|   |   |                                                                           |
|--------|--------|--------------------------------------------------------------------------------|
| þ |   | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

|   |   |                                                                               |
|--------|--------|------------------------------------------------------------------------------------|
| o      |   | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

| Delaware(State of Incorporation or Organization)                                    | 84-0592823(I.R.S. Employer Identification No.) |
|-------------------------------------------------------------------------------------|------------------------------------------------|
|                                                                                |                                           |
| 633 17th Street, Suite 1645 Denver, Colorado(Address of principal executive office) | 80202-3625(Zip Code)                           |
|                                                                                |                                           |
| (303) 296-3076(Registrant’s telephone number, including area code)       |

| Title of each class       |   | Name of each exchange on which registered |
|------------------------------------------|--------|--------------------------------------------------------------------|
| Common Stock, $0.001 par value per share |   | The NASDAQ Stock Market LLC                                        |

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|                      |   |                |   |                                                                  |   |                             |
|---------------------------|--------|---------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------|
| Large accelerated filer o |   | Accelerated filer o |   | Non-accelerated filer o (Do not check if a smaller reporting company) |   | Smaller reporting company þ |

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|  • | our stragegies, either existing or anticipated;                                                                                 |
|---------------|---------------------------------------------------------------------------------------------------------------------------------|
|  • | our future financial position, including anticipated liquidity;                                                       |
|  • | our ability to satisfy obligations from cash generated from operations;                                                    |
|  • | amounts and nature of future capital expenditures;                                                                         |
|  • | acquisitions and other business opportunities;                                                                             |
|  • | operating costs and other expenses;                                                                                        |
|  • | wells expected to be drilled, other anticipated exploration efforts and the expenses associated therewith;                 |
|  • | our asset retirement obligation;                                                                                           |
|  • | estimates of proved oil and natural gas reserves, deferred tax assets, and depletion rates;                                |
|  • | our ability to meet additional acreage, seismic and/or drilling cost requirements arising from acquisition opportunities;  |
|  • | other estimates and assumptions we use in our accounting policies; and                                                     |
|  • | future share repurchases.                                                                                                  |

|  • | oil and natural gas prices;                                                                                                            |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------|
|  • | our ability to replace oil and natural gas reserves;                                                                                   |
|  • | loss of senior management or technical personnel;                                                                                      |
|  • | inaccuracy in reserve estimates and expected production rates;                                                                         |
|  • | exploitation, development and exploration results;                                                                                          |
|  • | mechanical failure;                                                                                                                    |
|  • | the actual costs related to asset retirement obligation, and whether or not those retirements actually occur in the future;            |
|  • | the potential unavailability of drilling rigs and other field equipment and services;                                                  |
|  • | the existence of unanticipated liabilities or problems relating to acquired properties;                                                |
|  • | factors affecting the nature and timing of our capital expenditures, including the availability of service contractors and equipment;  |
|  • | the willingness and ability of third parties to honor their contractual commitments;                                                   |
|  • | permitting issues;                                                                                                                          |
|  • | the nature, extent and duration of  workovers;                                                                               |
|  • | the impact and costs related to compliance with or changes in laws governing our operations;                                           |
|  • | environmental liabilities;                                                                                                             |
|  • | acquisitions and other business opportunities (or the lack thereof) that may be pursued by us;                                         |
|  • | competition for available properties and the effect of such competition on the price of those properties;                              |
|  • | general economic, market or business conditions;                                                                                       |
|  • | weather;                                                                                                                               |
|  • | any change in interest rates or inflation;                                                                                             |
|  • | a lack of available capital and financing;                                                                                                  |

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| •  | risk factors consistent with comparable companies within our industry, especially companies  with similar market capitalization and/or employee census; and  |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •       | other factors, many of which are beyond our control.                                                                                                                   |

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|    | Part I                                                                                                             | Page   |
|---------|--------------------------------------------------------------------------------------------------------------------|--------|
| Item 1  | Description of Business                                                                                            | 10     |
| Item 1A | Risk Factors                                                                                                       | 15     |
| Item 1B | Unresolved Staff Comments                                                                                          | 15     |
| Item 2  | Description of Property                                                                                            | 15     |
| Item 3  | Legal Proceedings                                                                                                  | 20     |
|    |                                                                                                               |   |
|    | Part II                                                                                                            |   |
| Item 5  | Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities | 21     |
| Item 6  | Selected Financial Data                                                                                            | 23     |
| Item 7  | Management's Discussion and Analysis of Financial Condition and Results of Operations                              | 24     |
| Item 7A | Quantitative and Qualitative Disclosures About Market Risk                                                         | 30     |
| Item 8  | Financial Statements and Supplementary Data                                                                        | 31     |
| Item 9  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                               | 52     |
| Item 9A | Controls and Procedures                                                                                            | 52     |
| Item 9B | Other Information                                                                                                  | 53     |
|    |                                                                                                               |   |
|    | Part III                                                                                                           |   |
| Item 10 | Directors, Executive Officers and Corporate Governance                                                             | 54     |
| Item 11 | Executive Compensation                                                                                             | 54     |
| Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters                     | 54     |
| Item 13 | Certain Relationships and Related Transactions and Director Independence                                           | 54     |
| Item 14 | Principal Accountant Fees and Services                                                                             | 54     |
|    |                                                                                                               |   |
|    | Part IV                                                                                                            |   |
| Item 15 | Exhibits, Financial Statement Schedules                                                                            | 55     |
|    | Signatures                                                                                                         | 57     |

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|   | • |   | Identification and acquisition of strategic and significant producing properties; strategic and significant in that they are either accretive to our existing production or will provide an increase to the Company’s existing production base. |
|--------|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |   |                                                                                                                                                                                                                                                  |
|   | • |   | Utilization of strategic partners with industry experience in the specific geographic areas for which we desire to expand.                                                                                                                       |
|   | • |   | Cost effective implementation of internally and externally generated exploration and development drilling projects.                                                                                                                                   |
|   |    |   |                                                                                                                                                                                                                                                  |
|   | • |   | Boosting cash flows from existing oil and natural gas production through a combination of cost control and the exploitation of behind-pipe potential.                                                                                                 |

