A description of various tools and methods to mitigate exploration risk

1. First Order Exploration A technological basis for the direct detection of oil and gas fields using Direct Hydrocarbon Indicators (DHIs) Investigative data sets are ordered according to their proximity to the object of the search. The lowest order data sets are most predictive. Confidential 1

2. Oil and Gas Exploration Technology Overview Confidential 2 First Order Exploration, LLC

3. Oil and Gas Exploration – a direct approach The General Question: Before drilling, -can oil and gas be detected and explored for directly? The First Order Hypothesis: Direct Hydrocarbon Indicators (DHIs) can find Oil and Gas more directly and more efficiently than industry standard technologies. The Industry Hypothesis: Gas can be found directly through AVO and related analyses in younger sediments. The probability of success (Ps) for commercial production is less than 25% for wildcat wells. HC liquids (oil) cannot be discerned at all with industry acoustic tools. Industry exploration technology is mostly based on acoustic (seismic) methods. EM technologies have started to penetrate that market. Confidential 3 First Order Exploration, LLC

4. Direct Hydrocarbon Indicators DHIs are a collection of technologies that moredirectly measure the existence, depth and thickness and/or volume of hydrocarbons in the subsurface from the surface of the earth prior to drilling. We categorize technologies into three groups: Traditional ElectroMagnetic New Physics Confidential 4 First Order Exploration, LLC

6. Direct detection of hydrocarbons is secondary or tertiary function of the data.

9. greatly enhanced EM tools or “New Science” Technologies like Hydrocarbon Density and Nano-TechnologiesConfidential 5 First Order Exploration, LLC

10. First Order Exploration Model (FOEM)Workflow Scenarios Ideal – DHI driven exploration (built internally)Aerial DHI -> Area DHI -> Geology and/or Seismic -> Vertical DHI -> Drill Own 3D seismic without prospects built (built internally with our own or other 3D data ownership) Aerial DHI -> Area DHI -> Seismic and/orGeology -> Vertical DHI -> Drill Prospect/Project Already Built Traditionally with Geology and Seismic(First Order could evaluate and risk other company prospects and properties – a very efficient use of capital and time)Area DHI -> Vertical DHI -> Drill OR Vertical DHI -> Drill IndustrySeismic -> Geology -> Drill OR Geology ->Seismic -> Drill The FOEM reduces risk significantly early in the exploration or development processes. This will significantly reduce capital expenditures, prospect life-cycle, increase Ps and Return on Investment. Confidential 6 First Order Exploration, LLC

11. FOEM vs Traditional WorkflowProbability and Prospect Population Comparison FOEM FOEM DHI FOEM FOEM FOEM Knowing Traditional Hunch Confidential 7 First Order Exploration, LLC

12. FOEM vs Traditional WorkflowProspect Economics FOEM FOEM Confidential 8 First Order Exploration, LLC

13. Sidebar – Current Upstream Risk AnalysisUnconventional is now Conventional: Resource Plays Upstream capital expenditures are guided by apparent risk profileof each project. Industry is willing to pay an EXTREME PREMIUM in upfront costs to reduce risk in “Resource Plays” Resource plays extract reserves from very low permeability host rocks. Reservoir is created through expensive massive fracturing operations. In 2010, resource plays dominated exploration budgets at the expense of conventional exploration. Money has flowed here because of apparent lower risk profile (but with lower reward as well). Industry is willing to pay >$10,000/acre for mineral rights in resource plays vs. $250/acre in conventional plays. Shale plays require massive land positions. Example of one spacing unit of 160 ac = $1,600,000 just in land costs Resource plays still have risk – especially at the outset (Tuscaloosa Marine Shale – a bust) and after a play has produced awhile. Average EURs are usually lower than press releases. Risked ROI probably < 3:1. Confidential 9 First Order Exploration, LLC

15. significantly reduce upfront capital costs of science and land budgets

16. significantly increase conventional exploration success

17. Ps increased from 15% to 75%

18. Focus on projects that produce from high quality reservoirs

19. negate the need for extremely expensive completions thus reducing operating costsReturn on Investment should always exceed >3:1 in a program driven by DHIs and the FOEM (and perhaps much greater). Confidential 10 First Order Exploration, LLC

