Blue
Ridge
Enterprises                                                                      
Oil
Field Service


PO
Box
1703                                                                                                           Jerry
Worsham
 Mineral
Wells, Texas 76068
 817-266-2486
 jworsham@flash.net
 RESERVE
AND ECONOMIC REPORT OF
  AMERICAN
ENERGY PRODUCTION INC.
 An
engineering and economic evaluation was prepared on oil and gas property working
interests owned by Bend Arch Petroleum Inc. ("Bend Arch"), and Production
Resources Inc. ("PRI"), both wholly owned subsidiaries of American Energy
Production Inc. (the "Company") This evaluation includes twenty four (24) oil
and gas leases that are classified as Proved Producing Reserves (PDP), Proved
Behind Pipe Reserves (PDBP) and Proved Undeveloped Reserves (PUD). PRI is the
owner of all the leases in Medina County, Texas and operates two leases. Landmen
of Texas, an independent contract operator, operates seven leases. Proco
Operating Co. Inc. operates the Bend Arch wells under a contract operating
agreement.
 Daily
production as of December 31, 2008 for all entities is approximately 300 MCFD
and 47 BOPD gross, of which 230 MCFD and 36 BOPD is net to the Company.
Remaining reserves, future cash flows and present worth values were calculated
as of December 31, 2008. The attached Exhibit A lists the leases included in the
evaluation with location and miscellaneous lease information.
 In
previous years, the Company has reported the oil and gas reserves with Probable
and Possible Reserve categories included. The December 31, 2008 Reserve and
Economic Report will only include PDP, PDBP and PUD Proved Reserve categories.
Blue Ridge Enterprises Inc. believes this method of analyzing the reserves is a
more conservative way to give value to all of the producing leases owned by The
Company.
 Information
used in the evaluation was provided by Bend Arch and PRI and was supplemented by
data gathered from public sources. Summary results of this report are provided
below and details are presented in referenced attachments, The pricing scenario
utilized in the evaluation was determined based on fiscal year-end prices
as of December 31, 2008. Projected reserves and financial values are summarized
as follows:
  Reserve
      Categories
                  
                  OIL
                    MMB
                  
                  
                  Gas
                    BCF
                  
                  
                  Cash
      Flow
                    Btax $
                  
                  
                  PV
      10
                    Btax $PDP
                  
                  
                  0.303
                  
                  
                  
                  5.927
                  
                  
                  $
                  36,542,066
                  
                  
                  $
                  6,884,536PDBP
                  
                  
                  0.230
                  
                  
                  
                  7.500
                  
                  
                  
                  45,733,971
                  
                  
                  
                  12,201,860PUD
                  
                  
                  7,195
                  
                  
                  
                  27,095
                  
                  
                  
                  396,669,564
                  
                  
                  
                  127,959,348TOTAL
      PROVED
                  
                  
                  7,728
                  
                  
                  