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|         |   | Gross Wells |    |   | Net Wells |   |
|--------------|--------|-------------|---------|--------|-----------|--------|
|         |   | Oil         |    |   | Gas       |   |   | Oil |   |   | Gas |   |
|         |   |        |    |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Colorado     |   |        | — |   |      |   | 41 |   |   |   | — |   |   |   | 13.66 |   |
| Louisiana    |   |        | 2       |   |      |   | — |   |   |   | 0.11 |   |   |   | — |   |
| Montana      |   |        | 21      |   |      |   | — |   |   |   | 9.12 |   |   |   | — |   |
| North Dakota |   |        | 31      |   |      |   | 2 |   |   |   | 7.80 |   |   |   | 0.12 |   |
| Texas        |   |        | 28      |   |      |   | 1 |   |   |   | 24.36 |   |   |   | 0.13 |   |
| Wyoming      |   |        | 1       |   |      |   | — |   |   |   | 0.47 |   |   |   | — |   |
|         |   |        |    |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Total        |   |        | 83      |   |      |   | 44 |   |   |   | 41.86 |   |   |   | 13.91 |   |

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|                                       |   | Net Oil |      |   | Net Gas |   |    |   |   |   |      |   |
|--------------------------------------------|--------|---------|-----------|--------|---------|--------|---------|--------|--------|--------|-----------|--------|
|                                       |   | (Bbls)  |      |   | (Mcf)   |   |    | BOE    |   |   | %         |   |
|                                       |   |    |      |   |    |   |    |   |   |   |      |   |
| Williston Basin                            |   |    |      |   |    |   |    |   |   |   |      |   |
|      Operated     |   |    | 176,763   |   |    |   | 75,763  |   |   |   | 189,390   |   |   |   | 16.7 | % |
|      Non-Operated |   |    | 397,698   |   |    |   | 221,519 |   |   |   | 434,618   |   |   |   | 38.2 | % |
|                                       |   |    | 574,461   |   |    |   | 297,282 |   |   |   | 624,008   |   |   |   | 54.9 |  % |
|                                       |   |    |      |   |    |   |    |   |   |   |      |   |   |   |   |   |
|                                       |   |    |      |   |    |   |    |   |   |   |      |   |   |   |   |   |
| South Texas/Onshore Gulf Coast             |   |    |      |   |    |   |    |   |   |   |      |   |   |   |   |   |
|      Operated     |   |    | 388,103   |   |    |   | — |   |   |   | 388,103   |   |   |   | 34.1 | % |
|      Non-Operated |   |    | —   |   |    |   | — |   |   |   | —   |   |   |   | — | % |
|                                       |   |    | 388,103   |   |    |   | — |   |   |   | 388,103   |   |   |   | 34.1 |  % |
|                                       |   |    |      |   |    |   |    |   |   |   |      |   |   |   |   |   |
|                                       |   |    |      |   |    |   |    |   |   |   |      |   |   |   |   |   |
| D-J Basin                                  |   |    |      |   |    |   |    |   |   |   |      |   |   |   |   |   |
|      Operated     |   |    | 16,109    |   |    |   | 172,353 |   |   |   | 44,835    |   |   |   | 4.0 | % |
|      Non-Operated |   |    | 35,891    |   |    |   | 265,358 |   |   |   | 80,117    |   |   |   | 7.0 | % |
|                                       |   |    | 52,000    |   |    |   | 437,711 |   |   |   | 124,952   |   |   |   | 11.0 |  % |
|                                       |   |    |      |   |    |   |    |   |   |   |      |   |   |   |   |   |
|                                       |   |    |      |   |    |   |    |   |   |   |      |   |   |   |   |   |
| Total                                      |   |    | 1,014,564 |   |    |   | 734,993 |   |   |   | 1,137,063 |   |   |   | 100.0 | % |

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|                                                                 |   | Proved Developed |      |   |          |   |    |               |   |
|----------------------------------------------------------------------|--------|------------------|-----------|--------|---------------|--------|---------|--------------------|--------|
|                                                                 |   | Producing        |      |   | Non-Producing |   |    | Proved Undeveloped |   |   | Total Proved |   |
|                                                                 |   |             |      |   |          |   |    |               |   |   |   |   |
| Net Remaining Reserves                                               |   |             |      |   |          |   |    |               |   |   |   |   |
|      Oil/Condensate –  Bbls |   |             | 1,015,000 |   |          |   | ― |               |   |   | ― |   |   |   | 1,015,000 |   |
|      Plant Products –  Bbls |   |             | ―   |   |          |   | ― |               |   |   | ― |   |   |   | ― |   |
|      Gas – Mcf                        |   |             | 735,000   |   |          |   | ― |               |   |   | ― |   |   |   | 735,000 |   |

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|                                                |   |   | 2011    |   |   |   | 2010    |   |   |   | 2009    |   |
|-----------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                |   |   | Gross   |   |   |   | Net     |   |   |   | Gross   |   |   |   | Net |   |   |   | Gross |   |   |   | Net |   |
| Exploratory                                         |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Productive            |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Oil |   |   | ― |   |   |   | ― |   |   |   | ― |   |   |   | ― |   |   |   | 1 |   |   |   | 0.01 |   |
|         Gas |   |   | ― |   |   |   | ― |   |   |   | ― |   |   |   | ― |   |   |   | ― |   |   |   | ― |   |
|      Dry holes             |   |   | ― |   |   |   | ― |   |   |   | 1       |   |   |   | 0.55 |   |   |   | ― |   |   |   | ― |   |
|                                                |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                               |   |   | ― |   |   |   | ― |   |   |   | 1       |   |   |   | 0.55 |   |   |   | 1 |   |   |   | 0.01 |   |
|                                                |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Development                                         |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Productive            |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Oil |   |   | 20      |   |   |   | 5.11    |   |   |   | 5       |   |   |   | 0.36 |   |   |   | 3 |   |   |   | 0.09 |   |
|         Gas |   |   | 2       |   |   |   | 0.17    |   |   |   | ― |   |   |   | ― |   |   |   | 9 |   |   |   | 2.27 |   |
|      Dry holes             |   |   | ― |   |   |   | ― |   |   |   | ― |   |   |   | ― |   |   |   | ― |   |   |   | ― |   |
|                                                |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                               |   |   | 22      |   |   |   | 5.28    |   |   |   | 5       |   |   |   | 0.36 |   |   |   | 12 |   |   |   | 2.36 |   |

