CANTEX ENERGY CORP

The West Ant Hills Dakota channel play was commenced in 1997 by Beta Oil Corporation and John Lucken, with the acquisition of the prospect from Mitchell Exploration. Additional seismic was acquired immediately thereafter and thoroughly examined by Klipping and Associates. Seismic interpretation was very positive with respect to the confirmation of a thick Dakota channel sand and a structural high which subsequently became the initial location for the Hollon 4 11-25 well which was drilled early in 1998 in the NwNw of Section 25, T 37N, R63 W to a depth of 4486 feet. In summary, the Hollon #1 well confirmed the seismic and subsurface interpretation of the structure and most important, it verified the presence of the channel facies of the Dakota, encountenng approximately 65 feet of sandstone (gross thickness 86 feet). Oil shows were encountered in the top 20 feet of the sandstone.

The Hollon 11-25 was air drilled to a depth of 4312 feet, when the hole stopped dusting and had to be finished with mud. Serious hole drift was encountered suggesting the well bore moved west making the bottom hole location about 175 to 200 feet west of the surface location. Because of the dog-leg, electric logs only went to 4097 approximately 300 feet short of TD, and no logs were obtained over the objective zone. Two logging attempts failed to reach total depth and under the circumstances, it was determined that attempting a DST was mechanically too risky to attempt.

Hydrodynamics were known to account for the tilted oil water contact recognized in the two producing wells at the north end of this field. However, the Hollon #11-25 location was picked on the notion that the displacement of the Dakota oil would not have been so much to the north, which accounts for the show in only the upper 20 feet of the 65 feet of porous sandstone.

Hydrodynamic tilts on oil — water contacts are well known in other oil fields and not uncommon in many oil fields in the Rocky Mountain basins. In fact, South Glenrock and South Cole Creek fields exhibit between 500 and 600 feet of tilt on the oil water contacts. These two fields, also in the Powder River Basin, are productive from similar Dakota channel sand reservoirs,

The geologic data generated from the Hollon #11-25 supports the hydrodynamic trap interpretation of the West Ant Hills Dakota oil pool. The two wells that produced a combined total of over 410,000 BO, the Milestone #43-12 and the Ranger #2-Govt. are more than 400 feet structurally low to the Hollon #11-25. The Dakota channel sandstone outcrops approximately 7 miles south of the Hollon well and where it is charged with fresh water. The strong hydrodynamic gradient, flowing from south to north in the channel sandstone, has displaced what would be the normal static reservoir to a position north of the structural high (near the Hollon 411-24), creating the 400 foot oil column. This aspect of the West Ant Hills oil column is demonstrated on the cross section attached as an exhibit to the prospect maps. (Cross-section A-A')

The principal working interest partner decided the course of action was best to abandon the Hollon #11-25 and make plans to drill a follow up well to the north. Since 1998, several significant events have occurred which strengthen the economics to this prospect. Beta Oil has enhanced its land position by waiting for fee leases to expire and a new mineral owner to get its act together. Beta has 100% leases now instead of a 70/30 farm out under the original situation. Beta has acquired geochemical surveys that suggest our prospect has qualities similar to those of the nearby Ranger well, which has produced 306,000 180 from our target, the Dakota channel sandstone.

The principal working interest partner, in the meantime, opted not to pursue participation in drilling the follow-up on this prospect. Therefore, Beta presented the West Ant Hills prospect to TJ Oil and Gas Explorations. In July 2004 TJ Oil acquired a 60% working interest in the play subject to paying 67.58% of all drilling and completion costs, while Beta will pay the balance and act as operators.. In March of 2005 Cantex Energy Corp acquired a 18% working interest form TJ Oil in exchange for paying 23% of the drilling and completion cost. Beta and TJ Oil and Cantex Energy are going forward and intend to drill the well in early 2006.

The West Ant Hills play has in fact been enhanced by both the hydrodynamic and geochemical information, which sets up the need to drill another test on this prospect. If the entire porous channel sand is found oil saturated and productive, 70 to 80 feet of pay in typical Dakota channel reservoirs historically have produced 960,000 BO or more. This is a lucrative target at a shallow depth and economically very attractive.

The balance of this prospect information is still applicable, revised in part, and follows presenting more details for your consideration.

