Lone Star and PetroQuest

NORTHERN DJ BASIN
PRODUCING NIOBRARA WELLS AND LEASEHOLD
Laramie County, Wyoming

This Northern DJ Basin acquisition opportunity
includes 5 producing horizontal wells and a
leasehold position to expand the production base in an
active permitting and drilling area of the Niobrara Oil Play

• Current Operations
  • 4 operated wells plus one well operated by SM Energy
  • Projected May 2012 production / cash flow
    • 13.2 MBO gross production
    • 7.9 MBO net production
    • $673M net monthly cash flow
  • Proved developed producing reserves
    • PV10 of $21MM
    • 550 MBO and 325 MMcf net remaining reserves
  • Proved undeveloped reserves
    • PV10 of $26MM
    • 841 MBO and 291 MMcf net remaining reserves
• Leasehold Information
  • ~10,323 gross acres / ~10,183 net acres
    • 3,200 net HBP acres
    • State and fee leases covering all depths
    • 100% working interest / 80% net revenue interest
    • Area being developed on 640-acre spacing units
    • Seller controls operatorship in majority of potential spacing units
• Upside Potential
  • Low risk development and down spacing potential with the Niobrara expected to be drilled on 160-acre spacing
  • Additional horizontal potential in the Codell Formation
  • Deeper Greenhorn and Penn Perm prospective targets

NOTE: A Confidentiality Agreement (“CA”) must be executed prior
to receiving the data package. Meagher will furnish to you
a CA for execution prior to any data room visit.