North Texas/Panhandle Waterflood Project

Through the Company’s merger with Petrosearch Energy Corporation in 2009, the Company acquired a 100% working interest in 1,755 acres in the Quinduno Field in Roberts County, Texas, in the Anadarko Basin. The project is focused on infill drilling and the implementation of a water flood on the property. One infill well has been drilled to date and nine additional wells have been re-entered to determine their mechanical status and establish potential productivity. Three of these wells have been equipped and are now capable of producing, and three additional wells were equipped/converted for water injection. There are a total of 19 old wells that have not been plugged.

An agreement is in place with Complete Production Services Inc. (“CPS”), to provide up to a maximum of 10,000 bbls per day of water, and likewise treat and provide to the Company a minimum of 5,000 bbls per day of production water from third party sources. In addition, the Company has approval from the regulatory agencies to add eight more wells to the existing flood permit, as required under the agreement, to ensure our ability to inject the volumes that CPS will make available.

The Company is actively assessing the opportunities concerning this project, including additional engineering studies and farming out to prospective partners.