The West Ant Hills Dakota Channel Prospect is located in the eastern Powder River Basin, approximately 25 miles north of Lusk, Wyoming, just 2 miles west of U S Highway 85 and 7 miles north of the intersection of Hwys 270 and 85. Several oil and gas fields nearby produce from the Pennsylvanian Leo sandstone and Cretaceous Dakota (Fall River / Newcastle) formation. The prospect lies just west of the Ant Hills Field, discovered in 1927, which has produced 885,000 B0 from Dakota marine, regional facies sands at less than 4000 feet on the anticlinal feature. Eight producing wells averaged more than 100,000 B0 per well. Much more significant is the fact that Dakota Channel sandstone facies have been discovered and produced substantial oil from two key wells just north of the prospect leases. The west flank of the surface anticline has received little exploration evaluation with the exception of the Arrowhead well, which is tied to the Harvey 9A seismic line, and by projection lies just east of the Dakota Channel facies , encountering the Dakota marine facies and was non productive because of its structurally low position relative to the crest wells at Ant Hills Field.

The Milestone Corporation #43-12 was completed in 1984 for 156 BOPD and has accumulated 107,000 BO and is still producing 8 BO and 100 BWPD (fresh) from a partial (38 foot) oil column in an 80 foot sand section. The Ranger #2 Government was completed in August of 1961 for 300 BOPD and produced over 130,000180 in 16 months for an average of 259 BOPD. This well has produced a total of 306,000 B0 from 4800 feet, The oil is trapped in the thick Dakota Channel sandstone on a structural, north plunging anticlinal nose bounded on the east by an impermeable channel fill facies . This production sets up the prospective acreage within the channel facies south of the key wells, just described. (Reference the Dakota Channel Trends and Structure map and cross section A-A').

The Dakota Channel trends north - south along the west side of the Ant Hills Anticline. The trap potential is outstanding as the thick porous sandstone warps over the structural high created on the west flank of the Ant Hills Anticline. The reservoir's potential area is established by the oil water contact encountered in the Milestone Well at a subsea datum of -627 feet. The Dakota Structure map uses a more conservative datum of - 576 and still creates a prospective area covering most of 8 forty acre spacing units above the tilted oil - water contact and well within the channel trend which is seismically controlled and supported as well by the geochemical survey information.

In 1997, Beta Oil Corporation engaged Klipping and Associates as geophysical consultants for this project. Robert S. Klipping has interpreted approximately 12 miles of good 2 D, 24 fold data on lines BNI - 127, BNI - 129 and the Harvey Number 9A lines. Structural control conforms nicely to the geologic subsurface interpretation and is displayed on the attached Dakota Seismic Structure maps. More important was the amplitude anomaly associated with the Dakota Channel sand that confirmed the presence of the Dakota sand buildup associated with the fluviatile I lacustrine depositional trend of the channel which strikes north - south across the west plunge of the Ant Hills anticline, a Late Cretaceous Laramide feature. Some minor, normal, faulting was observed on the Harvey 9A and BNI 127 lines outside of the channel's west boundary and on the south end of the play, near the oil - water contact on the south end of the lease block. Both fault blocks are up-thrown throughout the prospective area.

Channel amplitude signals, and channel basal sag were observed on the dip-lines, BNI 129 (NW - SE) and the Harvey 9A (E -W) lines which tie to the strike line BNI - 127 (N - 5). Synthetic seismic control from non-channel and channel wells correlated to the Dakota interval very well. The amplitude anomaly across the prospective acreage shows a bright spot and approximately 70 feet of channel sandstone. Beta Oil Corporation acquired the Harvey line in May of 1997 and the BNI lines were in the possession of Westech Oil Corporation, from whom Beta had the original farm in.

The Hollon H 11-25 confirmed both the structural and stratigraphic aspects of the seismic interpretation described above.

The potential trap is formed by the facies change from porous, point bar sands within the channel sequence bounded on the up-dip side of the sandstone by a channel fill, shale facies creating a permeability barrier along the east side of the channel. The channel sandstone is draped over the west flank of the Ant Hills Anticline, creating a perfect structural setting. Further east of the Dakota channel sand facies is the regional Dakota facies associated with fluviatile to marine depositional sequence which accounts for the structural trap in the Dakota at the Ant Hills Field. This setting is similar to known producing fields within the Powder River Basin where statistically more than 90% of the Dakota's 225 million barrels of oil produced to date have come from similar depositional settings creating channel sand traps, i.e. South Donkey Creek - 2.4 MMBO / 10 wells, West Moorcroft - 8 M1 ?vlIBO / 16 wells, Coyote Creek - 22.4 MMBO / 52 wells and Kummerfeld — 5.3 MIvIBO , among others. (See the analog fields attached to this submittal). The prospective trap size for the West Ant Hills prospect is approximately 640 acres which puts it in the category of West Moorcroft field, located in T 51 N, R 68 W where the average channel sand pay thickness is 40 feet. In September of 1964, Davis Oil Company drilled the #1 Mellott well and completed it from the Dakota Channel Sand at 4750 - 70 feet for an WE of 1375 BOPD and produced a total of 1.396 MMIBO. West Moorcroft Field produced approximately 8 MIMIBO with an average recovery of 380 BOPAE. One 160-acre area in the field recovered 4.1 MIMIBO for a recovery factor of 640 BOPAF.