|         |   | Developed Acreage |                                                            |   | Undeveloped Acreage |   |
|--------------|--------|-------------------|-----------------------------------------------------------------|--------|---------------------|--------|
|         |   | Gross             |                                                            |   | Net                 |   |   | Gross |   |   | Net |   |
|         |   |              |                                                            |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Colorado     |   |              |           640 |   |                |   |           384 |   |   |   |  — |   |   |   |  — |   |
| Louisiana    |   |              |           687 |   |                |   |             51 |   |   |   |  — |   |   |   |  — |   |
| Montana      |   |              |        7,051                 |   |                |   |        3,131 |   |   |   | 11,876 |   |   |   |        3,078 |   |
| Nebraska     |   |              | —                                                         |   |                |   | — |   |   |   | 84,944 |   |   |   | 18,470 |   |
| North Dakota |   |              |      7,096                             |   |                |   |        2,714 |   |   |   |      19,900 |   |   |   |        3,717 |   |
| Texas        |   |              |        3,080                 |   |                |   |        2,486 |   |   |   |  — |   |   |   |  — |   |
| Wyoming      |   |              |        1,555                 |   |                |   |           329 |   |   |   |             40 |   |   |   |               1 |   |
|         |   |              |                                                       |   |                |   |    |   |   |   |    |   |   |   |    |   |
| Total        |   |              |      20,109                            |   |                |   |        9,095 |   |   |   |      116,760 |   |   |   |        25,266 |   |

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|                 | High    |   | Low    |    |
|----------------------|---------|--------|--------|---------|
| Fourth Quarter1 | $  | 25.25  |   |  $ |  13.56 |   |

|   | 1 | Our common stock commenced trading on NASDAQ on January 26, 2011. |
|--------|--------|------------------------------------------------------------------------|

|                 |   |  Year Ended March 31, |   |
|----------------------|--------|----------------------------|--------|
|                 |   |  2011                 |   |   | 2010  |   |
|                 |   |  High                 |   |   | Low |   |   | High |   |   | Low  |   |
|                 |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| First Quarter        |   | $                          | 14.40  |   |   | $ | 6.00 |   |   | $ | 9.90 |   |   | $ | 6.50 |   |
| Second Quarter       |   |                       | 13.00  |   |   |   | 9.20 |   |   |   | 9.50 |   |   |   | 7.30 |   |
| Third Quarter        |   |                       | 24.00  |   |   |   | 9.00 |   |   |   | 8.90 |   |   |   | 6.82 |   |
| Fourth Quarter1 |   |                       | 19.40  |   |   |   | 13.50 |   |   |   | 9.30 |   |   |   | 7.00 |   |

|   | 1 | Our common stock commenced trading on NASDAQ on January 26, 2011. |
|--------|--------|-------------------------------------------------------------------|

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| Plan Category                                              | Number of securities to be issued upon exercise of outstanding options, warrants and rights |   | Weighted-averageexerciseprice of outstanding options, warrantsand rights |   | Number of securities remaining available for future issuance under equity compensation plans |   |
|------------------------------------------------------------|---------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|
|                                                       |                                                                                        |   |                                                                     |   |                                                                                         |   |
| Equity compensation plans approved by security holders     | ―                                                                                     |   | N/A                                                                 |   | ―                                                                                      |   |
|                                                       |                                                                                        |   |                                                                     |   |                                                                                         |   |
| Equity compensation plans not approved by security holders | ―                                                                                     |   | N/A                                                                 |   | ―                                                                                      |   |
|                                                       |                                                                                        |   |                                                                     |   |                                                                                         |   |
| Total                                                      | ―                                                                                     |   | N/A                                                                      |   | 20,716                                                                                       |   |

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|                                 |   | Total Number of Shares Purchased1 |    |   | Average Price Paid Per Share |   |    | Number of Shares Purchased as Part of a Publicly Announced Plan1 |   |   | Maximum Shares that May Yet be Purchased under the Plan1 |   |
|--------------------------------------|--------|----------------------------------------|---------|--------|------------------------------|--------|---------|-----------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------|--------|
|                                 |   |                                   |    |   |                         |   |    |                                                                  |   |   |                                                               |   |   |   |   |   |
| January 1, 2011 - January 31, 2011   |   |                                   | 1,020   |   |                         | $      | 15.48   |                                                                  |   |   | 1,020                                                              |   |   |   | 109,440 |   |
| February 1, 2011 - February 28, 2011 |   |                                   | — |   |                         | $      | — |                                                                  |   |   | —                                                            |   |   |   | 109,440 |   |
| March 1, 2011 - March 31, 2011       |   |                                   | — |   |                         | $      | — |                                                                  |   |   | —                                                            |   |   |   | 109,440 |   |
|                                 |   |                                   |    |   |                         |   |    |                                                                  |   |   |                                                               |   |   |   |   |   |
| Total                                |   |                                   | 1,020   |   |                         |   |    |                                                                  |   |   | 1,020                                                              |   |   |   |   |   |

|              1 | On October 22, 2008, the Company’s Board of Directors authorized a share buyback program for the Company to repurchase up to 50,000 shares of its common stock for a period of up to 18 months.  The program does not require the Company to repurchase any specific number of shares, and the Company may terminate the repurchase program at any time.  On November 13, 2009, the Board of Directors increased the number of shares authorized for repurchase to 150,000.  On February 10, 2010, the Board extended the termination date of the program from April 22, 2010 to October 22, 2011.  During the year ended March 31, 2011, 10,997 shares were repurchased under the share buyback program and 109,440 shares remain available for future repurchase. |
|--------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                |   | Year EndedMarch 31, |      |
|-----------------------------------------------------|--------|---------------------|-----------|
|                                                |   | 2011                |      |   | 2010 |   |
|                                                |   |                |      |   |   |   |
| Revenue                                             |   |                |      |   |   |   |   |   |
|      Oil                   |   | $                   | 6,933,000 |   |   | $ | 6,223,000 |   |
|      Gas                   |   |                | 1,166,000 |   |   |   | 996,000 |   |
| Total revenue2                                      |   |                | 8,099,000 |   |   |   | 7,219,000 |   |
|                                                |   |                |      |   |   |   |   |   |
| Total production expense3                           |   |                | 3,527,000 |   |   |   | 2,942,000 |   |
|                                                |   |                |      |   |   |   |   |   |
| Gross profit                                        |   | $                   | 4,572,000 |   |   | $ | 4,277,000 |   |
|                                                |   |                |      |   |   |   |   |   |
| Depletion expense                                   |   | $                   | 1,131,000 |   |   | $ | 1,185,000 |   |
|                                                |   |                |      |   |   |   |   |   |
|                                                |   |                |      |   |   |   |   |   |
| Sales volume                                        |   |                |      |   |   |   |
|      Oil (Bbls)            |   |                | 93,613    |   |   |   | 98,865 |   |
|      Gas (Mcf) 1           |   |                | 172,386   |   |   |   | 228,575 |   |
|                                                |   |                |      |   |   |   |   |   |
| Average sales price4                                |   |                |      |   |   |   |   |   |
|      Oil (per Bbl)         |   | $                   | 74.06     |   |   | $ | 62.94 |   |
|      Gas (per Mcf)         |   | $                   | 6.76      |   |   | $ | 4.36 |   |
|                                                |   |                |      |   |   |   |   |   |
| Average per BOE                                     |   |                |      |   |   |   |   |   |
|      Production expense3,4 |   | $                   | 28.83     |   |   | $ | 21.48 |   |
|      Gross profit4         |   | $                   | 37.37     |   |   | $ | 31.23 |   |
|      Depletion expense4    |   | $                   | 9.24      |   |   | $ | 8.65 |   |

