COLDWELL BANKER COMMERICAL GEORGE REALTY

$8,800,000.00

FIRST OIL & GAS FIELD

COALINGA WESTSIDE FIELD

1. FIELD LOCATION:

Coalinga Westside Field, a part of the Coalinga Field, is located approximately 1 mile west

of the city of Coalinga, California. The city of Coalinga had a population of approximately

7,000, which is an oilfield town with schools and stores as well as abundance supply of

oilfield equipment, tools and technical & operational personnel. Coalinga Field is located

in the north, west and south of the city, and is the 3rd

largest oilfield in California.

2. LEASE STATUS AND SIZE OF THE FIELD:

The size of the Coalinga Westside Field for the First Oil & Gas Inc. is approximately

1,327.25 Acres, which consisted of 3 leases and 1 fee properties (Figure 1).

The official location, size, and royalties are summarized as follows:

LOCATION ACREAGE ROYALTY STATUS

Section 1 T21S R14E except NE ¼ 1,042.00 18.29% Lease

T21S R14E W ½ NW ¼ NE ¼

Section 35 T20S R14E except

SW ¼ SE ¼

Section2 T21S R14E NE ¼ 105.25 16.50% Lease

Section1 T21S R14E NE ¼ 140.00 18.29% Lease

Except W ½ NW ¼ NE ¼

Section 35 T20S R14E SW ¼ SE ¼ 40.00 4.00% Fee

Total: 1,327.25 Acres

3. NUMBER OF WELLS:

NUMBER

Oil Wells 37

Gas Wells 1

Fresh Water Wells (for cattle) 2

Total 40

4. OIL PRODUCTION:

OIL API GRAVITY GAS

Section 1 1-20 B/D 13.5-15.0

Section 2 1-4 17.0

Section 35 0-2 17.0 200 MCFD

(potential)

5. CURRENT PRODUCTION & INCOME:

(1) Section 1:

In Section 1, the oil production has been made from following three (3) wells, after the well

work in January, 2008:

Well #1-1

Well #1-3

Well #1-4

These wells are shown in the oil contour map with oil thickness of 40-50 feet (Figure 2).

Following shipments were made since January, 2008:

Date of Oil Shipment Amount of Oil Sale Price Gross Income

April 20, 2008 331.21 barrels $98.647 $32,663.99

June 29, 2008 157.39 barrels $118.965 $18,723.90

July 26, 2008 103.64 barrels $118.67 $12,299.17

Oct 20, 2008 147.55 barrels $61.7289 $9,107.97

Nov 24 2008 171.80 barrels $43.6289 $7,495.29

April 7, 2009 328.42 barrels $41.9540 $13,778.53

Sep 19, 2009 166.71 barrels $54.5570 $9,095.20

Oct 20, 2009 154.99 barrels $59.1200 $9,163.63

Total 1396.74 barrels $74.6589 $112,327.68

From these shipments, it shows that the oil production has been very stable since the well

work in January, 2008. The annual oil production would be 1,240 barrels from April 2008

to April 2009, which is about 3.4 Barrels per day. At the crude forecast price of $88 per

barrel for next year, its annual gross income would be approximately $109,120.

(2) Section 2:

The Section 2 oil is produced from the flowing wells, and its API gravity is 17o , which had

a better price than Section 1. With $88 per barrel price for Section 1, the Section 2 price

would be approximately $90 per barrel.

The Section 2 production was 171.8 barrels from above table.

(3) Section 35:

The Section 35 is currently shutdown without production, because it requires two

production tanks. With these tanks, the production would be approximately 176 barrels at

a gross income of $15,488 based upon previous production mode.

6. PRODUCTION FORECAST – NEAR TERM:

There are 3-5 wells, which could be worked-over with an estimated production of 4.5

barrels per day, or $144,540 additional gross income..

With this additional production, the total forecast oil production at $88/barrel price would

be:

Existing production 3.4 barrels/day $109,120

Section 35 (with facilities work): 176 barrels/yr $15,488

Work-over 3-5 wells 4.5 barrels/day $144,540

Total: $269,148

7. OPERATING COST:

Following are operating costs:

Field Operator (Part time, handling oilfield maintenance and oil shipment) $10,800

Electricity $3,600

Maintenance $5,000

Tax and Insurance $3,000

Total Operating Cost $22,400

8. OIL RESERVE:

Based upon the Argonaut Oil and Gas Consultant’s reports (Attachments 1, 2 and 3), the

proven and semi-proven reserves for Section 1 Temblor formation was 2,829,730 bbls as of

May 13, 1997. Since then there were 2,823 bbls oil produced, the current estimate of the

proven and semi-proven reserves for Section 1 would be:

2,829,730 bbls

- 2,823 bbls

2,826,907 bbls (as of September 19, 2009)

With primary recovery method (flowing and rod pumps), it could recover approximately

15% of oil, or approximately 424,036 barrels.

Additionally, if we could apply the secondary recovery method (steam), it could recover

40-65% of oil, or 1,130,763 – 1,837,490 barrels of recoverable crude.

In the west of the field, from Section 1, 2 and 35 Eocene formation, it contains

approximately 175,000 – 263,000 barrels of recoverable crude.

There are wildcat possibilities in the relatively large unexplored areas of Section 1 and 35.

9. DEVELOPMENT PROGRAM:

For Temblor Formation: The well depth is 1500 - 1700 feet. At the current drilling cost, it

may take $300,000 to drill one well. The estimated initial production would be 15 bbl/day

based upon the initial production record of Wells #1-3 and #1-4 (Attachment 4 and 5). At a

normal decline rate of approximately 10% per year, the first year production would be

14.25 bbls/day, or 5,201 bbl/year. At the forecast oil price of $88/bbl, its gross annual

income would be approximately $457,688. The payout period of the new well would be

approximately 8 months.

We estimate that it could drill 8 wells in Temblor formation at Section 1 to recover the

424,036 bbls of the crude oil.

For Eocene Formation: The well depth is approximately 350 feet. It may require $120,000

to drill one well. It initial production was estimated according to Well 1-5 (Attachment 6),

which was 2 bbl/day. However the oil thickness was 22 feet for Well 1-5 (Figure 3). If we

drill the well into the oil sand at 30 feet thickness, its initial production could be

approximately 3 bbl/day. Assuming the new well produces 2.5 bbl/day, its annual

production would be 912.5 bbl or $80,300. Its payout period would be approximately 1.5

year.

We estimate that it could drill 7-8 wells in the Eocene Formation to recover the

approximate 200,000 bbls of crude oil.

10. SALE PRICE:

The sale price of the Westside Oilfield would be $8.8 MM dollars, based upon the

following factors:

Oil production income from Sections 1, 2 and 35

Oil reserves in Temblor Zone (Section 1)

Oil reserves in Eocene Zone (Section 1, 2 and 35)

Tertiary production (steam push pull & steam flood) potential

Gas well for income and energy source.

Wildcat potential

40 acres fee-property had water wells for cattle or horses.

40 acres fee-property at the hill side with fantastic view over-sees the Coalinga

areas – could be developed for residential areas

STREET VIEW

AERIAL MAP

MAP OF OIL FIELD

THOMAS GUIDE

PLOT MAP

Addendum

Exclusive Listing Agent

Steve Hayashi Leo Pan

(626)462-5608(Direct) (909) 996-6388 (Cell) License #: 00814022 License #: 01863096

shayashi@coldwellbanker.com leo.pan@coldwellbanker.com

Coldwell Banker Commercial George

660 W. Huntington Dr.,

Arcadia, ca 91007

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