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September 2008, THIRD QUARTER 2008 – EXPLORATION AND PRODUCTION NEWS

BAILEY’s CREEK PROSPECT, MONROE COUNTY, ALABAMA

During January-February 2008, the Winn Craft Noble 35-1 #1 well, the initial test well of this prospect, was drilled and reached a total vertical depth of 13,760 feet (4,194.05 m). A 40-feet interval (12.2 m) was perforated in the Smackover oolitic dolomite in March and the well was put in production in May. As of September 30th it produced approximately 19,220 barrels oil. Presently, the daily production is 120 barrels of oil per day.

HANBERRY CHURCH PROSPECT, ESCOMBIA COUNTY, ALABAMA

During February-March 2008, the Winn Craft Kelly 34-3 #1 well, the initial directional test well of this prospect, was drilled and reached a total vertical depth of 14,208 feet (4,330.60 m). While cores and logs indicated saturated oil and gas pay with no water contact, the extended completion testing did not yield commercial production. A BHP test was done and a decision was made to plug and abandon the well.

WEST BEACH PROSPECT, CONECUH COUNTY, ALABAMA

Smackover Prospect

In December 2007, the Craft Callon 24-6 #1 well, the initial test well of this prospect, was drilled and reached a total vertical depth of 12,400 feet (3,779.50 m). Unfortunately, no oil show was encountered during drilling and core results confirmed high water saturations. A decision was made to plug and abandon the well. In order to drill an updip well offsetting this initial test well, the operator purchased additional leases. Subsequently, the Craft Indigo Blackstone 19-4 #1 well was drilled in May 2008. Unfortunately, no reef was encountered and the well was plugged and abandoned.

Frisco City Prospect

In April 2008, the Craft Hanks 33-10 #1 well, being the Frisco City initial test well, was drilled and reached a total vertical depth of 12,000 feet (3,657.60 m). Unfortunately, no evidence of oil or gas production was encountered in the Frisco City sands and the well was plugged and abandoned.

Both Frisco City and Smackover prospects were unsuccessful.

MOHAWK PROSPECT, COLUMBIA COUNTY, ARKANSAS

In July 2007, the Hagaman-Smith et al #1 well, the initial test well of this prospect, was drilled and reached a total depth of 10,625 feet (3,238.50 m). There was no oil or gas show while drilling but two of the sidewall cores indicated great fluorescence and visible oil stain. Based on the logs and sidewall core results, the well was completed in August-September 2007. The well was put in production in October 2007. It has produced approximately 13 230 barrels in 10 months. Its present production is 40 barrels of oil per day.

BAKERSFIELD ARCH PROSPECT, KERN COUNTY, CALIFORNIA

During late January to mid-February 2008, Huntington Energy LLC drilled the Canfield Ranch 12X-34 well, being the initial test well of this three well prospect, and reached a total depth of 10,610 feet (3 234 m). There were several gas shows while drilling the Stevens sands. After a careful review of the logs, the well was plugged and abandoned.

Subsequently, the South Strand 84X-17 well was drilled on the second prospect and reached a total depth of 10,400 feet (3 170 m) and encountered the anticipated Stevens sands. While log analysis indicated probable oil production, a decision was taken to plug and abandon the well due to the fact that the majority of the partners considered this well uneconomic.

The disappointing results of these two dry holes lead the operator and partners to take the decision to reprocess the 3D seismic before considering the drilling of the third prospect. Compass Global Resources has assumed operatorship for the 3D seismic reprocessing project.

CHALLENGER PROSPECT, MADERA & MERCED COUNTIES, CALIFORNIA

During January-February 2008, the Wil E. Coyote #1-33 well was drilled to a depth of 5,430 feet (1 655 m). This initial test well encountered the Blewett sand with good porosity. The uppermost 6-feet interval of the entire 16-feet sand was perforated in March and a build-up test was conducted. It appears that the well has an absolute open-flow potential between 9 and 12 million cubic feet of dry gas per day. The third party pipeline gas connection is scheduled to be in place approximately May 1, 2009.
In order to define the maximum gas reserves in the immediate area of the Challenger Prospect, the operator shot 33.3 square-miles of 3D seismic in September. The processing should be available during the first quarter of 2009.
New wells will be proposed and drilled after the 3D seismic interpretation is finalized.

BALL RANCH PROSPECT, KENEDY COUNTY, TEXAS

Abaco Operating LLC continued to pursue its development efforts by drilling multiple wells and reprocessing and merging the existing 3D seismic with additional proprietary 3D data located to the south of our original 3D coverage area. In addition, a bottom hole pressure build-up test was conducted in the French State #1 well in order to explain why a production decline was observed in other wells in the vicinity of the French State #1 well.

