractures bearing oil and gas might look like this.

  7. Golden #1 • Looking down into the James-Lime formation from above, the micro-fractures bearing oil and gas might look like this.

  8. Golden #1 • Looking down into the James-Lime formation from above, the micro-fractures bearing oil and gas might look like this.

  9. Golden #1 • Looking down into the James-Lime formation from above, the micro-fractures bearing oil and gas might look like this.

  10. Golden #1 • Looking down into the James-Lime formation from above, the micro-fractures bearing oil and gas might look like this. • Notice that oil and gas will drain from the micro-fractures penetrated by the wellbores.

  11. Golden #1 • Because of the tight nature of the James-Lime formation, significant reserves are left untouched because they simple cannot flow to the wellbores of the Golden #1.

  12. Golden #2 • The Golden #2 will intersect these untouched micro-fractures and recover the trapped gas and condensate.

  13. Golden #2 • The Golden #2 will intersect these untouched micro-fractures and recover the trapped gas and condensate.

  14. Golden #2 • The Golden #2 will intersect these untouched micro-fractures and recover the trapped gas and condensate.

  15. Golden #2 • The Golden #2 will intersect these untouched micro-fractures and recover the trapped gas and condensate. • Notice the gas and oil drains without affecting the Golden #1.

  16. Winn #2 • In November of 2007, Silver Oak Operating, Inc. drilled an increased density well on their Winn Unit in this Benson Field. This well is situated next to our existing units in this field, a little over one mile west-southwest of our Golden #2 proposed location. This well is currently producing at a rate of 1.5 million cubic feet a day. At $7/MCF this would gross $315,000 per month, making it on par with the original well.

  17. Location of Silver Oak Operating Winn #2 X

  18. .98 BCF X Winn #2

  19. 2.1 BCF X Winn #2

  20. 1.3 BCF X Winn #2

  21. 1.1 BCF X Winn #2

  22. .98 BCF X Winn #2

  23. Golden #1 • The latest reserve study done on the Golden #1 well estimates an additional 1.254 BCF of gas and 1,652 BC remains to be recovered, this would equate to a gross recovery of $8.92 million in additional reserves. • This does not include any new reserves found by the Golden #2. • If the Golden #2 performs like the Golden #1 at today’s gas and oil prices, the majority of this investment would be recovered within the first 12 months.

  24. Conclusion • Increased density wells are the lowest risk wells drilled. They combine all the subsurface geology of the original well along with the actual production numbers to project an economic model that should be quite accurate. • This makes the Golden #2 well a very low-risk, high-reward probability, barring any mechanical problems.

  25. Thank you Phone: 940-455-7444 2652 FM 407, Suite 250 Bartonville, TX. 76226 www.redrockenergy.com

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