The Termo Company

Initiative to optimize production starts to bear…oil

July 15, 2011

Breaux Bridge, Louisiana -

In an ongoing effort to reduce its idle well inventory and optimize production from existing fields, Termo Team members in Louisiana and Long Beach identified and brought online two wells in recent weeks. The Rycade #4 benefited from a switch to an ESP and the Fleming #7D, which had been idle, was pulled and cleaned out. This work has brought an incremental increase in production of 100 BOPD from this field and added approximately 150,000 BO in reserves. The team is currently examining the SML #17 for a work-over and optimization.

Termo adds up to 15 well locations in existing fields in L. A. and Ventura County

July 1, 2011

Santa Paula, California -

Through an ongoing geological review and reinterpretation of data, Termo has identified the potential for up to 15 new well locations in existing and proposed field expansions within the Los Angeles and Ventura Basins. Additional mineral acreage has been secured through leasing and three projects are in the planning and permitting phases. The first wells are expected to spud in late 2011 or early 2012. Depending on the success of the first wells, drilling will continue for two to three years.

Termo Acquires Granite Wash Acreage

June 13, 2011

Long Beach, California -

Termo is excited to announce its entry into this highly prolific and productive area with its acquisition of Newport Oil Company’s 297 net acres in Washita County, Oklahoma. The acreage lies within 25 separate sections and has a net working interest as high as 13%. The purchase included interest in 5 currently producing wells operated by Chesapeake Energy. Some of these wells have had initial production rates as high as 10,000 MCFPD and 1,000 BOPD. Chesapeake has an aggressive drilling plan for this area, so Termo expects to see a great deal of activity within its interest block. While wells are currently being drilled one per section, the general belief within the industry is that the resource will be better produced with multiple wells per section. Termo’s acreage also has multiple target zones within the Granite Wash and Cleveland Sand.

Termo Welcomes Manuel Magallanes, Production Engineer, Onboard

April 1, 2011

Long Beach, California -

Termo is pleased to announce that Manuel Magallanes has joined the company as a Production Engineer. Formerly with Baker Hughes and Schlumberger as a technical advisor in the Artificial Lift Divisions, he brings broad industry knowledge to well production and strong capabilities in well optimization. Originally from Venezuela, Manuel has worked in Romania, Azerbaijan, and most recently Texas. With a BS in Petroleum Engineering and an MS in Drilling and Production from the Universitatea Petrol–Gaze din Ploiesti, Romania, he is expected to make a significant contribution to Termo’s ongoing idle well review and well optimization program.

Best Practices for Minimizing Environmental Impact

The Termo Company strives to reduce its environmental impact while expanding its operations to meet the growing energy demand in California and beyond. Our efforts include decreasing operational use of natural resources, advanced drilling techniques and investing in new technologies.

We’ve highlighted the technologies and practices implemented to minimize our environmental impact:

•Small Drilling Pads: Developments in drilling methods and technology are leading to efficiency gains for oil and natural gas producers. Modern pad drilling techniques allow rig operators to drill groups of wells more efficiently and improved rig mobility reduces the time it takes to move from one well location to the next, and this reduces the environmental footprint.

•Multi-Well Drilling Pads: New methods of drilling allow smaller surface pads to reach greater exploratory acreage beneath the surface. Multi-well pad drilling allows us to reach our target area without disturbing as much surface. Using this technique, we have drilled up to four wells from a single acre drill pad, significantly reducing the surface disruption from our operations.

•Well and Casing Integrity: We ensure that the wellbore is structurally sound and that no leaks exist: wellbore fluids are isolated from the surrounding earth by casing and cement, and the casing is pressure-tested prior to any hydrocarbon production. Casing integrity is ensured throughout the process by continuous monitoring of annular pressure. The casing and cement ensure zonal isolation of oil and gas during the producing life of the well.

•Reducing air emissions: The Termo Company is continuously evaluating emission-reduction technologies as its operations become more efficient. We recognize the global concern about the potential impact of greenhouse gas (GHG) and other air emissions on the environment. Our efforts include vapor recovery on production systems, dust control on roads and facilities, erosion control for disturbed areas, and quarterly equipment leak detection and repair audits. In addition, we use processing equipment to remove methane from produced water preventing possible escape to the atmosphere. Consistent with our environmental commitment, we continue to implement measures to reduce atmospheric GHG emissions and integrate air quality programs into our business practices.

•Health and operational safety: We live by these key health and safety principles: protecting the environment in which we work is a core value for The Termo Company. Workers communicate with us daily about operations and identify potential hazards. If an unforeseen event occurs, we will report the incident. Then we follow the procedure to clean it up properly, work diligently to determine why it happened and identify what we will do to prevent re-occurrence.

•Hiring and maintaining highly respected contractors: We use outside contractors to perform drilling operations on our behalf. We rigorously review the qualifications of each contractor, including environmental, health and safety records as part of our internal commitment to The Termo Company’s contractor selection process. We also retain independent third party inspectors to monitor operations on our drill sites.

In summary, we will always try to do the right thing and implement the appropriate management systems. This includes developing customized procedures, procuring equipment as necessary and using the best practices available. If a job can’t be done in a safe and environmentally conscious manner, we won’t proceed until we can do so in a responsible way.

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