| Nevada                                         |   |   |   | 20-8428738                        |
|------------------------------------------------|--------|--------|--------|-----------------------------------|
| (State or other jurisdiction of incorporation) |   |   |   | (IRS Employer Identification No.) |
|                                                |   |        |   |                                   |
| 5416 Birchman Avenue, Fort Worth,          Texas | 76107      |
|--------------------------------------------------|------------|
| (Address of principal executive offices)         | (Zip Code) |

----

----

----

| • | Barnett Shale Resource and Exploration Mineral      Interests We acquired approximately 9,000 gross acres (approximately      6,750 net acres) in the "oil window" of the Barnett Shale located seventy      miles Northwest of Dallas, Texas. The mineral interests included forty-six      vertical wells drilled within the last two years and both proven undeveloped      reserves (the "resource play" portion of the acquisition) and unproven mineral      interests (the high quality "exploratory" portion of the acquisition). The      vertical wells are all 9,000 feet deep or less and take an average of 18      days to drill.                                                                                                                                                                                                                                                                          |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| • | Corsicana Enhanced Oil Recovery (EOR) and      Mineral Interests We acquired approximately 4,392 contiguous acres in      a mature oil field for the purpose of redevelopment. The field, located      47 miles South of Dallas, Texas, is the oldest commercial field in Texas,      with production beginning in the 1890's. An estimated 83% of the original      oil in place still remains in the reservoir. These reserves are at depths      of 1,000 feet or less, and wells can be drilled and completed quickly at      a cost of less than $60,000 per well. An affiliate of the registrant had      begun the permitting process to initiate an alkaline-surfactant polymer      (ASP) flood pilot project. The Texas regulatory office (RRC - Railroad Commission      of Texas) issued the permit for the first Polymer pilot flood in March.      Injection into the pilot project commenced in June 2007 |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| • | Fayetteville Shale Mineral Interests      We acquired approximately 9,492 gross acres (6,537 net acres) in the "fairway"      of the Fayetteville Shale located primarily in Conway, Faulkner, and White      Counties in Central Arkansas. We expect to initiate drilling operations      prior to the end of the next fiscal year. We may dispose of the asset as      it is not located in our geographic area of operations..                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| • | Tri-County Gas Gathering System We acquired      an undivided thirty percent (30%) joint venture interest in the Tri-County      Gas Gathering System, which includes pipeline, compressors, a gas processing      plant, and several hundred miles of right-of-ways. The system services the      majority of our Barnett gas produced.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| • | Big Giant Note Receivable We acquired      a note receivable from Big Giant, our drilling contractor, in the amount      of $2.6 million. The note is secured by the rig dedicated to our Barnett      shale acreage.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

----

|   |                                  | Years Ending December 31 | 2006      |   | 2005      |   |
|--------|---------------------------------------|--------------------------|-----------|--------|-----------|--------|
|   | Production                            |                     |      |   |      |
|   |                                  | Oil (Bbl)                | 34,019    |        | 7,262     |   |
|   |                                  | Gas (Mcf)                | 177,016   |        | 77,650    |   |
|   |                                  | Total (BOE)              | 64,555    |        | 20,650    |   |
|   |                                  |                     |      |   |      |   |
|   | Revenues                              |                     |      |   |      |
|   |                                  | Crude Oil                | 1,777,716 |        | 555,900   |   |
|   |                                  | Gas                      | 1,096,575 |        | 553,299   |   |
|   |                                  | Total                    | 2,874,291 |        | 1,109,199 |   |
|   |                                  |                     |      |   |      |   |
|   | Average Sale Price (per BOE)          | 44.52                    |           | 53.71  |      |
|   | Direct      Operating Costs (per BOE) | 17.53                    |      | 27.01  |      |

----

----

----

----

| • | the domestic and foreign supply of oil and      gas;            |
|--------|-----------------------------------------------------------------|
| • | the price and availability of alternative fuels;                |
| • | weather conditions;                                             |
| • | the level of consumer demand;                                   |
| • | the price of foreign imports;                                   |
| • | world-wide economic conditions;                                 |
| • | political conditions in oil and gas producing      regions; and |
| • | domestic and foreign governmental regulations.                  |

----

| • | injury or loss of life;                                                            |
|--------|------------------------------------------------------------------------------------|
| • | severe damage to or destruction of property,      natural resources and equipment; |
| • | pollution or other environmental damage;                                           |
| • | clean-up responsibilities;                                                         |
| • | regulatory investigations and penalties; or                                        |
| • | suspension of operations                                                           |

----

----

----

| • | we may be required to dedicate a substantial      portion of our cash flows from operations to the payment of our indebtedness,      reducing the funds available for our operations; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | a portion of our borrowings are at variable      rates of interest, making us vulnerable to increases in interest rates;                                                              |
| • | we may be more highly leveraged than some of      our competitors, which could place us at a competitive disadvantage;                                                                |
| • | our degree of leverage may make us more vulnerable      to a downturn in our business or the general economy;                                                                         |
| • | the terms of our credit arrangements could      contain numerous financial and other restrictive covenants;                                                                           |
| • | our debt level could limit our flexibility      in planning for, or reacting to, changes in our business and the industry      in which we operate; and                               |
| • | we may have difficulties borrowing money in      the future.                                                                                                                          |

----

| • | changes in oil and natural gas prices;                                                     |
|--------|--------------------------------------------------------------------------------------------|
| • | variations in quarterly drilling, re-completions,      acquisitions and operating results; |
| • | changes in financial estimates by securities      analysts;                                |
| • | changes in market valuations of comparable      companies;                                 |
| • | additions or departures of key personnel; or                                               |
| • | future sales of our stock                                                                  |

----

| ***Reserves***                                    |   | ***Barnett         Shale*** |   | ***Corsicana        Field*** |   | ***Total*** |   |
|---------------------------------------------------|--------|-----------------------------|--------|------------------------------|--------|-------------|--------|
| Proved Developed (MBOE)                           |   | 437                         |   | 106                          |   | 543         |   |
| Proved Undeveloped (MBOE)                         |   | 417                         |   | 11,302                       |   | 11,719      |   |
| Total Proven Reserves at March 31, 2007           |   | 854                         |   | 11,408                       |   | 12,262      |   |
|                                              |   |                             |   |                              |   |             |   |
| Estimated Future Net Revenues (000's)             |   | 18,373                      |   | 453,307                      |   | 471,680     |   |
|                                              |   |                             |   |                              |   |             |   |
| Present Value of Future Net Revenues      (000's) |   | 10,105                      |   | 170,863                      |   | 180,968     |   |
| (discounted at 10%)                               |   |                        |   |                         |   |        |   |
| Benchmark Pricing                                 |   |                        |   |                         |   |        |   |

|   | Natural Gas per mcf  | $7.1   |  |        |   |
|--------|----------------------|--------|--|--------|--------|
|   | Crude Oil per barrel | $63.74 |  | $60.61 |   |

