COST OF TERA SES UNCONVENTIONAL EAGLE FORD SHALE AND CONVENTIONAL SURVEY SERVICES PER 4-SQUARE MILES

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2 COST OF TERA SES UNCONVENTIONAL EAGLE FORD SHALE AND CONVENTIONAL SURVEY SERVICES PER 4-SQUARE MILES Identify boundaries areas of high hydrocarbon saturations, or sweet spots Produce a 2-D survey map showing the individual survey lines, color coded for hydrocarbon intensity Produce a 3-D digitally georeferenced hydrocarbon intensity map Combine available seismic with TERA $145,000 Perform EM surveys over TERA hydrocarbon highs to define depth, and combine with seismic to form a hydrocarbon stack

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4 In the Eagle Ford basin, the best production is limited to areas that contain a high density of natural fractures within the shale. These fractures systems are filled with carbonate composed silt which improves shale reservoir quality. They frequently correlate with low relief structures that can only be detected with the most expensive high resolution seismic which cannot directly identify Eagle Ford shale sweet spots. Operators have therefor the approach of; scatter drilling wells over a large area, completing with massive fracks, and observing the results. Gradually as more wells saturate an area, a pattern emerges that shows regional areas of higher oil production. These are classified as c, or Tier I.

5 HOW TERA FINDS SWEET SPOTS: AN EARLIER VERSION OF TERA GAVE MITCHEL ENERGY THE EDGE IN THE BARNET SHALE Rather than attempting to identify inferred mechanical differences in reservoir rock properties as with seismic, TERA simply detects areas of high hydrocarbon concentrations. This was first accomplished in the Barnet shale in the late 1980 s for Mitchel Energy, a pioneer in shale gas development, which used an earlier version, ERA to help identify sweet spots for drilling before successful fracking methods had been developed. The original ERA system could only work from stationary positions. Values were taken at 20-minute station readings, repeated three times on separate days for accuracy, and plotted on a map with inferred contour lines delineating values. It was slow work, but enabled Mitchel Energy to drill the best locations and exploit the natural fractures which are essential to successful shale development.

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7 Production from shale is highly variable and a high value well can often be adjacent to low value wells. Most operators have a few outstanding producing wells, and a large number of modest producers. This condition is common in conventional reservoirs as well, but is less understood in shale because the subtle differences that distinguish an outstanding well from a poor well cannot generally be detected with seismic alone. If companies could define the best locations in advance of drilling, they would be far less vulnerable to today s low prices. All shale wells are characterized by steep hyperbolic decline curves, however some wells in core areas decline more gradually, and will produce much higher EUR s than others. Talus believes that these geologic conditions that produce extremely high EUR s can be detected with TERA at very low cost, perhaps only 5% of high resolution seismic. Applied properly, this method could delineate the most prolific locations for an extremely high production Eagle Ford shale well.

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10 HOW TERA SES FINDS SWEET SPOTS TERA allows for continuous readings in reconnaissance mode and can cover large areas at minimal expense. TERA can easily find sweet spots in previously undefined areas. However, we believe that this method can also be used to find enriched sweet spots within core areas. When combined with existing seismic the composite data set would reveal defined boundaries of high hydrocarbon concentrations, natural microfractures, and subtle structural relief. These areas will likely exist within previously defined core areas and should reveal smaller one well high value locations. Outside of existing defined core areas TERA SES would find a large number of smaller sweet spots that would make Tier II and Tier III leases far more valuable. TERA surveys of drilled uncompleted wells can provide be grades for future performance; thereby allowing completion engineers to better plan methods and priority. TERA hydrocarbon signatures on uncompleted wells can be matched with completed wells to improve production volume forecasting.

11 TARGETING PREVIOUSLY UNIDENTIFIED SHALE SWEET SPOTS WITH TERA SES In areas outside core sweet spots well production performance can quickly drop. Sweet spots become increasingly harder to identify. Expensive acreage quickly loses its value and operators are forced into an increasingly smaller area. Reduced NPV-10 asset value due to lower reservoir quality hurts stock valuations and reduces management financing options. TERA SES can greatly improve shale economics by targeting high oil saturations with resulting limiting drilling and completion waste. TERA SES IDENTIFIED SWEET SPOTS N MINI FAULTS NOT DETECTED W/SIESMIC TIER II ACREAGE (640 ACRE SECTION)

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15 TERA SES can identify smaller well defined fracture systems (sweet spots) within known Tier I, and unknown Tier II.

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17 EFFECTIVE IN EAGLE FORD & MOST CONVENTIONAL & UNCONVENTIONAL OIL & GAS RESERVOIRS t SCHEDULE A DEMO