| 1 |   | Due to the timing and accuracy of sales information received from a third party operator as described in “Volumes and Prices” above, sales volume amounts may not be indicative of actual production or future performance.                                                                                                                      |
|---|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2 |   | Amount does not include water service and disposal revenue.  For the year ended March 31, 2011, this revenue amount is net of $107,000 in well service and water disposal revenue, which would otherwise total $8,206,000 in revenue for the year ended March 31 2011, compared to $50,000 to total $7,269,000 for the year ended March 31, 2010.  |
| 3 |   | Overall lifting cost (oil and gas production expenses and production taxes)                                                                                                                                                                                                                                                                                  |
| 4 |   | Averages calculated based upon non-rounded figures                                                                                                                                                                                                                                                                                                           |

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|                              |   | Year EndedMarch 31, |      |
|-----------------------------------|--------|---------------------|-----------|
|                              |   |                | 2011      |   |   |   | 2010 |   |
|                              |   |                |      |   |   |   |   |   |
| Lease operating expenses          |   | $                   | 1,874,000 |   |   | $ | 1,680,000 |   |
| Workover costs                    |   |                | 856,000   |   |   |   | 452,000 |   |
| Production taxes                  |   |                | 586,000   |   |   |   | 498,000 |   |
| Transportation and other expenses |   |                | 211,000   |   |   |   | 312,000 |   |
|                              |   |                |      |   |   |   |   |   |
|                              |   | $                   | 3,527,000 |   |   | $ | 2,942,000 |   |

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|                                                                                                    |   | Page   |   |
|---------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                                                                                                    |   |   |   |   |
| Report of Independent Registered Public Accounting Firm – Ehrhardt Keefe Steiner & Hottman PC |   |   | 32     |   |
|                                                                                                    |   |   |   |   |
| Consolidated Balance Sheets                                                                             |   |   | 33-34  |   |
|                                                                                                    |   |   |   |   |
| Consolidated Statements of Operations                                                                   |   |   | 35     |   |
|                                                                                                    |   |   |   |   |
| Consolidated Statements of Shareholders’ Equity                                                   |   |   | 36     |   |
|                                                                                                    |   |   |   |   |
| Consolidated Statements of Cash Flows                                                                   |   |   | 37     |   |
|                                                                                                    |   |   |   |   |
| Notes to Consolidated Financial Statements                                                              |   |   | 38-51  |   |

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|                                                                                                                                                                                                                                             |   | March 31, |        |   | March 31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|-------------|--------|-----------|--------|
|                                                                                                                                                                                                                                             |   | 2011      |        |   | 2010      |   |
|                                                                                                                                                                                                                                             |   |      |        |   |      |   |
| Assets                                                                                                                                                                                                                                           |   |      |        |   |      |   |
| Current assets:                                                                                                                                                                                                                                  |   |      |        |   |      |   |
|      Cash and cash equivalents                                                                                                                                                                                          |   | $         | 4,051,000   |   |      | $      | 4,905,000 |   |
|      Accounts receivable:                                                                                                                                                                                               |   |      |        |   |      |   |   |   |
|           Oil and gas sales                                                                                                                                                                    |   |      | 1,674,000   |   |      |   | 1,021,000 |   |
|           Joint interest and other receivables, net of allowance of $93,000 and               $86,000, respectively |   |      | 329,000     |   |      |   | 401,000 |   |
|      Other current assets                                                                                                                                                                                               |   |      | 539,000     |   |      |   | 732,000 |   |
|                                                                                                                                                                                                                                             |   |      |        |   |      |   |   |   |
| Total current assets                                                                                                                                                                                                                             |   |      | 6,593,000   |   |      |   | 7,059,000 |   |
|                                                                                                                                                                                                                                             |   |      |        |   |      |   |   |   |
| Oil and gas property, full cost method:                                                                                                                                                                                                          |   |      |        |   |      |   |   |   |
|      Proved property                                                                                                                                                                                                    |   |      | 35,379,000  |   |      |   | 33,915,000 |   |
|      Unproved property                                                                                                                                                                                                  |   |      | 3,112,000   |   |      |   | 1,555,000 |   |
|      Accumulated depletion and impairment                                                                                                                                                                               |   |      | (24,713,000 | )      |      |   | (23,582,000 | ) |
|                                                                                                                                                                                                                                             |   |      |        |   |      |   |   |   |
|      Net oil and gas property                                                                                                                                                                                           |   |      | 13,778,000  |   |      |   | 11,888,000 |   |
|                                                                                                                                                                                                                                             |   |      |        |   |      |   |   |   |
| Support equipment and other non-current assets, net of accumulated     depreciation of $377,000 and $374,000, respectively                                                                                              |   |      | 471,000     |   |      |   | 451,000 |   |
|                                                                                                                                                                                                                                             |   |      |        |   |      |   |   |   |
| Total non-current assets                                                                                                                                                                                                                         |   |      | 14,249,000  |   |      |   | 12,339,000 |   |
|                                                                                                                                                                                                                                             |   |      |        |   |      |   |   |   |
| Total assets                                                                                                                                                                                                                                     |   | $         | 20,842,000  |   |      | $      | 19,398,000 |   |

