AMERICAN MINERALS GROUP

TALIHINA OKLAHOMA GAS

PROJECT
LeFlore County

DRILLING LOCATION FOR DRESSER LEASE

FIRST LOCATION FOR STANLEY SAND & JACKFORK SAND WELLS

PROPOSAL OPTIONS FOR DEVELOPMENT OF THE TALIINA GAS FIELD

There are several options for the development procedures for the Talihina
Gas Field.
The project has already put in time, effort and expense for acquiring the
geological and engineering due diligence, and legal title due diligence for
the land leasehold acquisition.
The primary target zone for the project is the Jackfork Sand. The initial
drilling locations will be in the top sections of the leasehold acreage. First
Jackfork well will be on the drillsite pad which was built by Newfield
Exploration in 2011 at an approximate cost of $500,000.
Although most of the acreage has been leased by Project Team, there are
some open acres that could not be found or leased for various reasons. In
Oklahoma, it is standard procedures to Force Pool these stranded acres
to be part of the Drillsite Unit under the specified Spacing allocations
determined by the Oklahoma Corporation Commission (OCC). In the case
of the Jackfork Sand formation the spacing is 320 acres where the
prospect acreage lies. Future plans are to request from OCC, smaller
spacing units if we believe that it is feasible and necessary to sufficiently
drain the formation reservoir for each wellbore. The Forced Pooling
Process takes approximately 3 to 4 months in the OCC system.
The Forced Pooling process should begin immediately and when approved,
we will begin the drilling of first Jackfork well on Newfields location. If this
well shows the productive results that we anticipate, we will begin
procedures for drilling the second Jackfork well across the road from the
first well.
After first well is proven productive, we will begin construction of the 8
steel pipeline to transport gas to the main 32 gas pipeline that runs
through the field.
The proposed PHASE I would be implemented if we wanted to begin
drilling immediately for the Stanley Sand gas formation. This development
drilling plan would include the initial 4 wells drilled and completed to
approximately 2,800 ft.
The procedures for constructing the 4 poly pipeline would begin
immediately after production capability is proven in the first Stanley Sand
gas well. We would immediately negotiate acquisition of Pipeline Right of

Way from the various relevant surface owners. The pipeline would be
approximately 3 miles in length.
By the time we drilled and completed these first 4 Stanley wells, we
should have the Forced Pooling rulings approved from the OCC. (Which is
standard and we foresee absolutely no problems with this procedure)

The other benefits of the shallow Stanley wells will be: 1) immediate and
additional gas revenues, with much development potential across our
acreage position. 2) The Right of Way will already have been acquired for
the 8 permanent steel pipeline for transporting the larger gas production
from the Jackfork wells.
The Stanley Sands and the Jackfork Sands in the are not known to produce
any significant saltwater in the production process, therefore we will not
require any Saltwater Disposal systems in our project.
NOTE: If we want to bypass the PHASE I Stanley Sand development
drilling process, we can just focus on acquiring the Forced Pooling rulings
from OCC and get the pipeline Right of Way under option until we drill the
first Jackfork Sand well. We can also be working on the best Gas
Marketing Agreements that we can negotiate. We will have many items
to be working on while these various procedures are being implemented.

