WILLISTON BASINDEVELOPMENT PROJECT

Five Well Package

Smith Embayment Area

Renville County, North Dakota

HISTORY:

• Williston Basin Discovery Well Drilled in 1952• 51 Years After Spindletop

•Redevelopment Targets for Horizontal Drilling-Red River-Ratcliff-Nesson/Mississippian-Bakken

•Oil Saturated Fields

•Bakken Formation Expanding to North Dakota

THE SMITH EMBAYMENT

• Covers 25 Township Area on Eastern Flank of the Williston Basin• Carved Out of Normal Shoreline Caused by Salt Collapse in the Prairie Evaporite• Field Produces from Mississippian Carbonate  from 4500 to 6000 ft.• All Wells (except Smith) discovered in 1960’s• Smith, Discovered in 1990’s, Produced Over 4 Million Barrels of Oil from 5400 ft.• Individual Well Cum’s Over 500,000 Barrels from Grainstone & Dolomite Reservoirs

THE PROJECTThe Smith Embayment was originally developed in the

mid-1960’s, with the discovery of the oil in the Sherwood

carbonate(Mission Canyon) at a depth of 4700’. To date,

this area has produced approximately 3.7 million barrels

of oil from the Sherwood and Mohall reservoirs. The

discoveries were made with the use of 2-D seismic lines

that were shot along section boundaries, so structures

located within a section were not recognized.

A detailed geological and engineering study have been

completed using core data from existing wells, decline

curves and production data from existing wells, along with

some of the existing 2-D data. The results of this study

clearly indicate the following:

1.) Un-tapped reserves in the Sherwood can be exploited through the drilling of new wells, both horizontal and vertical, by extending existing fields and drilling into new satellite structures.

2.) Most wells that found production in the Sherwood did not drill deep enough to test the deeper Mohall. We now understand that locating Mohall accumulations under Sherwood field structures is an opportunity that was not earlier recognized.

3.) If the embayment, as well as the resulting structures were caused by salt collapse, deeper beds, such as the Nisku, Duperow and Red River could be productive below the Mission Canyon here, as they are in other parts of the basin.

THE PLAN

The plan is to drill a 5-wells program on five separate structures with in the study area. The following are an overview of these projects:

•Dry Creek Prospects 1 & 2

• Grassland Prospect

• Greene Prospect

• Cola Field Prospect

DRY CREEK PROSPECTS 1 & 2

• Extensions to the Truro Sherwood Shoreline

Fields• Oil Accumulations trapped by Formation of Lateral Anhydrite Seal in the Sherwood

Prospect #1• Production in Existing Well - 69 MBO• Structure Covers Approximately 640 Acres

Prospect #2• Drill Stem Test Comparable to Production in Embayment• Structure Covers Approximately 750 Acres

GRASSLAND PROSPECT

• Sherwood Island Shoal Prospect

• One Productive Well - 45 MBO

• Oil Saturation in the Sherwood

• Structure Should Support More Than 1 Well

• Approximately 640 Acres

GREENE PROSPECT

• Greene Field Produced 373 MBO From 2 Wells

• Approximately 450 Acres With 50’ Oil Column

• Structure Should Support 2 More Wells

• Waterflood Candidate

• Another 373 MBO Left on this Structure

CHOLA PROSPECT

• Produced 1.2 MMBO - 80 Ft. of Oil Column

• Geometry Suggest 2-Stage Salt Dissolution in the    Prairie Salt

• Implementing A Waterflood

• Test Mohall, Nisku & Duperow Structures

• Commercial Reserves Found In Comparable    Structures in Multiple Horizons

• Possible New Play on Existing Structures

POTENTIAL RESERVES

Sherwood & Mohall Reservoirs- Through the drilling of new structures, extension of known structures and re-development of existing fields, there could double the existing reserves for the study area or another 3.7 million barrels of oil.

Deeper Reservoirs-A 3-D survey could aid in the success in defining deeper salt related structures, there could be up to an additional four million barrels of reserves trapped if just one of the deeper Nisku, Duperow or Red River reservoirs are successful. This is an on-going study.