----

| • | customary royalty interests;                                       |
|--------|--------------------------------------------------------------------|
| • | liens incident to operating agreements and      for current taxes; |
| • | obligations or duties under applicable laws;                       |
| • | development obligations under oil and gas leases;      or          |
| • | burdens such as net profit interests.                              |

----

| Fiscal 2006        | High   | Low    |
|--------------------|--------|--------|
| June 30, 2006      | $Nil   | $Nil   |
| September 30, 2006 | $Nil   | $Nil   |
| December 31, 2006  | $1.26  | $0.05  |
| March 31, 2007     | $1.33  | $0.95  |
|               |   |   |
| Fiscal 2005        | High   | Low    |
| June 30, 2005      | $Nil   | $Nil   |
| September 30, 2005 | $Nil   | $Nil   |
| December 31, 2005  | $Nil   | $Nil   |
| March 31, 2006     | $Nil   | $Nil   |

----

----

----

----

|                              | Fiscal year ended March 31 |   |
|-----------------------------------|----------------------------|--------|
|                              | 2008                       |   | 2009 |   | 2010 |   |
| Office Lease - starting June 2007 | 111,000                    |   | 150,000 |   | 132,000 |   |
| Mineral Lease loans               | 100,000                    |   | 100,000 |   |   |   |
| 1st State Bank Note               | 79,600                     |   |  |   |   |   |
| Frost National Bank note payable  | 1,950,000                  |   |  |   |   |   |
| Related Party Notes Payable       | 3,294,594                  |   | 324,330 |   |   |   |

----

----

----

|                                                                                                                                 | Page   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                 |   |
| Report of Independent Registered Public      Accounting Firm                                                                         | F-2    |
|                                                                                                                                 |   |
| Balance Sheet, March 31, 2007                                                                                                        | F-3    |
|                                                                                                                                 |   |
| Statements of Operations, Three Months      Ended March 31, 2007 and Years Ended December 31, 2006 and 2005                          | F-4    |
|                                                                                                                                 |   |
| Statements of Stockholders' Equity (Deficit),      Three Months Ended March 31, 2007 and Years Ended December 31, 2006 and      2005 | F-5    |
|                                                                                                                                 |   |
| Statements of Cash Flows, Three Months      Ended March 31, 2007 and Years Ended December 31, 2006 and 2005                          | F-6    |
|                                                                                                                                 |   |
| Notes to Financial Statements                                                                                                        | F-8    |
|                                                                                                                                 |   |

 

----

| **1931 E. 37th Street, Suite 7         Odessa, Texas 79762         (432) 363-0067         Fax (432) 363-0376** | **2626 Royal Circle         Kingwood, Texas 77339         (281) 359-7224         Fax (281) 359-7112** | **3300 N. A Street, Bldg. 4, Suite 200                Midland, Texas 79705         (432) 686-9381         Fax (432) 684-6722** |
|----------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------|

----

| **ASSETS**                                                                                                                                                                                                                                                                                                |   |       |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|--------|
| Current Assets:                                                                                                                                                                                                                                                                                           |   |       |   |   |
|           Cash                                                                                                                                                                                                                                          | $      | 212,254    |   |   |
|           Accounts      Receivable:                                                                                                                                                                                                                     |   |       |   |   |
|                     Oil      and Gas                                                                                                                                                                  |   | 495,200    |   |   |
|                     Related      Party                                                                                                                                                                |   | 376,994    |   |   |
|                     Other                                                                                                                                                                             |   | 63,389     |   |   |
|           Total      Current Assets                                                                                                                                                                                                                     |   | 1,147,837  |   |   |
|                                                                                                                                                                                                                                                                                                      |   |       |   |   |
| Note Receivable                                                                                                                                                                                                                                                                                           |   | 1,614,218  |   |   |
|                                                                                                                                                                                                                                                                                                      |   |       |   |   |
| Oil and Gas Properties      - successful efforts method                                                                                                                                                                                                                                                   |   | 11,712,673 |   |   |
|           Less      Accumulated Depletion and Depreciation                                                                                                                                                                                              |   | (2,740,044 | )      |   |
|                     Oil      and Gas Properties (net)                                                                                                                                                 |   | 8,972,629  |   |   |
|                                                                                                                                                                                                                                                                                                      |   |       |   |   |
| Investment in Pipeline                                                                                                                                                                                                                                                                                    |   | 9,426,049  |   |   |
|           Less      Accumulated Depreciation                                                                                                                                                                                                            |   | (218,500   | )      |   |
|                     Investment      in Pipeline (net)                                                                                                                                                 |   | 9,207,549  |   |   |
| Total Assets                                                                                                                                                                                                                                                                                              | $      | 20,942,233 |   |   |
|                                                                                                                                                                                                                                                                                                      |   |       |   |   |
| **LIABILITIES**                                                                                                                                                                                                                                                                                           |   |       |   |   |
| Current Liabilities:                                                                                                                                                                                                                                                                                      |   |       |   |   |
|           Accounts      Payable                                                                                                                                                                                                                         | $      | 704,151    |   |   |
|           Payable      to Related Parties                                                                                                                                                                                                               |   | 4,371,318  |   |   |
|           Accrued      Expenses                                                                                                                                                                                                                         |   | 1,430,184  |   |   |
|           Current      Portion of Long-Term Debt                                                                                                                                                                                                        |   | 5,424,194  |   |   |
|                     Total      Current Liabilities                                                                                                                                                    |   | 11,929,847 |   |   |
|                                                                                                                                                                                                                                                                                                      |   |       |   |   |
|           Notes      Payable                                                                                                                                                                                                                            |   | 3,605,937  |   |   |
|           Notes      Payable - Related Parties                                                                                                                                                                                                          |   | 3,618,924  |   |   |
|           Less      Current Portion of Notes Payable                                                                                                                                                                                                    |   | (5,424,194 | )      |   |
|                     Total      Long-Term Debt                                                                                                                                                         |   | 1,800,667  |   |   |
|                                                                                                                                                                                                                                                                                                      |   |       |   |   |
|           Deferred      Tax Liability                                                                                                                                                                                                                   |   | 1,734,563  |   |   |
|                     Total      Liabilities                                                                                                                                                            |   | 15,465,077 |   |   |
|                                                                                                                                                                                                                                                                                                      |   |       |   |   |
|           Minority      Interest in Pipeline                                                                                                                                                                                                            |   | 4,685,301  |   |   |
|           Commitments      and Contingencies                                                                                                                                                                                                            |   | -          |   |   |
|                                                                                                                                                                                                                                                                                                      |   |       |   |   |
| **Stockholders' Equity**                                                                                                                                                                                                                                                                                  |   |       |   |   |
|           Common      Stock, $.001 par,200,000,000 shares authorized                           71,954,262      shares outstanding on March 31, 2007 |   | 71,954     |   |   |
|                                                                                                                                                                                                                                                         |   |       |   |   |
|           Additional      Paid-In-Capital                                                                                                                                                                                                               |   | 1,970,795  |   |   |
|           Retained      Deficit                                                                                                                                                                                                                         |   | (1,250,894 | )      |   |
|                     Total      Stockholders' Equity                                                                                                                                                   |   | 791,855    |   |   |
|                     Total      Liabilities and Stockholders' Equity                                                                                                                                   | $      | 20,942,233 |   |   |
|                                                                                                                                                                                                                                                                                                      |   |       |   |   |

