N O V A R E S O U R C E, I N C. CERTIFIED PETROLEUM GEOLOGISTS REGISTERED PROFESSIONAL ENGINEERS CERTIFIED PETROLEUM GEOPHYSICISTS

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2 N O V A R E S O U R C E, I N C. CERTIFIED PETROLEUM GEOLOGISTS REGISTERED PROFESSIONAL ENGINEERS CERTIFIED PETROLEUM GEOPHYSICISTS P. O. Box Dallas, Texas Tel/Fax(972) novapet@tx.rr.net page 1 of 10 Mr. Joseph Damato Reliance Oil & Gas, Inc FM 466 Seguin, Texas (214) ; Fax 1609 joe@relianceoil.com RE: Reliance Oil & Gas, Inc. s Nelson Lease of Guadalupe Co, Tx Recoverable Reserves and Economic Analysis Re: Nelson Oil & Gas Lease of Abstract A-25 Guadalupe County, Texas Mr. Damato, As per your request, using your supplied data, and under your authorization, Nova Resource, Inc. has analyzed the data supplied by the operator and updated by Nova to determine the remaining recoverable oil and gas reserves from the owned and operated oil and gas lease located in the northeastern portion of Guadalupe Co., Tx and otherwise known as the Nelson lease of the Samuel Highsmith League Abstract # 25 located between Darst Creek oil field and Dunlap oil field approximately 6 miles southwest of the town of Luling Texas. Adjacent developed fields also include Bob Rose, Luling W., and the Luling-Branyon fields. A detailed analysis of the interests in the referenced lease was performed using the lease plat and other data supplied by the operator, data from the Railroad Commission of Texas, and selected records from commercial and private data sources. Detailed audits of the data supplied by the operator were not performed. The referenced lease s recoverable oil and gas reserves potential was analyzed by applying standard industry analytical procedures and criteria to derive the reserves evaluation and valuation as stated in this report.

3 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Nelson Lease of Guadalupe Co, TX page 2 of 10 The available data indicate that 4 wellbores exist on the Nelson lease with three (3) being productive and one (1) reported dry hole. The lease consists of one contiguous unit of approximately +/- 80 acres running in a northeast to southwest direction south of US Highway 90 approximately 6 miles southwest of the town of Luling Texas. The lease has eight (8) in-fill and two (2) stepout drilling locations for a total of 10 well locations remaining to be drilled. This report refers only to existing producing wells and to the ten (10) well remaining locations. The referenced Nelson lease is productive for oil and/or gas and/or water from several Cretaceous age formations. Productive formations from the surrounding fields include the Updip Austin Chalk, the Edwards Lime, and/or the Navarro formations. The Austin Chalk is considered the primary reservoir with the Edwards and Navarro being secondary reservoirs. Three distinct shallow hydrocarbon producing reservoir plays exist in the area of Guadalupe County and are identified as the, 1) Lower Cretaceous Shelf Carbonate Fault Zone Oil Play; 2) the Buda Fault Zone Oil Play; and 3) the Austin Chalk play. Deeper reservoirs no doubt exist in the area, however, few wells have been drilled to the lower horizons. Recent Activity in the Vicinity of the Nelson Lease: Recently reported drilling has occurred on nearby leases using conventional and horizontal drilling. These nearby newly drilled wells are reported by the operator of the Nelson lease to have resulted in the completion of oil wells from the Austin Chalk formation with initial potential productions of up to 200 Barrels of oil per day per well with an average potential of 51 barrels of oil per day per well. The operator states that it believes that it can substantially increase oil production by the use of Horizontal Radial Fracturing on the projected wells in anticipation of creating fractures in the reservoir which radiate outward from the wellbore in a circumference approximately 60 to 80 feet.