Western Part

In January 2007, the Clark-Sain #19 well reached a total depth of 14,756 feet (4,497.60 m) and encountered numerous gas shows while drilling. The Vicksburg sand levels being the Vx1 & Vx3 were fractured and commingled. Production commenced in February 2007 and the well has produced 1.5 billion cubic feet of gas since inception. In December 2007, 2 3/8” tubing was installed in the well. The current production rate is approximately 430 thousand cubic feet of gas per day.
During June-July 2007, the Clark-Sain #20 well was drilled and reached a total depth of 15,252 feet (4,648.80 m). Numerous gas shows were encountered while drilling and the Vx1 & Vx5 Vicksburg sands intervals, found productive, were fractured and commingled in August. The well has produced 735 million cubic feet of gas since inception. The current production rate is approximately 900 thousand cubic feet of gas per day.
Following the Clark-Sain #20 well, the French State #2 well was drilled to a total depth of 13,988 feet (4,263.54 m). It was completed in the excellent Vx1 sand interval. Production commenced in September 2007 and the well has produced 1.1 billion cubic feet of gas since inception. The current production rate is approximately 1 million cubic feet of gas per day.
In November 2007, the operator initiated the drilling of the French State #3 well that reached a total depth of 13,640 feet (4,157.50 m). The first two Vicksburg sand intervals, having had good gas shows, were perforated, fractured and commingled in December 2007. Its cumulative production through the end of September 2008 is approximately 0.584 billion cubic feet of gas. The current production rate is approximately 1 million cubic feet of gas per day.
In April 2008, the operator initiated the drilling of the Clark-Sain #21 well which reached a total depth of 15,150 feet (4,617.72). Numerous gas shows were observed while drilling leading the operator to perforate three Vicksburg sands levels that were fractured and finally commingled during May-June 2008. The well produced 0.15 billion cubic feet of gas in four months. The current production rate is approximately 900 thousand cubic feet of gas per day.
The French State #4 well, being an up-dip location to the French State #3 well, was drilled during May-June 2008 to a total depth of 13,590 feet (4,142.23 m). Numerous gas shows were encountered and the first two intervals of Vicksburg sands were fractured and commingled in July. During the first three months of production, the well produced .225 billion cubic feet of gas. The current production rate is approximately 1.8 million cubic feet of gas per day.
From April 2007 through September 2008, many workovers were conducted on various wells. In March 2007, a production string was installed in the Clark-Sain #10 well, in June 2007 in the French State #2 and #3 wells, and July 2007 in the French State #1 well. Remedial clean-out operations were conducted in the Clark-Sain #8, #9, #10, #12 and French State #1 & #3 wells. In addition, a bottom hole pressure build-up test was conducted in the French State #1 well.


Eastern Part

During July-August 2008 the Ball “A” #1 well was drilled to a depth of 16,100 feet (4,907.30 m). The unique objective of this well was a deep Vx sand level that was unproductive. Unfortunately, the well was plugged and abandoned.

During December 2007-January 2008, the Ball Ranch #3 well was converted to a water disposal well for immediate use of disposing water from the surrounding gas producing wells. During March and April 2008, remedial clean-out operations were conducted in both the Ball Ranch #5 well and the Ball Ranch #7 well.

EXXONMOBIL JOINT VENTURE (NORTH JULIAN PROSPECT/BALL RANCH AREA)

In late August 2008, the operator initiated the drilling of the Santa Fe Ranch #135-1 well. ExxonMobil did not participate. After drilling the upper section of the Vicksburg sands with numerous gas shows, a severe gas kick was experienced. A decision was taken to not drill the deeper Vicksburg sands and complete the well in the upper Vicksburg sands. The completion is underway.

BLOCKER PROSPECT, HARRISON COUNTY, TEXAS

Comstock Oil & Gas, LP continued the development of the field(s) by drilling three additional wells to the Cotton Valley objective.
During October and November 2007, the Slone #1 well was drilled to a total depth of 10,367 feet (3,160 m). The Cotton Valley sands encountered were fractured and completed in December 2007. During eight months, this well has produced approximately 108 million cubic feet of gas and 544 barrels of oil.
In December 2007, the Slone ”A” #2 well located southwest of the B.S. Harrison #4 well was drilled to a total depth of 10,350 feet (3,154.70 m). This Cotton Valley development well was fractured and completed in January 2008. The cumulative production through July 2008 is approximately 40 million cubic feet of gas and 241 barrels of oil.
In February 2008, another development well, the B.S. Harrison #10 well, was drilled to a depth of 10,312 feet (3,143.10 m) and encountered the Cotton Valley sands which were fractured and completed in March 2008. The cumulative production through July 2008 is approximately 62 million cubic feet of gas and 363 barrels of oil.