----

|                                                                                                                                                                                                                                                                    | Three Months        Ended |       | Years Ended December 31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|------------|--------------------------|--------|
| Revenues                                                                                                                                                                                                                                                           | March 31, 2007            |       | 2006                     |   | 2005 |   |
|          Oil      and Gas Sales                                                                                                                                                                                       | $                         | 814,400    |                     | $      | 2,874,291 |   | $ | 1,109,199 |   |
|          Pipeline      Revenues                                                                                                                                                                                       |                      | 424,257    |                     |   | 1,162,790 |   |   | 606,420 |   |
|          Sale      of Leases                                                                                                                                                                                          |                      | 19,431     |                     |   | 400,378 |   |   | 23,820 |   |
|          Other      Income                                                                                                                                                                                            |                      | 151,199    |                     |   | 45,771 |   |   | 79,720 |   |
|                   Total      Revenue                                                                                                                                     |                      | 1,409,287  |                     |   | 4,483,230 |   |   | 1,819,159 |   |
|                                                                                                                                                                                                                                                               |                      |       |                     |   |   |   |   |   |   |
| **Costs and Expenses**                                                                                                                                                                                                                                             |                      |       |                     |   |   |   |   |   |   |
|          Oil      & Gas Lease Operating Expenses                                                                                                                                                                      |                      | 168,346    |                     |   | 1,131,502 |   |   | 557,680 |   |
|          Severance      and Ad Valorem Taxes                                                                                                                                                                          |                      | 40,962     |                     |   | 163,523 |   |   | 65,982 |   |
|          Pipeline      Operating Expenses                                                                                                                                                                             |                      | 152,541    |                     |   | 427,295 |   |   | 206,485 |   |
|          Depletion      & Depreciation                                                                                                                                                                                |                      | 468,540    |                     |   | 1,940,354 |   |   | 433,817 |   |
|          General      & Administrative                                                                                                                                                                                |                      | 135,947    |                     |   | 281,727 |   |   | 112,596 |   |
|          Interest,      net of capitalized interest of $113,706,                    $420,230,      and $96,211 in 2007, 2006, and 2005, respectively |                      | 63,321     |                     |   | 13,660 |   |   | 13,000 |   |
|                   Total      Costs and Expenses                                                                                                                          |                      | 1,029,657  |                     |   | 3,958,061 |   |   | 1,389,560 |   |
|                                                                                                                                                                                                                                                               |                      |       |                     |   |   |   |   |   |   |
| Income from operations before income taxes               and minority interest                                                                                                                                        |                      | 379,630    |                     |   | 525,169 |   |   | 429,599 |   |
|                                                                                                                                                                                                                                                               |                      |       |                     |   |   |   |   |   |   |
| Income Tax Provision                                                                                                                                                                                                                                               |                      | (1,421,148 | )                        |   | - |   |   | - |   |
| Minority Interest Expense                                                                                                                                                                                                                                          |                      | (106,276   | )                        |   | (332,413 | ) |   | (128,511 | ) |
| Net (Loss) Income                                                                                                                                                                                                                                                  | $                         | (1,147,794 | )                        |   | $192,756 |   | $ | 301,088 |   |
|                                                                                                                                                                                                                                                               |                      |       |                     |   |   |   |   |   |   |
| **Basic and Diluted Loss per Common Share**                                                                                                                                                                                                                        |                      | (0.02      | )                        |   |   |   |   |   |   |
| **Weighted Average Common Shares Outstanding**                                                                                                                                                                                                                     |                      | 69,616,786 |                     |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                               |                      |       |                     |   |   |   |   |   |   |
| **Pro-Forma Earnings Per Share**                                                                                                                                                                                                                                   |                      |       |                     |   |   |   |   |   |   |
|          Net      Income                                                                                                                                                                                              |                      |       |                     | $      | 192,756 |   | $ | 301,088 |   |
|          Proforma      Income Tax Expense at Statutory Rate (35%)                                                                                                                                                     |                      |       |                     |   | (67,465 | ) |   | (105,381 | ) |
|          Proforma      Net Income                                                                                                                                                                                     |                      |       |                     | $      | 125,291 |   | $ | 195,707 |   |
|                                                                                                                                                                                                                                                               |                      |       |                     |   |   |   |   |   |   |
| **Proforma Weighted Average Shares Outstanding**                                                                                                                                                                                                                   |                      |       |                     |   | 68,129,310 |   |   | 68,129,310 |   |
| **Proforma Basic and Diluted      Earnings Per Share**                                                                                                                                                                                                             |                      |       |                     | $      | 0.00 |   | $ | 0.00 |   |
|                                                                                                                                                                                                                                                               |                      |       |                     |   |   |   |   |   |   |