4 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Nelson Lease of Guadalupe Co, TX page 3 of 10 REGIONAL PLAYS GEOLOGIC DESCRIPTIONS Play Number 1 (Lower Cretaceous Shelf Carbonate Reservoirs): The Lower Cretaceous age shelf carbonate formation plays consists of carbonates of the Edwards, Georgetown, and Glen Rose formations that produce oil from structural traps along regional fault zones. The downdip boundary of the play follows the edges of the Luling, Charlotte, and Mexia fault zones, and the updip boundary is the Balcones Fault Zone. Reservoirs of the play are extensively dolomitized restricted-platform and tidal-flat carbonates. Reservoir porosity was created by dolomitization and subsequent diagenetic de-dolomitization, collapse breccias formed by removal of tidal-flat evaporates, and moldic porosity after leaching of bioclastic fragments. Depths range from 1,000 to 5,000 feet. Source rocks are the Lower Cretaceous marine shelf and slope organic-rich mudstones. The Lower Cretaceous reservoirs are sealed by down-faulted, less permeable Upper Cretaceous carbonates and mudstones with many reservoirs located on paleo-highs along the San Marcos Arch. The reservoirs in this play are typified by the Luling-Branyon, Darst Creek, and Salt Flat Field pays. Play Number 2 (Buda Fault Zone Reservoirs): The Buda Fault Zone Oil Play is defined by Upper Cretaceous Buda Formation chalk reservoirs that produce oil from structural traps along peripheral fault zones. The updip boundary of the play is the Balcones Fault Zone, and the down dip boundary is the Luling and Charlotte Fault Zones. Reservoirs in this play are coccolith- and foraminifer-bearing micrites. Fracturing is required in the chalk for the rock to be a reservoir. Fracturing is present in the Buda near fault zones. Depths to the Buda range from 1,000 to 6,000 feet. Source rocks for the Buda are considered to be mudstones within the Buda and the overlying Eagleford formation, which, by juxtaposition with fractured Buda in the fault zones, allows for migration into the Buda from the Eagleford. The Buda produces from structurally high positions along the fault zones.

5 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Nelson Lease of Guadalupe Co, TX page 4 of 10 Play Number 3 (Austin Updip Oil Reservoirs): The Austin Updip Oil play is defined by Upper Cretaceous Austin carbonate reservoirs that produce oil from structural traps along fault zones with associated fracturing. The boundaries of the play are the limits of the Balcones, Mexia, Luling, and Charlotte fault zones. Reservoirs are, as in the Buda formation play, coccolith- and foraminifer-bearing micrites or chalks of the Austin formation. The chalk must be fractured for an economic reservoir to be present. Minor reservoirs in this play are limestones of the Upper Cretaceous Dale and Anacacho Formations. Depths of undiscovered reservoirs range from 1,000 to 4,000 feet. Source rocks are considered to be the organic-rich micrites within the Austin and the mudstones of the underlying Eagleford Formation. Traps are related to the fault zones including the Mexia, Luling, Charlotte, and Balcones segments. Faulting has brought the fractured Austin, Dale, and Anacacho limestone into structurally high positions relative to the less porous Upper Cretaceous. LEASE PRIMARY OBJECTIVE DESCRIPTION Primary Target Pay Formation (Austin Chalk): The Austin Chalk is a known productive formation and is productive in fields surrounding your referenced Guadalupe County, Texas Nelson lease.

