1. “Perspectives on Montana’s Petroleum Industry” MREA-MPA-MONTAX “Bridges to the Future” Conference October 15, 2009 Dave Ballard President Ballard Petroleum Holdings LLC Billings, Montana

2. Presentation Overview Industry Overview and Economic Contribution Meet the Producers Producing Areas and Trends Geologic Elements of an Oil Field Field Examples and the Technology of Discovery and Production Have We Reached Peak Production?

3. Field Examples and the Technology of Discovery and Production Surface Geologic Mapping Subsurface Geologic Mapping Seismic Mapping Shallow “Tight” Gas Frac Stimulation Horizontal Drilling and Frac Stimulation Waterflood Enhanced Oil Recovery CO 2 Flood Enhanced Oil Recovery Sensitive Environment Operations

4. Horizontal Drilling and Frac Technology Updated as of May, 2009 Elm Coulee (2000)

5. Elm Coulee Field Richland County, Montana Drilling Site

6. Elm Coulee Area Lodgepole fm (Miss) Three Forks fm (Dev) Nesson Anticline WESTEAST SCHEMATIC STRUCTURAL CROSS-SECTION Modified after Meissner (1978) Antelope Field Three Forks fm (Dev) SASKATCHEWANMANITOBA NORTH DAKOTA SOUTH DAKOTA MONTANA WYOMING WILLISTON BASIN Member Extents: Cross-Section MIDDLE MEMBER LOWER SHALE UPPER SHALE OVER-PRESSURED AREA Nesson Ant Bakken Type Log Elm Coulee Antelope Bakken Formation Williston Basin

7. ELM COULEE AREA PRE-2000 BAKKEN PENETRATIONS

8. TYPE LOG – ELM COULEE AREA Balcron Oil - #44-24 Vaira SESE Sec. 24, T.24N., R.54E. Modified after J. LaFever Density/Neutron Porosity GR/Caliper Lodgepole Fm. Three Forks Fm. Upper Shale Middle Member (Dolomite, var silty, arg) 30 20 10 0%0 (API Units) 100 TARGET BAKKEN 45 FT

9. Vaira #44-24 Vertical Well and Williams 11X-24 Horizontal Well Sec. 24, T.24N., R.54E. VERTICAL VS. HORIZONTAL BAKKEN WELL PRODUCTION ELM COULEE FIELD, RICHLAND CO., MONTANA

10. ZERO EDGE UPPER BAKKEN SHALE ZERO EDGE MIDDLE BAKKEN MBR ZERO EDGE LOWER BAKKEN SHALE BAR/BANK COMPLEX BASINAL NORTHEAST GEOLOGIC SETTING – ELM COULEE FIELD Bakken Structure, Depositional Limits, Productive Area

11. SOUTH NW NW 3 22N 56E Gamma Ray Sonic Dual Laterolog CROSS-SECTION - MIDDLE BAKKEN DOLOMITE MEMBER Richland County, Montana NORTH NE SW 34 24N 57ESE SW 21 25N 57ESE SW 6 23N 57W UNCONFORMITY DATUM TOP BAKKEN FM < 6% POROSITY Gamma Ray Density/Neutron Dual Laterolog > 6% POROSITY SWSE 19 23N 57E Gamma Ray Density/Neutron Dual Laterolog NESWSW 15 23N 55E LOWER BAKKEN SHALE THREE FORKS FM LODGEPOLE UPPER BAKKEN SHALE MIDDLE BAKKEN MEMBER (DOLOMITE) MAP INTERVAL LODGEPOLE THREE FORKS Bakken Stratigraphic Cross-Section Richland County

12. Bakken Oil Well Frac Stimulation Richland County, Montana

13. Oil Tank Battery

14. TARGET ZONE SUMMARY MAP – ELM COULEE FIELD (Jan-2006) 450 Square Miles EUR 225 MMBO, 270 BCFG