Edwards Production, Inc.

Lease: Coe #6 & #7Monthly Production (Sept 2007 - Aug 2008)

Date Price Barrels Value 100% Net WI Gross12/27/2005 56.77 171.8 $9,753.81 $9,051.68 $6,492.38

1/26/2006 54.31 175.13 $9,512.10 $8,827.35 $6,331.49 3/17/2006 52.9 173.74 $9,190.01 $8,528.44 $6,117.10

4/6/2006 0 0 $825.26 $765.89 $549.31 4/30/2006 64.82 175.31 $11,363.02 $10,545.11 $7,563.51 5/29/2006 65.59 154.21 $10,114.43 $9,386.39 $6,732.42 6/29/2006 65.71 179.35 $11,784.78 $10,936.51 $7,844.24 8/15/2006 67.7 177.84 $12,040.05 $11,173.41 $8,014.16 9/21/2006 58.88 174.74 $10,287.82 $9,547.26 $6,847.83

10/18/2006 53.81 146.68 $7,892.34 $7,324.20 $5,253.34 11/22/2006 53.73 167.51 $9,000.87 $8,352.92 $5,991.20 12/29/2006 56.81 173.39 $9,851.07 $9,141.94 $6,557.12

2/10/2007 53.43 176.86 $9,449.38 $8,769.14 $6,289.74 3/15/2007 55.39 177.46 $9,828.99 $9,121.44 $6,542.42 4/19/2007 58.83 162.33 $9,549.06 $8,861.69 $6,356.09 5/24/2007 58.18 169.75 $9,875.61 $9,164.72 $6,573.45 6/25/2007 62 174.78 $10,836.36 $10,056.33 $7,212.95

8/7/2007 66.98 170.7 $11,432.77 $10,609.85 $7,609.94 9/15/2007 73.69 163.65 $12,059.65 $11,191.62 $8,027.20

10/25/2007 80.31 149.67 $12,019.49 $11,154.39 $8,000.46 11/27/2007 89.67 137.94 $12,368.62 $11,478.42 $8,232.86 12/27/2007 86.19 155.64 $13,413.91 $12,448.48 $8,928.63

1/24/2008 86.45 153.84 $13,299.71 $12,342.49 $8,852.62 3/20/2008 98.87 158.89 $15,709.61 $14,578.99 $10,456.71 4/12/2008 106.31 167.59 $17,816.21 $16,533.99 $11,858.91 5/21/2008 118.4 155.37 $18,395.06 $17,071.22 $12,244.21 6/18/2008 128.33 152.1 $19,518.23 $18,113.59 $12,991.82 7/25/2008 128.16 161.6 $20,710.87 $19,220.40 $13,785.67 8/26/2008 110.46 131.71 $14,548.65 $13,501.61 $9,683.95

Monthly Production

Date Price Barrels Value 100% Net WI Gross12/27/2005 54.02 183.03 $9,888.05 $9,176.24 $8,652.04

1/8/2006 55.31 179.64 $9,936.70 $9,221.39 $8,694.61 2/16/2006 49.97 156.64 $7,827.80 $7,264.27 2/22/2006 49.97 155.98 $7,794.82 $7,233.67 $13,669.79 3/16/2006 50.9 147.68 $7,516.20 $6,975.11 $6,576.68

4/9/2006 54.07 149.25 $8,069.95 $7,489.01 $7,061.21 5/15/2006 56.07 151.31 $8,483.95 $7,873.23 5/30/2006 56.07 176.73 $9,909.25 $9,195.93 $16,094.05 6/20/2006 55.63 175.7 $9,774.19 $9,070.59 $8,552.42 7/27/2006 58.44 179.72 $10,502.84 $9,746.80 $9,189.99 8/22/2006 58.07 146.85 $8,527.58 $8,021.51 $7,563.25

Lease: Ragsdale #2

9/8/2006 49.38 151.66 $7,488.97 $6,949.84 9/26/2006 49.38 139.47 $6,887.03 $6,391.23 $12,579.00

