<PAGE>
                                                                   EXHIBIT 10.10


SUMMARY REPORT
UPDATED ASSESSMENT OF THE LANDERS HORIZONTAL JETTING TECHNOLOGY

Prepared For:

VERDISYS, INC.
10600 North De Anza Boulevard, Suite 250
Cupertino, CA 95014

October 13, 2003

DAI Project No. J90203

Prepared By:

Noel L. Daniel, LPG
Consulting Geologist

DANIEL & ASSOCIATES, INC.
11110 Indian Lake Boulevard
Indianapolis, IN 46236-9384                  (317) 894-8614
<PAGE>

October 13, 2003

Mr. Andrew Wilson
Chief Financial Officer
Verdisys, Inc.
10600 North De Anza Boulevard, Suite 250
Cupertino, CA 95014

RE:      SUMMARY REPORT
         UPDATED ASSESSMENT OF THE LANDERS HORIZONTAL JETTING TECHNOLOGY
         DAI PROJECT NO. J90203

Dear Mr. Wilson:

An updated assessment of the Landers Horizontal Jetting technology (HJT)
developed and patented by Mr. Carl Landers of Landers Horizontal Drill,
Inc./Advanced Petroleum Enhancement, Inc. has been completed by Daniel and
Associates, Inc. (DAI). This summary report has been prepared in accordance with
the proposed scope of work as outlined in DAI Proposal No. P90203 to our Client,
Verdisys, Inc., dated September 4, 2003. The proposal was approved by Verdisys,
Inc. on September 4, 2003 via email and retainer fee on September 5, 2003.

The assessment was conducted on a best efforts basis and represents a
professional opinion after evaluation of information furnished by several
parties and a site visit to observe field observations of the horizontal jetting
technology used in an actual oilfield project near Oil City, Louisiana.

The opportunity to be of service to Verdisys, Inc. in this important project is
greatly appreciated.


Sincerely,

DANIEL & ASSOCIATES, INC.

Noel L. Daniel, LPG
Consulting Geologist
<PAGE>

                                TABLE OF CONTENTS

DISCLAIMER STATEMENT

EXECUTIVE SUMMARY

1.0      INTRODUCTION

2.0      SUMMARY OF THE PATENTED LANDERS HORIZONTAL DRILLING TECHNOLOGY

3.0      UPDATED REVIEW OF THE LANDERS HORIZONTAL DRILLING TECHNOLOGY
         PERFORMANCE

         3.1      UPDATED REVIEW OF THE HORIZONTAL DRILL TECHNOLOGY FROM
                  SELECTED LHD SERVICE PROJECTS

         3.2      PREVIOUS REVIEW OF THE HORIZONTAL DRILL TECHNOLOGY FROM
                  SELECTED LHD SERVICE PROJECTS

4.0      MARKET VIABILITY OF THE TECHNOLOGY

5.0      SUMMARY OPINION

                  5.1      CONCLUSIONS

                  5.2      RECOMMENDATIONS

APPENDICES

APPENDIX 1-OIL AND GAS WELL PRODUCTION RECORDS FROM VARIOUS STATE GEOLOGIC
           SURVEY AGENCIES

APPENDIX 2-SELECTED PRODUCTION CURVES FROM HJT TREATED OIL AND GAS WELLS

APPENDIX 3-AFFIDAVITS

APPENDIX 4-RESUME OF NOEL DANIEL
<PAGE>

                              DISCLAIMER STATEMENT

This document was prepared for Verdisys, Inc, the only intended beneficiary of
our work. No other party should rely on the information contained herein without
prior written consent of Verdisys, Inc.

In preparation of this report, DANIEL & ASSOCIATES, INC. has applied generally
accepted professional practices and standards of performance in exercising its
professional judgment, skills, and care in a manner consistent with that of
other professionals performing similar work under similar conditions. All
information, conclusions, and recommendations in this report are necessarily
governed by the recommended Scope of Work, availability and reliability of
information furnished to DANIEL & ASSOCIATES, INC. by various governmental
sources, oil and gas operators, and others. Due to the nature of the work,
however, DANIEL & ASSOCIATES, INC. does not assume and specifically disclaims
any and all responsibility and/or liability for damages of any kind suffered by
any individual or entity arising from DANIEL & ASSOCIATES, INC. professional
acts, errors and/or omissions related in any way to the work performed in the
preparation of this report or any reliance on this report or action undertaken
in reliance on this report. No warranties, expressed or implied, are given or
made.
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       AN UPDATED ASSESSMENT OF THE LANDERS HORIZONTAL DRILLING TECHNOLOGY

                             DAI PROJECT NO. J90203
                                OCTOBER 13, 2003

EXECUTIVE SUMMARY

This report summarizes the results of an updated assessment of the Landers
Horizontal Drilling Technology (LHD) conducted by Daniel & Associates, Inc.
(DAI). DAI was retained by Verdisys, Inc. to prepare the report. The purpose of
this project was to review and update the overall performance of the technology
since the initial assessment was made by DAI in a report entitled, Project
Summary Report, Assessment of the Landers Horizontal Drill Technology, dated
August 21, 2000. The assessment was conducted on a best efforts basis and
represents a professional opinion after evaluation of information furnished by
several documented sources and field observations of the horizontal drilling
technology used in an actual oil field project near Oil City, Louisiana.

