One prospect, each of trillion-cubic-foot (TCF) natural gas reserve potential, is identified in this sparsely explored portion of the prolific Val Verde Basin. The prospect is mapped on the basis of available well control and reprocessed seismic data, identifying 1 Ouachita thrust closure. Prospect "Thrust Plate 1" maps as much as 300' structurally high to and encloses a natural gas show well within objective horizons of the Project Area Located in Terrell County, Texas. commercial gas production in the Pakenham Field, within thrusted Strawn carbonate and stratigraphic Permo-Penn sand reservoirs, which may be additional targets in the Project, occurs within 10-15 miles of the mapped structure. Terrell County comprises the west central portion of the Val Verde Basin, a giant natural gas field province of the greater Permian Basin. Brown Bassett Field, 12-15 miles northeast of the Project Area, contains 1.8 TCF natural gas, estimated ultimate recovery. The Ouachita Thrustbelt, the primary target of this Project, produces along the leading edge northwest of the Project Area in Pecos County, Texas from fractured Devonian novaculite reservoirs. McKay Creek Field is approximately 7 miles to the northwest of the Project Area boundary. Significant new drilling, production and reserves expansion is reported along the producing front in Pinon Field. Additional producing analogs are found within the Ouachita Thrustbelt system in the Arkoma Basin, Rocky Mountain Overthrust Trends and the Canadian Foothills Trend. Project consultants include Providence Technologies, Inc., of Roswell, NM and Midland, TX, and Douglas Roper of Midland, Texas. Providence has operated substantial successful 2D and 3D seismic programs within the immediate area, leading to discovery of major new reserves. Mr. Roper has been a successful interpreter and explorer within the play for both major and independent oil companies for over 25 years.

EXPLORATION OBJECTIVE

The objective of this project is to pursue the natural gas show well(s) within the 2D swath imaging area to image, drill and discover trillion cubic foot (TCF)-potential natural gas within this proven, producing, but vastly under-explored Ouachita Thrustbelt domestic frontier. New seismic results enhance will explorationists' ability to image the complex play and to reduce risks of drilling and play extension, as demonstrated in industries successful development of the Strawn thrust play just forward of the Ouachita front in this area.

DEMONTRATED POTENTIAL

A single well within the Texas Ouachita thrust front, the Longfellow 600-4 #2 in Pinon Field, Pecos County illustrates the potential and opportunity. The well began production in 1983 at a rate of approximately 3.3 million cubic feet per day (MMCFPD) and continues today, some 17 years after initial production, with literally no decline.

The well has produced some 22 billion cubic feet (BCF) to date. The Natural Gas & Oil Corp., 1 Nellie Hardgrave, within the proposed 2D swath shoot area and demonstrated the presence of hydrocarbons within the project area. TD'd in 1965 at 18,409', the well drill-stem tested (15,670' � 15,914') gas to the surface in 6 minutes, flowing 439 MCFPD for 2 ½ hours. Initial shut-in pressure was 4,992 pounds, flowing pressure was 1,537 � 1,591 pounds and final shut-in pressure was 3,387 pounds in 2 ½ hours. Reports suggest this test was within the thrusted Ouachita Tesnus section and it is unknown whether the test penetrated the Caballos novaculite, which pays along the thrustfront.

HYDROCARBONS OF THE OUACHITA TREND

Hydrocarbon concentrations are proven in southern Oklahoma and West Texas. That the two areas are closely linked with Paleozoic aulacogens is of considerable significance, perhaps the principal hydrocarbon source. In West Texas, McKay Creek, Pinon and Thistle Fields seem to represent a second concentration of hydrocarbons; one may reasonably expect additional discoveries in this general area. Three potential sources are described in the literature as origins of Ouachita hydrocarbons including indigenous Ouachita facies, aulacogenic basin sources and foreland rocks beneath the overthrust belt. World-class gas fields exist within the aulacogenic forelands of the Val Verde Basin of West Texas, with estimated ultimate recoveries (EUR) in the range of 13-17 TCF gas. The Ouachita thrusted regime is juxtaposed against the foreland sediments. While a broad band of the frontal system within the Ouachita thrust of Oklahoma produces significant hydrocarbons, current production in the Val Verde region is limited to the interpreted thrustfront. Within the equivalent frontal system of the West Texas Ouachita thrust, behind the producing thrustfront, very few penetrations exist. The zone is poorly imaged and sparsely populated with test wells. A major difference between the two producing regions is that seismic imaging of complex geology of the Val Verde Basin is further complicated by the Cretaceous Edwards outcrop, characterized by high velocity limestone mesas, and dissected by deep erosional valleys. In addition to difficult topography, the mesas constitute a severe source-generated noise environment for seismic imaging. Recent advances in seismic imaging solutions have resulted in significant new discovery and production within previously unimaged thrusted sections in the Val Verde Basin, with current EUR's of 300 BCF.