----

|                                                                                                                                                                                                          |   | March 31, |       |   | March 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|------------|--------|-----------|--------|
|                                                                                                                                                                                                          |   | 2011      |       |   | 2010      |   |
|                                                                                                                                                                                                          |   |      |       |   |      |   |
| Liabilities and Shareholders' Equity                                                                                                                                                                          |   |      |       |   |      |   |
| Current liabilities:                                                                                                                                                                                          |   |      |       |   |      |   |
|      Accounts payable                                                                                                                                                                |   | $         | 496,000    |   |      | $      | 161,000 |   |
|      Accrued liabilities                                                                                                                                                             |   |      | 1,167,000  |   |      |   | 1,836,000 |   |
|                                                                                                                                                                                                          |   |      |       |   |      |   |   |   |
| Total current liabilities                                                                                                                                                                                     |   |      | 1,663,000  |   |      |   | 1,997,000 |   |
|                                                                                                                                                                                                          |   |      |       |   |      |   |   |   |
| Long-term liabilities:                                                                                                                                                                                        |   |      |       |   |      |   |   |   |
|      Deferred tax liability                                                                                                                                                          |   |      | 2,319,000  |   |      |   | 2,217,000 |   |
|      Asset retirement obligation                                                                                                                                                     |   |      | 1,795,000  |   |      |   | 1,674,000 |   |
|                                                                                                                                                                                                          |   |      |       |   |      |   |   |   |
| Total long-term liabilities                                                                                                                                                                                   |   |      | 4,114,000  |   |      |   | 3,891,000 |   |
|                                                                                                                                                                                                          |   |      |       |   |      |   |   |   |
| Total liabilities                                                                                                                                                                                             |   |      | 5,777,000  |   |      |   | 5,888,000 |   |
|                                                                                                                                                                                                          |   |      |       |   |      |   |   |   |
| Commitments                                                                                                                                                                                              |   |      |       |   |      |   |   |   |
|                                                                                                                                                                                                          |   |      |       |   |      |   |   |   |
| Shareholders’ Equity:                                                                                                                                                                                   |   |      |       |   |      |   |   |   |
|      Preferred shares, $0.001 par value, 600,000 authorized and none issued or          outstanding                                |   |      | —    |   |      |   | — |   |
|      Common shares, $0.001 par value, 6,400,000 shares authorized and          1,782,000 and 1,773,000 shares issued, respectively |   |      | 18,000     |   |      |   | 18,000 |   |
|      Additional paid-in capital                                                                                                                                                      |   |      | 23,020,000 |   |      |   | 22,945,000 |   |
|      Treasury shares, at cost, 76,000 and 65,000 shares, respectively                                                                                                                |   |      | (373,000   | )      |      |   | (251,000 | ) |
|      Accumulated deficit                                                                                                                                                             |   |      | (7,600,000 | )      |      |   | (9,202,000 | ) |
|                                                                                                                                                                                                          |   |      |       |   |      |   |   |   |
| Total shareholders’ equity                                                                                                                                                                              |   |      | 15,065,000 |   |      |   | 13,510,000 |   |
|                                                                                                                                                                                                          |   |      |       |   |      |   |   |   |
| Total liabilities and shareholders’ equity                                                                                                                                                              |   | $         | 20,842,000 |   |      | $      | 19,398,000 |   |

----

|                                                                   |   |   | Year Ended |    |
|------------------------------------------------------------------------|--------|--------|------------|---------|
|                                                                   |   |   | March 31,  |    |
|                                                                   |   |   | 2011       |    |   |   | 2010 |   |
|                                                                   |   |   |       |    |   |   |   |   |
| Revenues:                                                              |   |   |       |    |   |   |   |   |
|      Oil and gas sales                        |   | $      | 8,099,000  |    |   | $ | 7,219,000 |   |
|      Well service and water disposal revenue  |   |   | 107,000    |    |   |   | 50,000 |   |
|                                                                   |   |   |       |    |   |   |   |   |
| Total revenues                                                         |   |   | 8,206,000  |    |   |   | 7,269,000 |   |
|                                                                   |   |   |       |    |   |   |   |   |
| Expenses:                                                              |   |   |       |    |   |   |   |   |
|      Oil and gas production                   |   |   | 2,941,000  |    |   |   | 2,444,000 |   |
|      Production tax                           |   |   | 586,000    |    |   |   | 498,000 |   |
|      Well service and water disposal expenses |   |   | 11,000     |    |   |   | 43,000 |   |
|      Depletion and depreciation               |   |   | 1,165,000  |    |   |   | 1,221,000 |   |
|      Accretion of asset retirement obligation |   |   | 166,000    |    |   |   | 166,000 |   |
|      General and administrative               |   |   | 1,515,000  |    |   |   | 1,779,000 |   |
|                                                                   |   |   |       |    |   |   |   |   |
| Total expenses                                                         |   |   | 6,384,000  |    |   |   | 6,151,000 |   |
|                                                                   |   |   |       |    |   |   |   |   |
| Income from operations                                                 |   |   | 1,822,000  |    |   |   | 1,118,000 |   |
|                                                                   |   |   |       |    |   |   |   |   |
| Other income (expense):                                                |   |   |       |    |   |   |   |   |
|      Interest and other income                |   |   | 12,000     |    |   |   | 90,000 |   |
|      Interest and other expenses              |   |   | (26,000    | )  |   |   | (32,000 | )  |
|                                                                   |   |   |       |    |   |   |   |   |
| Total other income (expense)                                           |   |   | (14,000    | )  |   |   | 58,000 |   |
|                                                                   |   |   |       |    |   |   |   |   |
| Income before income taxes                                             |   |   | 1,808,000  |    |   |   | 1,176,000 |   |
|                                                                   |   |   |       |    |   |   |   |   |
| Current income tax expense                                             |   |   | 104,000    |    |   |   | 172,000 |   |
| Deferred income tax expense (benefit)                                  |   |   | 102,000    |    |   |   | (24,000 | )  |
|                                                                   |   |   |       |    |   |   |   |   |
| Total income tax expense                                               |   |   | 206,000    |    |   |   | 148,000 |   |
|                                                                   |   |   |       |    |   |   |   |   |
| Net income                                                             |   | $      | 1,602,000  |    |   | $ | 1,028,000 |   |
|                                                                   |   |   |       |    |   |   |   |   |
| Per share amounts:                                                     |   |   |       |    |   |   |   |   |
|      Basic                                    |   | $      | 0.94       |    |   | $ | 0.60 |   |
|      Diluted                                  |   | $      | 0.94       |    |   | $ | 0.60 |   |
|                                                                   |   |   |       |    |   |   |   |   |
| Weighted average common shares outstanding:                            |   |   |       |    |   |   |   |   |
|      Basic                                    |   |   | 1,710,453  |    |   |   | 1,707,353 |   |
|      Diluted                                  |   |   | 1,710,453  |    |   |   | 1,707,353 |   |