10/27/2006 43.8 181.11 $7,932.62 $7,361.51 $6,941.04 11/30/2006 42.03 174.84 $7,348.53 $6,819.45 $6,429.96 12/29/2006 45.15 183.95 $8,305.34 $7,707.40 $7,267.17

1/31/2007 39.52 180.4 $7,129.41 $6,616.09 $6,238.23 2/1/2007 44.45 178.47 $7,932.99 $7,361.85 $6,941.37

3/15/2007 46.51 140.98 $6,556.98 $6,084.92 $5,737.36 3/15/2007 46.95 41.95 $1,969.55 $1,951.09 $1,951.09 4/11/2007 49.23 183.91 $9,053.89 $8,402.10 4/26/2007 49.23 153.6 $7,561.73 $7,017.36 $14,538.67 5/12/2007 48.03 159.43 $7,657.42 $7,106.15 $6,700.24 6/12/2007 52.25 65.8 $3,438.05 $3,438.05 $3,438.05 6/12/2007 52.25 93.6 $4,890.60 $4,538.53 6/25/2007 52.25 153.54 $8,022.47 $7,444.94 $11,298.93

7/5/2007 59.69 162.29 $9,687.09 $6,989.78 7/23/2007 59.69 157.57 $9,405.35 $8,728.31 $16,705.88 8/22/2007 57.79 148.15 $8,561.59 $7,945.29 $7,491.39 9/13/2007 65.02 163.21 $10,611.91 $9,848.06 9/28/2007 65.02 153.59 $9,986.42 $9,267.58 $18,023.54

10/27/2007 72.09 153.1 $11,036.98 $10,242.55 $9,657.36 11/7/2007 80.36 156.44 $12,571.52 $11,666.69 $11,000.08 12/1/2007 75.21 151.77 $11,414.62 $10,593.05

12/22/2007 75.21 156.12 $11,741.79 $10,896.66 $20,261.86 1/15/2008 79.07 156.27 $12,356.27 $11,466.92 $10,811.74

2/7/2008 81.63 153.46 $12,526.94 $11,625.31 2/29/2008 81.63 145.48 $11,875.53 $11,020.79 $21,352.16 3/24/2008 90.61 155.08 $14,051.80 $13,040.46 $12,295.33 4/17/2008 99.59 153.41 $15,277.84 $14,178.29 $13,368.11

5/9/2008 111.09 155.13 $17,233.39 $16,122.72 5/9/2008 111.99 154.16 $17,264.38 $16,021.90 $30,307.72

6/23/2008 120.3 153.61 $18,478.51 $17,148.67 $16,168.70 7/18/2008 120.97 153.66 $18,588.45 $17,250.70 $16,264.89 8/12/2008 104.12 151.82 $15,807.45 $14,669.81 8/12/2008 104.12 155.3 $16,169.79 $15,006.06 $27,980.09 9/27/2008 92.31 154.88 $14,297.48 $13,268.48 $12,510.30

Lease: Coe #6 & #7Monthly Production (Sept 2007 - Aug 2008)

Date Price Barrels Daily Value WI Gross Expense WI Net12/27/2005 56.77 171.8 5.7 $9,753.81 $6,492.38 $200.00 $6,292.38

1/26/2006 54.31 175.13 5.8 $9,512.10 $6,331.49 $200.00 $6,131.49 3/17/2006 52.9 173.74 5.8 $9,190.01 $6,117.10 $200.00 $5,917.10

4/6/2006 0 0 0.0 $825.26 $549.31 $200.00 $349.31 4/30/2006 64.82 175.31 5.8 $11,363.02 $7,563.51 $200.00 $7,363.51 5/29/2006 65.59 154.21 5.1 $10,114.43 $6,732.42 $200.00 $6,532.42 6/29/2006 65.71 179.35 6.0 $11,784.78 $7,844.24 $200.00 $7,644.24 8/15/2006 67.7 177.84 5.9 $12,040.05 $8,014.16 $200.00 $7,814.16 9/21/2006 58.88 174.74 5.8 $10,287.82 $6,847.83 $200.00 $6,647.83

