Termo increases existing production 11% through optimization

January 6, 2012

Termo continues to execute on its optimization strategy having made significant internal production gains since early summer when several leases were shut-in or production curtailed due to regulatory and operational issues.

From January through October 2011, oil production increased 11.7% and gas production has increased 5.8%. This increase is largely attributed to decreasing down-time and re-examining marginal wells. The analysis of marginal wells lead to several actions being taken such as cleanouts, acidizing, adding additional perfs, or changing pumps.

In comparison U.S. crude oil production during this same period grew 5% nationally; regionally the Rocky Mountain regions increased 4%, the West Coast region 6%, and Louisiana onshore declined -2%. (Source EIA)

We are extremely pleased to beat the national production gain and thank the dedication of our engineers and field personnel.

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Oil and Gas Sands Test in St. Martin Parish, Louisiana

South Louisiana

Termo is partnering with Penta Resources of Lafayette, Louisiana in the Bull Moose Prospect to test the reserve potential of the Marg Tex 2, Stuart A and Bol Mex 2 sands. The well has a proposed TVD of 11,500’ and is located on the north flank of the Section 28 Field. In adjacent fault blocks are the Amoco St. Martin Land #9 and Stanolind St. Martin Land #5 wells. The Amoco #9 has produced 1.19 BCF and 1,100 MBO and the Stanolind #5 has produced 5.90 BCF and 580 MBO. The fault trap is bounded laterally by faults “R” and “S” and updip by Superior St. Martin Land #B-1 and Cypress Stuart #1 with gas pay in the Bol Mex 2A sand. Control for the faulting and salt placement is from reprocessed 3-D seismic data and subsurface well control.

The proposed well will penetrate the Marg Tex sands up-dip from the apparent pay zone in the Amoco SML #20 well. In the up-thrown fault block, the Amoco SML #21 well is actively producing from the Marg Tex 2A sand. Downthrown on Fault T is the Amoco St. Martin Land #16 which is actively producing the Marg Tex 2A sand. In the fault block to the east and on strike, the Amoco St. Martin Land #7, #14 and #19 wells are productive in the Marg Tex 2 sand with cumulative production of 144 MBO and 208 MMCF.

Reserves Summary:

Two cases were run with three sands productive by virtue of the down-dip or adjacent production, a likely case with the Marg Tex 2 having 48 MBO, and 144 MMCF, the Stuart sand having 100 MBO and 250 MMCF and the Bol Mex 2 having 412 MBO and 889 MMCF for total potential reserves of 312 MBO and 639 MMCF. An upside reserve estimate calculated for all three sands is 544 MBO and 1,582 MMCF. The proposed 11,500’ well is estimated to cost $1.2 million dry hole or $2.4 million dry hole if a liner over the Het sand is required. The completed well would cost an additional $720,000 or $1.92 million for a completed well if the liner is not required.

Contacts:

Penta Resources – Jim Diehl – diehlland(at)aol.com

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