----

|   | Combined Totals |   | Common Stock |   |
|--------|-----------------|--------|--------------|--------|

|   | Common         Stock |   | Members'        Investment |   | Number of        Shares |   | Amount |   | Paid-In         Capital |   | Retained         Deficit |   | Total |
|--------|----------------------|--------|----------------------------|--------|-------------------------|--------|--------|--------|-------------------------|--------|--------------------------|--------|-------|

| Combined Equities of Merged Companies                                                                                                                                            |   |        |   |   |          |   |            |   |   |        |   |   |           |   |   |             |   |   |            |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|----------|--------|------------|--------|--------|--------|--------|--------|-----------|--------|--------|-------------|--------|--------|------------|--------|
|              December      31, 2004                                                                             | $      | 1,000  |   |   | 143,414  |   | -          |   | $      | -      |   | $      | 30,798    |   | $      | (1,131,023) |   | $      | (955,811   | )      |
|                                                                                                                                                                             |   |        |   |   |          |   |            |   |   |        |   |   |           |   |   |             |   |   |            |   |
| Reverse Merger Adjustments:                                                                                                                                                      |   |        |   |   |          |   |            |   |   |        |   |   |           |   |   |             |   |   |            |   |
|              Goldrange      Resources, Inc.                                                                     |   | -      |   |   | -        |   | 13,379,310 |   |   | 13,379 |   |   | (13,379   | )      |   | -           |   |   | -          |   |
|              Merged      Companies                                                                              |   | (1,000 | )      |   | (143,414 | )      | 54,750,000 |   |   | 54,750 |   |   | (938,720  | )      |   | -           |   |   | (1,028,384 | )      |
|                                                                                                                                                                             |   |        |   |   |          |   |            |   |   |        |   |   |           |   |   |             |   |   |            |   |
| Restated Balance,      December 31, 2004                                                                                                                                         |   | -      |   |   | -        |   | 68,129,310 |   |   | 68,129 |   |   | (921,301  | )      |   | (1,131,023  | )      |   | (1,984,195 | )      |
|                                                                                                                                                                             |   |        |   |   |          |   |            |   |   |        |   |   |           |   |   |             |   |   |            |   |
| Net Income 2005                                                                                                                                                                  |   | -      |   |   | -        |   | -          |   |   | -      |   |   | -         |   |   | 301,088     |   |   | 301,088    |   |
|                                                                                                                                                                             |   |        |   |   |          |   |            |   |   |        |   |   |           |   |   |             |   |   |            |   |
| Balance, December      31, 2005                                                                                                                                                  |   | -      |   |   | -        |   | 68,129,310 |   |   | 68,129 |   |   | (921,301  | )      |   | (829,935    | )      |   | (1,683,107 | )      |
|                                                                                                                                                                             |   |        |   |   |          |   |            |   |   |        |   |   |           |   |   |             |   |   |            |   |
| Net Income 2006                                                                                                                                                                  |   | -      |   |   | -        |   | -          |   |   | -      |   |   | -         |   |   | 192,756     |   |   | 192,756    |   |
|                                                                                                                                                                             |   |        |   |   |          |   |            |   |   |        |   |   |           |   |   |             |   |   |            |   |
| Balance, December 31, 2006                                                                                                                                                       |   | -      |   |   | -        |   | 68,129,310 |   |   | 68,129 |   |   | (921,301  | )      |   | (637,179    | )      |   | (1,490,351 | )      |
|                                                                                                                                                                             |   |        |   |   |          |   |            |   |   |        |   |   |           |   |   |             |   |   |            |   |
| Sale of Common Stock                                                                                                                                                             |   | -      |   |   | -        |   | -          |   |   | -      |   |   | -         |   |   | -           |   |   | -          |   |
|              February      2007                                                                                 |   | -      |   |   | -        |   | 2,124,952  |   |   | 2,125  |   |   | 1,897,875 |   |   | -           |   |   | 1,900,000  |   |
|              March      2007                                                                                    |   | -      |   |   | -        |   | 1,700,000  |   |   | 1,700  |   |   | 1,528,300 |   |   | -           |   |   | 1,530,000  |   |
| Change in Tax Status of Two Merged                            Companies |   | -      |   |   | -        |   | -          |   |   | -      |   |   | (534,079  | )      |   | 534,079     |   |   | -          |   |
| Net Loss 2007                                                                                                                                                                    |   | -      |   |   | -        |   | -          |   |   | -      |   |   | -         |   |   | (1,147,794  | )      |   | (1,147,794 | )      |
|                                                                                                                                                                             |   |        |   |   |          |   |            |   |   |        |   |   |           |   |   |             |   |   |            |   |
| Balance, March 31,      2007                                                                                                                                                     | $      | -      |   | $      | -        |   | 71,954,262 |   | $      | 71,954 |   | $      | 1,970,795 |   | $      | (1,250,894  | )      | $      | 791,855    |   |
|                                                                                                                                                                             |   |   |   |   |     |   |       |   |   |   |   |   |      |   |   |        |   |   |       |   |

----

|                                                                                                                                      |   | Three Months        Ended |   |   | Years Ended December 31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|--------|--------|--------------------------|--------|
| **Operating Activities:**                                                                                                                 |   | March 31, 2007            |   |   | 2006                     |   |   | 2005 |   |
|       Net      Loss                                                                                         | $      | (1,147,794                | )      | $      | 192,756                  |   | $ | 301,088 |   |
|             Adjustments      to reconcile net cash from operating activities: |   |                           |   |   |                          |   |   |  |   |
|             Income      Tax Expense                                           |   | 1,421,148                 |   |   |                          |   |   |  |   |
|             Depletion,      Depreciation, & Amortization                      |   | 468,540                   |   |   | 1,940,355                |   |   | 433,817 |   |
|             Joint      Venture Partner Expense                                |   | 106,276                   |   |   | 332,413                  |   |   | 128,511 |   |
|             Note      Accretion                                               |   | 41,487                    |   |   | 128,334                  |   |   |   |   |
|       Changes      in Operating Assets and Liabilities                                                      |   |                           |   |   |                          |   |   |  |   |
|             Cash      Overdraft                                               |   |                           |   |   | 186,912                  |   |   |  |   |
|             Changes      in Other Assets                                      |   | 13,454                    |   |   | (13,455                  | )      |   | (5,375 | ) |
|             Changes      in Accrued Liabilities                               |   |                      |   |   | 86,667                   |   |   | 23,723 |   |
|             Change      in Related Party Receivables/Payables                 |   | (516,714                  | )      |   | (543,483                 | )      |   | 14,701 |   |
|             Changes      in Other Receivables                                 |   | (63,389                   | )      |   | 2,324                    |   |   | (21,934 | ) |
|             Change      in Revenue Receivables                                |   | (495,201                  | )      |   | 86,762                   |   |   | (327,757 | ) |
|             Changes      in Accounts Payable                                  |   | 704,151                   |   |   | -                        |   |   | 175,605 |   |
|       Net      Cash provided from operating activities                                                      |   | 531,958                   |   |   | 2,399,585                |   |   | 722,379 |   |
|                                                                                                                                      |   |                           |   |   |                          |   |   |  |   |
| **Investing Activities:**                                                                                                                 |   |                           |   |   |                          |   |   |  |   |
|                                                                                                                                      |   |                           |   |   |                          |   |   |  |   |
|       Oil      & Gas Drilling, Completing and Leasehold Acquisition Costs                                   |   | (2,091,787                | )      |   | (6,371,739               | )      |   | (1,679,003 | ) |
|       Change      in Drilling Reimbursements in Excess of Costs                                             |   | (1,962,407                | )      |   | 492,160                  |   |   | 1,280,768 |   |
|       Change      in Accounts Payable related to drilling                                                   |   | -                         |   |   | 2,220,498                |   |   | - |   |
|       Deposits                                                                                              |   | -                         |   |   | 200,000                  |   |   | (200,000 | ) |
|       Change      in Accrued Liabilities                                                                    |   | (1,267,477                | )      |   | 722,450                  |   |   | 1,014,964 |   |
|       Investments      in Pipeline Joint Venture                                                            |   | (1,187,542                | )      |   | (4,643,249               | )      |   | (3,187,995 | ) |
|       Note      Receivable Collections                                                                      |   | 987,022                   |   |   |                     |   |   |   |   |
|       Net      Cash used in investing activities                                                            |   | (5,522,191                | )      |   | (7,379,880               | )      |   | (2,771,266 | ) |
|                                                                                                                                      |   |                           |   |   |                          |   |   |  |   |
| **Financing Activities**                                                                                                                  |   |                           |   |   |                          |   |   |  |   |
|       Notes      Payable Advance                                                                            |   | 999,667                   |   |   | 704,466                  |   |   | 1,939,606 |   |
|       Changes      in Notes Payable Related Party                                                           |   | -                         |   |   | 1,264,957                |   |   | 930,602 |   |
|       Minority      Cash Contributions, Net of Distributions                                                |   | 772,820                   |   |   | 1,747,320                |   |   | 107,961 |   |
|       Net      cash received from common stock subscriptions                                                |   | 3,430,000                 |   |   | -                        |   |   | -  |   |
|       Net      Cash provided from financing activities.                                                     |   | 5,202,487                 |   |   | 3,716,743                |   |   | 2,978,169 |   |
| Net Increase in cash                                                                                                                      |   | 212,254                   |   |   | (1,263,552               | )      |   | 929,282 |   |
| Cash - Beginning of      the period                                                                                                       |   | -                         |   |   | 1,263,552                |   |   | 334,270 |   |
| Cash - End of the period                                                                                                                  | $      | 212,254                   |   | $      | -                        |   | $ | 1,263,552 |   |
|                                                                                                                                      |   |                      |   |   |                     |   |   |   |   |

