July
      10,
      2006




Quest
      Oil
      Corporation


Mr
      James
      B Panther, II


Chief
      Executive Officer


580
      2nd
      Street, Suite 102


Encinitas,
      California 92024





Re:Year
      End
      Reserves and Economic Report


**As
      of March 31, 2006**





Mr
      Panther:





At
      your
      request, Gleason Engineering has prepared an estimate of proved hydrocarbon
      liquid and gas reserves, and future production rates as of March 31, 2006
      attributable to certain shut-in wells and drilling opportunities, which have
      been acquired by Quest Oil Corporation during the past fiscal year. These wells
      and drilling opportunities are located in Eastland and McCullough Counties,
      Texas. Please be advised that while generalized parameters for product pricing
      and expenses were used as a guide in determining the economic operating life
      of
      each property, the conclusions of this analysis should not be construed to
      be an
      estimate of the future value of the reserve estimates.





The
      summary table below presents the estimated net remaining proved reserves as
      of
      March 31, 2006 reviewed by Gleason Engineering. Hydrocarbon liquid volumes
      are
      expressed in standard 42 gallon barrels and are comprised of crude oil,
      condensate and natural gas liquids. All sales gas volumes are expressed in
      thousands of cubic feet (MCF) at the official temperature and pressure bases
      of
      the areas where the gas reserves are located.





Estimated
      Gross and Net Remaining Reserves


Attributable
      to Certain Wells


**Eastland
      and McCullough Counties, Texas**


As
      of
      March 31, 2006




Reserve
                Category
            Gross
                Oil Volumes
            Net
                Oil Volumes
            Gross
                Gas Volumes
            Net
                Gas Volumes
            Future
                Net Cash Flow
            PV
                @ 10%(bbl)
            (bbl)
            (mcf)
            (mcf)
            (
                $
                )
            (
                $
                )Proved
                Producing
            34,008
            27,108
            0
            0
            781,735
            513,616Proved
                Non-producing
            76,227
            59,238
            0
            0
            1,942,788
            908,461Proved
                Undeveloped
            410,474
            316,060
            24,147
            19,318
            11,284,305
            4,983,044Total
                Proved
            520,709
            402,406
            24,147
            19,318
            14,008,828
            6,405,121Probable
            223,709
            177,912
            23,893
            19,114
            5,720,840
            2,670,786Total
                Proved & Probable
            744,418
            580,318
            48,040
            38,432
            19,729,668
            9,045,907







***Review
      Procedure and Opinion***





In
      our
      opinion, the estimates of future reserves for the wells and locations reviewed
      by Gleason Engineering were prepared in accordance with generally accepted
      procedures for the estimation of future reserves.





In
      performing our review, we relied upon data available from the commercial
      databases of IHS Energy Group, and the records of certain public agencies,
      which
      require the reporting of such data. Reliance on the experience and expertise
      of
      Gleason Engineering was made for those data not generally available through
      public domain or commercial sources.





Gleason
      relied on a study of the geology of the Adams Branch Sand in the area of the
      leases referenced provided by Quest Oil Corporation. This study presented a
      geologic evaluation of the Hawk Eye (Adams Branch) Field as well as the
      potential of additional production opportunities that may be found with further
      development and evaluation. With regard to the Hawk Eye and Midkiff Fields,
      the
      geologic report presented by Quest was accepted as represented with no revisions
      or modifications.





Gleason
      relied on a study of the geology of the Nettie Gardner Lease in the area
      referenced by Quest Oil Corporation. This study presented a geologic evaluation
      of the Nettie Gardner Lease in particular and the E X O C Field in general.
      According to this study, oil and gas production has previously been established
      in the area as demonstrated by the 108,000 barrels of oil produced from the
      Bishop-Biemer Lease immediately to the north of the subject lease. This study
      was based on additional information supplied by Quest and summarized in reports
      by Bill Stinson and Gary Herring. With regard to these geologic reports, Gleason
      accepted them as represented with no revisions or modifications.





Finally,
      Gleason relied on certain financial data and well test data and well status
      reports supplied by Quest and made available to Gleason for its review. Such
      data are not generally available to the general public, but are considered
      fundamental to rendering an accurate evaluation of the value and productivity
      of
      the leases and properties, which are the subjects of this report.








