1. PROPOSAL Merging of Tarblaster AS and ELLYCRACK AS
with Tarblaster as the overtaking company

2. THE COMPANIES
Tarblaster and Ellycrack are two independent companies, but they share:
office
accountant and auditor
and use the same R&D institutions
Board members, management and shareholders are to a large extent the same.

3. Tarblaster AS
Tarblaster is developing a technology for extraction and upgrading of oil from oil sand, oil shale and the like.
The first patent application in extraction and upgrading of oil from oil sand is granted in Canada and is pending in a number of countries. In addition two new applications within the same category have been filed.
As a result of the R&D, two additional patent applications are under preparation. The first is called SoundCrack and the second is called PlasmaCrack.
At present Tarblaster has invested about NOK 25 million in its project.

4. Ellycrack AS
Ellycrack is developing technologies for upgrading of heavy oil.
Ellycrack holds two patents on its VISCOSITOR process in addition to a patent on an electrical upgrading technology called EEC (Electrical Cracking and Conversion). In addition, a new patent named SandBlaster is under preparation.
At present Ellycrack has invested about NOK 35 million in its project.

5. Technologies Tarblaster AS TB1 TB2 TB3 SoundCrack PlasmaCrack
Ellycrack AS V1
GasBlaster
Nozzle
SandBlaster
ECC

6. Industrialisation of the Tarblaster process
EST
EST
Tarblaster TB2
Demon-stration unit TB3
Medium scale plant TB-X
Commer-cial plant TB-25
6-10 kg/hr
Located in Oslo
For continuous operation
R&D-Tool
100 kg/hr
Located in Trondheim
Including of coke regeneration
For continuous operation
Demo tool
1-10 t/hr
Use of existing demo-tool?
Proof of scalability
t/hr
1st commercial step
Located on site
2,500 t/hr
Reactor
10m x 6m
H = 25m
R&D-Phase:
Commercialisation Phase
Tarblaster AS
Client / Customer
27/04/2010
Tarblaster AS – René Sass

7. Industrialisation of the Ellycrack process
Viscositor 1
Viscositor2
Demon-stration unit VX
Medium scale plant V2K
Commercial plant V20
50 bbl/d
Located in Trondheim
Oil cracking reactor
Experimental tool
50 bbl/d
Located in Edmonton
R&D-Tool
Mass and energy balance test
Coke regeneration
200 bbl/d
Located in Canada
Including coke regeneration
For continuous operation
Demo tool
2,000 bbl/d
Proof of scalability
Proof and demonstration tool
20,000 bbl/d
Regenerator
D=5m
H=10m
R&D-Phase:
Commercialisation Phase
Ellycrack AS
Client / Customer
26/04/2010

8. Consequences merged companies
One company, one management
Free float of technologies
No internal competition
Reduced costs
Added value to the merged company compared to two stand alone companies
Faster exit through an IPO

9. The rationale for the merger
One company, one management
Easier to manage
Free float of technologies between the companies
Patent situation clear and simple and patents can be shared and internal competition is avoided.
Substantial savings
Reduced management costs, sharing of equipment and resources
Added value to the merged company
Higher exit value of a merged company than two companies on a stand alone basis.
Faster exit through an IPO
It is believed that a merged company can be listed on a stock exchange within a three year period.

10. The rationale for the merger
Easier to finance and thus greater possibility to have the technologies developed and brought to the market
A merged company will make it easier to finance the company in the present financial market.
Can later de-merge into smaller companies and increase the value.
It might be strategic to de-merge one or more technologies in order to increase the value of each or the company. Full freedom to plan the exit as it may beneficial for the company.

11. The rationale for the merger
Release Olav from potential conflict of interest
Will eliminate any questions about which company new technologies should be granted to.
Reduced risk/hedging
All technologies in one company. If one technology fails or takes long time to realize, other technologies can be given priority, thus reducing risk
Almost 100% of Tarblaster shareholders are Ellycrack shareholders
Merging with Tarblaster means that Ellycrack will also be supported by the professional investor (Epi-V)

12. The vision of the merged company
New Tarblaster AS will be a “clean tech” company which is developing more environmental friendly and cost saving solutions for the heavy oil and oil sand industry.

13. Profile Solidly funded company until exit
International experienced Board of Directors
Experienced management and engineering team
Profound knowledge and experience in oil processing
Empowering environment for new ideas and inventions within the company´s vision
Successful ideas are transferred into independent projects and businesses.
Development of different projects in parallel

14. Time schedule Formal Board meetings in both companies
June 2010
Extraordinary general assemblies and announcement to company register (Brønnøysund) with 3 months lead time
Second week in August 2010
Closing of the merger in extraordinary general assemblies
Mid November
Design of merged business plan
October 2010

15. Exchange
One share in Ellycrack will give one share in Tarblaster whereby Ellycrack´s shareholders will hold 30,83% and Tarblaster´s shareholders will hold 69,17% in the merged company.