6 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Nelson Lease of Guadalupe Co, TX page 5 of 10 Austin Chalk Formation: Drilling, Completion and History: There have been multiple stages of exploration and development in the Austin Chalk since the first wells were drilled in the 1920 s. Conventional drilling with vertical wells established many commercially successful oil wells. Fractures are required to be present to establish commercial production of oil from the Austin Chalk. The Austin Chalk reservoir is a tight, fine-grained, fossiliferious, fractured carbonate interbedded with shales and marls that were deposited in a quiet open marine environment during a period of marine transgression. The main productive chalk trend lies at a depth of 500 to 8,000 feet. The thickness of the Austin Chalk ranges from 35 to 500 feet with specific targets within that interval. Variable lateral reservoir characteristics exist throughout the trend resulting in a wide range of production profiles. As a consequence, operators have drilled horizontal wells in areas of known production in order to encounter as many vertically fractured zones as possible in order to expose as much of the productive fractured Austin Chalk as possible to the wellbore. In most areas of the Austin Chalk, horizontal legs have been drilled to the Northeast or to the Southwest in order to encounter the greatest number of fractures. The operator plans to use less expensive and as effective Horizontal Radial Fracturing to complete the wells. Wells drilled to the Southeast or Northwest typically encounter fewer numbers of faults but these horizontal legs follow along larger faults and can produce high initial volumes of oil as well. A successful horizontal well drilled in the Austin Chalk can expect 50 to 200 barrel of oil per day initial potential. This initial productive potential allows for the rapid payout of the cost of drilling the horizontal well. The reservoirs daily production declines very rapidly due to depletion of the fracture fluid pressure and collapse of the fractures with subsequent restriction of the flow of oil through the fractures to the wellbores. A sustained lower rate of oil production can be expected from these fractured reservoirs after the initial high rate of production declines. The rapid payout of the drilling cost has sustained the drilling interests in the Austin Chalk reservoirs. With today s price of oil in the range of $ 90 per barrel of oil, the Austin Chalk is once again being drilled in the many locations remaining to be developed.

7 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Nelson Lease of Guadalupe Co, TX page 6 of 10 Accurate production records on a well by well basis are not available for typical Austin Chalk leases drilled. Since Texas allows production to be reported by lease and not by well, a lease with multiple wells drilled and producing may have large cumulative production but it is unknown as to how much oil or gas was produced from any one well unless the operator metered each well. Techniques have been developed to estimate the recoverable oil or gas reserves from such leases but only a metered well record will definitively reveal how much oil or gas has been recovered from any one well. For this reason only the operator s reported averages have been used in this report and records from the surrounding lease production records to project the recoverable reserves from the referenced Nelson lease of Guadalupe County, Texas using the new completion and production techniques reported applicable by the operator. The operator has informed Nova that they intend to enter into an agreement whereby the investor and the operator shall split all costs and production and revenue on a 50/50 basis to the drill, test, and complete, if warranted, ten (10) wells on the referenced Nelson lease. Reliance Oil & Gas, Inc. has reported that 100% of the costs associated with each wells drilling and completion will be at $ 550,000 USD which includes, all land, geology, engineering and contingency costs. The lease has an 80% Net Revenue Interest and a 100% Working Interest. The Operator, Reliance Oil and Gas, Inc. shall be responsible for payment of 50% Working Interests Costs and shall receive 40% NRI in the wells and lease and production and revenue and the investors shall be responsible for payment of 50% Working Interests costs ans shall receive 40% NRI in the wells and lease and production and revenue. All prices of oil at $ 85 per barrel and well operating costs in Nova s evaluations are held constant. An oil severance tax of 7.1 % and an ad valorum tax of 2% of the net revenue are used. A salvage value of 2 % is included in the analysis. A decline rate of 20 % is used in this analysis. The operator reports that water disposal is available. Therefore the operator reports that the projected Lease Operating Expense will be no more than $ 7,200 per well per year on average. Initial production rates from new wells may vary from 50 barrels to 200 barrels of oil per well per day with an average initial production rate of 50 Barrels of oil per day used in the analysis and anticipated from any successful well.