10/18/2006 53.81 146.68 4.9 $7,892.34 $5,253.34 $200.00 $5,053.34 11/22/2006 53.73 167.51 5.6 $9,000.87 $5,991.20 $200.00 $5,791.20 12/29/2006 56.81 173.39 5.8 $9,851.07 $6,557.12 $200.00 $6,357.12

2/10/2007 53.43 176.86 5.9 $9,449.38 $6,289.74 $200.00 $6,089.74 3/15/2007 55.39 177.46 5.9 $9,828.99 $6,542.42 $200.00 $6,342.42 4/19/2007 58.83 162.33 5.4 $9,549.06 $6,356.09 $200.00 $6,156.09 5/24/2007 58.18 169.75 5.7 $9,875.61 $6,573.45 $200.00 $6,373.45 6/25/2007 62 174.78 5.8 $10,836.36 $7,212.95 $200.00 $7,012.95

8/7/2007 66.98 170.7 5.7 $11,432.77 $7,609.94 $200.00 $7,409.94 9/15/2007 73.69 163.65 5.5 $12,059.65 $8,027.20 $200.00 $7,827.20

10/25/2007 80.31 149.67 5.0 $12,019.49 $8,000.46 $200.00 $7,800.46 11/27/2007 89.67 137.94 4.6 $12,368.62 $8,232.86 $200.00 $8,032.86 12/27/2007 86.19 155.64 5.2 $13,413.91 $8,928.63 $200.00 $8,728.63

1/24/2008 86.45 153.84 5.1 $13,299.71 $8,852.62 $200.00 $8,652.62 3/20/2008 98.87 158.89 5.3 $15,709.61 $10,456.71 $200.00 $10,256.71 4/12/2008 106.31 167.59 5.6 $17,816.21 $11,858.91 $200.00 $11,658.91 5/21/2008 118.4 155.37 5.2 $18,395.06 $12,244.21 $200.00 $12,044.21 6/18/2008 128.33 152.1 5.1 $19,518.23 $12,991.82 $200.00 $12,791.82 7/25/2008 128.16 161.6 5.4 $20,710.87 $13,785.67 $200.00 $13,585.67 8/26/2008 110.46 131.71 4.4 $14,548.65 $9,683.95 $200.00 $9,483.95

2007 AVG Production: 2008 AVG Production (Jan-Aug)Monthly: 136.6 Monthly: 135.1

Daily: 4.6 Daily: 4.5

Projection

Example Price Daily WI Annual

$40/barrel $40.00 135.1 4.5 $5,405.50 $3,600.06 $200.00 $3,400.06 $40,800.76 $45/barrel $45.00 135.1 4.5 $6,081.19 $4,050.07 $200.00 $3,850.07 $46,200.85 $50/barrel $50.00 135.1 4.5 $6,756.88 $4,500.08 $200.00 $4,300.08 $51,600.95 $55/barrel $55.00 135.1 4.5 $7,432.56 $4,950.09 $200.00 $4,750.09 $57,001.04

Barrels per

Month

MonthlyValue

MonthlyWI Gross

MonthlyExpense

MonthlyWI Net

Monthly Production9%

Date Price Barrels Daily Value WI Gross WI Net 12/27/2005 54.02 183.03 6.1 $9,888.05 $8,652.04 $778.68 $7,873.36

1/8/2006 55.31 179.64 6.0 $9,936.70 $8,694.61 $782.51 $7,912.10 2/16/2006 49.97 156.64 5.2 $7,827.80 $- $- 2/22/2006 49.97 155.98 5.2 $7,794.82 $13,669.79 $1,230.28 $12,439.51 3/16/2006 50.9 147.68 4.9 $7,516.20 $6,576.68 $591.90 $5,984.78 4/9/2006 54.07 149.25 5.0 $8,069.95 $7,061.21 $635.51 $6,425.70

