Mineral Sales

Overview Current state of Oil and Gas Industry Primary areas of operation inside the U.S. Common terms used in the industry Gaining experience and education Opportunities in the O&G industry Questions and Answers Closing

State of the Oil & Gas Industry Despite reports from the gold standard (Baker Hughes) rig counts stood still during November and December, with no measurable gains after a steady incline throughout the year. Decreasing natural gas rig counts offset rising oil counts through years end and caused the industry to show year-to-year declines in U.S. drilling permits of 5 to 10% for the months of October & November. So, is the party over? Definitely Not…! For the third straight year companies project sizeable increases in drilling for the coming year. Following a 13.8% increase in well completions during 2010 and a 21.3% year-to-year increase in 2011 as of October, according to the counts from the U.S. Energy Information Administration, Independent operators say they plan to increase drilling in 2012 by another 37.6%. In a survey that was just reported to the American Oil & Gas Reporter, 78.9% of large size drillers and 72.2% of medium size drillers say they will drill more wells this year than last year, compared to only 50.0% of the Small drillers (reporting to drill 0-4 wells projected in 2012). The outlook is very positive for the O&G industry leading into 2012.

U.S. Rig Count (2012) –Jan 6 th, 2012 thru Feb 10 th, 2012 State of the Oil & Gas Industry

U.S. drilling permits approved in December 2011 State of the Oil & Gas Industry

Primary U.S. Areas of Operation

(RI) Royalty interest: –A share of production or the value or proceeds of production, when and if there is production. Royalty is normally expressed in a fraction (e.g., 1/6 th ). A royalty interest owner has no right to operate the property and no right to lease the property. Different types of royalty (land owner’s Royalty; Non-Participating Royalty; and Overriding Royalty). (ORRI) Overriding royalty interest: –A share of production free of the costs of production, usually carved out of the lessee’s interest under an O&G lease. Normally used to compensate parties who have helped structure a drilling venture. Overriding royalties usually terminate when the lease terminates. Common Industry Terms

Lease vs. Sale Open for lease (NMA) Net mineral acres vs. Gross mineral acres (HBP) Held by production Gross lease vs. Net lease Bonus or (Lease Bonus): a payment to induce a lessor to execute the lease No deductions clause Commencement clause Depth clause Pooling or Unitization clause Common Industry Terms

Read and study the industry –American Oil & Gas Reporter magazine –Oil and Gas Law in a Nut Shell (5 th edition, by John S. Lowe) –Independent Oil and Gas Association of (name of state) –(NARO) National Association of Royalty Owners –(IPAA) Independent Petroleum Association of America –(NAPE) North American Prospect Expo * The World’s Largest Prospect & Property Expo in Houston, TX. Held twice per year. Gaining Experience and Education

Outright sale of mineral interest Outright sale of oil & gas companies Outright sale of oil & gas equipment Mineral lease marketing and negotiations Mineral rights and lease auctions Opportunities to make revenue in the Oil & Gas Industry

Questions and Answers

Shawn Terrel Vice President United Country Auction Services The End