TEXAS ENERGY EXPLORATION, LLC - Brookshire Salt Dome Field, Waller County

Acquisition

Texas Energy Exploration, LLC is a privately owned company that holds oil and gas leases in some of the most desirable locations on the Brookshire Dome, Waller County, Texas.

The leases are in between and directly off setting producing oil and gas wells and known proven reserves. Several successful wells have been drilled on the Texas leases. The drilling success rate in the Brookshire Field over the last several years has shown that 8 out of 10 wells drilled have found reserves of oil and gas above 3,000 ft. The Texas Railroad Commission has set the daily allowable rate of production per well at 300 barrels of oil per day.

Reserves of the Brookshire Dome Miocene gas sand have produced up to 1 BCF of gas at 1,700 ft.(Mosbacher Well). At the current market price of $4.50/mcf for gas, the value of each well would be $4.5 mm.

Location

The Brookshire Dome Field is located in Austin and Waller Counties, Texas, 35 miles west of Houston on and surrounding the I-10 Freeway.

The Brookshire salt Dome is one of the largest salt domes located within the gulf coast region of Texas. The cap rock of the Brookshire Salt Dome is 3.5 miles by 4 miles and covers approximately 5,000 acres.

The acreage controlled by Texas Energy Exploration, LLC and the current production locations are south of IH-10 in the southeast and northeast quadrants which are the most productive area’s of the Dome. The terrain is flat to very gently rolling except where bisected by the Brazos River, and Bessie’s Creek. The lands are devoted principally to light agriculture and horse farms.

Geology

The Brookshire Dome is located within the Gulf Coast geological province, which extends 700 miles from the Rio Grande to Florida. Approximately 450 miles of the trend is within Texas. This is one of the most prolific oil and gas producing provinces in the world.

The Gulf Coast is a homocline with regional dip into the Gulf of Mexico. A thick sequence of Cenozoic sediments exceeding, in places, 20,000 feet were deposited across a flat coastal plain. Alternating transgressive and down warping resulted in a series of structurally and stratigraphically important seaward-marching continental/marine "hingeline" trends.

The provenance of Gulf Coast oils are the thick marine shale sections, just seaward of these "hingelines", the cleaner reservoir rocks are in close proximity to these generative shale’s. The result is a series of productive "fairways". These are designated by stratigraphic nomenclature, i.e. the Wilcox, Wilcox-Yegua, Jackson-Yegua, Frio-Vicksburg, Marginulina-Frio and Miocene trends, to name a few.

Accumulation along these trends is controlled by both structure and stratigraphy. Sedimentary downloading and consequent deformation has resulted in a series of normal (down-to-the-coast) fault systems. These growth faults are associated spatially with prominent anticlinal structures in the down-thrown blocks that have formed some of the most prolific Gulf Coast fields. Within these fields, secondary faulting and diverse depositional processes have combined to produce a variety of complicated structural and stratigraphic traps.

Of at least equal importance as hydrocarbon habitat are the various salt domes for which the Gulf Coast is noted. It was, in fact the discovery at Spindletop Salt Dome, in 1901 that opened the modern age of petroleum exploration and production.

Salt domes are pillars of salt which have risen from depth in response to sedimentary deposition and difference in the specific gravities of the salt and overlying (surrounding) sediments. This salt flowage varies extensively from dome to dome; some domes have surface expression, others are deep-seated. Domal shape may vary from straight-sided to mushroom topped with salt "overhangs" which mask the sequence of underlying sands.

In general, salt domes are classified as either "shallow" or "deep" piercement (shallow being those that extend within 2500' of the surface). Salt Domes are associated with prolific oil and gas fields.

Hydrocarbon accumulation around salt domes may be either structural, stratigraphic, or both. The mechanics of salt dome intrusion coupled with cyclic rates of structural growth and sedimentation produce atypical traps. The fault pattern at piercement domes is frequently radial (i.e. faults radiating from the dome outward); peripheral faults, those that extend transverse to flank dip are also common. Because of this, numerous fault-segregated reservoirs with discrete productive reservoirs and water levels may be found unless reservoirs have been cut-off from down-dip oil/water contacts (by faulting or porosity barriers) the reservoir producing mechanism is most frequently water drive with correspondingly large per acre/foot.

Salt movement may also create reservoirs entirely extrinsic to the flanks and crests of salt domes. As the salt stocks rise and penetrate the surrounding sediments, salt is withdrawn from contiguous areas resulting in depressions termed "rim synclines." It two or more salt domes are in relative proximity to each other, counterporaneous salt withdrawal may result in an interdomal positive structure. An example of this would be the Katy Field that is near Brookshire and is created in part by salt withdrawal from that domal area.