In conclusion, it is the author's professional opinion that the patented LHD
technology has been demonstrated to be technically sound. The technology will
not always produce favorable results of increased oil and gas production due to
subsurface factors beyond the control of the technology. If the reservoirs have
been severely depleted or negatively impacted in some manner, the technology
will not benefit the operator. For the most part, the technology should perform
favorably in most oil and gas wells that have potential for improved reservoir
characteristics. In conjunction with well planned and executed reservoir
enhancement treatments, the LHD technology has been successfully demonstrated to
enhance oil and gas production in wells that otherwise were under performing.
While there is a need for refinement of the technology through continued
research and development, it is my opinion that the LHD technology has
substantial value as a relatively low cost means of enhancing oil and gas
production in the U.S. and the oil producing nations of the world.

This project has resulted in an updated evaluation of the LHD technology market
viability and concludes that: 1) the LHD technology can reliably attain the
marketplace driven goal of enhanced oil and gas productivity; and 2) the
marketplace will respond to the LHD technology if it is reasonably priced.

Based on the author's consideration of information reviewed concerning the LHD
technology and market viability, the following recommendations are respectively
submitted:

         -        It is recommended that routine information on every oil and
                  gas well serviced by the LHD technology be recorded in a file
                  format suitable for future reference and evaluation; this will
                  be especially important as the technology grows in usage by
                  the industry; information management will become vital.

<PAGE>

         -        As a service sector product, the LHD technology should be
                  priced to offer benefits to the small independent operator as
                  well as the larger independents and major oil companies;
                  pricing will drive market growth, especially for the next 2-3
                  years with the smaller independents; as the service continues
                  to demonstrate reliability and positive results, the larger
                  independents and majors will likely become more likely to
                  utilize it; pricing will become secondary as compared to
                  increased productivity.

         -        It is recommended that a strong marketing program be developed
                  to approach the larger independents and major oil companies;
                  while slow to accept new technologies in the petroleum
                  industry, the larger firms will eventually accept the LHD
                  technology once demonstrated by a few of the more well known
                  firms.

         -        It is the author's opinion that the greatest strength
                  represented by the LHD technology is to use it to create oil
                  and gas production deals; It is recommended that growth
                  emphasis be placed more on use of the technology to acquire
                  and participate in oil and gas development projects that lend
                  themselves to this technology. The real value of this
                  technology is using it to create future opportunities.

1.0      INTRODUCTION

The purpose of this project was to provide a qualified independent updated
assessment for Verdisys, Inc. of the technical viability of the patented Landers
Horizontal Drill technology (LHD). The LHD technology was originally developed
for the enhancement of oil and gas production in the petroleum industry by Mr.
Carl Landers, inventor of the technology. The scope of work implemented by
DANIEL & ASSOCIATES, INC. (DAI) for this project consisted of the following key
components:

         X        An updated review of Mr. Landers's patented LHD technology as
                  applicable to the petroleum industry;

         X        Review of selected past LHD service projects;

                                       2

<PAGE>

         X        Field observation of an actual LHD oil and gas project in
                  Louisiana;

         X        Assessment of the LHD service pricing criteria;

         X        Evaluation of market viability of the technology; and;

         X        Summary conclusions, recommendations, and professional
                  opinion.

2.0      SUMMARY OF LHDI'S PATENTED HORIZONTAL DRILLING TECHNOLOGY

The development of the Landers Horizontal Drill (LHD), according to Mr. Carl
Landers of Landers Horizontal Drill, Inc. (LHDI), the inventor of record, came
about directly as a result of the need to drill inexpensive horizontal borings
(referred to as lateral borings) through oil well casing or open hole into
surrounding reservoir rock. The LHD technology was developed to offer a cost
effective, portable, and practical well field service alternative to more
expensive, traditional reservoir enhancement technologies including
whip-stocking and horizontal drilling. The intent of the LHD technology has been
to provide a low cost approach in increasing oil and gas production. The well
bore radius can be effectively increased laterally by jetting multiple channels
to an approximate distance of 300 feet from the vertical well bore. Reservoir
stimulation can be effectively enhanced by applications of traditional formation
fracturing and acid treatment applied to each of the laterals.