20. Confidential 11 The Problem With Unconventional Plays – Many Are Uneconomic at Today’s Prices – 15% Target ROI – Credit Suisse Analysis Current NYMEX – HH 1/26/11 First Order Exploration, LLC

21. DHI Area Technologies Confidential 12 First Order Exploration, LLC

22. Direct Hydrocarbon Indicators Area Tools DHI Area tools solve 2 of the 3 dimensions necessary to find oil and gas. The area tool finds the surface or near surface evidence that an oil or gas field is at some depth below this indicator. Historically, “geochem” was used for this purpose where HCs are measured in the soil. This technique was proven to be undependable for prospects because of HC movement and soil residence of HCs is not predictable. Other more robust indicators have emerged through the years. Most are related to the “REDOX Cell” first published by Pirson in 1981. Tompkins further refined Pirson’s work in 1990 and 1993. These technologies measure the effects of the existence of a REDOX cell vertically above an oil or gas field or measure the current directly. Other Area tools unrelated to the REDOX cell have been used successfully but are less well understood such as technologies with Hydrocarbon Density, micro-gravity based technologies, nano-technologies and certain bizarre Russian technologies. These are intriguing and will take more work to fully understand. Confidential 13 First Order Exploration, LLC

23. The REDOX CellOil and gas fields produce measurable electrical currents The REDOX cell is simply the observation that above oil and gas fields there is a zone of increased negative charge (-Eh). The driving force for the zone of –Eh has been postulated as either themigration of HCs vertically from the field OR the existence of an electrical current originating from the oil/gas field flowing vertically to the surface of the earth. The manifestations of the REDOX cell are many. Most support the latter electrical theory.Additionally, this electrical current phenomena has been measured directly. This electrical current is measureable and has vector attributes that point in the oil field direction High and low frequencies have been measured (RIT, RECON and RP) Electrical current lowers Eh and Ph in the volume of rock above accumulations Russian investigators have measured Eh and Ph changes directly Effects seen above fields as anomalously bright seismic reflectors within the “diagenetic chimney” The current flow causes anomalous accumulation of reduced states of iron oxidesandiron sulfidesfrom the near surface to 3000’ in depth that have been measured in cuttings The Electrical Signal and derivative signatures are unique to Oil and Gas fields– a form of direct detection Many of the Area tool indicators have tremendous track records. DNME (IP) is 90% predictive in over 150 examples. Confidential 14 First Order Exploration, LLC

24. RIT,RECON, RP, ESFT (direct) EL,TOP, VEG, DC IP MM DHIs Confidential 15 First Order Exploration, LLC

25. REDOX CellEvidence of environmental changes above oil and gas fields Lower Eh and higher Ph occur above the oil and gas fields Confidential 16 First Order Exploration, LLC

26. REDOX Cell Evidence of anomalous Pyrite concentration above oil and gas fields Epigenetic pyrite concentration in a well drilled in Russia Maximum pyrite concentrations occur at depths 175-875 m Confidential 17 First Order Exploration, LLC

27. REDOX Cell Evidence of anomalous Pyrite concentration above oil and gas fields Epigenetic pyrite concentration in wells drilled in some fields in China. Each color is a different well. Anomalous above producing wells Pyrite concentration depth, m Confidential 18 First Order Exploration, LLC

28. REDOX CellEvidence of Induced Polarization signal above an oil field. Oil Well Dry Hole Oil Productive Confidential 19 First Order Exploration, LLC

29. REDOX Cell Evidence of Reduced Iron anomalies above an oil and gas field Productive Nonproductive Productive Productive Nonproductive Confidential 20 First Order Exploration, LLC

30. Area DHI Statistics REDOX cell related IP – perhaps the best documented track record of 90% Ps internationally MM – magnetic technique that boasts a 88% Ps in South Texas RIT, RECON – fewer examples. An emerging technology. EL – elemental anomalies in soils. Old technologies are inconsistent. Newer technologies may be more robust! IP – documented 90% success ES – cite high success rates Confidential 21 First Order Exploration, LLC

