S. Louisiana Gas Condensate Prospect

We are seeking a blended capital structure for this project. Its an extremely interesting Louisiana Gas/ Condensate Project. Client has secured 2 land leases and negotiated the terms of a 3rd. Based on the 2 leases secured its estimated that there is 200 billion cf (mid range) 575 billion cf (top end) of reserves. The average recovery ratio for gas that they've used to construct their models is about 80%. This equates to (6,000 cubic ft = 1 BOE) 66MM BOE or top end 83MM BOE x 80% recovery. It's a considerable reserve and a very exciting gas play. The economics and proforma we have takes a conservative view on reserve expectations due to general technical prudence and a wish not set field development thresholds to high.

The area concerned is surrounded by producing gas fields and the above analysis has been determined by analyzing the well logs and production data from the surrounding wells. These surrounding wells are 2-3+ kms around and this gas play will be producing from the same known producing formations. They have mapped the play across the acquired blocks based on this data. There are 3 known producing formations and a 4th not currently drilled. They will not target the 4th formation in the 1st instance to avoid any unitisation discussions which could delay their initial well. as a caveat and "ace in the hole" so to speak, the 4th formation has not been included in the economic proforma projections. Full economics and all pertinent data is available. The client is in an advanced state of readiness for this project having secured all permits, land agreements, drilling contractor and created a full field development plan (FDP) with regard to it. Its estimated that 10 wells will be required for the full FDP but the initial risk capital request $23.6MM which is the cost of the first 2 wells with related infrastructure costs(facilities & pipeline 1 & 2 costs + plus recovery of signing bonuses). The full development plan is estimated at $70MM. The full FDP will only proceed following agreed production thresholds being met on testing of each well.

Proposed Terms:

• Two well commitment with option to exit 2nd well with no penalty.
• $23.6 million capital investment
• Leases & G&G costs
• 50% interest in LP after payout, principle is returned in 24 to 48 months with 100% preferred net revenue distributions until principle investment is paid back in full
• potential 71% IRR
• Net Present Value $160MM with 575% + cash-on-cash return (12% discount rate)
• 50% NRI Available
• Technical & administrative support provided by ODSS

Contact:

Bradley Anderson
BAnderson@proteuscp.com