AUDAX EXPLORATION, INC P.O. BOX 1825

LINDALE, TX 75771

903-882-8813 BUSINESS/FAX

GEOLOGIC SUMMARY SULFUR RIVER PROSPECT, HUNT COUNTY,TX

The IMC #1 Wassom was drilled in 1982, and reached an initial total depth of 7870’ in Lower Paleozoic Joins Formation. The well was re-entered by H.L. Brown of Midland in 1996 and deepened to 10402’; the formation at total depth was middle Arbuckle Group, specifically the Kindblade Formation. Gas and water were tested from the “Brown Zone” of the Kindblade Formation, but were uneconomical. Nonetheless, the original test and subsequent deepening established reservoir rock in the Arbuckle dolomite. Additionally, several older wells contain thick, porous and permeable Simpson-Tulip Creek sands, ranging from 170’ to 270’ of clean, frosted, porous and permeable sands.

Samples from the IMC #1 Wassom were examined by North Texas Sample Service, revealing the well had drilled from Mesozoic Cotton Valley sands directly into Lower Paleozoic Simpson clastics and limestones. Subsequent examination of the Arbuckle samples by Jack Latham of Kiowa Lake indicated shelfal dolomites and limestones in the Arbuckle Kindblade Formation as well. Moreover, these clastics and limestones are considered shelf (edge) “Arbuckle” in nature.

The anomaly presented is a Lower Paleozoic, shelfal area. Subsurface well control indicates no thrusting at all to the south and east of the #1 Wassom. The Amoco #1 Stewart, NW Hopkins County, establishes more than 10,000’ of vertical separation between the ancestral Lower Paleozoic shelf edge occupied by the #1 Wassom et al wells and the successor Basin of East Texas. The latter shelf edge/detachment zone is easily defined by Bouguer gravity and substantiated by seismic and the limit of the Louann salt.

The subsequent withdrawal and rotation of the Amazonian plate southward during Middle Pennsylvanian left a breach between the successor East Texas Basin and the Ouachita thrust sheet. Uplift/short range thrusting of the shelf edge blocks were the last minor episode of the thrusting, as the impinging plate lost impetus.

Sample information provided by North Texas Sample Service from nearby wells indicates differing Formations surrounding the Prospect Block. These are variously, Stanley shales; Jackfork shales and quartzites; Big Fork cherts and limestones; Womble shales; Novaculites, and so forth. As the samples and Bouguer gravity show, these various Ouachita Formations occur horizontally in clusters, separated from one another by interior thrust and wrench faults. As is the case with Wilburton Field in Latimer County, OK, the Block is from 4000’ to 10,000’ structurally higher in all four directions to the blocks surrounding it.

Sample and subsurface well data indicate at least 1000’ of structural advantage may be gained to the IMC #1 Wassom, both in the 200’ Tulip Creek sands as well as the Arbuckle Kindblade Formation. The areal extent of the Prospect is in excess of 10,000 acres, permitting reserves on the order of .5 to 1 TCF to be emplaced. The Arbuckle Kindblade Formation can be tested at a depth of 10,000’. The area is quiet, and unleased.

Subsequent to all my work and mapping, Reeves Exploration of Burleson, TX, processed voluminous data from his analyses of hydrocarbon seeps in the area. The interpretation supplied herein corroborates to a high degree the geologic interpretation, and indicates the entire 20,000 acres within the thrust block to have hydrocarbons beneath.

In summary, the Prospect is regionally anomalous by multiple thousands of feet, being upthrown in all four directions. The reservoirs are exceptional, and there are shows downdip. Though the geology is complex and somewhat indecipherable, the risk to return is equally exceptional. Basically, this is a company maker as of old.