PROSPECT GEOLOGY OF THE BIG CANYON RANCH AREA

The ranch is located approximately 15 miles SW of the estimated leading edge of the Ouachita overthrust and another 15 miles NE of the axis of the Val Verde Basin. There are four distinct pay possibilities on and in the vicinity of the ranch: the Wolfcamp sands, the Ouachita overthrust system, the thrusted Strawn play and the autocthonous early Paleozoic platform margin. Sparse seismic control, recently reprocessed, suggests the ranch area is within a lower Paleozoic structural trend The deepest known prospective zone on the ranch is the early sub-thrust Paleozoic platform rocks which define the Val Verde Basin.

This basin is considered to be a cratonic margin sag basin resulting from the subsequent deposition of the Ouachita thrusts. One typically could expect the Ellenburger to occur here at depths exceeding twenty thousand feet. The play would consist of defining large wrench faulted structures with at least 2,000' of closure at the Ellenburger level.

These features are interpreted to be a manifestation of strike/slip movement as a result of NW-SE oriented principal horizontal stresses affecting ancient down-to-the-basin normal faulting of the early Paleozoic continental margin. Such large features could have multiple TCF gas reserves, but attempts south of the Puckett � Brown Bassett trend to date, some with significant shows, have not found such reserves. These wells, normally air drilled, cost in excess of $3 million.

Recent state-of-the-art swath 2D and 3D seismic reconnaissance within the last 10 years has developed a thrusted Strawn play. In some locales, the Pennsylvanian section has been sheared off the underlying structures and transported several miles north. Depths for this play in the ranch area could be 15000' to 18000'. EUR's for this play to the north have been up to 20 BCF/well. These traps are interpreted to be highly folded and fractured hanging wall anticlines of stacked thrust sheets, a similar tectonic style to the Ouachita. This play is remains active with Conoco, Enron and Tom Brown being among active operators; the lease cycle is presently turning in the trend.

The Ouachita overthrust system consists of a complexly folded and faulted series of limestone and clastics interpreted to have been deposited in a deep water environment and transported tens of miles over the continental margin. These rocks are Cambrian to Pennsylvanian in age and are exposed in the Marathon Basin, south of the Glass Mountains. Similar tectonics and lithologies are expected in the ranch area. The Nellie Hardgrave well in section 12, just north of the ranch may contain thousands of feet of these rocks. The objective would be to locate hanging wall anticlines on all thrust faults, which traverse the shoot area.

Production generally occurs in the fractured Caballos Novaculite chert and Tesnus. This system should be encountered below 5,000'. Some estimated per well reserves, using Pinon Field as an example, may be 15-25 BCF. It should be noted that all of the Ouachita fields to date with significant production have been located at the leading edge of the thrust system north and west of the ranch area. Noteworthy fields include McKay Creek Field, with cumulative production from Caballos chert of over 6 BCF plus 1.1 MMBO, Pinon Field producing gas from the Ouachita Dimple formation and Thistle Field producing from the Caballos, expected EUR of 4 MMBOE. Some good well examples of this production, in addition to the Longfellow above, are the Fina Green 4-2, which has produced 16.9 BCF since 1983 and the Fina West Ranch 501, which has produced 9.38 BCF since 1989. These wells are reported to exhibit very flat decline curves. The upper Wolfcamp play is a less complex sand rich section which some think was sourced by the emergent Paleozoic Mountains of the overthrust. These beds generally dip to the north, the trap being various sand pinchouts to the south. These reservoirs could be found 3,000' to 5,000' with estimated reserve potential of 2-5 BCF per well.

SEISMIC PROGRAM

The challenges to seismic imaging in the Val Verde Basin include near surface statics problems, vibrator decoupling, source-generated noise and severe ground roll, steep topography, complex geology, steep dips and rapidly varying velocity fields. These challenges create the opportunity through now-proven imaging advancements in this basin by current project personnel. The fundamental reason the opportunity remains within this proven, producing, world-class domestic province is due to the problems cited above, and industry's understandable reluctance to drill �in the blind�.

Beginning in 1989, personnel associated with the project sponsored and conducted ground-breaking seismic tests, seeking to quantify Val Verde region imaging problems and provide imaging improvements in this difficult imaging province. Test results were significant, resulting in some 700 miles new non-exclusive 2D swath basin reconnaissance of the western half of the Val Verde basin between 1989-1993. In 1994, seismic project participants Tom Brown and Conoco drilled and discovered on the basis of the 2D seismic a new pay zone in the Val Verde Basin, a thrusted Strawn reservoir, at the Tom Brown ACU 49-1 in Terrell County, approximately 13 miles north of the current project area. The well came on flowing 14 MMCFPD plus 300 barrels condensate per day (BCPD), beginning a significant new play for some reported new 400 BCF EUR from Strawn and overlying Wolfcamp sand production. The definitive, high-quality 3D surveys (the Pakenham 3D Project and the Val Verde 3D Project, 125 square miles) conducted to image and develop the new reservoirs discovered beginning in 1994 were conducted by Providence Technologies, Inc. of Roswell, NM who are committed to this Project.