                  40,522
                  
                  
                  $
                  478,945,601
                  
                  
                  $
                  147,045,744
  -1-
 A
one-line economic summary (by lease) of the results from this evaluation is
included in the attachments along with summary economics and a graph of gross
production. Detailed results of the evaluation showing forecasts of production,
reserves, revenues, and income for each lease are presented in a yearly format,
and are attached and made part of this report. Lease summary reports have been
included to provide details of the analysis.
 EVALUATION
METHODOLOGY AND RESERVES DISCUSSION
 Each of
the twenty four (24) existing leases was evaluated as separate entities for the
purpose of PDF, PDBP and PUD and each lease has multiple wells. Each of the
categories shown on Exhibit A were evaluated as an individual producing entity
for the purposes of forecasting future production, remaining reserves, revenues,
expenses and cash flow.
 PRICING
FORECAST
 Reserve
estimates and economic evaluations utilized realized year-end oil and natural
gas prices as of December 31, 2008. Prices were included at the lease or well
level. These realized product prices reflect adjustments that include price
differentials, BTU content, field losses and usage, and gathering and
compression. No further adjustments to gas price for all of the factors
mentioned above were included. Since actual wellhead revenue data was available
for oil prices, no fiirther adjustments were used. All prices were applied on a
per- lease basis in the economic evaluations. Oil and gas prices were held
constant for the life of each lease.
 First
month combined forecast prices are as follows:
 Posted
prices as of December 31,2008
 Oil
                Gas$44.60
      bbi
                $5.71
      Mcf
 EXPENSES
 Lease
operating expenses were estimated based on actual expenses incurred by Bend Arch
and PRI during 2008. Data from lease operating statements was provided and used
to perform the customary analysis for determining base lease operating expenses.
Overhead charges were excluded from use in this analysis. Lease expenses in this
evaluation were held constant for the life of the lease at the 2008 monthly
average. Since expense data for several newly producing leases included only 3
or 4 months of data, actual expenses may vary from those assumed in this
analysis. A concerted effort was made to apply reasonable expenses that should
be conservative compared to actual amounts.
 FUTURE
WELLINVESTMENTS
 Future
well investments were assumed to be $350,000 per well for a 4,800 foot well and
$80,000 for a 1,000 foot well. Bend Arch and PRI personnel verified this cost to
be reasonable. Blue Ridge Enterprises Inc. cannot be responsible for drilling
costs that exceed or are less than this assumption.
 -2-
 WELL
OWNERSHIP INTERESTS
 Ownership
interests for all leases were taken from lease information provided by Bend Arch
and PRI, Blue Ridge Enterprises Inc. performed no further detailed lease
ownership or title checks nor did Blue Ridge Enterprises Inc. compare the gross
and net revenue to the working or net interests and, therefore; can take no
responsibility for the accuracy of ownership interests used in this
evaluation.
 FUTURE
INCOME
 Future
net revenue in this report includes deductions for state production taxes.
Future net income is after deducting these taxes, fixture capital costs if
known, but before consideration of any state and/or federal income taxes. The
future net income has not been adjusted for any outstanding loans that may
exist, nor does it include adjustments for cash on hand or undistributed income.
No deductions were made for overhead, depletion, depreciation, interest expense,
or any other indirect costs. Salvage value for equipment recovered at
abandonment of properties was considered to be insignificant and no value was
assigned. Future net income has been discounted at various annual rates,
including a standard ten percent (10%), to determine its "present worth." The
present worth is shown to indicate the effect of time on the value of
money.
 RESERVE
DETERMINATION
 The
estimated reserves, revenues and cash flow shown in this report were determined
for PDF, PDBP, and PUD attributable to Bend Arch and PRI's net working and
revenue interests. Active producing properties with sufficient historical
production to estimate future production rates and reserves are referred to as
PDP. Reserve categories/definitions adhered to by most evaluation engineers are
published by the Society of Petroleum Evaluation Engineers and were used as the
basis for determming reserve categories in this report. Sufficient geological
and engineering data was made available to categorize reserves with a reasonable
degree of confidence.
 GENERAL
 Reserves
and values included in this report are estimates only and should not be
construed as being exact quantities. The reserve estimates were performed using
a number of assumptions about long-term productivity; however, accepted
engineering practices were used and were primarily based on historical rate
decline analysis for existing producers. As additional pressure and production
performance data becomes available, reserve estimates may increase or decrease
in the future. The revenue from such reserves and the actual related costs may
be more or less than the estimated amounts. Because of governmental policies and
uncertainties of supply and demand in addition to other influencing factors,
prices actually received for the reserves included in this report and the costs
incurred in recovering such reserves may vary from the price and cost
assumptions referenced. Therefore, in all cases, estimates of reserves and their
value may increase or decrease in the future.
 -3-
 In
evaluating the information available for this analysis, items excluded from
consideration were all matters as to which legal or accounting, rather than
engineering interpretation, may be controlling. As in all aspects of oil and gas
evaluation, there are uncertainties inherent in the interpretation of
engineering data and such conclusions necessarily represent only informed
professional judgments.
 The
titles to the properties have not been examined nor has the actual degree or
type of interest owned been independently confirmed. A field inspection of the
properties is not usually considered necessary for the purpose of this
report.
 This
report's exhibits include one-line economic summaries for each lease, graphical
production history and forecast decline curves for individual leases, projected
production and cash flow economic results by lease, and miscellaneous individual
lease information. Additional information that was reviewed will be retained and
is available for review at any time. Blue Ridge Enterprises Inc. can take no
responsibility for the accuracy of the data used in the analysis, whether
gathered from public sources or otherwise.
 Blue
Ridge Enterprises Inc.
  
 
 -4-