**Hawk
      Eye & Midkiff (Adams Branch) Fields**





***Production
      & Development History***





The
      first
      wells drilled to test the Adams Branch Sand within the study area were drilled
      in 1982. Throughout the 1980’s, Quest’s research indicated that more than two
      hundred (200) wells were drilled and successfully completed in the Adams Branch
      Sand. Quest’s records suggest that there are currently eleven (11) active
      producing wells and one hundred sixty-six (166) wells available for production
      reactivation while nineteen (19) are completed as injection wells. Another
      twenty-four (24) have been plugged and abandoned.





In
      contrast to the above, the Railroad Commission of Texas indicates that one
      hundred fifty-six (156) wells are indicated to be open with fifteen (15)
      classified as injection wells. Additionally, well test records indicate that
      one
      hundred ten (110) wells have indications of production from well test records
      such that reserves can be reliably estimated in accordance with generally
      accepted standards. This leaves fifty-nine (59) wells for which no well or
      test
      data were identified.





During
      the last three months of Quest’s Fiscal year, Quest began a well reactivation
      program by beginning operations to restore production to twelve (12) wells.
      As
      of the close of the Fiscal Year, full time production operations were not yet
      established.








***Future
      Production Rates***





Initial
      production rates are based on a review of well test records available from
      the
      files of the Texas Railroad Commission. Currently there are eleven (11) wells
      producing from the field. Test data and other related information were used
      to
      estimate the anticipated initial production rates for those wells that could
      reasonably anticipated to be returned to production. Those wells for which
      well
      tests were lacking or unavailable were not considered to be viable for
      reactivation. This is not to suggest that these wells cannot be returned to
      production, but rather that data were not available to ascertain with a suitable
      degree of certainty, the likelihood of returning the wells to production. Should
      future testing and evaluation indicate that the, currently lacking test data,
      are viable production candidates, then it is possible that an additional reserve
      volume could be added to these properties.





***Reserve
      Estimates***





In
      general, the reserves for the wells and locations reviewed by Gleason
      Engineering were estimated utilizing generally accepted engineering practices.
      An analysis and interpretation of production history, test records, and geologic
      mapping were conducted to assist in the estimate of recoverable reserves from
      the captioned leases. Conclusions derived from a study of these records
      indicated that reserve recovery per well could range from about 8,500 gross
      barrels to 6,200 gross barrels and average about 7,000 barrels per well for
      the
      wells with reserves classified as Proved Undeveloped or Probable.





As
      indicated above there are reported to be another group of wells in the subject
      leases which may be able to be returned to production. If additional study
      warrants and testing indicates the feasibility of such, operations could be
      initiated to place these wells on production. As stated above, if the wells
      are
      found to be productive, then the reserve volumes that may be realized could
      be
      comparable to the oil volumes reported above. However, the current absence
      of
      any quantified engineering data precludes the assignment of reserves to these
      wells at this time.





As
      a
      final consideration, the estimates of producing rates and reserves by Gleason
      are lower than those represented by Quest. Generally accepted engineering
      practice requires the reliance on quantified and verifiable data in reaching
      a
      conclusion regarding reserve volumes.





***Capital
      Requirements***





The
      Reserves presented in the Table of Estimated Gross Remaining Reserves are
      grouped into two categories. Those categories are, Proved Undeveloped and
      Probable. These two categories correspond to SPE reserve definitions as outlined
      below.





In
      the
      case of all reserves reported, there is an expectation that certain capital
      expenditures may be required to realize the production of the Oil Volumes
      Estimated. Quest Oil Corporation has estimated that a capital investment of
      $8,500 per well will adequately cover the costs of returning the subject wells
      to production. This estimate is based on expenditures incurred on twelve (12)
      wells, which were being reactivated at the time of this report. Gleason
      Engineering has accepted these estimates as represented and has made no
      investigation as to the validity of Quest’s assumptions in this
      regard.





