Lindrith Mancos Oil and Dakota Project

Our Lindrith project, adjacent to by 50 MMBO, 300 BCFG, has 3 strong Mancos oil zones, two traditional Dakota oil and gas zones (which are similar to the ratty Frontier/Sussex in the PRB). Estimates (Mancos only) are for 450 MBOE per well with fully developed ROI of 39.6%, NPV14 $335 MM. Majority of the acreage resides in a vertically developed area south of Gavilan Mancos, west of Puerto Chiquito (West) Mancos, east of Lindrith Gallup Dakota Pools, north of Rio Puerco Mancos Pool. SJR operates several wells in Lindrith and offers the project to investors to join at favorable arrangement to earn and develop additional acreage. SJR plans to drill and recomplete for Mancos and Dakota oil and gas. (Shallower Pictured Cliffs gas is also prevalent.) We will be doing several things:

A) Commence lower cost re-entry of existing well (Regina) to the Mancos which has had favorable swab tests;

B) Drill on SJR North Block and add Farmin acreage to the Dakota—test 2 Dakota zones, 3 Mancos zones

C) Pending data put on production or consider HZ options in Dakota or Mancos.

D) Drill South Block Mancos well and investors have opportunity to earn South Block acreage.

Leases:

We own 10000 acres in leases, and we have 2012-14 Fee paid up 5-year leases + 5 yr extension; Federal 10-year leases. Most leases expire 2022-24. Delivered NRI -79%. Investors to earn all zones completed. Potential to grow to 40000 acres.

Deal Terms:

SJR to form Partnership with investors contributing a third for a quarter for drilling and completion of new wells. Investor will earn proportionate share in North Block for each well in which they participate. Investor to have opportunity to earn additional acreage after participating in the South Block. Investors will contribute their proportionate share of $500 per net acre in each of the blocks.