Patents for the LHD technology by Carl Landers were approved by the U.S. Patent
Office in May 9, 1995 (Patent No. 5,413,184) and December 29, 1998 (Patent No.
5,853,056). Both patents cover methodology and apparatus for horizontal well
drilling. A partial excerpt summary of the invention from the U.S. Patent
document 5,853,056 for the patents is included as follows:

                                       3

<PAGE>

METHOD OF AND APPARATUS FOR HORIZONTAL WELL DRILLING (SUMMARY OF THE INVENTION)

"The present invention is directed to a method and apparatus for penetrating a
well casing and surrounding earth strata. Furthermore, the present invention is
directed to a method of penetrating a well casing and surrounding earth strata
utilizing a two-step process wherein a flexible shaft having a ball cutter on
one end thereof is used to make a cut through a well casing and a pre-cut into
the earth's strata surrounding the well casing and the second step involves the
use of a flexible tube having a nozzle blaster on the end thereof which is then
inserted down the well casing into the pre-cut and in combination with a high
pressure fluid pumped through the flexible tube and out through the nozzle
blaster, a horizontal extension of the pre-cut can then be made up to a distance
of more than 200 feet (61 m). The upset tubing can then be turned from the
surface 90o to repeat the process in another direction. One can then cut another
hole through the casing and repeat the process up to 4 directions on one level.
Many levels can be opened with the same procedure. The invention has application
in drilling oil, gas, or water, for example."

3.0      UPDATED REVIEW OF THE LANDERS HORIZONTAL DRILLING TECHNOLOGY
         PERFORMANCE

3.1      PREVIOUS DAI REVIEW OF THE HORIZONTAL DRILL TECHNOLOGY FROM SELECTED
         LHD SERVICE PROJECTS

The material presented in this section was previously included in the DAI report
entitled, Assessment of Horizontal Jetting Technology, dated August 21, 2000,
DAI Project No. J81600. It is included again in this report to provide
continuity of information in the original report and

                                       4

<PAGE>

information and opinions presented in this report.

The following tabularized petroleum well test results have been obtained from
information supplied to Carl Landers from selected customers who have utilized
the Lander Horizontal Drill technology in various petroleum reservoirs. These
LHD test programs have been conducted by 5 independent oil producers in a wide
variety of production depths, reservoir lithologies, and regional locations in
the U.S. The reported LHD test results are somewhat varied in results. Generally
the LHD process of reservoir enhancement demonstrated the ability to drill
horizontal lateral borings at distances in the range of 200-400 feet with noted
improvement in petroleum production rates in several of the oil wells as
compared to production rates prior to LHD treatment.

3.1      UPDATED REVIEW OF THE LANDERS HORIZONTAL DRILLING TECHNOLOGY FROM
         SELECTED SERVICE PROJECTS

WELLINGTON OPERATING COMPANY LHD TEST OF THE MUDDY SANDSTONE UNIT #30-6 OIL
WELLS

DAI has acquired oil production records from the State of Colorado Department of
Oil and Gas for the Wellington Operating Company Muddy Sandstone Unit #30-6 oil
wells (3 wells in the unit). A copy of the production records is included in
Appendix 2 of this report. The production records were used by DAI to construct
an oil production curve for this unit. The production curve is included in
Appendix 2. An Affidavit sworn by Mr. Bradley A. Pomeroy, President, Managing
Operations Officer, Wellington Operating Company, has been acquired by DAI. The
affidavit swears the following:

                                       5

<PAGE>

         That he had engaged Landers Horizontal Drill to jet channels and
         stimulate two (2) wells, the Unit 19-10 and the Unit 40-2, on or about
         June, 1999. These wells were completed as oil wells in the Wellington
         Muddy Sandstone Unit, Larimer County, Colorado, over 20 years. Both
         have been producing continuously since their completion from a depth of
         approximately 4,700 feet. The wells had been producing up to
         approximately 5 barrels of oil per day prior to Lander's work. Channels
         could not be emplaced in the Unit 19-10, probably due to deviation at
         the Muddy Formation of at least 10o. Eight channels were cut, at two
         different depths, in the Muddy Formation in the Unit 40-2 in one day.
         After the stimulation the well was swabbed for a day and a half.
         Results of the swab runs indicated that oil, gas, and water production
         had increased significantly. As all producing wells on the south end of
         the Wellington Unit are not individually gauged and are gathered
         together, specific per well production dated is not collected; however,
         field production data indicated that the laterals jetted into the Unit
         40-2 well had been successful.

         That he had engaged Advanced Petroleum Enhancement, Inc. (Landers
         Horizontal Drill) to mill holes in casing, jet channels and stimulate
         the Meyer #3 well on or about June 2000. This well was completed as an
         oil well in the Fort Collins Oil Field, Larimer, County, Colorado over
         20 years ago. The well has been producing intermittently since its
         completion in the Niobrara Formation (chalk) at a depth of about 3,800
         feet. Historic data indicated that this well, when pumping, made less
         than one barrel of oil per day. Eight channels were cut at two
         different depths, in the Niobrara Fm. in the Meyer #3 well in one day.
         An immediate increase in gas from the bore hole was noticed. The well
         was swabbed for one day and was returned to production. The first day
         after APE jetted channels, the Meyer #3 well made 40 barrels of oil.
         The first week saw production of 225 barrels of oil. Although a rapid
         decline in production occurred and the well eventually returned to
         pre-jetting rates, the channel jetting procedure was successful. The
         fractures in the Niobrara chalks, which feed oil to the well bore, tend
         to close quickly if not located in an extensional structural setting.