31. Area DHI Statistics Non-REDOX cell related sources AEM–cited 86% Ps in Texas by a major. 75% correct in parts of East Texas Basin. First Order monitored. HDT– Ps 85% from First Order examples. First Order monitored BIO– Hydrocarbon eating microbes. They cite high success rates NT- Nano-Technologies - cite high success rates Confidential 22 First Order Exploration, LLC

32. Area DHI Examples Russia - IP George West Field - MM Thunder Horse Fields - Offshore deep water - MM Florida – EL Boswell - HDT Camp Cooley - AEM+ HDT+ GMT + EL+ RIT Wasson Field – secondary recovery – AEM Colorado State Line Trend – AEM Confidential 23 First Order Exploration, LLC

33. Area DHIsREDOX Cell Related Examples DHIs directly measure the REDOX current or manifestations of the current. Confidential 24 First Order Exploration, LLC

34. Area DHIMM Thunder Horse and Thunder Horse North Oil Fields Bob West Field >1 TCF Bob West Field showing wells drilled from 1986 to 1997. MM survey recorded in 1986. Field discovered in 1990 > 1 TCF in South Texas. Offshore under more than 6000’ of water. Confidential 25 First Order Exploration, LLC

35. 1 2 3 Area DHIIP NE SW anomalous 1 – productive, highflowrate 2 – productive, lower flow rate 3 – non-productive IP surveys identify areas of anomalous pyrite accumulated within the first 3000’ in the subsurface. The IP anomalies are almost always associated with commercial oil or gas production. The excess pyrite deposition is caused by the REDOX cell currents. Confidential 26 First Order Exploration, LLC

36. Area DHIIP Severo-Guljajevskaya oil and gas field (Barents Sea, Northern RF) Confidential 27 First Order Exploration, LLC

37. West Texas example of IP survey correlating perfectly to production. Surveyed in 1982 with 6 wells in field. The rest of the field was perfectly delineated. Confidential 28 First Order Exploration, LLC Area DHIIP

38. Area DHIIP 1983 Surveys by Zonge Engineering. Since 1998, Russian companies have been 90 % successful with similar technologies. Note that two measurements are made here – the IP measurement hachured and the “deep anomaly” in red and orange. Production Confidential 29 First Order Exploration, LLC

39. Area DHIEL (Radiometrics) 1971 Sun Oil Co. Radiometric Survey in South Florida Sunniland Trend. Pre-drill predictions were 73% correct. Size of blue circle is relative to cumulative production for each well. Note potential undrilled prospects although map published in 1971. Clearly, this area is profoundly underexplored. Therefore, there are more exploration models to use in the area. It also means that DHIs are perfectly suited for this kind of area. More than 100 MMBOE have been produced from the Sunniland Trend. USGS (1995) estimates an additional 370 MMBOE remains to be found in South Florida. Post-drill successful predictions Pre-drill successful predictions Prospect Prospect Prospect Prospect Corkscrew Prospect Confidential 30 First Order Exploration, LLC

40. HDT Technologies HDTs supposedly measure hydrocarbons directly at the reservoir level although that level is not known. HDT has been very successful in producing areas. Confidential 31 First Order Exploration, LLC

41. Area DHIHDT (Hydrocarbon Density Technology) Top of CVL Structure map From 3D seismic Surface HDT Survey BHL HDT Anomaly confirmed structure Chesapeake 1 Boswell gas well. Participation based entirely on HDT tool. Well started at 15 MMCFG/d. Chesapeake later provided 3D information that the HDT confirmed. The HDT perfectly predicted the success of this deep Cotton Valley Reef well in 2008. Confidential 32 First Order Exploration, LLC

42. HDT Example 2Deep Bossier of East Texas Basin Post-drill example of HDT signal over 2 different pressure environments of the same reservoir. Survey was taken shortly after production began. The data shows a prolific signal (red) where there is prolific production, a good signal where there is good production (orange) and a null signal where there is no production. Burlington 1 Smith 27 BCF 6 yrs Burlington 1 Savell 3.5 BCF in 4.7 yrs Confidential 33 First Order Exploration, LLC