***Reserves***





The
      summary table below presents the estimated net remaining proved reserves as
      of
      March 31, 2006 reviewed by Gleason Engineering. Hydrocarbon liquid volumes
      are
      expressed in standard 42 gallon barrels and are comprised of crude oil,
      condensate and natural gas liquids. All sales gas volumes are expressed in
      thousands of cubic feet (MCF) at the official temperature and pressure bases
      of
      the areas where the gas reserves are located.





Estimated
      Gross and Net Remaining Reserves


Attributable
      to Certain Wells


**Eastland
      County, Texas**


As
      of
      March 31, 2006




Reserve
                Category
            Gross
                Oil Volumes
            Net
                Oil Volumes
            Gross
                Gas Volumes
            Net
                Gas Volumes
            Future
                Net Cash Flow
            PV
                @ 10%(bbl)
            (bbl)
            (mcf)
            (mcf)
            (
                $
                )
            (
                $
                )Proved
                Producing
            34,008
            27,108
            0
            0
            781,735
            513,616Proved
                Non-producing
            76,227
            59,238
            0
            0
            1,942,788
            908,461Proved
                Undeveloped
            395,082
            303,745
            0
            0
            10,653,026
            4,575,991Total
                Proved
            505,317
            390,091
            0
            0
            13,377,549
            5,998,068Probable
            192,925
            153,285
            0
            0
            4,539,249
            1,924,443Total
                Proved & Probable
            698,242
            543,376
            0
            0
            17,916,798
            7,922,511








**Nettie
      Gardner Lease- E X O C Field**





***Production
      & Development History***





The
      first
      wells drilled to test the Gardner Sand within the study area were drilled in
      1976, although it was reported and the public record shows they were completed
      in the Morris Sand. According to Gary Herring, the geologist who originally
      researched this area, the Morris and Gardner have been confused in this area
      frequently. The Morris Sand is generally found higher in the stratigraphic
      section in association with the Goen Lime, while the Gardner is found in closer
      proximity to the Caddo Lime and below the Goen Lime. Geologically, it is more
      likely these wells have encountered the Gardner Sand and therefore concluded
      that all production in the area has actually been produced from the Gardner
      Sand. Public records show that the Bishop-Biemer Lease has produced 108,000
      barrels of oil from six (6) wells to date. This is an average of about 18,000
      barrels per well.





***Future
      Production Rates***





Initial
      production rates are based on a review of well test records available from
      the
      files of the Texas Railroad Commission. Currently there are no wells producing
      from the field. Test data and other related information were used to estimate
      the anticipated initial production rates for those wells that could reasonably
      anticipated to be completed in the target sand.





***Reserve
      Estimates***





In
      general, the reserves for the wells and locations reviewed by Gleason
      Engineering were estimated utilizing generally accepted engineering practices.
      An analysis and interpretation of production history, test records, well log
      evaluation, and geologic mapping were conducted to assist in the estimate of
      recoverable reserves from the captioned leases.





Conclusions
      derived from a study of these records indicated that reserve recovery for wells
      anticipated to encounter gas is about 25,000 mcf per well. This is based on
      an
      assumed drainage area of 20 acres and a sand thickness comparable to that in
      the
      Gardner Number 2 well, which will be recompleted in the first phase of
      development. Two (2) wells are anticipated to encounter gas in the target
      horizon.





Three
      (3)
      wells are projected to be drilled to the Gardner and encounter oil on
      completion. Based on analogy to the Bishop-Biemer Lease and an understanding
      of
      the oil and water production anticipated, it is estimated that each well may
      recover about 15,000 barrels of oil. The drilling of these wells has been
      scheduled two months apart to allow adequate time for performance
      evaluation.





***Capital
      Requirements***





The
      Reserves presented in the Table of Estimated Gross Remaining Reserves are
      grouped into two categories. Those categories are, Proved Undeveloped and
      Probable. These two categories correspond to SPE reserve definitions as outlined
      below.





In
      the
      case of all reserves reported, there is an expectation that certain capital
      expenditures may be required to realize the production of the Oil Volumes
      Estimated. Quest Oil Corporation has estimated that a capital investment of
      $23,600 per well will adequately cover the costs of returning the shut-in wells
      to production. Quest has provided an estimate of drilling and completion costs
      for new wells, which shows anticipated costs to be about $60,000 per well.
      Gleason Engineering has accepted these estimates as represented and has made
      no
      investigation as to the validity of Quest’s assumptions in this
      regard.