The production curve for this well (Appendix 2) supports the production
increases as stated in the Affidavit. A copy of this Affidavit is included in
Appendix 3.

DRY BONES PRODUCTION LHD TEST OF THE GAM #1 AND #2 OIL WELLS

An Affidavit sworn by Mr. Clarence J. Ballowe, Owner and Partner, Dry Bones
Production, has

                                       6

<PAGE>

been acquired by DAI. The affidavit swears the following:

         That he engaged Landers Horizontal Drill to recomplete and stimulate
         two (2) oil wells, the Gam #1 and Gam #2, on or about January 2002.
         These wells were spudded circa 1960 and are producing in the Annona
         Chalk Formation (fractured limestone) and located in the Caddo Pine
         Island Oil Field, northwest Louisiana at a depth of approximately 1,500
         feet. The wells had been producing up to approximately 1/10 barrel of
         oil per day or less. After laterals were drilled by Landers Horizontal
         Drill, oil production increased approximately ten (10) fold the
         previous production of said wells. The affiant further declared that to
         his knowledge, information and belief, the increase in production has
         essentially remained the same.

A copy of this Affidavit is included in Appendix 3. It appears that the LHD
laterals improved the productivity of these 2 wells by a factor of 10. It seems
possible that some form of follow-up well treatment such as a CO(2) frac or
diesel fuel frac in conjunction with installation of the laterals may have
further enhanced oil productivity in this well.

BURLINGTON RESOURCES LHD TEST OF THE UTE 32-11 #402 COAL BED METHANE GAS WELL

DAI has acquired oil production records from the State of Colorado Department of
Oil and Gas for the Burlington Resources Ute 32-11 #402 gas well. A copy of the
production records is included in Appendix 1 of this report. The production
records were used by DAI to construct an oil production curve for this unit. The
production curve is included in Appendix 2.

Coal bed gas production from the Ute Indian federal lease is from the Fruitland
Coal within the Ignacio Blanco Field. Details of the geology, production depths,
and well treatment by the LHD process have not been obtained at the time this
report was prepared. However, records indicate that

                                       7

<PAGE>

the Ute 32-11 #402 coal bed methane gas well (API No. 05-067-07622 was tested
using the LHD laterals in March 1998. First gas production from the well was in
1990.

Production records for this well indicate that the LHD was not successful in
increasing coal bed methane gas production. Although production records for the
period prior to January 1999 were not obtained for this well (the period
includes the installation date for the LHD laterals installation), a review of
the gas production curve does not reflect any noticeable increase in gas
productivity following installation of the laterals.

KLM EXPLORATION CO., INC. LHD TEST OF THE WAGNER LEASE #1 OIL WELL

DAI has acquired oil production records from the State of Kansas Geological
Survey, Department of Oil and Gas for the KLM Exploration Company, Inc. Wagner
No. 1 oil well. A copy of the production records is included in Appendix 2 of
this report. The production records were used by DAI to construct an oil
production curve for this well. The production curve is included in Appendix 2.

Production from the Wagner lease is from the McLouth Sandstone within the
McLouth Oil Field. Details of the geology, production depths, and well treatment
by the LHD process have not been obtained at the time this report was prepared.
However, records indicate that the Wagner #1 well (API No. 15-087-20415 was
tested using the LHD laterals in September 2000. First oil production from the
field was in 1988.

                                       8
<PAGE>

The oil production curve for this well illustrates the results of the LHD
horizontal jetting test. Oil production was increased from approximately 150
barrels per month in July 2000 to more than 1000 barrels in August 2000. While
production rapidly diminished during the next 2-3 months, oil production
remained above 300 barrels per month for the next 8-12 months. As of June 2002
production records, the well performance appeared to have stabilized at
approximately 250 barrels per month until at least early 2003. No records were
available after this period at the time of this report. The LHD jetting test
appears to have been successful for this well.

MOON-HINES-TIGRETT OPERATING CO. LHD TEST OF THE BETSY-DIXON 23-6 #1 GAS WELL

DAI has acquired gas production records for the Moon-Hines-Tigrett Operating
Company Betsy-Dixon 23-6 #1 gas well from the Alabama State Oil and Gas Board.
The LHD laterals were drilled into the Betsy-Dixon 23-6 #1 gas well in August
2002. The well is located in the South Kennedy Field, Lamar County, Alabama.
Initial production from this well was recorded as April 1999. Prior to the LHD
laterals, gas production from this well had declined to approximately 1,750 MCF
per month. Gas is produced from perforations in four Benton sand zones ranging
over a depth interval of 2,303-2,964 feet.

As can be seen in the production curve for this well (Appendix 2), upon
installation of an unknown number of LHD laterals and unknown followup well
treatment, the well responded with a gas production increase to approximately
8,244 Mcf in September 2002. Gas production declined to

                                       9
<PAGE>

4,149 Mcf by May 2003, the most recent available month with production records
as of the time this report was prepared.