43. Atmospheric Area DHI Tool – AEM The atmospheric tool measures some an EM manifestation of the oil and gas signal in the air above the field. It is postulated that the atmospheric effect is caused by live migrating hydrocarbons or perhaps CO2 that is given off by bacteria eating hydrocarbons . Alternatively, it may also be caused by the REDOX cell discharging and is another truly EM effect. Confidential 34 First Order Exploration, LLC

44. Area DHIAEM Wasson Field Waterflood, West Texas Colorado State Line Trend Camp Cooley #2. East Texas Confidential 35 First Order Exploration, LLC

45. Area DHIAEM Dew Field. East Texas Expanded Bossier, East Texas BasinTurbidites at 13,000’, Gas Outline of Expanded Bossier turbidite cut-and-fill mini-basinfilled with up to 120’ of sand.Note clear shape match (boot) of seismic and AEM in the south. Sands have 15-20% porosity, >5 md,and 10,000# BHSIP. Area of poor Bossierwells - <1 BCF – showno leakage to the surface. APC 4 Stephens cored entire sand at the edge of the turbidite APC 3 Blair tested50 MMCFGPD and made 1 BCF first month of production AEM data shot in 1995 as partof the Cotton Valley Reef Program.This was an area outside the areaof interest and therefore was notshot in detail with redundancy.In spite of that, the best wellsin the Bossier lie with the AEMand the poor Bossier wells arenot! Note poor Bossier wells withinAEM indicate other horizonsare prospective. Bubble map of Production (blue) and “Practical IP” from Drillinginfo.com. Note bubbles are not exactly proportional with the lower value bubbles being too large. Confidential 36 First Order Exploration, LLC

47. 14-16,000’ deepGood Production 2-5 BCF/well Great Production 10-30 BCF/well Confidential 37 First Order Exploration, LLC

48. Multiple Area DHI Example The Camp Cooley #2R well was drilled in 1998 by Broughton Operating Corp. This is a world class gas well that produces from a Cotton Valley reef at 14,800 feet. This well was used as a test bed for many of the technologies that were tested. It is clear that good reservoirs will have a clear signal at the surface of the earth directly above the reservoir. Confidential 38 First Order Exploration, LLC

49. Multiple Area DHIsEL, GMT, HDT, AEM HDT survey. Warm colors productive. Cool colors – depleted or nonproductive. Well had produced 30 BCF already when survey taken. Data shows depletion except for NW corner. New well there had higher pressures. BIO survey. Anomalous values in large circles. AEM. Well had already produced 11 BCF. Note depleted signal in center around BHL. Bright colors indicate seepage. Contours from 3D seismic CVL. Enzyme Leach Multivariate Analysis EL Survey. Mobile Cations and Anions above 45 BCF Cotton Valley Reef in East Texas Basin. Top of production at 14,800’. Reef is 400’ tall. Outline of reef from 3D in red. Multivariate analysis “clouded” the data into a “hydrocarbon” factor. Confidential 39 First Order Exploration, LLC

50. Vertical DHI Tools After the potentially productive area is identified with the Area DHIs, depth – the third dimension - needs to be quantified. There are far fewer vertical tools available compared to the area DHIs. These data define the prospect’s geology – depth, relative reservoir quality, thickness, trapping mechanism and, finally, an estimate of reserves can be approximated when combined with local production data. Confidential 40 First Order Exploration, LLC

51. Direct Hydrocarbon IndicatorsVertical Tools Vertical tools solve for the last dimension – Depth. Vertical signal not linked to horizontal signal - yet. Vertical DHIs all rely on the 80:1 ratio of the resistivity difference between the oil filled reservoir vs. the brine filled reservoir. This high S/N in the resistivity of the sediments affects EM signals distinctly. With proper correlation to wells with high quality reservoirs – productive and non-productive - predictive results are common. The time-tested EMT method for vertical HC identification is driven by natural energy sources. Confidential 41 First Order Exploration, LLC

52. Direct Hydrocarbon IndicatorsVertical Tools Resolves the object of the search – HCs in reservoirs. Accurate depth, relative porosity and fluid identification have been predicted from 800’ to 16,500’. DHI methods are much lower cost than seismic There are newer, less-developed technologies that have great potential that do use manmade energy sources. Potential seen in using common industry seismic equipment and setup with new seismic based fluids resolving technology. A near-perfect correlation of area and vertical tools is the desired results. The First OrderExploration Model combines the Area and Vertical DHIs with the traditional seismic and geological datasets. Confidential 42 First Order Exploration, LLC

