The Oldest Energy Property Clearinghouse and the First Website in the Petroleum Industry

2. Energy Exchange Presents: WINDOWS OF OPPORTUNITY IN ENERGY

3. Three Parts The Energy Exchange Opportunities in Energy Select Projects

4. What is the Energy Exchange? An energy consulting firm www.ERCO-EnergyResources.com An association of engineers, geologists, and financial professionals Not a brokerage firm

5. Our Purpose To connect energy projects with funding sources

6. The Energy Exchange Initially Modeled after Real Estate�s MLS Oldest energy clearing house (1983) Petroleum industry's first website (1994) www.enex.com

7. The Energy Exchange Hundreds of projects available From $10 thousand to $10 billion

8. The Energy Exchange A Technical Network (ERCO) A Financial Network We close the gap between the energy technical community and the financial community.

9. The Energy Exchange

10. Shoe Store Analogy XYZ Shoe Store EnEx Shoe Store

11. Energy Store Analogy One Project Store Energy Exchange Store

12. Who are we?

13. Technical Associates David H. Mangum, P.E. - Petroleum Engineer, Geologist, MBA Bill Olson - Geologist, Geophysicist, MBA, Attorney Cesar Abeigne, PhD � V. P. International, Geo scientist, Speaks 5 languages Belkis Fernandez � Petroleum Engineer, Reservoir Modeling, From Venezuela Vladimir Ingerman, Ph.D. � Geophysicist, From Russia Charles Mangum, P.E. � Civil Engineer, Drilling Rig Designer Dennis McMurdie � M.S., Geologist, Salt Lake City Bob Oberndorf, Geologist, Denver Edwin Tillman � Computer Systems Engineer Daniel Mangum, Petroleum Landman D. Grady Mangum � Information Systems D. B. Mangum � Field Operations, Oklahoma Khalid Al-Ruwaili � Petroleum Engineer, Saudi Arabia Jim Evans � Geophysicist Many Others Nationwide & Worldwide

14. David H. Mangum, P.E., President Licensed Petroleum Engineer / Geologist Over 35 years petroleum experience with five Fortune-100 energy companies (Mobil, Shell, Schlumberger, Tenneco, and Coastal) Geology, Mississippi State University B.S. in Petroleum Engineering, University of Texas M.B.A., Pepperdine University Real Estate and Securities License (Expired)

15. Legal Professionals Bob Olson, Esq. � Attorney, Geologist, Geophysicist, MBA George Nama, Esq. � International Law Darin Mangum, Esq. � Securities, Former SEC

16. Financial Associates Janson Durney, West Point Military Academy Alex Westwood, Finance Rick Veale, Product Trading Alan Tomkow, Business Development Gerald Avery, Administration Hector Escamilla, Jr. Gwen O. Pearson, African Business Development Dennis Timpe, Oil and Gas Production Contracts Darin H. Mangum, Esq., Legal Counsel Many More Nationwide & Worldwide

17. Part II WHY INVEST IN ENERGY?

18. WHY INVEST IN ENERGY? Inflation Hedge High Financial Rewards Cash Flow (Mail Box Money) Diversification Tax Benefits Competition Lease Costs Drilling Prospect Availability Demand / Consumption Oil Production Trend Price Forecasts Drilling Costs Technology Environment Government Endorsement Money Crunch

19. That Sinking Feeling

20. Three Boogie Men

22. Two Strategies - Gold or Oil  (Natural Gas or Silver)

23. HIGH FINANCIAL REWARDS Producing Wells � 10-20% Cash-on-Cash Return Developmental Wells � 85% success 25% to 100% Annualized Return on Investment Exploratory Wells (Wildcats) - 10% to 50% Success 100 to one Return-on-Investment

24. Purchase Proven Natural Gas (Project 9085)

25. RISK Drilling is becoming less risky. Several projects have a probability of success better than 90%. Many projects would be economically attractive even if oil or gas prices would fall 50%.

26. COMPETITION The big money has gone offshore, because there are �too few easy-to-find big oil fields� remaining onshore in the USA. Over 10,000 oil companies have left the arena since 1982.

27. Average Oil Well Producing Rates

28. DRILLING PROSPECT QUALITY Because the big oil companies are pulling out of the USA, the quality of small drilling prospects are getting better.

30. LEASE COSTS Oil companies are not as anxious to renew leases. (so lease costs are low)

31. Demand / Consumption U.S. consumes 25% of world�s petroleum. Asians are taking lessons from the USA.

32.

33. China is buying up world oil reserves Venezuela Angola USA

36. OIL PRODUCTION TREND USA output is at 35 year low Over two-thirds of USA onshore oil wells are �marginal�. (Less than 10 barrels per day)

37. Oil Imports Yesterday � 30% During Embargo (1970) Today � 67% (All Time High) Tomorrow � 73% within 20 years. The U.S. Office of Technology Assessment says that �This will Bankrupt the U.S.A.�

39.