5/15/2006 56.07 151.31 5.0 $8,483.95 $- $- 5/30/2006 56.07 176.73 5.9 $9,909.25 $16,094.05 $1,448.46 $14,645.59 6/20/2006 55.63 175.7 5.9 $9,774.19 $8,552.42 $769.72 $7,782.70 7/27/2006 58.44 179.72 6.0 $10,502.84 $9,189.99 $827.10 $8,362.89 8/22/2006 58.07 146.85 4.9 $8,527.58 $7,563.25 $680.69 $6,882.56 9/8/2006 49.38 151.66 5.1 $7,488.97 $- $-

9/26/2006 49.38 139.47 4.6 $6,887.03 $12,579.00 $1,132.11 $11,446.89 10/27/2006 43.8 181.11 6.0 $7,932.62 $6,941.04 $624.69 $6,316.35 11/30/2006 42.03 174.84 5.8 $7,348.53 $6,429.96 $578.70 $5,851.26 12/29/2006 45.15 183.95 6.1 $8,305.34 $7,267.17 $654.05 $6,613.12 1/31/2007 39.52 180.4 6.0 $7,129.41 $6,238.23 $561.44 $5,676.79 2/1/2007 44.45 178.47 5.9 $7,932.99 $6,941.37 $624.72 $6,316.65

3/15/2007 46.51 140.98 4.7 $6,556.98 $5,737.36 $516.36 $5,221.00 3/15/2007 46.95 41.95 1.4 $1,969.55 $1,951.09 $175.60 $1,775.49 4/11/2007 49.23 183.91 6.1 $9,053.89 $- $- 4/26/2007 49.23 153.6 5.1 $7,561.73 $14,538.67 $1,308.48 $13,230.19 5/12/2007 48.03 159.43 5.3 $7,657.42 $6,700.24 $603.02 $6,097.22 6/12/2007 52.25 65.8 2.2 $3,438.05 $3,438.05 $309.42 $3,128.63 6/12/2007 52.25 93.6 3.1 $4,890.60 $- $- 6/25/2007 52.25 153.54 5.1 $8,022.47 $11,298.93 $1,016.90 $10,282.03 7/5/2007 59.69 162.29 5.4 $9,687.09 $- $-

7/23/2007 59.69 157.57 5.3 $9,405.35 $16,705.88 $1,503.53 $15,202.35 8/22/2007 57.79 148.15 4.9 $8,561.59 $7,491.39 $674.23 $6,817.16 9/13/2007 65.02 163.21 5.4 $10,611.91 $- $- 9/28/2007 65.02 153.59 5.1 $9,986.42 $18,023.54 $1,622.12 $16,401.42

10/27/2007 72.09 153.1 5.1 $11,036.98 $9,657.36 $869.16 $8,788.20 11/7/2007 80.36 156.44 5.2 $12,571.52 $11,000.08 $990.01 $10,010.07 12/1/2007 75.21 151.77 5.1 $11,414.62 $- $-

12/22/2007 75.21 156.12 5.2 $11,741.79 $20,261.86 $1,823.57 $18,438.29 1/15/2008 79.07 156.27 5.2 $12,356.27 $10,811.74 $973.06 $9,838.68 2/7/2008 81.63 153.46 5.1 $12,526.94 $- $-

2/29/2008 81.63 145.48 4.8 $11,875.53 $21,352.16 $1,921.69 $19,430.47 3/24/2008 90.61 155.08 5.2 $14,051.80 $12,295.33 $1,106.58 $11,188.75 4/17/2008 99.59 153.41 5.1 $15,277.84 $13,368.11 $1,203.13 $12,164.98 5/9/2008 111.09 155.13 5.2 $17,233.39 $- $- 5/9/2008 111.99 154.16 5.1 $17,264.38 $30,307.72 $2,727.69 $27,580.03

6/23/2008 120.3 153.61 5.1 $18,478.51 $16,168.70 $1,455.18 $14,713.52 7/18/2008 120.97 153.66 5.1 $18,588.45 $16,264.89 $1,463.84 $14,801.05 8/12/2008 104.12 151.82 5.1 $15,807.45 $- $- 8/12/2008 104.12 155.3 5.2 $16,169.79 $27,980.09 $2,518.21 $25,461.88 9/27/2008 92.31 154.88 5.2 $14,297.48 $12,510.30 $1,125.93 $11,384.37

