Lone Star Production Company ("LSPC") has been exclusively generating prospects in the Permian Basin for over 25 years. In 2005, LSPC began working the southern Midland Basin searching for fractured Ellenburger Dolomite that LSPC had successfully exploited in the Val Verde Basin. While testing numerous Ellenburger prospects, LSPC and its partners conducted extensive geochemical, petrophysical, and mineralogical analyses in the Wolfcamp Shales and identified tremendous volumes of hydrocarbons in place in the Wolfcamp. LSPC began quietly assembling a large portfolio of leases and strategic partnerships with skilled operators. At present LSPC has non-operated ownership in >200 wells in over 90,000 acres in the Southern Midland Basin and has partnered with EP Energy (El Paso), Devon, FDL, Callon, BHP, Sable (AEP), EOG, Approach, Discovery, Foreland and others

In early 2010, LSPC brought in El Paso to join it on a 15,000 acre University lease block to test the Wolfcamp Shales for oil. At that time, Broad Oak (now Laredo) had just completed the industry’s first horizontal Wolfcamp lateral for oil in far northeast Reagan County. Simultaneously, EOG had begun initial evaluation of the Wolfcamp along the Crockett/Irion County line. LSPC’s extensive science work and initial drilling results convinced El Paso of the large scale economic viability of the horizontal Wolfcamp Shale Oil Play across northern Crockett County and motivated El Paso to spend over $170,000,000 to acquire ~135,000 acres at the September 2010 University Lands Lease Sale. This aggressive approach secured a well-positioned contiguous lease block with a single lessor which allows for substantial D&C savings due to economies of scale. LSPC has similarly encouraged numerous other operators into the basin to partner with LSPC in developing the Wolfcamp

Most of the current producing laterals are completed in the Wolfcamp "A," "B" & "C" Benches. There are, however, a rapidly growing number of lateral completions in the Wolfcamp "Lower C" and Lower Spraberry Benches throughout the area

Shale oil reservoir OOIP estimates are ~220-350+ BO/ac.-ft. and 102+ MSCF/ac.-ft. yielding ~110 to ~200+ MMBOE of Wolfcamp Shale oil per section. Oil recoveries are improving rapidly as operators learn how to optimize production and implement the efficiencies of pad drilling. Early average EURs per lateral achieved about 350 MBOE and since have steadily climbed to 850-1,000 MBOE. Finally, the regional oil potential appears to extend broadly across the southern Midland Basin and Ozona Arch

LSPC has been a pioneer in establishing and developing the horizontal Wolfcamp Shale play since its inception. It possesses superior Permian Basin land, geoscience and completions expertise. LSPC has created enormous added value for its various operating partners due to its uniquely broad exposure across the Southern Midland Basin.