53. Vertical DHI Statistics EMT– Ps 80% from technology database, First Order’s primary vertical DHI tool EA - new tool with great potential RP – new tool with great potential Confidential 43 First Order Exploration, LLC

54. Vertical DHI ExamplesEMT Deep Gas - CVL Reef - CHK 1 Boswell Deep Gas - Bossier – ENCANA 1 Dodd Shallow Oil - Woodbine – Diasu 1 Cadenhead Shallow Gas - Cook Mtn Shallow Oil - Tannehill Confidential 44 First Order Exploration, LLC

55. Vertical DHI Examples Confidential 45 First Order Exploration, LLC

56. Vertical DHIEMT – Boswell #1 Relative Porosity Top of Reef EMT log on right side indicates porosity and hydrocarbons. Green fill is low porosity. Mudlog on left. Note correlation of low porosity to slow drilling zones. Top of reef was control drilled due to pressure control problems. Initial production was 15 MMCFG/d. EMT data collected before reef was drilled. HC Base of Reef Mix Wet Fluids Confidential 46 First Order Exploration, LLC

57. Vertical DHIEMT Relative Porosity Encana 1 Dodds. Deep Bossier well in Amoruso Field. Initially produced more than 20 MMCFG/d. Well log obtained after EMT work completed. HC Fluids Confidential 47 First Order Exploration, LLC

58. Vertical DHIEMT Confidential 48 First Order Exploration, LLC

59. Vertical DHIEMT Confidential 49 First Order Exploration, LLC

60. Vertical DHIEMT Confidential 50 First Order Exploration, LLC

61. Vertical DHIEMT – Dry Hole Confidential 51 First Order Exploration, LLC

62. Vertical DHIEMT – Suspended Hole with Shows EMT Profile Mudlog Gas Penn shale Remarkable correlation of EMT shows to shows in wildcat well. Shale Gas, Tight but fractured lime, Barnett Shale, Mississippian Dolomite porous zone 4 Shows predicted – 4 shows indicated on drilling Marble Falls LS Barnett Shale Miss Dol Confidential 52 First Order Exploration, LLC

63. Vertical DHIRP CHK 1 Boswell – CV Reef Relative Resistivity Profile Gas charged CV Reef Bossier Gas Sand Well log Confidential 53 First Order Exploration, LLC

64. First Order Exploration Model Prospect Examples KDS Prospect CHK 1 Boswell IA Technology (Russia) Confidential 54 First Order Exploration, LLC

65. FOEM Prospect Example KDS Prospect - EMT + EAT + Seismic EAT Confidential 55 First Order Exploration, LLC

66. FOEM Prospect ExampleKDS Prospect – EMT + HDT + Seismic HDT in color fills. Pink is productive Structure contours built from EMT data. -7260 is G/W contact. Blue diamonds are wet reservoir. Red Diamonds are productive. Pink is tight reservoir.. Confidential 56 First Order Exploration, LLC

67. FOEM Prospect ExampleEMT + HDT + RP + 3D Seismic HDT Anomaly Confidential 57 First Order Exploration, LLC

68. Integration TechnologyIP + EM + Seismic The calculation of integrated seismic and EM attribute (IA) by interval velocity and resistance values. The attribute reacts to change of rock fluid saturation IA-integrated attribute V-interval velocity (seismic output data) R- resistance (EM output data) L-logging data V,m/s Water saturated layer IA<1 R,Ohm•m IA IA>1 Oil-saturated layer Integrated Attribute IA= F(V, R, L) Confidential 58 First Order Exploration, LLC

69. Conclusions Fundamental observations indicate that both area and vertical DHIs are REAL and can mitigate exploration risk from every aspect of the process – land to drilling. First Order has investigated and used many of the available direct detection tools on the market First Order probably has perhaps the best understanding of how these tools work and where the may not work. First Order can design an economically phased program to evaluate large acreage blocks down to site specific prospects using the tools that are appropriate for the project Confidential 59 First Order Exploration, LLC