Exploration and Project Updates

March 20, 2013

Termo is excited to be a working interest partner in the Houston Energy (HE) Clearwater Bayou Prospect, Vermillion Parish, Louisiana. HE is currently testing the discovery well in the East White Lake Field with flowing gas from several sands. Current flow rates and total net pay suggest a very promising project.

In St. Martin Parish, Termo recently completed the LUCA #1 / SMLC #26 well and will complete two additional wells drilled by LUCA in an exploration partnership between Termo, Penta and LUCA that comprised the Bull Moose Prospect. Results to this point indicate a very successful project.

In Los Angeles County, California, Termo is submitting a permit for up to twelve wells in, and adjacent to, a currently operated field. Permits have been recently acquired for wells in Fresno County, California that the company expects to drill in 2013.

Currently the company is participating in the drilling or completion of ten wells from the Bakken to the Eagleford, Colorado to Louisiana.

Infill and Development Drilling Studies

Los Angeles Basin, California

Termo's review of the geologically complex area of the Aliso Canyon and Oat Mountain oil fields has resulted in the drilling of new wells over the past ten years. Several pay zones were found in each well and are on production. Initial results have been very encouraging. New information from these wellswas incorporated into a geological interpretation to enable further development.

Termo went through the extensive (and expensive) process of designing and permitting locations for up to 10 additional wells in this area, designating a new project area, North Aliso Canyon, for which we have begun the environmental review process for local entitlements. Permitting in Los Angeles County is a rigorous and time consuming process, and Termo engaged the services of some of the best environmental and technical consultants in California to help us design and implement a sound and successful program for the area. We worked with stakeholders, held public meetings, and toured the field with local leaders.

However, forces beyond our control derailed the project and it has been put on hold indefinitely. A combination of unjustified NIMBYism and a large utility company accident resulted in a political climate which made it all but impossible to continue forward. We remain hopeful that we can work with local leaders to implement a project that is scaled down but reasonable and acceptable.

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