----

|                                                                                       |   | Three Months        Ended |   |   | Years Ended December 31, |   |
|--------------------------------------------------------------------------------------------|--------|---------------------------|--------|--------|--------------------------|--------|
| **Supplemental Disclosure of Cash Flow      Information**                                  |   | March 31, 2007            |   |   | 2006                     |   |   | 2005 |   |
|       Cash      paid during year for:                        |   |                      |   |   |                     |   |   |   |   |
|             Interest           | $      | 73,234                    |   | $      | 185,284                  |   | $ | 65,151 |   |
|                                                                                       |   |                      |   |   |                     |   |   |   |   |
|             Income      Taxes  |   | -                         |        |        | -                        |        |  | - |   |
|                                                                                       |   |                      |   |   |                     |   |   |   |   |
|                                                                                       |   |                      |   |   |                     |   |   |   |   |
| **Non Cash Investing and Financing      Activities**                                       |   |                      |   |   |                     |   |   |   |   |
|       Contribution      of Note Receivable                   | $      | 2,601,240                 |   | $      | -                        |   | $ | - |   |
|                                                                                       |   |                      |   |   |                     |   |   |   |   |
|       Contribution      of Note Payable                      | $      | (1,950,000                | )      | $      | -                        |   | $ | - |   |
|                                                                                       |   |                      |   |   |                     |   |   |   |   |
|       Conversion      of Note Payable to Minority Interest   | $      | (1,490,000                | )      | $      | -                        |   | $ | - |   |
|                                                                                       |   |                      |   |   |                     |   |   |   |   |
|       Contribution      of Related Party Receivable/Payables | $      | 651,240                   |   | $      | -                        |   | $ | - |   |
|                                                                                       |   |                      |   |   |                     |   |   |   |   |
|       Oil      & Gas Lease Contributed by Owner              | $      | -                         |   | $      | -                        |   | $ | 145,190 |   |
|                                                                                       |   |                      |   |   |                     |   |   |   |   |
|                                                                                       |   |                      |   |   |                     |   |   |   |   |
|                                                                                       |   |                      |   |   |                     |   |   |   |   |
|                                                                                       |   |                      |   |   |                     |   |   |   |   |
|                                                                                       |   |                      |   |   |                     |   |   |   |   |
|                                                                                       |   |                      |   |   |                     |   |   |   |   |
|                                                                                       |   |                      |   |   |                     |   |   |   |   |

----

----

----

----

| • | Approximately 8,800 acres of proven producing,      proven undeveloped, and unproven reserves located in the "oil window" of      the Barnett Shale in North Central Texas;                                                            |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Approximately 6,000 acres of undeveloped leasehold      in the Fayetteville shale prospect in central Arkansas; and                                                                                                                    |
| • | A note and option receivable. The outstanding      principal of the note receivable was $2,614,246. The note is secured by      a drilling rig. The face value of the option receivable is $300,000 and      the carrying value is $0. |

| • | An undivided 44.44% interest in a joint venture      that owns 30% of the Tri-County Gas Gathering System, a pipeline servicing      the section of the Barnett Shale where REO's leasehold is located and a      100% working interest in one lease located in the oil window of the Barnett      Shale. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Deferred tax liabilities of $313,414.                                                                                                                                                                                                                                                                     |

| • | 95% working interest in approximately 4,000      acres in leasehold in East Central Texas. The majority of the property is      classified as proven undeveloped and is the subject of an ASP flood pilot.      JMT's cost basis in the leasehold was zero due to an impairment write-down      taken on the property several years ago. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                 | March 31        2007 |   |
|--------------------------------------|----------------------|--------|
| Federal Statutory      Tax Rate      | 34%                  |   |
| State                                | 1%                   |   |
| Consolidated Effective      Tax Rate | 35%                  |   |
|                                 |                 |   |