The response performance in gas production for this well is significant. The LHD
jetting test appears to have been successful for this well.

MOON-HINES-TIGRETT OPERATING CO. LHD TEST OF THE LANGSTON 31-7 #1 GAS WELL

DAI has acquired gas production records for the Moon-Hines-Tigrett Operating
Company Langston 31-7 gas well from the Alabama State Oil and Gas Board. The LHD
laterals were drilled into the Langston 31-7 #1 gas well in December 2001. The
well is located in the Bluff Field, Fayette County, Alabama. Initial production
from this well was recorded as September 1980. Prior to the LHD laterals, gas
production from this well had declined to approximately 2,495 MCF per month. Gas
is produced from perforations in two Gilmer sand zones ranging over a depth
interval of 1,891-2,056 feet.

As can be seen in the production curve for this well (Appendix 2), upon
installation of an unknown number of LHD laterals and unknown followup well
treatment, the well responded with a gas production increase to approximately
13,389 Mcf in March 1999. Gas production declined to 3,931 Mcf by May 2003, the
most recent available month with production records as of the time this report
was prepared. Increased gas production from the LHD laterals resulted in a
significant increase in gas reserve value.

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<PAGE>

The response performance in gas production for this well is significant. The LHD
jetting test appears to have been successful for this well.

METRO ENERGY GROUP, INC. LHD TEST OF THE GLASSELL F-6 OIL WELL

On September 26, 2003, the author was invited to observe the drilling of LHD
laterals in the Metro Energy Group, Inc. Glassell F-6 oil well. Those in
attendance included Don Boyd, consulting petroleum engineer, John Levitts,
President of Metro Energy Group, Inc., Rick Holcomb, Partner in Metro Energy
Group, Inc., and Carl Landers of Landers Horizontal Drill, Inc.

The test well is located in the Caddo Pine Island Field of northwest Louisiana
near Oil City, Louisiana. The well was originally drilled several years ago in
the old field to a depth of approximately 1,456 feet in the Annona (Chalk)
Formation. Prior to drilling the laterals, the well reportedly had been
producing less than 1 barrel of oil per day with some water and trace of gas
from the Annona Chalk.

The author observed the drilling of the first LHD lateral at an indicated depth
of 1,422 feet and a horizontal jetting of the lateral to an indicated distance
of 191 feet. The lateral was completed in approximately 1 hour. An additional 3
laterals were drilled during the next day. The second, third, and fourth
laterals were drilled at a depth of 1,456 feet in the Annona Chalk and jetted to
indicated horizontal distances of 173 feet, 248 feet, and 250 feet
(approximately). The well was not treated with any acid.

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<PAGE>

On October 3, 2003, the author learned that the well had undergone daily casing
swabbing. Initial production estimates were reported at 37-40 barrels per day of
total fluid with approximately 27-29 barrels of oil per day. Gas was not
measured by estimated at 10,000-12,000 cubic feet per day. The static fluid
level in the well prior to LHD installation of the laterals was measured at 960
feet. After installation and swabbing, the fluid level was measured at a depth
of 412 feet. The operator has installed a Permaswab unit on the well (automatic
swabbing unit). The well is pulling a casing swab every 90 minutes. Field
reports indicate the well is yielding in the range of 10-20 barrels of oil per
day.

The results of this test are preliminary at the time this report was prepared.
However, initial results indicate a favorable well response to installation of
the laterals. The operator stated that LHD laterals will be installed in
additional wells if favorable results from the test well continue to be
demonstrated.

3.2      PREVIOUSLY SELECTED LHD SERVICE PROJECTS

RESULTS OF THE CITIZENS GAS & COKE UTILITY LHD TEST PROGRAM

A five-well test program of the Landers Horizontal Drill technology was
completed by Citizens Gas & Coke Utility (Citizens) in 1997 in the Illinois
Basin. The results of the test program were reported by Citizens as encouraging
but not definitive because too few wells were tested. The complete test results
report, Landers Horizontal Drill Test Program, January 1998, was provided to DAI
by LHDI and is included in Appendix 4 of the August 2000 DAI report. Citizens
stated in

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the report that the LHD technology has proven the ability to 1) successfully
mill 3/4" holes in production casing; 2) blast horizontal channels of up to 410
feet in length through these holes using a waterjet cutting nozzle; 3) to cut
sandstone, limestone, dolomitic-limestone, and shale formations; and 4) to
economically enhance oil production in some wells. Of the five test wells, one
of the wells had an economic production increase, three wells had uneconomic
production increases, and one shale well had horizontal channels successfully
placed but was not production tested. Citizens noted that it should be noted
that two of the three uneconomic LHD test wells were "long shots". These two
wells were highly uneconomic as vertical drilled wells and are not believed by
Citizens as representative of the potential market for LHD technology. Table 1
from the original August 21, 2000 DAI report summarizes the results of the LHD
test program.