Basic Earth Science drilled the Wassenberger #12-24, an exploratory well in the SW/NW of Section 24, T 37 N, R 63 W, in an attempt to extend the Dakota Channel sand production. Charlie Mitchell, the geologist who generated this play, when he worked for Basic Earth Science, watched the well. The well was air drilled to the top of the Dakota where a water flow was encountered and the hole became unstable. No shows were encountered in the Dakota and the Dakota came in structurally very low to prognosis. A thorough post-mortem of the well bore was done using subsurface and computer generated (Baker Hughes Intech ) analysis. An interval analysis involving subsurface well control from 9 Ant Hills wells and the Ranger #2 and #4 wells indicates an average thickness from the Pierre to the top of the Dakota of 4908 feet. The Wassenberger #12-24 well encountered hole deviations measured while drilling from 11 to 16 degrees and stratigraphic , non -fault, stretch in the section of 230 feet greater than the average thickness. (See the attached correlation comparison between the subject well and the Ranger #4). The uncorrected, apparent datum for the Dakota is -710 feet. The maximum calculated lateral well bore drift is about 650 feet. To account for the log stretch, deviation is concluded to have been laterally to the west, northwest from the surface location which put the bottom hole location in the SENE of Section 23. Had the well deviated up-dip the logs should have exhibited normal to shortened interval thickness from the Pierre to the Dakota.

With correction for deviation of the well bore and allowing for NW dip on the Dakota, the calculated Dakota top for the bottom hole location is -645, well below the oil water contact as observed in the channel well to the north, the Milestone #43-12. Though the well did not penetrate the entire Dakota sand because of the hole problems, the upper 32 feet of the logged portion of the Dakota exhibits a welt-defined channel sand profile on the Gamma Ray -Neutron log that was obtained. The Basic well was structurally 9 feet high to the Ranger H 2 Govt. at shallow depths, before deviation became serious. The Ranger # 2 Govt. well produced 306,000 180 from the Dakota channel sandstone reservoir.

Additionally, if the Wassenberger well had deviated up-dip, the subsurface Dakota map would have to be contoured with a sharp low, contrary to the surface strike and dip data structural information. The seismic data also conforms to the surface structural data and clearly shows a dip rate that remains consistent with a north striking, west dipping subsurface configuration on the Dakota. For all of these reasons, it is concluded that the Basic Earth well's bottom hole location is down-dip and west of its surface location.

The Hollon #11-25 also exhibited down-dip drifting as described elsewhere in this report.

Beta Oil Corporation originally acquired the Mitchell leasehold consisting of 320 acres comprised of two federal oil and gas minerals and assumed the Mitchell farm in from Westech Energy Corporation. The fee lands, now controlled by Beta Oil Corporation (640 Ac. Gr. / 600 Ac. Net) are well situated to control the prospective channel acreage. In June, 1998, Beta / Lucken acquired the only open 40 acre parcel, NWNE/ne/4 of Section 24, T37N, R63W at the competitive lease sale in Cheyenne for $270 per acre in a hotly contested bidding battle. Yates Petroleum controls some edge acreage in the down-dip part of the play and four forty-acre parcels north of the proposed location. Beta has in the past had a farmout from Yates, on the four forties and has a renewal of an option on the same leases.

Beta Oil Corporation has selected a location in the NE NW of Section 24, T37N, R 63 W to further evaluate this prospect. This well site is recommended based on the consideration of all the geochemical and geologic data developing a sweet spot for the Dakota channel sandstone target. If successful, the well sets up several offset locations.

The topography affords the best location, on a flat pasture area near an existing road, slightly southeast of the center of the 40-acre lease, but within the State of Wyoming's location tolerance.

Beta Oil Corporation estimates that 6 to 8 presently controlled, forty-acre drill sites contain potential for the Dakota Channel reservoir. If the channel sand is found to be productive, it is estimated that recoverable reserves should be similar to many of the known recoveries that have ranged from 300 BOPAF to more than 600 BOPAF. The entire Dakota sandstone zone should be well above the oil / water contact and found to be oil saturated throughout. It is likely that the pay zone will be 50 to 70 feet thick. It is quite possible that the highest wells could achieve recoveries in the range of 1 MMBO per well. Beta believes that the prospect represents a gross reserve potential of between 3.2 and 4.8 MMBO at a very attractive shallow depth on average of approximately 5000 feet. The risk to reward ratio represented by this prospect is extremely good and based upon economic cases run by Beta, payouts appear to be 6 to 8 months per well. ( see the Pro forma under “Investors”.)