BOOKER 3D PROSPECT, LIPSCOMB/OCHILTREE COUNTIES, TEXAS

Since March 2007, five horizontal wells have been drilled in order to develop the productive sands in this prospect area.
The Babe 940#3H horizontal well was drilled in March 2007, fractured and completed in April-May 2007. This well, whose primary objective was the Cleveland sands, reached a total vertical depth of 7,337 feet (2,236.30 m) and a total measured depth of 10,080 feet (3,072.40 m). Gas shows were encountered in the Cleveland sands and a frac treatment was performed. The cumulative production through August 2008 is approximately 350 million cubic feet of gas and 2,356 barrels of oil.
The Coco 1119#4H horizontal well, having the Morrow sands as the primary objective, was drilled in August 2007. The well reached a total depth of 9,300 feet (2,834.64 m). The analysis of the electrical logs confirmed that these channels sands lacked sufficient permeability to be commercial. Therefore, this well was plugged and abandoned.
The Pokey 1033#3H horizontal well was drilled in February 2008. The well reached a total vertical depth of 7,274.34 feet (2,217.22 m) and a total measured depth of 10,347 feet (3,153.77 m). Numerous gas shows were encountered while drilling and the well was fractured in March-April 2008. Cumulative production from May through July is approximately 4.7 million cubic feet of gas and 700 barrels of oil.
Red Willow Mid-Continent, LLC became the new operator of this area during June 2008. In June 2008, Red Willow drilled the Angel 909#3H horizontal well, a development well of the Cleveland sands. This well reached a total vertical depth of 7,306.61 feet (2,227.05 m) and a total measured depth of 10,350 feet (3,154.68 m). The well encountered numerous gas shows while drilling and was fractured and completed in July-August 2008. As of to date, no production data has been reported from the operator.
During July-August 2008, the Buddy 998#1H horizontal well was drilled to a total vertical depth of 7,512 feet (2,289.66 m) and a total measured depth of 10,280 feet (3,133.34 m). Gas shows were encountered in the Hepler sands while drilling. The well was fractured and completed in September 2008. The well was put in production in mid-September. No production data has been reported to date.
Two additional wells have been proposed and agreed by partners in order to develop both the Hepler and Cleveland sands. These additional wells will be drilled soon.

SOUTH TYLER PROSPECT, SMITH COUNTY, TEXAS

The initial test well, the Willingham-Daniels #1 well, was drilled in April 2007. The well was perforated in the Upper Travis Peak sands. The production facilities were installed in order to perform a frac treatment on the Upper Travis Peak sands. This frac treatment was performed in January 2008. A build-up test was performed in the Lower Travis Peak sands. Presently the well is being re-completed in this lower level. It is most probable that the Travis Peak sands will be abandoned and a future completion made in the Paluxy formation.

PAUL’s DRAW PROSPECT, CAMPBELL COUNTY, WYOMING

Since March 2007, Trend has drilled two new wells in Section 18, a third well in Section 17 and a fourth well in Section 9 which is currently being completed. Trend has also implemented several workovers on existing wells.
In June 2007, the Trend Federal #17-2 well was drilled to a total depth of 8,810 feet (2,685.30 m). It encountered the Minnelusa C-2 sand structurally higher than in the Trend Federal #17-1 well with a net 30 feet oil column. The uppermost part of the Minnelusa C-2 sand formation was perforated and completed in July-August 2007. At the end of August, the production rate was approximately 290 barrels of oil per day and the well has a cumulative production of 109,150 barrels of oil. More importantly, this well led Trend to revise the 3D seismic structure which extends northward and appears even larger that the existing Jazbo field. Trend plans to drill a well in the near future to confirm or condemn the extension of this structure.
In September 2007, Trend drilled the Trend Federal #23-18 well to a total depth of 9,091 feet (2,770.93 m). This well encountered a net 32 feet oil column in the highly permeable Minnelusa C-2 sand. This interval was completed in October and the well has a cumulative production of approximately 28,750 barrels of oil through August 2008.
During September-October 2007, the Trend Federal #34-18 well was drilled to a total depth of 9,000 feet (2,743.20 m). Unfortunately the permeable upper interval of the Minnelusa C-2 sand was not present. Therefore, this well was plugged and abandoned.
In September 2008, Trend drilled the Trend Federal #14-9 well. This well encountered the Minnelusa C-2 sand with a relatively large oil column that is currently being evaluated. This well confirms the northern extension of the structure discovered in Section 17. The well is currently being completed.
Since March 2007, numerous workovers were achieved on several wells primarily to reduce the water production (cement squeeze followed by a re-perforating of the completed interval), to repair or change pumps, to install production tubing, and to remove loose debris in the wellbore restricting or covering the wells’ perforations.
The two existing offset locations on the structure in Section 18 will be drilled soon.

MARACAS FIELD, CESAR BASIN, COLOMBIA

The gas exploitation project has suffered several setbacks and delays.
Due to the fact the initial pipeline layout encumbered several existing mining concessions, other propositions had to be made in accordance with the Colombian Ministry of Mines and Energy, Ingeominas (the Colombian Mines and Geology Institute) and the owners of the mining licences. Finally a proposed pipeline layout was agreed by all parties.
In July 2008, Texican received a Ministry of Mines and Energy’s letter, approving the concept of our exploitation project and requesting all the related documentation. At the end of September 2008, Texican Oil provided all the necessary documentation for the Ministry’s review and decision. According to Colombian law, the Ministry has 60 days to give a firm and definitive reply.
Meanwhile, Texican Oil has initiated the acquisition process for the environmental licences and is currently contacting the landowners to acquire the right-of-way agreements.
As of today, the gas treatment plant and the compressor system are near completion.