Oil Land Investment Criteria

Sherwood monitors domestic wildcats throughout the Gulf Coast and Rockies. We generally avoid non-conventional shales such as Barnett Shale, Fayetteville Shale and the Floyd Shale because of inadequate reserves and flow rates. We are extremely impressed with the Reagan Bossier of Central East Texas both because of reserves and flow rates and areal extent of the fields. We are also impressed with some Piceance Basin Coalbed Methane and the Bakken Oil Shale play in Montana and North Dakota. We generally prefer conventional sandstone or fracture reservoir with field size of 30 BCF or more. We usually play wells with EUR above 5 BCF, flow rates in excess of 3MMCFG/D with good pressures. These criteria assure we are concentrating on the top 5% of discoveries drilled annually in the domestic US.

Investment Focus – Currently, the sole focus of the Company is the Reagan Bossier of Central East Texas. The company believes these discoveries by Burlington Resources, EnCana. Leor Energy and Anadarko are some of the largest domestic gas discoveries in US history. There are 8 discoveries. Three exceed 1 TCF in size. The EnCana Amoruso is reported to have EUR of over 3 TCF and is not yet delimited. It has individual wells that average 20MMCFG/D on initial test. 300 development wells are planned. Anadarko Holly Branch is over 10,000 acres in areal extent. In addition to Reagan York and Bonner sands the field contains a new fractured shale member which is estimated to contain over 3 TCF in place alone. Conoco Phillips/Burlington is developing the first strike Savell (1 TCF EUR) and has two new discoveries on trend. The shelf edge is 250 miles long and is also prospective for these Reagan Sands. The sands may also be carried further outboard into the main basin. PGS is conducting an industry sponsored 3D shoot that is imaging over 2000 square miles of this enormous gas charged basin. Industry will drill over 20 super deep wildcats to test for these outboard sands this year alone.

The play has been largely ignored by the financial press. Except for the operators, there has been no significant leasing activity by any new entrants. Energy Hedge Energy Hedge Funds and Private Equity Players in Energy are notably absent. Sherwood believes this demonstrates serious deficiencies in the information flow in the capital markets for Energy . Sherwood is concentrating its entire organization and available capital on this play. We have found no comparable set of allocation opportunities that can match Reagan Bossier in the collective experience of our entire staff of professionals and industry contacts.