----

|                                             |   | March 31        2007 |   |
|--------------------------------------------------|--------|----------------------|--------|
| Expected Tax Expense      from Operations        | $      | 132,870              |   |
| Tax Expense related to change in tax      status |   | 1,288,278            |   |
| Income Tax Provision                             | $      | 1,421,148            |   |
|                                             |   |                 |   |

|                                                                                                                                                   |   | March 31        2007 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|--------|
| Deferred Tax Assets:                                                                                                                                   |   |                 |   |
|           Net      Operating Loss Carryforward                                                       | $      | 952,916              |   |
|                     Total      Deferred Tax Assets |   | 952,916              |   |
|                                                                                                                                                   |   |                 |   |
| Deferred Tax Liabilities                                                                                                                               |   |                 |   |
|           Oil      & Gas Properties Basis                                                            |   | 1,956,886            |   |
|           Pipeline      Assets Basis                                                                 |   | 730,593              |   |
|                     Total      Deferred Liabilites |   | 2,687,479            |   |
| Net Deferred Tax Liability                                                                                                                             | $      | 1,734,563            |   |
|                                                                                                                                                   |   |                 |   |

|                                                                                                 |   | March 31        2007 |   |
|------------------------------------------------------------------------------------------------------|--------|----------------------|--------|
| Numerator                                                                                            |   |                 |   |
|           Net      Income (Loss)                   | $      | (1,147,794           | )      |
| Denominator                                                                                          |   |                 |   |
|           Weighted      Average Shares Outstanding |   | 69,616,786           |   |
|                                                                                                 |   |                 |   |
| Basic and Diluted-      Net Income                                                                   | $      | (0.02                | )      |

----

|                          | Fiscal Years Ending March 31, |      |
|-------------------------------|-------------------------------|-----------|
|                          |                          | 2008      |   |   | 2009 |   | 2010 |   | 2011 |   | 2012 |   |
| Frost National Bank      Note | $                             | 1,950,000 |   | $ |   |   |   |   |   |   |   |   |
| 1st State Bank Note           |                          | 79,600    |   |   |   |   |   |   |   |   |   |   |
| Lease Note No. 1              |                          | 100,000   |   |   |   |   |   |   |   |   |   |   |
| Lease Note No. 5              |                          |      |   |   | 100,000 |   |   |   |   |   |   |   |
| Note Payable - Shareholder    |                          |      |   |   | 324,330 |   |   |   |   |   |   |   |
| Note Payable - Shareholder    |                          | 3,294,594 |   |   |   |   |   |   |   |   |   |   |
|                          | $                             | 5,424,194 |   | $ | 424,330 |   | - |   | - |   | - |   |
|                          |                          |      |   |   |   |   |   |   |   |   |   |   |

----

|                                    | March 31, 2007 |   |
|-----------------------------------------|----------------|--------|
| Beginning Balance                       | 8,050,000      |   |
| 4 for 1 splt November 30, 2006          | 24,150,000     |   |
| Shares Cancelled                        | (18,820,690    | )      |
| Shares Outstanding January 31, 2007     | 13,379,310     |   |
| Shares issued      for Benco acquistion | 16,041,750     |   |
| Shares issued for REO acquisiton        | 22,885,500     |   |
| Shares issued for JMT acquisition       | 15,822,750     |   |
| Private Placement shares issued         | 3,824,952      |   |
| Ending Balance                          | 71,954,262     |   |
|                                    |           |   |

|              | Fiscal Year Ending March 31, |   |
|-------------------|------------------------------|--------|
|              | 2008                         |   | 2009 |   | 2010 |   |
| Minimum Base Rent | 110,835                      |        | 152,210 |  | 131,525 |   |

----

|                                                        | Three Months         Ended        March 31, 2007 |      |
|-------------------------------------------------------------|--------------------------------------------------|-----------|
| Minority Interest      at December 31, 2006                 | $                                                | 2,316,205 |   |
|                                                        |                                             |           |   |
| Conversion of Note      Payable to Minority Interest Equity |                                             | 1,490,000 |   |
| Capital Contributions                                       |                                             | 772,820   |   |
| Income Allocation                                           |                                             | 106,276   |   |
| Minority Interest at March 31, 2007                         | $                                                | 4,685,301 |   |
|                                                        |                                             |      |   |

----

|                                       | Oil and Gas        Segment |       | Pipeline         Segment |   | Total     |   |
|--------------------------------------------|----------------------------|------------|--------------------------|--------|-----------|--------|
| Current Assets                             | $                          | 1,092,281  |                     | $      | 55,556    |   | $ | 1,147,837 |   |
| Note Receivable                            |                       | 1,614,218  |                     |   |           |   |   | 1,614,218 |   |
| Oil & Gas Properties (net)                 |                       | 8,972,629  |                     |   |           |   |   | 8,972,629 |   |
| Investment in Pipeline (net)               |                       |       |                     |   | 9,207,549 |   |   | 9,207,549 |   |
| Total Assets                               |                       | 11,679,128 |                     |   | 9,263,105 |   |   | 20,942,233 |   |
|                                       |                       |       |                     |   |      |   |   |   |   |
| Current Liabilities                        |                       | 10,793,658 |                     |   | 1,136,192 |   |   | 11,929,850 |   |
| Long-Term Debt                             |                       | 1,800,664  |                     |   |           |   |   | 1,800,664 |   |
| Deferred Tax Liabilitiy                    |                       | 1,003,970  |                     |   | 730,593   |   |   | 1,734,563 |   |
| Total Liabilities                          |                       | 13,598,292 |                     |   | 1,866,785 |   |   | 15,465,077 |   |
|                                       |                       |       |                     |   |      |   |   |   |   |
| Minority Interest                          |                       |            |                     |   | 4,685,301 |   |   | 4,685,301 |   |
| Stockholder's Equity                       |                       | (1,919,164 | )                        |   | 2,711,019 |   |   | 791,855 |   |
| Total Liabilities and Stockholder's Equity |                       | 11,679,128 |                     |   | 9,263,105 |   |   | 20,942,233 |   |
|                                       |                       |       |                     |   |      |   |   |   |   |
| Total Revenue                              |                       | 985,030    |                     |   | 424,257   |   |   | 1,409,287 |   |
| Total Costs and Expenses                   |                       | (877,116   | )                        |   | (152,541  | )      |   | (1,029,657 | ) |
| Income Tax Provision                       |                       | (1,326,047 | )                        |   | (95,101   | )      |   | (1,421,148 | ) |
| Minority Interest Expense                  |                       |       |                     |   | (106,276  | )      |   | (106,276 | ) |
| Net (Loss) Income                          | $                          | (1,218,133 | )                        | $      | 70,339    |   | $ | (1,147,794 | ) |
|                                       |                       |       |                     |   |      |   |   |   |   |

|                          | Year Ending March 31 |    |
|-------------------------------|----------------------|---------|
|                          |                 | 2008    |   |   | 2009 |   |   | 2010 |   |
| Restricted Stock Compensation | $                    | 581,137 |   | $ | 195,336 |   | $ | - |   |
| Stock Option Compensation     |                 | 39,382  |   |   | 21,256 |   |   | 9,232 |   |
|                          | $                    | 620,519 |   | $ | 216,592 |   | $ | 9,232 |   |
|                          |                 |    |   |   |   |   |   |   |   |

