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Fortaleza Energy Inc. August 2014 Rational for the Acquisition of Stimsol Business from Arcan Resources Ltd and the Creation of BlendForce Energy Services Inc. Vision – Rapidly Changing Industry. - PowerPoint PPT Presentation

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August 2014Rational for the Acquisition of Stimsol Business from Arcan Resources Ltd and the Creation of BlendForce Energy Services Inc.Fortaleza Energy IncVision Rapidly Changing IndustryImproving Commodity Prices however there remains significant risks with continued success of resource play development in North AmericaResource Play Development large land position deep drilling inventory profits driven with field execution- cost reductions.Resource Plays returns are very sensitive to costs and commodity pricesSignificant shift down market in Companies being financed however investors remain selective

Vision - Investment OpportunityStimsol Acquisition from Arcan ResourcesOperating BusinessImmediate Cash FlowLow maintenance capital No outside equity requirementGrowth opportunitiesVery quick payback less than two yearsPotential to pay dividends in the futureDiversified lines of business Exploration variety of resource playsProduction existing producing wellsComplete management team in place and operating the business

History of StimsolStimsol created in 1983 Operating in Red Earth Creek Stimsol Acquired by Arcan in September 2011 for $24.5mm.Business consisted of: Proprietary Acid Blend with $134/m3 royalty5 C&A Pumpers, 7 Pressure Tank TrucksProduction Services Business employing 85 people with operational bases located in Grande Prairie, Blackfalds and Red Earth Creek. Corporate Office and Lab based in Calgary.In 2012 , acquired Firm Acid Supply from Canexus and Univar for 80,000 m3 per In 2011, commenced construction of Acid Blend Facility in Swan Hills for $7.3mm - commission in November 2012.2013 disposed of $8.0mm of equipment.Terminated take or pay acid supply contracts with Univar and Canexus

The Acquisition Stimulation Fluid Blending FacilityArcan has agreed to sell to Fortaleza the assets and business of StimSol for $2.5mm.Assets:The Swan Hills Blending Facility site operated by StimSol located within the town of Swan Hills, Alberta consisting of 48,400 sq. meter site governed by municipal and provincial surface lease.Disposal Well located within facility site LSD 2-14-66-10 W5M and bottom hole located at LSD 8-14-66-10 W5M and all equipment associated with asset and special assignment of disposal zone rightsWarehouse & Office Building (50ft X 120ft), including office furniture, pump room and load cell station and QC lab and associated equipment.10 750 bbl fiberglass acid tanks within containment4 400 bbl steel storage tanks within containment4 100 bbl steel storage tanks within containmentAll equipment associated with handling, blending and shipping of all products produced out of the Swan Hills Facility.Office, Lab and computer equipment located at 7874 10th Street N.E. Calgary, Alberta and the assignment of the commercial lease agreement.

Blendforce Swan HillsService Area 250 KMVision Maximizing Value of Service AreaCarbonate PlayLight Oil Resource Play being exploited with Horizontal multi stage acid fracs.840 sections of oil charged platform reef. Estimated Unconventional OOIP of 2.5 billion bbls with per section OOIP of 1.6 -6.2mmbbls Sleeping Giant

Wells Drilled Since 2006

Play Types Undrilled LSDsSwan Hills Carbonate Play

35% Acid Acid in the Field Acid Frac 1,000 cubic meters - 33 Truck LoadsDiluted to 28% and chemical added:Friction reducersCorrosion inhibitorsSolids ControlsDemulsifierSpearhead 200m3 per job any horizontal stage fracs. Diluted to 15% and chemicals addedCorrosion inhibitorsSolids ControlsStimulation Fluid Well Cleanouts Scale Removal -15 m3 per jobDiluted to 15% and chemicals addedEvery producing well with associated water requires Acid treatmentSpecialty Chemical BlendsFlow Back Fluid DisposalDisposal Well

Revenue Streams and Field Margins

Identified Work

Expansion OpportunitiesTransportation From Terminal to SHAW Blending Facility - $50/m3From Shaw Blending Facility to Field $50-75/m3New LocationBlending Facility is new locationSE Saskatchewan - Bakken Fort Nelson -NE BC MontneySupply Logistic Management for Frac FluidsFluid & Logistics Management Water and Petroleum Based FracsFlow Back Water Disposal$750,000 InvestmentCapacity to dispose of 300 m3 of fluid per dayNew completion flowback 1500 - 2500 m3 per well.