----

|                        |   |                        |                                                   |   |    |                     |                |            |   | Additional                   |                                                    |   |   |                       |                       |   |    |                                   |                        |   |   |                                     |                                                |   |   |                         |                                                     |
|-----------------------------|--------|-----------------------------|--------------------------------------------------------|--------|---------|--------------------------|---------------------|-----------------|--------|------------------------------|---------------------------------------------------------|--------|--------|----------------------------|----------------------------|--------|---------|----------------------------------------|-----------------------------|--------|--------|------------------------------------------|-----------------------------------------------------|--------|--------|------------------------------|----------------------------------------------------------|
|                        |   | Common shares               |                                                   |   | paid-in |                     |                | Treasury shares |   |                         | Accumulated                                             |   |   |                       |                       |   |
|                        |   | Shares                      |                                                   |   | Amount  |                     |                | capital         |   |                         | Shares                                                  |   |   | Amount                     |                       |   | deficit |                                   |                        | Total  |   |
|                        |   |                        |                                                   |   |    |                     |                |            |   |                         |                                                    |   |   |                       |                       |   |    |                                   |                        |   |   |                                     |                                                |   |   |                         |                                                     |   |
| March 31, 2009         |   |    1,753,000 |                                                   |   | $       |    18,000 |                |            | $      |    22,825,000 |                                                    |   |   |    (38,000) |                       |   | $       |      (43,000) |                        |   | $      |    (10,230,000)           |                                                |   | $      |    12,570,000 |                                                     |
|                        |   |                        |                                                   |   |    |                     |                |            |   |                         |                                                    |   |   |                       |                       |   |    |                                   |                        |   |   |                                     |                                                |   |   |                         |                                                     |   |
| Purchase of treasury shares |   |                        | —                                                |   |    |                     | —             |            |   |                         | —                                                 |   |   |                       |    (27,000) |   |    |                                   |    (208,000) |   |   |                                     | —                                             |   |   |                         |        (208,000       |   ) |
| Share based compensation    |   |                        |         20,000 |   |    |                     | —             |            |   |                         |         120,000 |   |   |                       | —                    |   |    |                                   | —                     |   |   |                                     | —                                             |   |   |                         |         120,000  |   |
| Net income                  |   |                        | —                                                |   |    |                     | —             |            |   |                         | —                                                 |   |   |                       | —                    |   |    |                                   | —                     |   |   |                                     |        1,028,000 |   |   |                         |      1,028,000                  |   |
|                        |   |                        |                                                   |   |    |                     |                |            |   |                         |                                                    |   |   |                       |                       |   |    |                                   |                        |   |   |                                     |                                                |   |   |                         |                                                     |   |
| March 31, 2010         |   |    1,773,000 |                                                   |   | $       |    18,000 |                |            | $      |    22,945,000 |                                                    |   |   |    (65,000  | )                          |   | $       |    (251,000             | )                           |   | $      |      (9,202,000 | )                                                   |   | $      |    13,510,000 |                                                     |
|                        |   |                        |                                                   |   |    |                     |                |            |   |                         |                                                    |   |   |                       |                       |   |    |                                   |                        |   |   |                                     |                                                |   |   |                         |                                                     |   |
| Purchase of treasury shares |   |                        |   —                                    |   |    |                     |   — |            |   |                         |   —                                     |   |   |                       |    (11,000) |   |    |                                   |    (122,000) |   |   |                                     |   —                                 |   |   |                         |         (122,000 |   ) |
| Share based compensation    |   |                        |       9,000              |   |    |                     |  —       |            |   |                         |  75,000                                            |   |   |                       |  —              |   |    |                                   |  —               |   |   |                                     |  —                                       |   |   |                         |      75,000                     |   |
| Net income                  |   |                        | —                                                |   |    |                     | —             |            |   |                         | —                                                 |   |   |                       | —                    |   |    |                                   | —                     |   |   |                                     | 1,602,000                                           |   |   |                         |     1,602,000                        |   |
|                        |   |                        |                                                   |   |    |                     |                |            |   |                         |                                                    |   |   |                       |                       |   |    |                                   |                        |   |   |                                     |                                                |   |   |                         |                                                     |
| March 31, 2011         |   |    1,782,000 |                                                   |   | $       |    18,000 |                |            | $      | 23,020,000                   |                                                    |   |   |    (76,000  | )                          |   | $       |    (373,000             | )                           |   | $      |   (7,600,000                        | )                                                   |   | $      |    15,065,000 |                                                     |

----

|                                                                                                                                                   |   | Year Ended |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|
|                                                                                                                                                   |   | March 31,  |
|                                                                                                                                                   |   | 2011       |   |  2010 |
|                                                                                                                                                   |   |       |   |   |
| Cash flows from operating activities:                                                                                                                  |   |       |   |   |
|  Net income                                                                                                                                  |   |  $    | 1,602,000  |   |   |  $ | 1,028,000  |   |
| Adjustments to reconcile net income to net cash provided by                                                                                  |   |       |   |   |   |   |   |   |
| operating activities:                                                                                                                             |   |       |   |   |   |   |   |   |
|  Depletion and depreciation                                                                                                                  |   |       | 1,165,000  |   |   |   | 1,221,000  |   |
|  Deferred tax expense (benefit)                                                                                                              |   |       | 102,000  |   |   |   | (24,000  | ) |
|  Accretion of asset retirement obligation                                                                                                    |   |       | 166,000  |   |   |   | 166,000  |   |
|      Payments on asset retirement obligation                                                                                  |   |       | (283,000 |   |   |   | (134,000 | ) |
|      Share based compensation                                                                                                 |   |       | 75,000 |   |   |   | 72,000  |   |
|                                                                                                                               |   |       |   |   |   |   |   |   |
| Change in:                                                                                                                                             |   |       |   |   |   |   |   |   |
|      Accounts receivable, net                                                                                                 |   |       | (581,000 |   |   |   | 419,000 |   |
|      Other current assets                                                                                                     |   |       | 193,000 |   |   |   | (224,000  | ) |
|      Accounts payable, accrued and other liabilities                                                                          |   |       | 185,000 |   |   |   | 142,000  |   |
|                                                                                                                                                   |   |       |   |   |   |   |   |   |
| Net cash provided by operating activities                                                                                                              |   |       | 2,624,000 |   |   |   | 2,666,000  |   |
|                                                                                                                                                   |   |       |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                                                                  |   |       |   |   |   |   |   |   |
|      Oil and gas property                                                                                                     |   |       | (3,302,000 | ) |   |   | (1,612,000 | ) |
|      Support equipment                                                                                                        |   |       | (54,000 | )  |   |   | (29,000 | )  |
|                                                                                                                                                   |   |       |   |   |   |   |   |   |
| Net cash used in investing activities                                                                                                                  |   |       | (3,356,000 | )  |   |   | (1,641,000 | )  |
|                                                                                                                                                   |   |       |   |   |   |   |   |   |
| Cash flows from financing activities:                                                                                                                  |   |       |   |   |   |   |   |   |
|      Purchase of treasury shares                                                                                              |   |       | (122,000 | )  |   |   | (208,000 | )  |
|                                                                                                                                                   |   |       |   |   |   |   |   |   |
| Net cash used in financing activities                                                                                                                  |   |       | (122,000 | ) |   |   | (208,000 | )  |
|                                                                                                                                                   |   |       |   |   |   |   |   |   |
| Net (decrease) increase in cash and cash equivalents                                                                                                   |   |       | (854,000 | )  |   |   | 817,000 |   |
|                                                                                                                               |   |       |   |   |   |   |   |   |
| Cash and cash equivalents, beginning of year                                                                                                           |   |       | 4,905,000 |   |   |   | 4,088,000 |   |
|                                                                                                                                                   |   |       |   |   |   |   |   |   |
| Cash and cash equivalents, end of period                                                                                                               |   | $          | 4,051,000 |   |   |  $ | 4,905,000  |   |
|                                                                                                                                                   |   |       |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                                                                                                      |   |       |   |   |   |   |   |   |
|      Cash paid for interest                                                                                                   |   | $          | ― |   |   |  $ | 17,000  |   |
|      Cash paid for income taxes                                                                                               |   | $          | 204,000 |   |   |  $ | 7,000  |   |
| Non-cash:                                                                                                                                              |   |       |   |   |   |   |   |   |
|     Increase in oil and gas property due to asset retirement          obligation |   | $          | 265,000 |   |   |  $ | 54,000  |   |
|     Vested shares issued as compensation                                                                                           |   | $          | 74,000  |   |   |  $ | 48,000  |   |
|     Accrued capital expenditures                                                                                                   |   | $          | 141,000 |   |   |  $ | 687,000  |   |