----

|                           | Crude Oil        (MBBL) |   | Natural Gas         (MMCF) |   | Crude Oil        Equivalents        (MBOE) |   |
|--------------------------------|-------------------------|--------|----------------------------|--------|--------------------------------------------|--------|
| Proved Developed Producing     | 156                     |   | 999                        |   | 328                                        |   |
| Proved Developed Non-Producing | 82                      |   | 764                        |   | 214                                        |   |
| Proved Undeveloped             | 11,439                  |   | 1,628                      |   | 11,720                                     |   |
| Balance at April 1, 2007       | 11,677                  |   | 3,391                      |   | 12,262                                     |   |
|                           |                    |   |                       |   |                                       |   |

|                            | **Barnett Shale Project** | ****   | **CorsicanaProject**       |   |
|---------------------------------|---------------------------|--------|----------------------------|--------|
|                            | Crude Oil        (MBBL)   |   | Natural Gas         (MMCF) |   | Crude Oil        Equivalents        (MBOE) |   | Crude Oil        (MBBL) |   |
| Proved      Developed Producing | 51                        |   | 999                        |   | 223 |   | 106 |   |
| Proved Developed Non-Producing  | 82                        |   | 764                        |   | 214 |   |  |   |
| Proved Undeveloped              | 136                       |   | 1,628                      |   | 417 |   | 11,302 |   |
| Balance at April 1, 2007        | 269                       |   | 3,391                      |   | 854 |   | 11,408 |   |
|                            |                      |   |                       |   |   |   |   |   |

----

| • | Estimates are made of quantities of proved      reserves and future amounts expected to be produced based on current year-end      economic conditions.                                                                  |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                     |
| • | Estimated future cash inflows are calculated      by applying current year-end prices of natural gas and oil relating to our      proved reserves to the quantities of those reserves produced in each future      year. |
|   |                                                                                                                                                                                                                     |
| • | Future cash flows are reduced by estimated      production costs, costs to develop and produce the proved reserves and abandonment      costs, all based on current year-end economic conditions.                        |
|   |                                                                                                                                                                                                                     |
| • | The resulting future net cash flows are discounted      to present value by applying a discount rate of 10%.                                                                                                             |

|                                                                                      |   | **Total**     |   |
|-------------------------------------------------------------------------------------------|--------|---------------|--------|
|                                                                                      |   | April 1, 2007 |   |
| Future Cash Inflows                                                                       | $      | 732,751,890   |   |
| Future Costs                                                                              |   |               |   |
|              Production  |   | (150,282,390  | )      |
|              Development |   | (110,789,600  | )      |
| Total Undiscounted Future      Net Cash Flow                                              |   | 471,679,900   |   |
| Income Taxes                                                                              |   | (165,088,000  | )      |
| 10% Annual Discount                                                                       |   | (188,962,530  | )      |
| Standardized Measure of Discounted      Future Net Cash Flow                              | $      | 117,629,370   |   |
|                                                                                      |   |          |   |

----

|                                                                                      | **Barnett Project** | ** **    | **Corsicana Project** |   |
|-------------------------------------------------------------------------------------------|---------------------|---------------|-----------------------|--------|
|                                                                                      |                | April 1, 2007 |                  |   | April 1, 2007 |   |
| Future Cash Inflows                                                                       | $                   | 41,390,430    |                  | $      | 691,361,460 |   |
| Future Costs                                                                              |                |               |                  |   |  |   |
|              Production  |                | (13,113,970   | )                     |   | (137,168,420 | ) |
|              Development |                | (9,903,140    | )                     |   | (100,886,460 | ) |
| Total Undiscounted      Future Net Cash Flow                                              |                | 18,373,320    |                  |   | 453,306,580 |   |
| Income Taxes                                                                              |                | (6,430,000    | )                     |        | (158,658,000 | ) |
| 10% Annual Discount                                                                       |                | (5,374,920    | )                     |   | (183,587,610 | ) |
| Standardized Measure of Discounted Future      Net Cash Flow                              | $                   | 6,568,400     |                  | $      | 111,060,970 |   |
|                                                                                      |                |          |                  |   |   |   |

|                                                            |   | Successful         Efforts |   |   |   |   |
|-----------------------------------------------------------------|--------|----------------------------|--------|--------|--------|--------|
| Unproved oil and gas      properties                            | $      | 2,789,212                  |   |   |   |   |
| Proved oil and gas properties                                   |   | 8,923,461                  |   |   |   |   |
| Support Equipment      and facilities                           |   | 0                          |   |   |   |   |
|                                                            |   | 11,712,673                 |   |   |   |   |
| Less accumulated depletion,      depreciation, and amortization |   | (2,740,044                 | )      |   |   |   |
| Net Capitalized Costs                                           | $      | 8,972,629                  |   |   |   |   |
|                                                            |   |                       |   |   |   |   |

|                                                                                   | Three Months        Ended        3/31/2007 |      | Year         Ended        12/31/2006 |   |
|----------------------------------------------------------------------------------------|--------------------------------------------|-----------|--------------------------------------|--------|
| Property Acquisition Costs                                                             |                                       |      |                                 |   |   |   |
|              Proved   | $                                          | -         |                                 | $      | - |   |
|              Unproved |                                       | 97,251    |                                 |   | 2,203,837 |   |
| Exploration Costs                                                                      |                                       | 1,886,247 |                                 |   | 4,167,902 |   |
| Development Costs                                                                      |                                       |           |                                 |   |  |   |
| Amortization rate per equivalent      barrel of production                             |                                       | 25.84     |                                 |   | 32.40 |   |

|          |     |   | Oil & Gas Production |   |
|---------------|----------|--------|----------------------|--------|
|               |     |   | Oil         Bbl      |   | Gas         Mcf |   | Total        BOE |   |
| Year Ended    | 12/31/04 |   | 1,721                |   | 13,587 |   | 4,083 |   |
|          | 12/31/05 |   | 7,262                |   | 77,650 |   | 20,650 |   |
|          | 12/31/06 |   | 34,019               |   | 177,106 |   | 64,555 |   |
| Quarter ended | 3/31/07  |   | 7,023                |   | 55,562 |   | 16,603 |   |