8 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Nelson Lease of Guadalupe Co, TX page 7 of 10 RESERVES AND ECONOMIC ANALYSIS Nova performed a through analysis of the leases described by the operator for the regional reservoirs and also used public and private data and proprietary data sources to complete the analysis. The following is a summary of the ten (10) wells to be drilled anticipated recoverable reserves from your interests in the referenced Nelson Lease of Guadalupe County, Texas. Production does exist from the lease and also from the surrounding leases from the Austin Chalk formation. Production from any new successfully drilled and completed wells upon the lease is expected to be from the Austin Chalk and possibly from the Lower Cretaceous or Buda formations and is anticipated to be from a depth between 2,000 and 3,000 feet. The original lease NRI and LOE used are 80 % and $ 7,200 per well per year respectively with Reliance paying for its 50% working interests and the Investors pay for their 50% working interests (a total of 100% working Interests Expenses at $ 550,000 USD per well) and both Reliance and the investors each receiving 50% of 80% NRI or 40% NRI each of all of the production and revenue from the wells and lease with the land owner retaining a 20% royalty in all of the production and revenue from the wells and lease. Drilling of a horizontal radial frac well location is projected to produce an average Initial Potential Calculated Absolute Open Flow Rate of 50 Barrels of oil per day per well. Nova has used an exponential decline rate of 20% for the projected initial production rates. Initial Potential of any well may be zero, lower, or higher than projected, and declines rates may be lower or higher than projected. Due to the fractured nature of the Austin Chalk, the primary objective reservoir, spacing of the wellbores can be high or low with 2.0 acres per well being typical for other developed fields. This report uses a spacing of 2.0 acres per remaining well location for the ten (10) well development valuation.

9 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Nelson Lease of Guadalupe Co, TX page 8 of 10 Pipelines and gatherers in the area include Luling Gas Gathering, Casa Pipeline System, Oasis Pipeline System 3900, and PLAML, TEPPO Crude Oil, CONPH, GULFM (Gulfmark Energy), ELPAF (El Paso Field Services), etc. Using the operator supplied data and other sources of data the following oil reserves volumes can reasonably be expected to be in place from ten (10) successful wells to be drilled using conventional analytical techniques from wells drilled in optimum locations upon the lease. ECONOMICS AND RESERVES SUMMARY TEN WELLS ANALYSIS On a ten (10) well basis: ten (10) wells development at 50 BOPD per well: To 100% Working Interest on a successful basis as projected: Capital Investment: $ 5,500,000 USD Ultimate oil recovery: Net recoverable oil: 813,039 Bbls 650,431 Bbls Net Income/Investment Ratio: 8.84:1 Net Present PV- 0% Discount: $ 43,099,544 USD Net Present PV-10% Discount: $ 29,153,372 USD

10 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Nelson Lease of Guadalupe Co, TX page 9 of 10 A three page recoverable reserves and production/cash flow projection analysis for ten wells to be drilled is attached. A sensitivity analysis projection is also included for the ten (10) well locations oil recovery from your planned drilling project. The sensitivity analysis uses projections from zero barrels of oil recovery initial rates per well per day for each of the eight wells to 75 barrels of oil recovery initial rates per well per day for each of the ten wells to be drilled and uses exponential decline rates from 20% to 50% to calculate 16 possible recovery rates and recoverable reserves values for this project. All oil and gas ventures involve risk of loss of part or all of any investment. This analysis does not include risk analysis. Nova does not guarantee, warrant, express or imply, by inclusion or omission, the presence of all or any hydrocarbons, either oil or natural gas, based upon data supplied by any operator. Nova has accepted the operator s supplied data as accurate without audit. Anyone considering investing in or attempting to recover oil and gas from any oil and gas well or project should seek their own independent third party outside council and advise before investing in any oil and gas venture. Nova is acting as an independent consulting geological, geophysical, and engineering firm retained by the operator to perform this analysis. Nova does not have or retain any interests in the referenced or adjacent leases.