Purchase PriceStimsolPurchase PriceTotalArcanCanexisProposedRevisionProposedRevisionProposedRevisionOn Closing$1,000,000$2,000,000$200,000$800,000$2,000,000After Completion of Three Wells$500,000$100,000$400,000After Completion of Six Wells$500,000$500,000$100,000$500,000$400,000After Completion of Nine Wells$500,000$100,000$400,000$2,500,000$500,000$2,000,000

Working CapitalWorking Capital MonthlyTimingWorking CapitalG&A$80,000Jul-Sept$240,000Overhead $50,000Jul-Sept$150,000One Arcan Well Supply CostSep-Oct0.0Coral Hill 1 WellsJul-Sept$400,500Light Stream 1 WellsJul-Sept$18,000Unconventional Gas 7 WellsJul-Sept$253,400

Total$1,061,900

Capital ProjectsCapital ProjectsMax MinSafety Shower Facility $250,000$250,000Equiping Disposal Well$750,000Volatile Tank Completion$40,000$40,000Total$1,040,000$290,000

Required FundsTotal Capital RequirementsMaxMinWorking Capital$1,061,900$1,061,900Capital Projects$1,040,000$290,000Purchase Price$2,500,000$2,500,000Total$4,601,900$3,851,900

Work -Cash FlowLand HoldingsWell Locations20142015SectionsQ1Q2-Q4Q1Q2-Q4Arcan1172854548Light Stream & Coral Hill240>3000658Light Stream & Coral Hill922205222Crescent Point280Pengrowth260Pennwest203

28% Acid Fracs Supply20013111815% Spearhead 10128Load and Go28894292Water Disposal1118120 Licenced Carbonate HZ Wells in the service areaRevenue28% Acid Frac Supply$3,780,000$3,150,000$5,040,000Blending and Chemical Supply$1,530,000$1,224,000$2,448,000Custom Blending$162,000$162,000$162,00015% Spearhead $660,000$792,000$528,000Load and Go $413,850$195,300$427,800Water Disposal0.0$396,000$648,000Total Revenue$6,545,850$5,919,300$9,253,800Gross Margin $2,575,960$2,503,980$3,847,28039%42%42%Overhead $350,000$150,000$450,000General and Admin $700,000$300,000$900,000$1,050,000$450,000$1,350,000Net Cash Flow$1,525,960$2,053,980$2,497,280Cummulative Cash Flow$1,525,960$3,579,940$6,077,220

Field Margins$/m3Scenario 1Scenario 2Scenario 3Scenario 4Scenario 5Scenario 6Acid Frac SupplyArcan Supplies AcidCustom BlendingLoad and GoFrac 15% HCLSpearheadWater DisposalBlendForcePumperSavingsStimsolStimsolBlendForceBlendForcePumperSavingsField Price$700$850$340$90$310$330$450$120$18

Raw 38% Acid @ Bruderheim$175$175$79$118Trucking Swan Hills$550.0$55Cost of Added Chemicals $140$140$145$48Blending Costs$20$20$20$15Trucking to Location$55$110$550.0Total Cost of Supply$445$425$220$20$134$181$3

Net Margin$255$425$120$70$176$149$15

Volume for Diluted Acid per Job m3900900900900152002002000Number of Trucks Loads333333331760Days of Blending and Shipping18711

Revenue per Job$630,000$765,000$135,000$306,000$81,000$4,650$66,000$90,000$24,000$36,000Gross Margin Per Job$229,500$382,500$108,000$63,000$2,64029,800$30,00036%50%35%78%57%45%83%