SUMMARY OF SOUTH EAST OKLAHOMA GAS RESOURCE PLAY

EXECUTIVE SUMMARY
AMERICAN MINERALS GROUP (AMG) is currently developing a resource natural
gas play within the Arkoma Basin / Ouachita Facies Region of South East Oklahoma. The
general description of the project is as follows:
Several years ago, GHK Company of Oklahoma City did drill and develop a natural gas
field in the Potato Hills of Oklahoma (see attached article) and did since then produce nearly 350
Billion Cubic Feet of sold natural gas at a value of over $650,000,000. Lime Rock Partners of
Houston recently paid $180,000,000 cash for this small resource play in a purchase from GHK.
In time, the field is expected to sell over 800 BCF from the Jackfork Sandstone alone. There are
21 wells in Potato Hills with an average production to date of over 10 BCF per wellhead so far.
The gas is sweet and readily available to a major pipeline and gas markets within the US. Within
the immediate area of the Potato Hills Gas Field, the geologist who discovered that play brought
another twin geological feature (3 miles east of the original field) to our group. Upon
confirmation and the drilling of 5 test wells, it was determined that indeed the second field was
there and approximately the same size as Potato Hills. Pressures, depths, porosity and geological
trapping were all identical to Potato Hills, and the main formation of pay at Potato Hills was the
same pay in the adjacent Talihina South East project.
The entire resource play we hold today should have over 2 trillion cubic feet of gas in
place with some PPD and PUD reserves. Lee Keeling and Associates gave the 5 developed wells
over 283 BCF in two separate reports as a gas in place number. We assume a recovery per well
head of at least 10 BCF and a cost to drill and complete below $ per well at depths above 16,000
feet. Keeling cites a USGS report from last year showing this region to have over 6 TCF in
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place. The potential, combined with shale play possibilities, is very substantial. The entire
section of lease holdings contains a 32 pipeline which we have access to, with over 200 MMCF
per day open capacity right now. Well head prices for delivered gas have ranged from $2.89 to
$5.34 in recent history. The economics are excellent at well over 7 to 1 return on investment . A
gas marketing agreement with Newfield Exploration, et al, could yield gas prices over $5 per
MMBTU in the current market (2015).

BULLET POINTS OF TALIHINA PROJECT

13,000 acres (gross) under lease today

40,000 acres available immediately at $3 per net acre in one lease agreement from one

owner.
Adjacent field has produced approximately 350 BCF cumulatively, and $650,000,000 in

gross revenue on $121,000,000 invested

Talihina Southeast Initial drilling play is identical to Potato Hills a few miles to southwest

in geological structure and potential

Gas transportation line is 32 Line AC from Wilburton to Columbia trunk lines with 400

million cubic feet/day available capacity

Natural Gas Marketing program on that line allows for current gas sales prices over $4.50

per million BTU (2015)

As a resource play, investment of $15 Million or less will prove up most of the 13,000

acre region.
A market value in 2015 of over $230,000,000 minimum.
At least 60 well locations within known geological structures and multiple pay zones
Depths from 2,800 to 4,000 ft. for Stanley Sand and 5,500 ft. to 13,000 ft. for Jackfork
Adjacent field wellhead sales to date of over 10 BCF per well on 21 core structure wells.

(We may expect 18 BCF per well average)

Most leases will average 20% NRI to the mineral holders with 3 to 5 year terms, some 10

years
Lee Keeling and Associates Report on Gas in Place exceeds 300 BCF on the 5 core
Jackfork wells drilled to date.