11 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Nelson Lease of Guadalupe Co, TX page 10 of 10 If you have any questions please feel free to call Nova Resource, Inc. at (972) or contact Nova by at novapet@tx.rr.com. Thank you for this opportunity to be of service to you and your company. Respectfully, Nova Resource, Inc. J. V. Rochefort President Encl: Recoverable Reserves Calculations Ten (10) wells recoverable three-page reserves analysis; one page sensitivity analysis; Lease and Well Maps and Data Nelson Lease Report & Invoice Damato Reliance Nelson Lease of Guadalupe Co., TX Recoverable Reserves Rpt & Invoice

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14 N O V A R E S O U R C E, I N C. CERTIFIED PETROLEUM GEOLOGISTS REGISTERED PROFESSIONAL ENGINEERS CERTIFIED PETROLEUM GEOPHYSICISTS P. O. Box Dallas, Texas Tel/Fax(972) novapet@tx.rr.net page 1 of 10 Mr. Joseph Damato Reliance Oil & Gas, Inc FM 466 Seguin, Texas (214) ; Fax 1609 joe@relianceoil.com RE: Reliance Oil & Gas, Inc. s Perfetto Lease of Guadalupe Co, Tx Recoverable Reserves and Economic Analysis Re: Perfetto Oil & Gas Lease of Abstract A-25 Guadalupe County, Texas Mr. Damato, As per your request, using your supplied data, and under your authorization, Nova Resource, Inc. has analyzed the data supplied by the operator and updated by Nova to determine the remaining recoverable oil and gas reserves from the owned and operated oil and gas lease located in the northeastern portion of Guadalupe Co., Tx and otherwise known as the Perfetto lease of the Samuel Highsmith League Abstract # 25 located between Darst Creek oil field and Dunlap oil field approximately 6 miles southwest of the town of Luling Texas. Adjacent developed fields also include Bob Rose, Luling W., and the Luling-Branyon fields. A detailed analysis of the interests in the referenced lease was performed using the lease plat and other data supplied by the operator, data from the Railroad Commission of Texas, and selected records from commercial and private data sources. Detailed audits of the data supplied by the operator were not performed. The referenced lease s oil and gas reserves potential was analyzed by applying standard industry analytical procedures and criteria to derive the reserves evaluation and valuation as stated in this report.

15 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Perfetto Lease of Guadalupe Co, TX page 2 of 10 The available data indicate that 5 wellbores exist on the Perfetto lease with three (3) being productive, one (1) abandoned productive well, and one (1) reported dry hole. The lease consists of one contiguous unit of approximately +/- 57 acres running in a northeast to southwest direction south of US Highway 90 approximately 6 miles southwest of the town of Luling Texas. The lease has seven (7) infill drilling locations and 3 probable and 2 possible drilling locations remaining with a full development project yielding an additional 3 probable locations remaining with a total of 12 well locations remaining to be drilled. This report refers only to existing producing wells and to the ten (10) infill and probable well locations. The referenced Perfetto lease is productive for oil and/or gas and/or water from several Cretaceous age formations. Productive formations from the surrounding fields include the Updip Austin Chalk, the Edwards Lime, and/or the Navarro formations. The Austin Chalk is considered the primary reservoir with the Edwards and Navarro being secondary reservoirs. Three distinct shallow hydrocarbon producing reservoir plays exist in the area of Guadalupe County and are identified as the, 1) Lower Cretaceous Shelf Carbonate Fault Zone Oil Play; 2) the Buda Fault Zone Oil Play; and 3) the Austin Chalk play. Deeper reservoirs no doubt exist in the area, however, few wells have been drilled to the lower horizons. Recent Activity in the Vicinity of the Perfetto Lease: Recently reported drilling has occurred on nearby leases using conventional and horizontal drilling. These nearby newly drilled wells are reported by the operator of the Perfetto lease to have resulted in the completion of oil wells from the Austin Chalk formation with initial potential productions of up to 200 Barrels of oil per day per well with an average potential of 51 barrels of oil per day per well. The operator has stated that it plans to increase the rate of production from the anticipated wells to be drilled by the use of Horizontal Radial Fracturing which creates fractures in a circumference around the wellbore out into the pay zone approximately 60 to 80 feet.

