SAN MIGUEL CREEK FIELD — McMULLEN COUNTY, TEXAS

The San Miguel Creek Field is located in northern McMullen County, Texas, approximately 55 miles south of San Antonio. The area is located on the San Marcos Platform, back reef of the Cretaceous Stuart and Sligo reefs. Early explolation on the San Miguel Creek Dome salt feature established Wilcox production from fault closures located above this salt domr and Lower Cretaceous Edward gas proiduction in the 1960's and 1970's. Away from the dome area the trap style for the Wilcox is defined by up-to-the coast normal faults that are discountinuous and random in natuire. Thesed faults can sometimes be seen on 2-D seismic data, but accurate mapping of fault placement is only possible with 3-D.

The San Miguel Cfreek Field area is located on the Cretaceous shelf margin. San Miguel Creek Dome is the prominent structural feature in the area. The Eagle Ford, Olmos and Cretaceous Edward formations were also first drilled in the 1950's and 1960's and have upside potential identified by the 3-D seismic and recent industry drilling success in this area.

NCEY Holdings, LLC, acquired a license to approximately 40 square miles of 3D seismic data in 2006 in McMullen & Atascotsa Counties, Texas. With this data, NCEY identified and successfully drilled numerous Wilcox Fault closures in a multi-well drilling program that commenced in 2006. Expanding on its prior drilling successes, NCEY recognized the exploratory and development potential of numerous shallow wilcox anomalies and acquired leases on approximately 5,000 additional acres in this area. NCEY drilled and completed a total of 19 new wells in this area.

The Wilcox sand is the primary objective of this drilling program with numerous known separate Wilcox sands that are productive from between 4,900 and 6,100 feet. Productgion is generally associated with tensional relief faulting and some stratigraphic traps.

Thye Wilcox sands are clean and homogeneous in sections but also incorporate shale sequences across the interval. Water saturations range between 32% and 52%. The average porosities in productive sands range from 22% to 27% with generally high associated permeability.

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