PROVIDING
      YOUR PETROLEUM ENGINEERING


NEEDS
      FROM ONE SOURCE









February
      22, 2008




**Charles
      Hill Drilling, Inc – a wholly owned subsidiary of Knight Energy
      Corp.**


2930
      Cheshire Way


Grand
      Prairie, TX 75052-8388




Re:
                  Valuation of Charles Hill
                Drilling,
                  Inc.’s Working interest in
                Eastland
                  and Stephens Cos., TX




**EXECUTIVE
      SUMMARY**




An
      engineering and economic evaluation was prepared on oil and gas property working
      interest owned by Charles Hill Drilling, Inc - a wholly owned subsidiary of
      Knight Energy Corp. This evaluation includes seventeen (17) oil and gas
      leases/wells that are classified as Proved Reserves and twelve (12) leases/wells
      that are classified as Probable Reserves. Charles Hill Drilling operates all
      of
      the leases and wells. Current production is approximately 325 MCFD and 30 BOPD
      gross, of which 260 MCFD and 24 BOPD is net to Charles Hill’s interests.
      Remaining reserves, future cash flow and present worth values were calculated
      as
      of December 31, 2007. The attached Exhibit A lists the wells included in the
      evaluation with location and miscellaneous well information.




Information
      used in the evaluation was provided by Charles Hill Drilling, Inc., and was
      supplemented by data gathered from public sources. Summary results of this
      analysis are provided below and details are presented in referenced attachments.
      The pricing scenario utilized in the evaluation was determined based on fiscal
      year-end prices as of December 31, 2007. Projected reserves and financial values
      are summarized as follows:




***Net
      Reserve Summary and PV10 Forecast from December 31,
      2007***




**Oil**
            
            **Gas**
            
            **Cash
                Flow**
            
            **PV10****(MBO)**
            
            
            **(MMCF)**
            
            
            **($M)**
            
            
            **($M)****Reserve
                Categories**PDP
            
            
            66.7
            
            
            430.2
            
            
            6,704
            
            
            3,542PDBP/PDNP
            
            
            47.5
            
            
            188.5
            
            
            4,355
            
            
            2,524PUD
            
            
            50.6
            
            
            196.0
            
            
            3,999
            
            
            1,945**Total
                Proved**
            
            
            **164.8**
            
            
            **814.7**
            
            
            **15,058**
            
            
            **8,011**PrBP/PrNP
            
            
            21.8
            
            
            201.1
            
            
            2,549
            
            
            1,524PrUD
            
            
            81.0
            
            
            492.8
            
            
            6,185
            
            
            2,606**Total
                PROB**
            
            
            **102.8**
            
            
            **693.9**
            
            
            **8,734**
            
            
            **4,130****TOTAL
                All Categories**
            
            
            **267.6**
            
            
            **1,508.6**
            
            
            **23,792**
            
            
            **12,141**




**Pinnacle
      Energy Services, LLC - page**1 of
      4


9420
      Cedar Lake Ave. Oklahoma City, OK 73114


Ofc:
      405-810-9151 Fax: 405-843-4700 www.PinnacleEnergy.com







A
      one-line economic summary (by well) of the results from this evaluation is
      included in the attachments along with summary economics and a graph of gross
      production. Detailed results of the evaluation showing forecasts of production,
      reserves, revenues, and income for each well/lease are presented in a yearly
      format, and are attached and made part of this report. Lease summary reports
      have been included to provide details of the analysis.




**EVALUATION
      METHODOLOGY AND RESERVES DISCUSSION**




Each
      of
      the five (5) existing leases were evaluated as separate entities – each
      lease has multiple wells. Each new well, Behind-Pipe, Non-Producing, and
      Undeveloped shown on Exhibit A was evaluated as an individual producing entity
      for the purposes of forecasting future production, remaining reserves, revenues,
      expenses and cash flow.




**PRICING
      FORECAST**




Reserve
      estimates and economic evaluations utilized realized year-end oil and natural
      gas prices as of December 31, 2007. Prices were included at the lease or well
      level. These realized product prices reflect adjustments that include price
      differentials, BTU content, field losses and usage, and gathering and
      compression. No further adjustments to gas price for all of the factors
      mentioned above were included. Since actual wellhead revenue data was available
      for oil prices, no further adjustments were used. All prices were applied on
      a
      per-well/lease basis in the economic evaluations. Oil and gas prices were held
      constant for the life of each well/lease.




First
      month combined forecast prices are as follows:




Posted
                prices as of December-07Starting
            
            
            Oil
            
            
            GasDecember
                31, 2007
            
            $
            89.73
                / bbl
            
            $
            8.49
                mcf




**EXPENSES**




Lease
      operating expenses were estimated based on actual expenses incurred by Charles
      Hill Drilling during 2007. Data from lease operating statements was provided
      and
      used to perform the customary analysis for determining base lease operating
      expenses. Overhead charges were excluded from use in this analysis. Lease
      expenses in this evaluation were held constant for the life of the lease/well
      at
      the 2007 monthly average. Since expense data for several newly producing leases
      included only 3 or 4 months of data, actual expenses may vary from those assumed
      in this analysis. A concerted effort was made to apply reasonable expenses
      that
      should be conservative compared to actual amounts.