***Reserves***





The
      summary table below presents the estimated net remaining proved reserves as
      of
      March 31, 2006 reviewed by Gleason Engineering. Hydrocarbon liquid volumes
      are
      expressed in standard 42 gallon barrels and are comprised of crude oil,
      condensate and natural gas liquids. All sales gas volumes are expressed in
      thousands of cubic feet (MCF) at the official temperature and pressure bases
      of
      the areas where the gas reserves are located.





Estimated
      Gross and Net Remaining Reserves


Attributable
      to Certain Wells


**McCullough
      County, Texas**


As
      of
      March 31, 2006


Reserve
                Category
            Gross
                Oil Volumes
            Net
                Oil Volumes
            Gross
                Gas Volumes
            Net
                Gas Volumes
            Future
                Net Cash Flow
            PV
                @ 10%(bbl)
            (bbl)
            (mcf)
            (mcf)
            (
                $
                )
            (
                $
                )Proved
                Producing
            0
            0
            0
            0
            0
            0Proved
                Non-producing
            0
            0
            0
            0
            0
            0Proved
                Undeveloped
            15,392
            12,315
            24,147
            19,318
            631,279
            407,053Total
                Proved
            15,392
            12,315
            24,147
            19,318
            631,279
            407,053Probable
            30,784
            24,627
            23,893
            19,114
            1,181,591
            716,343Total
                Proved & Probable
            46,179
            36,942
            48,040
            38,432
            1,812,870
            1,123,396








***Reserve
      Definitions***





The
      proved reserves, which are attributable to the wells reviewed by Gleason
      Engineering, conform to the definition as set forth in the Securities and
      Exchange Commission’s Regulation S-X Part 210.4-10 (a) as clarified by
      subsequent Commission Staff Accounting Bulletins and are based on the following
      definition and criteria:





**Proved
      reserves** of crude
      oil, condensate, natural gas, and natural gas liquids are estimated quantities
      that geological and engineering data demonstrate with reasonable certainty
      to be
      recoverable in the future from known reservoirs under existing operating
      conditions, i.e., prices and costs as of the date the estimate is made. Prices
      include consideration of changes in existing prices provided only by contractual
      arrangements, but not on escalation based on future conditions. Reservoirs
      are
      considered proved if either actual production or conclusive formation test
      supports economic producibility. In certain instances, proved reserves are
      assigned on the basis of a combination of core analysis and electrical and
      other
      type logs which indicate the reservoirs are analogous to reservoirs in the
      same
      field which are producing or have demonstrated the ability to produce on a
      formation test. The area of a reservoir considered proved includes (1) that
      portion delineated by drilling and defined by fluid contacts, if any, and (2)
      the adjoining portions not yet drilled that can be reasonably judged as
      economically productive on the basis of available geological and engineering
      data. In the absence of data on fluid contacts, the lowest known structural
      occurrence of hydrocarbons controls the lower proven limit of the reservoir.
      Reserves that can be produced economically through the application of improved
      recovery techniques are included in the proved classification when these
      qualifications are met: (1) successful testing by a pilot project or the
      operation of an installed program I the reservoir provides support for the
      engineering analysis on which the project or program was based, and (2) it
      is
      reasonably certain the project will proceed. Improved recovery includes all
      methods for supplementing natural reservoir forces and energy, or otherwise
      increasing ultimate recovery from a reservoir, including (1) pressure
      maintenance, (2) cycling, and (3) secondary recovery in its original sense.
      Improved recovery also includes the enhanced recovery methods of thermal,
      chemical flooding, and the use of miscible and immiscible displacement fluids.
      Proved natural gas reserves are comprised of non-associated, associated and
      dissolved gas. An appropriate reduction in gas reserves has been made for the
      expected removal of natural gas liquids, for lease and plant fuel, and for
      the
      exclusion of non-hydrocarbon gases if they occur in significant quantities
      and
      are removed prior to sale. Estimates of proved reserves do not include crude
      oil, natural gas, or natural gas liquids being held in underground or surface
      storage. Proved reserves are estimates of hydrocarbons to be recovered from
      a
      given date forward. They may be revised as hydrocarbons are produced and
      additional data become available.