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<PAGE>

                                     TABLE 1
                        SUMMARY OF OIL WELL TEST PROGRAMS
                       LANDERS HORIZONTAL DRILL TECHNOLOGY
                           CITIZENS GAS & COKE UTILITY
                              ILLINOIS BASIN FIELDS

<TABLE>
<CAPTION>
       WELL NAME           PERRY KING #141    PLUMMER "B" #1    SQUIRES ET AL #1          REAGAN #1              ELLETT #4
-----------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>                <C>               <C>                 <C>                      <C>
       FIELD NAME              Lawrence          Plummer            Plummer                Plummer                Plummer
-----------------------------------------------------------------------------------------------------------------------------------
        LOCATION           Lawrence Co., IL   Greene Co., IN    Greene Co., IN         Greene Co., IN          Greene Co., IN
-----------------------------------------------------------------------------------------------------------------------------------
                            Bridgeport A"         Salem            Geneva                New Albany                 Salem
   FORMATION/LITHOLOGY       sandstone          limestone         dolomite                  shale                 limestone
-----------------------------------------------------------------------------------------------------------------------------------
     LATERAL DEPTH (FT        934 & 938         718 & 719       1,583 & 1,585              1,440                    741
-----------------------------------------------------------------------------------------------------------------------------------
  DATE LATERALS DRILLED         9/97              9/97              9-10/97                 1997                   10/97
-----------------------------------------------------------------------------------------------------------------------------------
     NO. OF LATERALS         4 (2 zones)       6 (2 zones)       9 (2 zones)                 4                       5
-----------------------------------------------------------------------------------------------------------------------------------
  LENGTH OF LATERALS (FT)        300              51-226           100-297                50-410                  60-300
-----------------------------------------------------------------------------------------------------------------------------------
  DAILY OIL PRODUCTION
    PRIOR TO *LHD
       (BO/BW)                 2-3/18            4.5/300            6/54                 Not Tested              < 1/180
-----------------------------------------------------------------------------------------------------------------------------------
  DAILY OIL PRODUCTION
  AFTER LHD (BO/BW)            5/120            23.5/938           9.5/59                Not Tested              < 1/180
-----------------------------------------------------------------------------------------------------------------------------------
     ECONOMIC WELL
       (YES/NO)                  No               Yes                No                 Not determined              No
-----------------------------------------------------------------------------------------------------------------------------------
                                             Well
                                             enhancement       Laterals drilled    Laterals drilled only    Well initially drilled
                          Heavy oil could    was an            with water rather   to determine if the LHD  structurally low;
                          not be             economic &        than acid;          process could cut        suffered low reservoir
        COMMENTS          economically       technologic       improper acidizing  shale; a technologic     quality; could not be
                          produced           success           job                 success.                 improved.
===================================================================================================================================
</TABLE>

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<PAGE>


RESULTS OF THE SABA PETROLEUM, INC. LHD TEST PROGRAM

A two-well test program of the Landers Horizontal Drill technology was completed
by Saba Petroleum, Inc. (Saba) as reported to LHDI in April 1997 in the Richland
Field, Orange County, California. The LHD test program by Saba reportedly
resulted in a positive change in oil production. In a letter to LHD, dated April
23, 1997, a brief account of the test program was provided. A total of twelve
300 foot horizontal laterals through seven inch diameter slotted casing were
made in two oil producing wells at three levels in 4,000-4,700 foot depth range.
The targeted reservoir was identified as the Kraemer Zone, Miocene in age. The
reservoir consisted of partially consolidated sand/shale. Results indicated that
the laterals yielded gassier, lighter gravity oil and an increase fluid level
column in the well bore. Saba found the technology to have merit and indicated
an interest in using the LHD technology in the future. The Saba letter was
provided to DAI by LHDI and is included in Appendix 3 of the August 21, 2000 DAI
report.

RESULTS OF THE VOGLER DRILLING COMPANY LHD TEST PROGRAM

A single well test program of the Landers Horizontal Drill technology was
completed by Vogler Drilling Company (Vogler) in October 1999 in the Illinois
Basin of Muhlenberg County, Kentucky. In a letter to Mr. Landers, dated November
1, 1999, a brief account of the test program was provided. A total of ten
laterals were drilled in the Bethel sandstone of the Corley No. 4 well at a
depth of 1,545 feet. The laterals reportedly extended to a length of 300 feet.
The laterals were drilled with a relative angular horizontal spacing of 36
degrees. The results of the test program of the formerly abandoned well were
reported by Vogler as encouraging. After a 9,400 acid fracture job on the zone,
the well had an initial production rate of 14 BOPD. At the time of abandonment,
the well was producing at 1 BOPD. Vogler stated that in their opinion the well
could not have been successfully fractured without the laterals. The Vogler
letter is included in Appendix 3 of the August 21, 2000 DAI report and was
provided by LHDI to DAI.

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As an update to this discussion, DAI has obtained a summary of oil production
from the Corley #4 well since the well was serviced by the LHD test program. An
oil production summary for this well was obtained from the Kentucky Department
of Mines and Minerals. The production information was used to construct an oil
production curve and is included in Appendix 1 of this report. The information
was available for the reporting ending December 2000. The oil production curve
for this well is included in Appendix 2.