Cost Savings Per Job$296,700$24,000COGS$400,500$18,000$36,200Conversion Factor1.1823972,000Trucking65chemical14518000

Sources of FundsSources of FundsMaxMinFortaleza Cash Balances$3,200,000$3,200,000Fortaleza Bio Tech Shares$1,000,000$500,000Working Capital Line$500,000Defered Purchase Payment$500,000$500,000Equity Placement$1,000,000$1,500,000Total Proceeds$6,200,000$5,700,000

Asset ValueFortaleza Asset ValueAssetsUnit ValueAmount 000Asset Value $000Per ShareLiquidation Value $000Per ShareNotesWorking Capital (FD)$3,000$0.05$3,000$0.05Estimated as at December 31, 2013CRA Receivable$140$0.00$140$0.00Management Estimate (net proceeds)RestorGenex Corporation4200$800$0.01$800$0.01Market Price May 7, 2014Altheia Shares0.21900$380$0.01$190$0.00Last Transaction Value September 2010Tax Pools0.0550000$0$0.000.0Management EstimateOil and Gas Reserves$4,769$0.08$1,000$0.02Sproule December 31, 2012 - 2P @10% Buick Creek, Pine Creek

Total Assets$9,089$0.14$5,130$0.08

Liabilities0.00.00.00.00.0

Net Asset Value$9,089$0.14$5,130$0.08Share Outstanding 63,1380.140.08

Equity FinancingEquity OfferingAmount $1,500Price0.08Shares1875023%Shares Outstanding81,888

Sheet3Annual Operating Cash Flow20142015Q1Q2-Q4Q1Q2-Q4Blending$2,575,960$2,503,980$3,847,280Oil and Gas630000210000630000Total Operating Cash Flow$3,205,960$2,713,980$4,477,280General and AdminCorporate630000210000630000Blending10500004500001350000Net Cash Flow$1,525,960$2,053,980$2,497,280Per Share0.01863472060.0250827960.0304962876Annualized CFPS0.02484629410.10033118410.04066171685 Time multiple0.12423147060.50165592030.2033085841Capitalization10173.0666666667

Purchase PriceStimsolPurchase PriceTotalArcanCanexisProposedRevisionProposedRevisionProposedRevisionOn Closing$1,000,000$2,000,000$200,000$800,000$2,000,000After Completion of Three Wells$500,000$100,000$400,000After Completion of Six Wells$500,000$500,000$100,000$500,000$400,000After Completion of Nine Wells$500,000$100,000$400,000$2,500,000$500,000$2,000,000

Working CapitalWorking Capital MonthlyTimingWorking CapitalG&A$80,000Jul-Sept$240,000Overhead $50,000Jul-Sept$150,000One Arcan Well Supply CostSep-Oct0.0Coral Hill 1 WellsJul-Sept$400,500Light Stream 1 WellsJul-Sept$18,000Unconventional Gas 7 WellsJul-Sept$253,400

Total$1,061,900

Capital ProjectsCapital ProjectsMax MinSafety Shower Facility $250,000$250,000Equiping Disposal Well$750,000Volatile Tank Completion$40,000$40,000Total$1,040,000$290,000

Required FundsTotal Capital RequirementsMaxMinWorking Capital$1,061,900$1,061,900Capital Projects$1,040,000$290,000Purchase Price$2,500,000$2,500,000Total$4,601,900$3,851,900

Work -Cash FlowLand HoldingsWell Locations20142015SectionsQ1Q2-Q4Q1Q2-Q4Arcan1172854548Light Stream & Coral Hill240>3000658Light Stream & Coral Hill922205222Crescent Point280Pengrowth260Pennwest203