----

|                                                                                                                      | Three Months        Ended |      | Years Ended December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------|---------------------------|-----------|--------------------------|--------|
|                                                                                                                      |                      | 3/31/2007 |                     |   | 2006 |   |   | 2005 |   |   | 2004 |   |
| Oil & Gas Revenue:                                                                                                        | $                         | 814,400   |                     | $      | 2,874,291 |   | $ | 1,109,199 |   | $ | 144,514 |   |
| Gain on Sale of Working Interests                                                                                         |                      |      |                     |   |   |   |   |   |   |   |   |   |
| Gain on Sale of Oil & Gas Leases                                                                                          |                      |      |                     |   |   |   |   |   |   |   | 26,474 |   |
| Production Costs                                                                                                          |                      | 209,308   |                     |   | 1,295,025 |   |   | 623,662 |   |   | 15,268 |   |
| Exploration Costs                                                                                                         |                      |           |                     |   |  |   |   |  |   |   | 800,000 |   |
| Depreciation, Depletion, & Amortization                                                                                   |                      | 409,376   |                     |   | 1,869,683 |   |   | 394,217 |   |   | 96,951 |   |
|                                                                                                                      |                      | 195,716   |                     |   | (290,417 | ) |   | 91,320 |   |   | (741,231 | ) |
| Income Taxes                                                                                                              |                      | (68,501)  |                     |   | - |   |   | - |   |   | - |   |
|                                                                                                                      |                      |           |                     |   |  |   |   |  |   |   |  |   |
| Results of operations for oil and gas       producing activities (excluding corporate       overhead and financing costs) |                      | 195,716   |                     |   | (290,417 | ) |   | 91,320 |   |   | (741,231 | ) |
|                                                                                                                      |                      |      |                     |   |   |   |   |   |   |   |   |   |

----

----

----

| ****                                                    | ****                         | **Annual Compensation**      | **Long Term Compensation** | ****                                             |
|---------------------------------------------------------|------------------------------|------------------------------|----------------------------|--------------------------------------------------|
| ****                                                    | ****                         | ****                         | ****                       | ****                                             | **Awards** | **Payouts** | **** |
| **Name and Principal Position**                         | **Yr.**                      | **Salary ($)**               | **Bonus         ($)**      | **Other Annual        Compensation         ($)** | **Restricted         Stock        Award(s)        ($)** | **Securities         Underlying        Options/SARs        (#)** | **LTIP        Payouts        ($)** | **All Other         Compensation        ($)** |
| Steve Bajic        (former President &        Director) | 2004        2005        2006 | 0        2,000        36,000 | 0        0        0        | 0        0        0                              | 0        0        0 | 0        0        0 | 0        0        0 | 0        0        0 |
|                                                    |                              |                              |                            |                                                  |  |  |  |  |
| John Hiner        (former Director)                     | 2004        2005             | 0        0                   | 0        0                 | 0        0                                       | 0        0 | 0        0 | 0        0 | 0        0 |
|                                                    | 2006                         | 0                            | 0                          | 0                                                | 0 | 0 | 0 | 0 |
|                                                    |                              |                              |                            |                                                  |  |  |  |  |
| Mark S. Zouvas        (Current CEO & Director)          | 2007                         | 120,000                      | N/A                        | 9,000                                            | N/A | N/A | N/A | N/A |
|                                                    |                              |                              |                            |                                                  |  |  |  |  |
| Scott Allen        (Chief Financial Officer)            | 2007                         | 84,000                       | N/A                        | N/A                                              | N/A | N/A | N/A | N/A |
|                                                    |                              |                              |                            |                                                  |  |  |  |  |
| Brett Bennett        (Current V.P. & Director)          | 2007                         | 84,000                       | N/A                        | 18,000                                           | N/A | N/A | N/A | N/A |
|                                                    |                              |                              |                            |                                                  |  |  |  |  |
| M.O. Rife III        (Current Director)                 | 2007                         | N/A                          | N/A                        | N/A                                              | N/A | N/A | N/A | N/A |
|                                                    |                              |                              |                            |                                             |  |  |  |  |
| Jean-Baptiste Heinzer        (Current Director)         | 2007                         | N/A                          | N/A                        | N/A                                              | N/A | N/A | N/A | N/A |
|                                                    |                              |                              |                            |                                                  |  |  |  |  |
| Alan Rae        (Current Director)                      | 2007                         | N/A                          | N/A                        | N/A                                              | N/A | N/A | N/A | N/A |

----

| **Name and Address of Beneficial Owner**                              | **Amount and         Nature of         Beneficial         Ownership** | **Percentage of         Common Stock** |
|-----------------------------------------------------------------------|-----------------------------------------------------------------------|----------------------------------------|
| JMT Resources Ltd. (Shareholder)                                      | 15,822,750                                                            | 23.2%                                  |
| Benco Operating, Inc. (Shareholder)                                   | 16,041,750                                                            | 23.5%                                  |
| REO Energy Ltd. (Shareholder)                                         | 22,855,500                                                            | 33.5%                                  |
| Mark Zouvas (CEO & Director)                                          | 01                                                               | 0%                                     |
| M.O. Rife III (Director)                                              | 02                                                               | 0%                                     |
| Brett Bennett (V.P. & Director)                                       | 0                                                                     | 0%                                     |
| Jean-Baptiste Heinzer (Director)                                      | 0                                                                     | 0%                                     |
| Alan Rae (Director)                                                   | 0                                                                     | 0%                                     |
| **All directors and executive officers as      a group (5 persons )** | **0**                                                                 | **0%**                                 |
| **All Shareholders as a group**                                       | **54,750,000**                                                        | **80.2%**                              |

----

| • | Any director or executive officer of the Company;                                                                             |
|--------|-------------------------------------------------------------------------------------------------------------------------------|
| • | Any nominee for election as a director;                                                                                       |
| • | Any security holder named in the "Security      Ownership of Certain Beneficial Owners and "management" section above; and    |
| • | Any member of the immediate family      (including spouse, parents, children, siblings, and in-laws) of any such      person. |

| 21.1 | Subsidiaries of Registrant                                          |
|------|---------------------------------------------------------------------|
| 23.1 | Consent of Independent Registered Public Accounting      Firm       |
| 23.2 | Consent of Forest Garb & Associates                                 |
| 31.1 | Certification by the President and CEO Pursuant      to Section 302 |
| 31.2 | Certification by the CFO Pursuant to Section      302               |
| 32.1 | Certification by the President and CEO Pursuant      to Section 906 |
| 32.2 | Certification by the CFO Pursuant to Section      906               |

| By  | s/ Mark S. Zouvas                                          |
|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     | Mark S. Zouvas       Chief Executive Officer                                                                                                                                                                                                                            |
|     |                                                                                                                                                                                                                                                                    |
|     |                                                                                                                                                                                                                                                                    |

----