2007 AVG Production 2008 AVG Production (Jan-Sept)Monthly: 229.5 Monthly: 204.7

Daily: 7.6 Daily: 6.8

Projection

Example Price Daily

$40/barrel $40.00 204.7 6.8 $8,187.82 $7,164.34 $600.00 $6,564.34 $45/barrel $45.00 204.7 6.8 $9,211.30 $8,059.89 $600.00 $7,459.89 $50/barrel $50.00 204.7 6.8 $10,234.78 $8,955.43 $600.00 $8,355.43 $55/barrel $55.00 204.7 6.8 $11,258.26 $9,850.97 $600.00 $9,250.97

Lease: Ragsdale #2

LOExpense

Barrels perMonth

MonthlyValue

MonthlyWI Gross

MonthlyExpense

MonthlyWI Net

WI Annual

$78,772.13 $89,518.65

$100,265.17 $111,011.68

Edwards ProductionDeal Structure Example

1. Annual Combined Lease Valuation

Multiple 2.5 3.0 4.0 4.5 5.0 6.040 $78,772.13 $40,800.76 11.3 $119,573 $298,932 $358,719 $478,292 $538,078 $597,864 $717,437 45 $89,518.65 $46,200.85 11.3 $135,720 $339,299 $407,159 $542,878 $610,738 $678,598 $814,317 50 $100,265.17 $51,600.95 11.3 $151,866 $379,665 $455,598 $607,464 $683,398 $759,331 $911,197 55 $111,011.68 $57,001.04 11.3 $168,013 $420,032 $504,038 $672,051 $756,057 $840,064 $1,008,076

2. Additional Earn Out For Seller over 3 Years

$60.00 $60.00 0 11.3 $- 40% $65.00 $60.00 1,800 11.3 $20,390 40% $8,156 $8,156 $8,156 $24,468 $70.00 $60.00 3,600 11.3 $40,780 40% $16,312 $16,312 $16,312 $48,936 $75.00 $60.00 5,400 11.3 $61,170 40% $24,468 $24,468 $24,468 $73,404 $80.00 $60.00 7,200 11.3 $81,560 40% $32,624 $32,624 $32,624 $97,872 $85.00 $60.00 9,000 11.3 $101,950 40% $40,780 $40,780 $40,780 $122,340 $90.00 $60.00 10,800 11.3 $122,340 40% $48,936 $48,936 $48,936 $146,808 $95.00 $60.00 12,600 11.3 $142,730 40% $57,092 $57,092 $57,092 $171,276

$100.00 $60.00 14,400 11.3 $163,120 40% $65,248 $65,248 $65,248 $195,744

3. Example: 4x Annual Purchase Price @ $50 Current Oil Price with $70 / $80 / $90 Future Oil Prices

4x Annual Total

$50.00 $607,464 $70.00 $48,936 $656,400 $50.00 $607,464 $80.00 $97,872 $705,336 $50.00 $607,464 $90.00 $146,808 $754,272

4. Example: 5x Annual Purchase Price @ $55 Current Oil Price with $70 / $80 / $90 Future Oil Prices

5x Annual Total

$55.00 $840,064 $70.00 $48,936 $889,000 $55.00 $840,064 $80.00 $97,872 $937,936 $55.00 $840,064 $90.00 $146,808 $986,871

Current Oil Price

Ragsdale #2 Annual Before

Tax

Cole 6& 7 Annual

Before Tax

DailyBOPD

Combined Annual

2.5x Annual

3xAnnual

4xAnnual

4.5xAnnual

5xAnnual

6xAnnual

AVG Oil Price - 12 Mos Post-Closing

Minimum Oil Price

Bonus Barrel

DailyBOPD

Year 1 Total

Additional Value

Additional Earn Out %

Year 1 Earn Out

Year 2 Earn Out

Year 3 Earn Out

Total 3 Year

Earn Out

Current Oil Price

AVG Oil Price - 12 Mos Post-Closing

Total 3 Year

Earn Out

Current Oil Price

AVG Oil Price - 12 Mos Post-Closing

Total 3 Year

Earn Out