Brookshire Dome is a shallow piercement salt dome with caprock as shallow as 3150' (±). It is a large dome approximately 4 miles by 3.5 miles in dimension covering approximately 5,000 acres.

Exploration History

Brookshire Dome was identified in 1927 by Gulf Oil Corporation’s seismic reconnaissance. Hydrocarbon production was discovered in 1934 by the Seaport Oil Company #1 Vaughan well in a Frio supercap sand at a depth of 1978'. Reported production was 150 BOPH (flowing). Some geologists consider this area of the dome to be the apex of the Brookshire Salt Dome.

Sporadic drilling occurred throughout the 1940's and 1950's with little success. Oil was discovered on the flank by the Magnolia Petroleum Company #1 Vitek well that drilled through a 3400' salt overhang and completed in an Eocene sand at 5,800 ft.

Additional flank production was established in 1954 by the Humble Oil and Refining #1 Sam Jones well in a 6800' Cockfield sand under the well salt overhand.

In 1952 Humble Oil and Refining completed the #1 P.H. Donigan in a 4560' Cockfield sand for an initial potential of 180 BOPD, 375# FTP. Recorded production from this well totals 15,509 BO.

In 1968 Texaco completed the #1 Donigan Estate in a middle Wilcox sand (10,808' to 852' TVD) for a potential of 38,000 MCFD (AOF). This well recovered a total of 121,892 million standard cubic feet of natural gas. Gas prices in 1968 were .32 cents/mcf. Today gas prices in this field have ranged from $4.00/mcf to over $12.00/mcf over the last several years.

From the 1950’s until 1973 there was very few wells were on the Brookshire Salt Dome. In 1973 Aubrey Rabensburg, who was the chief geologist for John Mecom, Sr. from 1943 until Mr. Mecom retired in 1968. Mr. Rabensburg had discovered over 150 million barrels of oil and gas equivalent, throughout Texas, while working for Mr. Mecom. Mr. Rabensburg wanted to test the Miocene sands at 1,600 t0 1,700 for gas. Most companies thought the zone contained water, due to conventional logging techniques. Mosbacher Production Co. re-entered an old Kirby Exploration “dry hole” and via a triple combo log perf's in the Miocene sand proved up dry gas reserves. This well produced over 950,000 mcf gas. Mr. Rabensburg and Mr. Hoyt formed a partnership in the mid-1980’s. Subsequent drilling by the Rabensburg group and the Rex Harrison Hoyt group proved that the Miocene sands were Brookshire Salt Dome draped across the entire top of the Brookshire Salt Dome. Almost every well drilled on top of the cap rock of the Brookshire Salt Dome has encountered these Miocene sands, commercial oil and gas production from depths between 1,100 to 1,700 feet have been found. The Catahoula Sands near 2400 feet and the Frio

Sands near 2,800 feet have been found productive on the top of the dome. Wells in these sands produce greater than 500,000 MCF of gas. Other gas sands on top of the cap rock that have produced commercially with total reserves from 500,000 to 900,000+ mcf of gas are the Catahoula Sands at 2,400 ft., and the Frio Sands at 2,800 ft.

Oil Sands in the Catahoula formation wells averaged 37,000 barrels of oil of production in their first two years. Wells produce a maximum of 153,000 barrels of oil. With oil at $70.00 barrel this is significant both in terms of a quicker pay out and total potential return.

A recent "drilling-boom" has established very prolific oil production on the shallow crest of the dome the past few years. This has resulted in the drilling and completion of at least 100 oil wells at a depth generally less than 2700', that have produced over 10 million barrels of oil to date, and they are all producing. Completions are from the shallow Miocene and Catahoula sands.

Since companies in the oil industry thought that these fresh water sands were just water bearing, they were drilled through and largely unrecognized in earlier years. Although several gas wells were completed in the 1980's within the confines of the recently discovered producing areas the oil was missed. The quality of potential production was not apparent until recently. Significant development of the shallow oil and gas delayed until the year 2000.

The oil and gas leases owned by Texas Energy Exploration, LLC have proven oil & gas reserves above 3,100 feet. Furthermore, these leases also cover sands in the Yegua, Cockfield and Wilcox, which may hold considerable potential. Therefore, the potential reservoirs, underneath the proven reserves above 3,100 ft., may prove to be the most valuable. The leases of Texas Energy Exploration, LLC may cover production from 1,100’-10,300’ that could produce income for the next 20-50 years.

The Katy Gas Field has been producing out of the Wilcox Sands since 1943. These Wilcox sands were logged in the Texaco #1 Donigan well drilled in 1968. Texas Energy Exploration, LLC holds title to the Donigan Properties that were a part of the Wilcox sand discovery in 1968 that produced over 3 mmcf/day in 1968. It is Texas Energy Exploration, LLC’s intention to drill the shallower sands first, holding in reserve the Wilcox sands for the future.