**FUTURE
      WELL INVESTMENTS**




Future
      well investments were assumed to be $300,000 per well for a 4,800 foot well.
      Charles Hill Drilling personnel verified this cost to be reasonable, albeit
      slightly higher than the 2007 wells that cost $260,000 to 280,000. Pinnacle
      cannot be responsible for drilling costs that exceed or are less than this
      assumption.




**Pinnacle
        Energy Services, LLC - page**2 of
        4
 9420
        Cedar Lake Ave. Oklahoma City, OK 73114
 Ofc:
        405-810-9151 Fax: 405-843-4700 www.PinnacleEnergy.com







**WELL
      OWNERSHIP INTERESTS**




Ownership
      interests for all wells were taken from lease information provided by Charles
      Hill Drilling, Inc.. Pinnacle performed no further detailed lease ownership
      or
      title checks nor did Pinnacle compare the gross and net revenue to the working
      or net interests and, therefore; can take no responsibility for the accuracy
      of
      ownership interests used in this evaluation.




**FUTURE
      INCOME**




Future
      net revenue in this report includes deductions for state production taxes.
      Future net income is after deducting these taxes, future capital costs if known,
      but before consideration of any state and/or federal income taxes. The future
      net income has not been adjusted for any outstanding loans that may exist nor
      does it include adjustments for cash on hand or undistributed income. No
      deductions were made for overhead, depletion, depreciation, interest expense,
      or
      any other indirect costs. Salvage value for equipment recovered at abandonment
      of properties was considered to be insignificant and no value was assigned.
      Future net income has been discounted at various annual rates, including a
      standard ten percent (10%), to determine its "present worth." The present worth
      is shown to indicate the effect of time on the value of money.





**RESERVE
      DETERMINATION**




The
      estimated reserves, revenues and cashflow shown in this report were determined
      for Proved Developed Producing (PDP), Proved Behind-Pipe (PDBP), Proved
      Non-Producing (PDNP) and Probable reserves attributable to Charles Hill
      Drilling’s net working and revenue interests. Active producing properties with
      sufficient historical production to estimate future production rates and
      reserves are referred to as Proved Developed Producing (PDP). Reserve
      categories/definitions adhered to by most evaluation engineers are published
      by
      the Society of Petroleum Evaluation Engineers and were used as the basis for
      determining reserve categories in this report. Sufficient geological and
      engineering data was made available to categorize reserves with a reasonable
      degree of confidence.




**GENERAL**




Reserves
      and values included in this report are estimates only and should not be
      construed as being exact quantities. The reserve estimates were performed using
      a number of assumptions about long-term productivity; however, accepted
      engineering practices were used and were primarily based on historical rate
      decline analysis for existing producers. As additional pressure and production
      performance data becomes available, reserve estimates may increase or decrease
      in the future. The revenue from such reserves and the actual related costs
      may
      be more or less than the estimated amounts. Because of governmental policies
      and
      uncertainties of supply and demand in addition to other influencing factors,
      prices actually received for the reserves included in this report and the costs
      incurred in recovering such reserves may vary from the price and cost
      assumptions referenced. Therefore, in all cases, estimates of reserves and
      their
      value may increase or decrease in the future.




**Pinnacle
        Energy Services, LLC - page**3 of
        4
 9420
        Cedar Lake Ave. Oklahoma City, OK 73114
 Ofc:
        405-810-9151 Fax: 405-843-4700 www.PinnacleEnergy.com









In
      evaluating the information available for this analysis, items excluded from
      consideration were all matters as to which legal or accounting, rather than
      engineering interpretation, may be controlling. As in all aspects of oil and
      gas
      evaluation, there are uncertainties inherent in the interpretation of
      engineering data and such conclusions necessarily represent only informed
      professional judgments.




The
      titles to the properties have not been examined nor has the actual degree or
      type of interest owned been independently confirmed. A field inspection of
      the
      properties is not usually considered necessary for the purpose of this
      report.




This
      report’s exhibits include one-line economic summaries for each well/lease,
      graphical production history and forecast decline curves for individual
      wells/leases, projected production and cashflow economic results by well/lease,
      and miscellaneous individual well/lease information. Additional information
      that
      was reviewed will be retained and is available for review at any time. Pinnacle
      Energy Services, L.L.C. can
      take
      no responsibility for the accuracy of the data used in the analysis, whether
      gathered from public sources or otherwise.




Pinnacle
      Energy Services, LLC





Lance
      J.
      Galvin, P.E.


Petroleum
      Engineer




**Pinnacle
        Energy Services, LLC - page**4 of
        4
 9420
        Cedar Lake Ave. Oklahoma City, OK 73114
 Ofc:
        405-810-9151 Fax: 405-843-4700 www.PinnacleEnergy.com