----

----

----

----

|                      |   | 2011   |   |   | 2010   |   |
|---------------------------|--------|--------|--------|--------|--------|--------|
|                      |   |   |   |   |   |   |
| Valero Energy Corp.       |   | 19%    |   |   | 16%    |   |
| Nexen Marketing USA, Inc. |   | 9%     |   |   | 10%    |   |
|  Total               |   | 28%    |   |   | 26%    |   |

----

|                                     |   |   | 2011    |   |   |   | 2010         |   |
|------------------------------------------|--------|--------|---------|--------|--------|--------|--------------|--------|
|                                     |   |   |    |   |   |   |         |   |
| Lease and well equipment inventory       |   | $      | 399,000 |   |   | $      | 399,000      |   |
| Drilling and completion cost prepayments |   |   | 24,000  |   |   |   | 244,000      |   |
| Prepaid insurance premiums               |   |   | 16,000  |   |   |   | 49,000       |   |
| Prepaid income taxes                     |   |   | 81,000  |   |   |   | 21,000       |   |
| Other current assets                     |   |   | 19,000  |   |   |   | 19,000       |   |
|                                     |   |   |    |   |   |   |    |   |
| Total other current assets               |   | $      | 539,000 |   |   | $      | 732,000      |   |

----

|                                                     |   |   | 2011    |   |   |   | 2010          |   |
|----------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------------|--------|
|                                                     |   |   |    |   |   |   |          |   |
| Support equipment and lease and well equipment inventory |   | $      | 281,000 |   |   | $      | 272,000       |   |
| Plugging bonds                                           |   |   | 60,000  |   |   |   | 60,000        |   |
| Other non-current assets                                 |   |   | 130,000 |   |   |   | 119,000       |   |
|                                                     |   |   |    |   |   |   |     |   |
| Total support equipment and other non-current assets     |   | $      | 471,000 |   |   | $      | 451,000       |   |

----

|                                   |   |   | 2011      |   |   |   | 2010      |   |
|----------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|
|                                   |   |   |      |   |   |   |      |   |
| Revenue and production taxes payable   |   | $      | 340,000   |   |   | $      | 348,000   |   |
| Accrued compensation                   |   |   | 223,000   |   |   |   | 172,000   |   |
| Accrued operations payable             |   |   | 239,000   |   |   |   | 820,000   |   |
| Accrued income taxes payable and other |   |   | 238,000   |   |   |   | 396,000   |   |
| Short term asset retirement obligation |   |   | 127,000   |   |   |   | 100,000   |   |
|                                   |   |   |      |   |   |   |      |   |
|  Total accrued liabilities        |   | $      | 1,167,000 |   |   | $      | 1,836,000 |   |

|                                              |   |    | 2011      |    |   |    | 2010            |    |
|---------------------------------------------------|--------|---------|-----------|---------|--------|---------|-----------------|---------|
|                                              |   |    |      |    |   |    |            |    |
| Asset retirement obligation, beginning of period  |   | $       | 1,774,000 |    |   | $       | 1,698,000       |    |
|      Liabilities settled      |   |    | (283,000  | )  |   |    | (134,000        | )  |
|      Liabilities incurred     |   |    | 49,000    |    |   |    | 54,000          |    |
|      Accretion                |   |    | 166,000   |    |   |    | 166,000         |    |
|      Revisions to estimates   |   |    | 216,000   |    |   |    | (10,000         | )  |
|                                              |   |    |      |    |   |    |            |    |
| Asset retirement obligation at, end of period     |   | $       | 1,922,000 |    |   | $       | 1,774,000       |    |
|                                              |   |    |      |    |   |    |            |    |
| Less current portion                         |   | $       | (127,000  | )       |   | $       | (100,000        | )  |
|                          |   |    |      |    |   |    |            |    |
| Asset retirement obligation, less current portion |   | $  | 1,795,000 |    |   | $  |  1,674,000 |    |