40. DRILLING COSTS Rig activity is low, so drilling costs are low.

41. TECHNOLOGY Recent advances in oil finding technology have reduced risk and improved recovery . Some companies report 85% success on wildcat wells.

42. ENVIRONMENT Sierra Club endorses natural gas, wind, solar, and geothermal. (Combustion by-products of gas are carbon dioxide and water).

43. GOVERNMENT Encourages domestic drilling with special tax breaks. Mandates natural gas usage over oil and coal. Natural gas is now deregulated.

44. TAX BENEFITS Drilling is the best tax advantaged investment (Newsweek) Congress gives tax breaks to individual investors that are not available to large companies. 100% tax deductible ... 65 to 80% can be written off in first year Up to 100% tax-free income.

45. MONEY CRUNCH Traditional sources of drilling money are not as available. Big Oil Companies Banks Mezzanine Financing

46. CONGRESSIONAL TAX INCENTIVES Domestic Oil and Natural Gas makes our country more energy self-sufficient by reducing our dependence on foreign imports. Congress provides tax incentives to stimulate domestic petroleum production financed by private sources. These incentives are not "Loop Holes" -- they were placed in the Tax Code by Congress to make participation in oil and gas ventures one of the best tax advantaged investments.

47. INTANGIBLE DRILLING COST TAX DEDUCTION The Intangible Drilling Cost (IDC - labor, chemicals, mud, grease, etc.) - usually about 75% of the cost of a well. The IDC is 100% deductible during the first year. For example, a $100,000 investment would yield approximately $75,000 reduction in taxable income during the first year of the venture. These deductions are available in the year the money was invested, even if the well does not start drilling until March 31 of the following year. (See Section 263 of the Tax Code.)

48. TANGIBLE DRILLING COST TAX DEDUCTION Tangible Drilling Costs (TDC) are also 100% tax deductible. In the $100,000 example above, that is $25,000. (See Section 263 of the Tax Code.)

49. ACTIVE VS. PASSIVE INCOME The Tax Code prohibits the offsetting of losses from Passive activities against income from Active businesses. The Tax Code specifically states that a Working Interest in an oil and gas well is not a "Passive" Activity, therefore, deductions can be offset against income from active stock trades, business income, salaries, etc. (See Section 469(c)(3) of the Tax Code).

50. SMALL PRODUCERS TAX EXEMPTION The 1990 Tax Act provided special tax advantages for small companies and individuals. This tax incentive, known as the "Percentage Depletion Allowance", is specifically intended to encourage small company and individual participation in oil and gas drilling. This tax benefit is not available to large oil companies The "Small Producers Exemption" allows 15% of the Gross Income (not Net Income) from an oil and gas producing property to be tax-free. (See Section 613A of the Tax Code.)

51. ALTERNATIVE MINIMUM TAX The Tax Code specifically exempts Intangible Drilling Cost (IDC) as a Tax Preference Item. "Alternative Minimum Taxable Income" generally consists of adjusted gross income, minus allowable Alternative Minimum Tax itemized deduction, plus the sum of tax preference items and adjustments. "Tax Preference Items" are preferences existing in the Code to greatly reduce or eliminate regular income taxation. Included within this group are deductions for excess Intangible Drilling and Development Costs and the deduction for depletion allowable for a taxable year over the adjusted basis in the Drilling Acreage and the wells thereon.

52. Green Tax Breaks 2.1 cents per kWh for first 10 years Full depreciation in 5 years Federal Cash Grants (30%) federal cash grants avail that replace the capital cost tax credit with cash in the amount of 30% of the project's qualifying cost 50% Depreciation (2009) MACRS � (Modified Accelerated Cost-Recovery System) Bonus Depreciation (2009) ITC (Energy Investment Tax Credit) (10% Geothermal, 30% for solar, fuel cells, small wind systems)

53. Why Invest in Oil and Gas? High Financial Rewards Risk Tax Benefits Competition Lease Costs Drilling Prospect Availability Demand / Consumption Oil Production Trend Price Forecasts Drilling Costs Technology Environment Government Attitude Money Crunch

55. Sample Projects Purchase Proven Producing Natural Gas (#9085) Purchase Proven Producing Crude Oil (#9084) Gulf Coast Well Work-over Program (#9022) Texas Over-thrust Exploration Venture (#9019) Domestic Refinery Expansion (#9048) Well Enhancement Drilling With Water Jets (#9049) Cayce Drilling Venture (#9028) Geo-thermal Electrical Generation (#9020) Diesel Emissions Control (#9098) Nuclear Power Plant (90xx) Biofuels Electrical Power Generation (#9023) �Hundreds of other projects available