The records found for this well indicate that the well was treated by the
Landers horizontal drill in October 1999. Production data illustrate the sharp
increase in oil production for a period of approximately 3-4 months followed by
sustained monthly production of about 3 barrels of oil per day. This result
indicates that the laterals drilled into the Bethel sand successfully increased
production on a more sustained basis.

RESULTS OF THE DC & B Oil Company and Virsal Oil Company LHD Test Program

A two-well test program in the Hospah Field near Grants, New Mexico of the
Landers Horizontal Drill technology was completed by DC & B Oil Company (DC &
B). Additionally, a single gas well test program in Kern County, California of
the Landers Horizontal Drill technology was completed by Virsal Oil Company
(Virsal). An overview of the programs was reported to LHDI in a memo to Mr. Carl
Landers from the W.D. Newsom Consulting Company, dated June 4, 1997. A copy of
this memo is included in Appendix 3 of the August 21, 2000 DAI report.

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DC & B Oil Company LHD Test Program

According to the memo, two low production oil wells were intentionally selected
by the operator to test the LHD technology. Well No. 1 had been shut in as
uneconomic at 1/2 BOPD with no water before recompleted with horizontal
laterals. A total of four laterals were drilled to a total length of 100 feet at
an unspecified depth of less than 1,500 feet. Upon completion, the well
initially produced 35 BOPD and gradually leveled off to a production rate of 12
BOPD after 8 months. Well No. 2 had been producing at a rate of 3 BOPD and 150
BWPD. In September 1996 a total of 3 horizontal laterals were drilled to a total
length of 300 feet. Upon re-completion, the well reportedly had an initial
production of 15 BOPD and leveled off to a production rate of 13 BOPD and 158
BWPD after 8 months of production. This reservoir was indicated to be an active
water drive. The operator stated in the memo that the LHD technology produced
very economic results with payouts in 45-60 days. The operator expressed an
interest using the technology again.

VIRSAL OIL COMPANY LHD TEST PROGRAM

A single gas well previously completed in the Etchegoin formation reservoir and
undergone damage from acidization. This well was producing gas at 65-70 MCFPD
and 2 BWPD at a depth of 3,300-3,500 prior to the LHD test program. A total of
three laterals were drilled in May 1997 at lengths of 10-125 feet in a 6 foot
pay zone at depth of 3,350 feet. The laterals were drilled using fresh water
with swelling clay inhibitors. Results indicate that the horizontal laterals
drilled in the target pay zone produced less gas than expected. The operator
suggested that these results indicate that the remaining gas reserves for this
well were perhaps contained in the thinner (less permeable) gas sand stringers
and not the 6 foot target pay zone. This factor indicates that the reserves in
the thinner zones were previously producing the gas and were not impacted by the
horizontal laterals.

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The well when put back into production resumed production at about 70 MCFPD and
2 BWPD. The operator stated that the LHD performance was good.

ENERGY, INC. LHD TEST OF THE STONE #1 OIL WELL

On July 27, 2000, Energy, Inc. of Marion, Indiana contracted with Landers
Horizontal Drill Technology, Inc. to drill at total of seven horizontal laterals
in the Stone No. 1 oil well located in the Rich Valley Field, Wabash County,
Indiana. As well site geologist for Energy, Inc., the author personally observed
the lateral drilling process. The laterals were drilled to a maximum length of
300 feet in an open hole at a depth of 865 feet within the Trenton Formation
(Ordovician age). The oil production zone in the well was a dolomite. Prior to
drilling the horizontal laterals the Stone No. 1 well was producing
approximately 1 BOPD with very little water.

After gamma ray-neutron logging of the well, the laterals were observed to be
drilled with very little effort by APEI (LHDI service operator) once the proper
drilling pressures were determined largely by trial and error. Each of the
laterals was jetted using a weak acetic acid and biocide mixture pumped under
4,000-6,000 psi pressure through the jetting nozzle. The formation penetration
rate of the lateral jetting nozzle was observed to be more than 50 feet per
minute during jetting of the horizontal laterals. The performance of the two-man
service crew was very good. The next day, the well was swabbed and found to have
been damaged by a sludge consisting of abundant iron oxides, pyrite, and
degraded oil. These materials are probably the result of biologic degradation
and sulfur reducing bacteria over the past 100 years from bacterial
contamination introduced through past drilling and completion practices.

The well remained shut-in until August 12 at which time a biocide mixture and
surfactant was

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pumped into the well bore by displacement of formation water at a pressure of
approximately 500 psi. This process attempted to clean out the laterals and well
bore as much as possible. Subsequent swabbing and bailing yielded a significant
amount of drill cuttings and fines. However, the well appeared to yield no more
than 1-2 BOPD will virtually no water.

On August 21, the well was acidized using 525 gallons of 15% HCL acid with clay
and iron inhibitors with a surfactant. The well acidizing pressure was 400 psi.
The well was then swabbed to return the acidizing load. Continued swabbing
yielded 10-12 BO with very water. Preliminary results indicated a favorable
increase in oil production for this well.