28% Acid Fracs Supply20013111815% Spearhead 10128Load and Go28894292Water Disposal1118120 Licenced Carbonate HZ Wells in the service areaRevenue28% Acid Frac Supply$3,780,000$3,150,000$5,040,000Blending and Chemical Supply$1,530,000$1,224,000$2,448,000Custom Blending$162,000$162,000$162,00015% Spearhead $660,000$792,000$528,000Load and Go $413,850$195,300$427,800Water Disposal0.0$396,000$648,000Total Revenue$6,545,850$5,919,300$9,253,800Gross Margin $2,575,960$2,503,980$3,847,28039%42%42%Overhead $350,000$150,000$450,000General and Admin $700,000$300,000$900,000$1,050,000$450,000$1,350,000Net Cash Flow$1,525,960$2,053,980$2,497,280Cummulative Cash Flow$1,525,960$3,579,940$6,077,220

Field Margins$/m3Scenario 1Scenario 2Scenario 3Scenario 4Scenario 5Scenario 6Acid Frac SupplyArcan Supplies AcidCustom BlendingLoad and GoFrac 15% HCLSpearheadWater DisposalStimsolPumperSavingsStimsolStimsolStimsolStimsolPumperSavingsField Price$700$850$340$90$310$330$450$120$18

Raw 38% Acid @ Bruderheim$175$175$79$118Trucking Swan Hills$550.0$55Cost of Added Chemicals $140$140$145$48Blending Costs$20$20$20$15Trucking to Location$55$110$550.0Total Cost of Supply$445$425$220$20$134$181$3

Net Margin$255$425$120$70$176$149$15

Volume for Diluted Acid per Job m3900900900900152002002000Number of Trucks Loads333333331760Days of Blending and Shipping18711

Revenue per Job$630,000$765,000$135,000$306,000$81,000$4,650$66,000$90,000$24,000$36,000Gross Margin Per Job$229,500$382,500$108,000$63,000$2,64029,800$30,00036%50%35%78%57%45%83%

Cost Savings Per Job$296,700$24,000COGS$400,500$18,000$36,200Conversion Factor1.1823972,000Trucking65chemical14518000

Sources of FundsSources of FundsMaxMinFortaleza Cash Balances$3,200,000$3,200,000Fortaleza Bio Tech Shares$1,000,000$500,000Working Capital Line$500,000Defered Purchase Payment$500,000$500,000Equity Placement$1,000,000$1,500,000Total Proceeds$6,200,000$5,700,000

Asset ValueFortaleza Asset ValueAssetsUnit ValueAmount 000Asset Value $000Per ShareLiquidation Value $000Per ShareNotesWorking Capital (FD)$3,000$0.05$3,000$0.05Estimated as at December 31, 2013CRA Receivable$140$0.00$140$0.00Management Estimate (net proceeds)RestorGenex Corporation4200$800$0.01$800$0.01Market Price May 7, 2014Altheia Shares0.21900$380$0.01$190$0.00Last Transaction Value September 2010Tax Pools0.0550000$0$0.000.0Management EstimateOil and Gas Reserves$4,769$0.08$1,000$0.02Sproule December 31, 2012 - 2P @10% Buick Creek, Pine Creek

Total Assets$9,089$0.14$5,130$0.08

Liabilities0.00.00.00.00.0

Net Asset Value$9,089$0.14$5,130$0.08Share Outstanding 63,1380.140.08

Equity FinancingEquity OfferingAmount $1,500Price0.08Shares1875023%Shares Outstanding81,888

Sheet3Annual Operating Cash Flow20142015Q1Q2-Q4Q1Q2-Q4Blending$2,575,960$2,503,980$3,847,280Oil and Gas630000210000630000Total Operating Cash Flow$3,205,960$2,713,980$4,477,280General and AdminCorporate630000210000630000Blending10500004500001350000Net Cash Flow$1,525,960$2,053,980$2,497,280Per Share0.01863472060.0250827960.0304962876Annualized CFPS0.02484629410.10033118410.04066171685 Time multiple0.12423147060.50165592030.2033085841Capitalization10173.0666666667