16 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Perfetto Lease of Guadalupe Co, TX page 3 of 10 REGIONAL PLAYS GEOLOGIC DESCRIPTIONS Play Number 1 (Lower Cretaceous Shelf Carbonate Reservoirs): The Lower Cretaceous age shelf carbonate formation plays consists of carbonates of the Edwards, Georgetown, and Glen Rose formations that produce oil from structural traps along regional fault zones. The downdip boundary of the play follows the edges of the Luling, Charlotte, and Mexia fault zones, and the updip boundary is the Balcones Fault Zone. Reservoirs of the play are extensively dolomitized restricted-platform and tidal-flat carbonates. Reservoir porosity was created by dolomitization and subsequent diagenetic de-dolomitization, collapse breccias formed by removal of tidal-flat evaporates, and moldic porosity after leaching of bioclastic fragments. Depths range from 1,000 to 5,000 feet. Source rocks are the Lower Cretaceous marine shelf and slope organic-rich mudstones. The Lower Cretaceous reservoirs are sealed by down-faulted, less permeable Upper Cretaceous carbonates and mudstones with many reservoirs located on paleo-highs along the San Marcos Arch. The reservoirs in this play are typified by the Luling-Branyon, Darst Creek, and Salt Flat Field pays. Play Number 2 (Buda Fault Zone Reservoirs): The Buda Fault Zone Oil Play is defined by Upper Cretaceous Buda Formation chalk reservoirs that produce oil from structural traps along peripheral fault zones. The updip boundary of the play is the Balcones Fault Zone, and the down dip boundary is the Luling and Charlotte Fault Zones. Reservoirs in this play are coccolith- and foraminifer-bearing micrites. Fracturing is required in the chalk for the rock to be a reservoir. Fracturing is present in the Buda near fault zones. Depths to the Buda range from 1,000 to 6,000 feet. Source rocks for the Buda are considered to be mudstones within the Buda and the overlying Eagleford formation, which, by juxtaposition with fractured Buda in the fault zones, allows for migration into the Buda from the Eagleford. The Buda produces from structurally high positions along the fault zones.

17 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Perfetto Lease of Guadalupe Co, TX page 4 of 10 Play Number 3 (Austin Updip Oil Reservoirs): The Austin Updip Oil play is defined by Upper Cretaceous Austin carbonate reservoirs that produce oil from structural traps along fault zones with associated fracturing. The boundaries of the play are the limits of the Balcones, Mexia, Luling, and Charlotte fault zones. Reservoirs are, as in the Buda formation play, coccolith- and foraminifer-bearing micrites or chalks of the Austin formation. The chalk must be fractured for an economic reservoir to be present. Minor reservoirs in this play are limestones of the Upper Cretaceous Dale and Anacacho Formations. Depths of undiscovered reservoirs range from 1,000 to 4,000 feet. Source rocks are considered to be the organic-rich micrites within the Austin and the mudstones of the underlying Eagleford Formation. Traps are related to the fault zones including the Mexia, Luling, Charlotte, and Balcones segments. Faulting has brought the fractured Austin, Dale, and Anacacho limestone into structurally high positions relative to the less porous Upper Cretaceous. LEASE PRIMARY OBJECTIVE DESCRIPTION Primary Target Pay Formation (Austin Chalk): The Austin Chalk is a known productive formation and is productive in fields surrounding your referenced Guadalupe County, Texas Perfetto lease.