TA L I H I N A N AT U R A L G A S D E V E LO P M E N T P R O J E C T
LeFlore County Southeast Oklahoma
Overall Highlight Summary Plan / Costs & Revenues
Stanley Sand & Jackfork Sand
1. The Talihina project includes 13,000 acres for a gas drilling development
project, with an additional 400,000 of open acres for potential expansion
acreage available to South.
2. Primary Producing Zone is the Jackfork Sand
3. As many as 60 Jackfork wells can be drilled now, more with more acreage
available.
4. Secondary Producing Zone is Stanley Group of Sands.
5. As many as 100 Stanley Wells can be drilled now, with more acreage
available.
6. Jackfork Wells will vary across the acreage positions - from 5,000 ft. to
8,500 ft. in depth. The deeper wells will be in the south sections as the
geology in this area shows a steep downdip up to 500 ft. to 800 ft. per
mile.
(Stanley Wells will be drilled to 2,500 ft. to 3,000 ft. on initial first 4 wells)
7. PHASE I of the project is to drill 4 new shallow Stanley Wells to 2,500 ft.
Complete first well to test, then drill second well to test. If production is
commercial, then begin installing the 4 polypipe gas line and lay on the
surface to the main trunk line 3 miles south of wells.
8. PHASE II of the project is to drill two new Jackfork wells to approximately
5,200 ft. - Test first well for initial open flow. Drill second well and test.
Begin laying 8 steel line to main transport line 3 miles south along same
right of way as poly line.
9. Each Stanley well should cost approximately $ $250,000.
The 4 poly line for the shallow low pressure line should be about
$500,000 plus compressor install and approximately $35 thousand for
right of way acquisition.
10. Each Jackfork well should cost approximately $3,500,000. It is verified
that there will be a very large section of producing formation in these
wells. Newfield Exploration (a large public oil & gas company) has
performed and evaluated 3D seismic over the prospect acreage position.
In fact, Newfield built a $500,000 drill site where we plan to drill first
Stanley and Jackfork wells. We have acquired this Newfield lease and the
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drillsite location. This seismic shows that our locations are on an APEX
high for this Jackfork Zone, which is a very good indicator for very high
gas volumes and big gas reserves.
11. There will need to be a 3-mile pipeline built to transport the large gas
volumes from the many wells to be drilled. This initial steel pipeline will
connect to a much larger pipeline going east-west (Centerpoint Energy
Line AC) across the south end of the leasehold play. Cost of the 8 steel
pipeline should be approximately $1.5 million. (Right of Way will be
purchased with the 4 low pressure poly line for Stanley Wells.
(Eventually only the 8 Steel Line will be used for transporting all gas from
the field)
12. Each well is expected to produce to the sales line a minimum of 1.5
Million to 3 Million Cubic Feet Gas per day. ***It is very possible that we
could produce as much as 10 MMCFGD or more from each well, especially
on the high point Apex area.

PHASE I
STANLEY SAND FORMATION (Shallow Gas) Initial Phase of Drilling
and Production
Initial Wells Drilling Costs Estimate:
4 new Stanley wells X
$250,000
= $1 Million
Pipeline Gathering Lines Construction Costs: 3 miles
4 poly
pipeline = $500,000
Pipeline Right of Way
= $35,000
Compressor Rental & Location and Install
= $25,000
Total Initial Drilling Phase I for Stanley Sand
=$1.65
Million
(Holds 2,500 acres + 10 Additional Drillsite Locations + 4 Pipeline
& Right-away Infrastructure + Compression Facilities)
Stanley Drill/Complete estimated 4 well production 1 Million CFGD X
$3.50 = $3500/Day
----$105,000/Month (Gross Revenue) X
75% Net Revenue after Royalties and Operating Expenses
=
$78,750 / month. * 21 Month Payout
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
JACKFORK SAND FORMATION (Deep Gas) Initial Phase of Drilling and
Production

Initial Wells Drilling Costs Estimate: 2 new Jackfork wells X $3.5

Million
=
$7
Million
Pipeline (8 Steel Line buried 3 miles to main transport line)
=
$1.5 Million
Right of Way (Already purchased in the Stanley phase)
Total Initial Drilling Phase II for Jackfork
=
$8.5
Million
*Initial Acreage Position on the 2,500 acres is secured by the
shallow Stanley wells

PHASE II
Jackfork wells estimated 2 well production 3 Million CFGD X $3.50 =
$10,500/Day
X 30 days =
$315,000/Month
X 75%
=
$236,250/month
* at 1.5 MMCFG/Day is 36 Month Payout
* at 3 MMCFG/Day is 18
Month Payout
(There will be an acreage cost of $250/acre for the approximate
initial PHASE I & PHASE II drilling acreage which equates to
$625,000)
* The Net Revenue for the leases is 80% NRI
**There is approximately $1.8 Million currently invested into this
project for land fees, legal fees, and other costs to date total.
Total Phase I Stanley Gas
= $1,600,000
Total Phase II Jackfork Gas
= $8,500,000
Total Acreage Cost (2,500 acres initial)
=
$625,000

Total Project Cost Estimate

= $10,725,000

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