As an update to the DAI report of August 21, 2000, the Stone #1 well has not
been found to have increased oil production. While the company believes that the
installation of the laterals was successful, the outcome of the laterals and
followup treatment was unsuccessful.

4.0      MARKET VIABILITY OF THE LHD TECHNOLOGY

The market viability of the LHD technology in the petroleum service industry was
addressed by DAI in the August 2000 report based on the key factors of service
pricing criteria and industry operator perception of the service offered by the
LHD technology. Since the initial report was written, the key factors are still
of major importance in marketing the LHD technology.

An evaluation of the market viability of the LHD technology should still include
1) an assessment of the demonstrated capability of the technology to reliably
attain marketplace driven goals; and 2) an assessment of economic feasibility of
the technology. The LHD technology must still meet both

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primary factors to be viable in the marketplace.

The Landers Horizontal Drill technology was conceived, developed, and patented
during a period of time when the U.S. petroleum industry had been decimated by a
decade of depressed oil and gas market prices. This factor, along with
increasing governmental regulatory influences, has combined to squeeze the
profitability out of traditional independent oil and gas producers in the U.S.

MARKET POTENTIAL

Most U.S. oil producers are privately owned companies tending to be much smaller
than publicly owned oil and gas producers. For example, in 1992, when the major
oil companies produced a per company average of 345,000 barrels per day, the
other publicly-traded oil and gas companies produced an average of 10,000
barrels per day, and the remaining oil and gas companies produced an average of
only 300 barrels per day. These small private producers are quite numerous
accounting for about 7,400 of the nearly 8,000 companies reporting oil and/or
gas production in the U.S. in 1992.

The LHD technology has been demonstrated to significantly enhance oil and gas
production to depths of approximately 5,800 feet. At the same time, the LHD
technology has shown repeatedly it can produce a cost effective approach to turn
many marginal, shut-in wells, into profitable producers.

The service product is unique in that it substantially improves production
similarly to conventional horizontal drilling, but a fraction of the cost and in
significantly less time. At the time the August

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2000 DAI report was completed, Mr. Landers believed that the LHD technology was
positioned to succeed. The author agrees with his point of view based on what
I've seen in this updated assessment. I believe that the LHD technology has been
successfully demonstrated to have market viability through field testing by many
small petroleum independents. I also believe that the LHD technology has proven
to be potentially very profitable and can be done so on a large scale basis
through well managed growth.

5.0 SUMMARY OPINION

5.1      CONCLUSIONS

In conclusion, it is the author's professional opinion that the patented LHD
technology has been demonstrated to be technically sound. The technology will
not always produce favorable results of increased oil and gas production due to
subsurface factors beyond the control of the technology. If the reservoirs have
been severely depleted or negatively impacted in some manner, the technology
will not benefit the operator. For the most part, the technology should perform
favorably in most oil and gas wells that have potential for improved reservoir
characteristics. In conjunction with well planned and executed reservoir
enhancement treatments, the LHD technology has been successfully demonstrated to
enhance oil and gas production in wells that otherwise were under performing.
While there is a need for refinement of the technology through continued
research and development, it is my opinion that the LHD technology has
substantial value as a relatively low cost means of enhancing oil and gas
production in the U.S. and the oil producing nations of the world.

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This project has resulted in an updated evaluation of the LHD technology market
viability and concludes that: 1) the LHD technology can reliably attain the
marketplace driven goal of enhanced oil and gas productivity; and 2) the
marketplace will respond to the LHD technology if it is reasonably priced.

5.2      RECOMMENDATIONS

Based on the author's consideration of information reviewed concerning the LHD
technology and market viability, the following recommendations are respectively
submitted:

         -        It is recommended that routine information on every oil and
                  gas well serviced by the LHD technology be recorded in a file
                  format suitable for future reference and evaluation; this will
                  be especially important as the technology grows in usage by
                  the industry; information management will become vital.

         -        As a service sector product, the LHD technology should be
                  priced to offer benefits to the small independent operator as
                  well as the larger independents and major oil companies;
                  pricing will drive market growth, especially for the next 2-3
                  years with the smaller independents; as the service continues
                  to demonstrate reliability and positive results, the larger
                  independents and majors will become more likely to utilize the
                  technology; pricing will become secondary as compared to
                  increased productivity.

         -        It is recommended that a strong marketing program be developed
                  to approach the larger independents and major oil companies;
                  while slow to accept new

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                  technologies in the petroleum industry, the larger firms will
                  eventually accept the LHD technology once demonstrated by a
                  few of the more well known firms.

         -        It is the author's opinion that the greatest strength
                  represented by the LHD technology is to use it to create oil
                  and gas production deals; It is recommended that growth
                  emphasis be placed more on use of the technology to acquire
                  and participate in oil and gas development projects that lend
                  themselves to this technology. The real value of this
                  technology is using it to create future opportunities.

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