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 Regional Geology 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. Bell Creek Oil Field, Powder River County, Montana Encore Acquisition Company Waterflood Status as of 12/31/07 From: Encore Acquisition Company 8-K Report for 3/4/08 Injector Current rate 1,350 BOEPD Producer

5. Bell Creek CO 2 Project – Overview Map Bell Creek Field 21,771 acres (15 X 3.5 miles) Muddy Sandstone – 350 MM barrels Original Oil-in-Place Encore Operated: (WI=100%, NRI=85.3%) Current Production 1,233 BOPD Successful Waterflood – 38% Recovery Factor CO 2 Flood Potential = 30 MM barrels Peak CO 2 Oil Rate Uplift = 7,000 barrels per day ~ 225 mile route 8” – 100 MMSCF/Day Capacity N. Dakota S. Dakota Wyoming

6. Bell Creek CO 2 Project – Development Phasing Project divided into seven phases Reservoir Parameters: –API gravity: 33 -41 0 API –Depth: 4500’ –Flood Pressure: 2300 psi –Temperature: 108 0 F –Porosity: average = 24% –Permeability : average= 900 md –Gross Thickness: 25-30 feet –Original Oil-In-Place: 350 MM barrels –Remaining Oil-In-Place : 221 MM barrels –Minimum Miscibility Pressure: 1250 – 1850 psi –40-acre spacing – 5-spot pattern Bell Creek CO 2 injection will be installed in multiple phases between 2011 and 2025