McSimms Mancos Gas Project

Our McSimms project is in the highly prolific San Juan Basin Mancos formation—with 3 high pressured
Niobrara gas zones. The Mancos, a low risk gas development project, has been shown to be one of the
most predictable, continuous, repeatable shale plays in the U.S. with similar productive characteristics
across the specific gas window. A 2-mile lateral is conservatively estimated at 13 BCF EUR strongly
supported by lease line offset 1-mi lateral--Black Hills 724 #1H, 6 BCF EUR. The Mancos here is the same
geological setting as recent WPX & BP big producers. Our project is nearly shovel on
completing the unit and Forest Service approvals for pads and drilling is April 2019.
We are looking for financial partners to get McSimms initially drilled and completed. 85% of drilling
and completion costs are intangible drilling costs, which in many cases can provide tax breaks by
allowing deduction of most of these drilling costs. We are offering partner in for a 1/3 for a 1⁄4 (we get a
25% carry on the first two wells). Current low prices mean low entry costs, and when prices recover, the
McSimms economics are outstanding. In full development mode financial partner’s ROI is 55%, NPV10
$46 MM.