18 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Perfetto Lease of Guadalupe Co, TX page 5 of 10 Austin Chalk Formation: Drilling, Completion and History: There have been multiple stages of exploration and development in the Austin Chalk since the first wells were drilled in the 1920 s. Conventional drilling with vertical wells established many commercially successful oil wells. Fractures are required to be present to establish commercial production of oil from the Austin Chalk. The Austin Chalk reservoir is a tight, fine-grained, fossiliferious, fractured carbonate interbedded with shales and marls that were deposited in a quiet open marine environment during a period of marine transgression. The main productive chalk trend lies at a depth of 500 to 8,000 feet. The thickness of the Austin Chalk ranges from 35 to 500 feet with specific targets within that interval. Variable lateral reservoir characteristics exist throughout the trend resulting in a wide range of production profiles. As a consequence, operators have drilled horizontal wells in areas of known production in order to encounter as many vertically fractured zones as possible in order to expose as much of the productive fractured Austin Chalk as possible to the wellbore. The Operator plans to use less expensive and just as effective Horizontal Radial Fracturing to complete the wells. In most areas of the Austin Chalk, horizontal legs have been drilled to the Northeast or to the Southwest in order to encounter the greatest number of fractures. Wells drilled to the Southeast or Northwest typically encounter fewer numbers of faults but these horizontal legs follow along larger faults and can produce high initial volumes of oil as well. A successful horizontal well drilled in the Austin Chalk can expect 50 to 200 barrel of oil per day initial potential. This initial productive potential allows for the rapid payout of the cost of drilling the horizontal well. The reservoirs daily production declines very rapidly due to depletion of the fracture fluid pressure and collapse of the fractures with subsequent restriction of the flow of oil through the fractures to the wellbores. A sustained lower rate of oil production can be expected from these fractured reservoirs after the initial high rate of production declines. The rapid payout of the drilling cost has sustained the drilling interests in the Austin Chalk reservoirs. With today s price of oil in the range of $ 90 per barrel of oil, the Austin Chalk is once again being drilled in the many locations remaining to be developed.

19 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Perfetto Lease of Guadalupe Co, TX page 6 of 10 Accurate production records on a well by well basis are not available for typical Austin Chalk leases drilled. Since Texas allows production to be reported by lease and not by well, a lease with multiple wells drilled and producing may have large cumulative production but it is unknown as to how much oil or gas was produced from any one well unless the operator metered each well. Techniques have been developed to estimate the recoverable oil or gas reserves from such leases but only a metered well record will definitively reveal how much oil or gas has been recovered from any one well. For this reason only the operator s reported averages have been used in this report and records from the surrounding lease production records to project the recoverable reserves from the referenced Perfetto lease of Guadalupe County, Texas using the new completion and production techniques reported applicable by the operator. The operator has informed Nova that they intend to turnkey the operations to drill, test, and complete, if warranted, ten (10) wells on the referenced Perfetto lease. Reliance Oil & Gas, Inc. has reported that costs associated with each wells drilling and completion will be at a cost of $ 550,000 USD per well which includes all land, geology, engineering and contingency costs. The lease has an 80% Net Revenue Interest and a 100% Working Interest. The Operator, Reliance Oil and Gas, Inc. shall retain 50% Working Interests and pay its respective Working Interests costs and receive 50% of the 80% NRI Lease interest or 40% NRI interests in the wells and leases and production and revenue to be produced and the investors shall retain 50% Working Interests and pay their respective Working Interests costs and receive 50% of the 80% NRI Lease interest or 40% NRI interests in the wells and leases and production and revenue to be produced. All prices of oil at $ 85 per barrel and well operating costs in Nova s evaluations are held constant. An oil severance tax of 7.1 % and an ad valorum tax of 2% of the net revenue are used. A salvage value of 2 % is included in the analysis. A decline rate of 20 % is used in this analysis. The operator reports that water disposal is available. Therefore the operator reports that the projected Lease Operating Expense will be no more than $ 7,200 per well per year on average. Initial production rates from new wells may vary from 50 barrels to 200 barrels of oil per well per day with an average initial production rate of 50 Barrels of oil per day used in the analysis and anticipated from any successful well.