Proved
      developed oil and gas reserves are reserves that can be recovered through
      existing wells with existing equipment and operating methods. Additional oil
      and
      gas expected to be obtained through the application of fluid injection or other
      improved recovery techniques for supplementing the natural forces and mechanisms
      of primary recovery should be included as “proved developed reserves” only after
      testing by a pilot project or after the operation of an installed program has
      confirmed through production response that increased recovery will be achieved.
      Developed reserves may be subcategorized as producing or non-producing using
      the
      SPE Definitions:





·
            ***Producing***-
                Reserves sub-categorized as producing are expected to be recovered
                from
                completion intervals, which are open and producing at the time of
                the
                estimate. Improved recovery reserves are considered producing only
                after
                the improved recovery project is in
                operation.





·
            ***Non-Producing***-
                Reserves sub-categorized as non-producing include shut-in and behind
                pipe
                reserves. Shut-in reserves are expected to be recovered from (1)
                completion intervals which are open at the time of the estimate but
                which
                have not started producing, (2) wells which were shut-in for market
                conditions or pipeline connections, or (3) wells not capable of production
                for mechanical reasons. Behind pipe reserves are reserves that are
                expected to be recovered from zones in existing wells, which will
                require
                additional completion work or future recompletion prior to the start
                of
                production.





Proved
      undeveloped oil and gas reserves are reserves that are expected to be recovered
      from new wells on undrilled acreage, or from existing wells where a relatively
      major expenditure is required for recompletion. Reserves on undrilled acreage
      shall be limited to those drilling units offsetting productive units that are
      reasonably certain of production when drilled. Proved reserves for other
      undrilled units can be claimed only where it can be demonstrated with reasonable
      certainty that there is continuity of production from the existing productive
      formation. Estimates for proved undeveloped reserves are attributable to any
      acreage for which an application of fluid injection or other improved technique
      is contemplated, only when such techniques have been proved effective by actual
      tests in the area and in the same reservoir.







**Probable
      reserves** are
      those unproved reserves which analysis of geological and engineering data
      suggests are more likely than not to be recoverable. In this context, when
      probabilistic methods are used, there should be at least a 50% probability
      that
      the quantities actually recovered will equal or exceed the sum of estimated
      proved plus probable reserves.




In
      general, probable reserves may include (1) reserves anticipated to be proved
      by
      normal step-out drilling where sub-surface control is inadequate to classify
      these reserves as proved, (2) reserves in formations that appear to be
      productive based on well log characteristics but lack core data or definitive
      tests and which are not analogous to producing or proved reservoirs in the
      area,
      (3) incremental reserves attributable to infill drilling that could have been
      classified as proved if closer statutory spacing had been approved at the time
      of the estimate, (4) reserves attributable to improved recovery methods that
      have been established by repeated commercially successful applications when
      (a)
      a project or pilot is planned but not in operation and (b) rock, fluid, and
      reservoir characteristics appear favorable for commercial application, (5)
      reserves in an area of the formation that appears to be separated from the
      proved area by faulting and the geologic interpretation indicates the subject
      area is structurally higher than the proved area, (6) reserves attributable
      to a
      future workover, treatment, re-treatment, change of equipment, or other
      mechanical procedure s ,
      where
      such procedure has not been proved successful in wells which exhibit similar
      behavior in analogous reservoirs, and (7) incremental reserves in proved
      reservoirs where an alternative interpretation of performance or volumetric
      data
      indicates more reserves than can be classified as proved.





***General***





In
      general, the estimates of reserves for the wells and locations reviewed by
      Gleason Engineering are based on data generally available through March 31,
      2006 .





Neither
      we nor any of our employees have any interest in the subject properties and
      neither the employment to do this work nor the compensation is contingent on
      our
      estimates of reserves for the properties, which were reviewed.





This
      report was prepared for the exclusive use and sole benefit of Quest Petroleum.
      The data and work papers used in the preparation of this report are available
      for examination by authorized parties in our offices. Please contact us if
      we
      can be of further service.





Sincerely,







Dennis
      M
      Gleason, PE