20 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Perfetto Lease of Guadalupe Co, TX page 7 of 10 RESERVES AND ECONOMIC ANALYSIS Nova performed a through analysis of the leases described by the operator for the regional reservoirs and also used public and private data and proprietary data sources to complete the analysis. The following is a summary of the ten (10) anticipated wells recoverable reserves from your interests in the referenced Perfetto Lease of Guadalupe County, Texas. Production does exist from the lease and also from the surrounding leases from the Austin Chalk formation. Production from any new successfully drilled and completed wells upon the lease is expected to be from the Austin Chalk and possibly from the Lower Cretaceous or Buda formations and is anticipated to be from a depth between 2,000 and 3,000 feet. The original lease NRI and LOE used are 80 % and $ 7,200 per well per year. Reliance is to retain a 50% working interests and receive a 40% NRI interests and the investors are to retain a 50% working interests and receive a 40% NRI interests in the wells, leases, production and revenue. The land owner is to retain a 20% royalty in all of the production and revenue from the wells and lease. Drilling of a horizontal radial frac well location is projected to produce an average Initial Potential Calculated Absolute Open Flow Rate of 50 Barrels of oil per day per well. Nova has used an exponential decline rate of 20% for the projected initial production rates. Initial Potential of any well may be zero, lower, or higher than projected, and declines rates may be lower or higher than projected. Due to the fractured nature of the Austin Chalk, the primary objective reservoir, spacing of the wellbores can be high or low with 2.0 acres per well being typical for other developed fields. This report uses a spacing of 2.0 acres per remaining well location for the ten (10) wells development project.

21 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Perfetto Lease of Guadalupe Co, TX page 8 of 10 Pipelines and gatherers in the area include Luling Gas Gathering, Casa Pipeline System, Oasis Pipeline System 3900, and PLAML, TEPPO Crude Oil, CONPH, GULFM (Gulfmark Energy), ELPAF (El Paso Field Services), etc. Using the operator supplied data and other sources of data the following oil reserves volumes can reasonably be expected to be in place from ten (10) successful wells to be drilled using conventional analytical techniques from wells drilled in optimum locations upon the lease. ECONOMICS AND RESERVES SUMMARY TEN WELLS ANALYSIS On a ten (10) wells basis: ten (10) wells development at 50 BOPD per well: To 100% Working Interests on a successful basis as projected: Capital Investment: $ 5,500,000 USD Ultimate recoverable oil: 813,039 Bbls Net recoverable oil: 650,431 Bbls Net Income/Investment ratio: 8.84:1 Net Present PV- 0% Discount: $ 43,099,544 USD Net Present PV-10% Discount: $ 29,153,372 USD

22 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Perfetto Lease of Guadalupe Co, TX page 9 of 10 A three page recoverable reserves and production/cash flow projection analysis for ten (10) wells is attached. A sensitivity analysis projection is included for ten (10) well locations oil recovery from your planned drilling project. The sensitivity analysis uses projections from zero barrels of oil recovery initial rates per well per day for each of the eight wells to 75 barrels of oil recovery initial rates per well per day for each of the ten wells to be drilled and uses exponential decline rates from 20% to 50% to calculate 16 possible recovery rates and recoverable reserves values for this project. All oil and gas ventures involve risk of loss of part or all of any investment. This analysis does not include risk analysis. Nova does not guarantee, warrant, express or imply, by inclusion or omission, the presence of all or any hydrocarbons, either oil or natural gas, based upon data supplied by any operator. Nova has accepted the operator s supplied data as accurate without audit. Anyone considering investing in or attempting to recover oil and gas from any oil and gas well or project should seek their own independent third party outside council and advise before investing in any oil and gas venture. Nova is acting as an independent consulting geological, geophysical, and engineering firm retained by the operator to perform this analysis. Nova does not have or retain any interests in the referenced or adjacent leases.

23 Nova/Reliance: RE: Reliance Oil & Gas, Inc. s Perfetto Lease of Guadalupe Co, TX page 10 of 10 If you have any questions please feel free to call Nova Resource, Inc. at (972) or contact Nova by at novapet@tx.rr.com. Thank you for this opportunity to be of service to you and your company. Respectfully, Nova Resource, Inc. J. V. Rochefort President Encl: Recoverable Reserves Calculations Ten (10) wells recoverable three-page reserves analysis; one page sensitivity analysis; Lease and Well Maps and Data Perfetto Lease Report & Invoice Damato Reliance Perfetto Lease of Guadalupe Co., TX Recoverable Reserves Rpt & Invoice

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