----

----

|                                    |   | 2011   |    |   | 2010            |   |
|-----------------------------------------|--------|--------|---------|--------|-----------------|--------|
|                                    |   |   |    |   | Weighted        |   |   |   |   |   | Weighted |   |
|                                    |   |   |    |   | Average         |   |   |   |   |   | Average |   |
|                                    |   |   |    |   | Grant Date Fair |   |   |   |   |   | Grant Date Fair |   |
|                                    |   | Shares |    |   | Value           |   |   | Shares |   |   | Value |   |
|                                    |   |   |    |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Nonvested shares, beginning of year     |   |   | 15,306  |   |            | $      | 144,000 |   |   |   | 10,244 |   |   | $ | 120,000 |   |
|                                    |   |   |    |   |            |   |   |   |   |   |   |   |   |   |   |   |
|      Granted   |   |   | 9,270   |   |            |   | 81,000 |   |   |   | 8,982 |   |   |   | 72,000 |   |
|      Vested    |   |   | (6,914  | )      |            |   | (72,000 | ) |   |   | (3,920 | ) |   |   | (48,000 | ) |
|      Forfeited |   |   | — |   |            |   | — |   |   |   | — |   |   |   | — |   |
|                                    |   |   |    |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Nonvested shares, end of year           |   |   | 17,662  |   |            | $      | 153,000 |   |   |   | 15,306 |   |   | $ | 144,000 |   |

----

|                                        |   | 2011   |    |   | 2010   |   |
|---------------------------------------------|--------|--------|---------|--------|--------|--------|
| Current:                                    |   |   |    |   |   |   |
|      Federal       |   | $      | 93,000  |   |   | $      | 171,000 |   |
|      State         |   |   | 11,000  |   |   |   | 1,000 |   |
|  Total current income tax expense      |   |   | 104,000 |   |   |   | 172,000 |   |
|                                        |   |   |    |   |   |   |   |   |
| Deferred:                                   |   |   |    |   |   |   |   |   |
|      Federal       |   |   | 95,000  |   |   |   | (23,000 | ) |
|      State         |   |   | 7,000   |   |   |   | (1,000 | ) |
| Total deferred income tax expense (benefit) |   |   | 102,000 |   |   |   | (24,000 | ) |
|                                        |   |   |    |   |   |   |   |   |
| Income tax expense                          |   | $      | 206,000 |   |   | $      | 148,000 |   |

|                                                                       |   | 2011   |     |    | 2010   |   |
|----------------------------------------------------------------------------|--------|--------|----------|---------|--------|--------|
|                                                                       |   |   |     |    |   |   |   |   |
| Federal taxes at statutory rate                                            |   | $      | 615,000  |    |   | $      | 400,000 |   |
| State taxes, net of federal benefit                                        |   |   | 26,000   |    |   |   | 9,000 |   |
| Excess percentage depletion                                                |   |   | (270,000 | )       |   |   | (283,000 | ) |
| Adjustments to deferred tax assets related to intangible drilling costs    |   |   | (148,000 | )       |   |   | — |   |
| Non-deductible permanent items                                             |   |   | —  |    |   |   | 6,000 |   |
| Other adjustments, net                                                     |   |   | (17,000  | )  |   |   | 16,000 |   |
|                                                                       |   |   |     |    |   |   |   |   |
| Income tax expense                                                         |   | $      | 206,000  |    |   | $      | 148,000 |   |
| Effective tax rate expressed as a percentage of income before income taxes |   |   | 11       | %       |   |   | 13 | % |

----

|                                                  |   | 2011   |       |   | 2010   |   |
|-------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Deferred tax assets:                                  |   |   |       |   |   |   |
| Allowance for doubtful accounts                       |   | $      | 34,000     |   |   | $      | 31,000 |   |
| Asset retirement obligation                           |   |   | 703,000    |   |   |   | 647,000 |   |
| Statutory depletion carry-forward                     |   |   | 1,110,000  |   |   |   | 1,074,000 |   |
|                                                  |   |   |       |   |   |   |   |   |
| Gross deferred tax assets                             |   |   | 1,847,000  |   |   |   | 1,752,000 |   |
|                                                  |   |   |       |   |   |   |   |   |
| Other accruals                                        |   |   | 69,000     |   |   |   | 47,000 |   |
| Depletion, depreciation and intangible drilling costs |   |   | (4,235,000 | )      |   |   | (4,016,000 | ) |
|                                                  |   |   |       |   |   |   |   |   |
| Gross deferred tax liabilities                        |   |   | (4,166,000 | )      |   |   | (3,969,000 | ) |
|                                                  |   |   |       |   |   |   |   |   |
| Deferred tax assets (liabilities), net                |   | $      | (2,319,000 | )      |   | $      | (2,217,000 | ) |

----

|                                   |   |   | 2011        |    |   |   | 2010        |    |
|----------------------------------------|--------|--------|-------------|---------|--------|--------|-------------|---------|
|                                   |   |   |        |    |   |   |        |    |
| Proved property                        |   | $      | 35,379,000  |    |   | $      | 33,915,000  |    |
| Unproved property                      |   |   | 3,112,000   |    |   |   | 1,555,000   |    |
|                                   |   |   |        |    |   |   |        |    |
| Total capitalized oil and gas property |   |   | 38,491,000  |    |   |   | 35,470,000  |    |
| Accumulated depletion and impairment   |   |   | (24,713,000 | )  |   |   | (23,582,000 | )  |
|                                   |   |   |        |    |   |   |        |    |
| Net capitalized oil and gas property   |   | $      | 13,778,000  |    |   | $      | 11,888,000  |    |

| Costs Incurred During |   | Exploration |    |   | Development |   |      | Acquisition |   |   | Total Unproved |   |
|-----------------------|--------|-------------|---------|--------|-------------|--------|-----------|-------------|--------|--------|----------------|--------|
| Year Ended            |   | Costs       |    |   | Costs       |   |      | Costs       |   |   | Property       |   |
|                  |   |        |    |   |        |   |      |        |   |   |           |   |   |   |   |   |
| March 31, 2011   |   | $           | — |   |        | $      | 1,216,000 |        |   | $      | 756,000        |   |   | $ | 1,972,000 |   |
| March 31, 2010   |   |        | 1,000   |   |        |   | 361,000   |        |   |   | 73,000         |   |   |   | 435,000 |   |
| Prior Years           |   |        | — |   |        |   | —   |        |   |   | 705,000        |   |   |   | 705,000 |   |
|                  |   |        |    |   |        |   |      |        |   |   |           |   |   |   |   |   |
| Total                 |   | $           | 1,000   |   |        | $      | 1,577,000 |        |   | $      | 1,534,000      |   |   | $ | 3,112,000 |   |

|                                                               |   |   | 2011      |   |   |   | 2010      |   |
|--------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|
|                                                               |   |   |      |   |   |   |      |   |
| Development costs                                                  |   | $      | 1,454,000 |   |   | $      | 1,223,000 |   |
| Exploration costs                                                  |   |   | —   |   |   |   | 620,000   |   |
| Acquisitions:                                                      |   |   |      |   |   |   |      |   |
|      Proved                                    |   |   | 519,000   |   |   |   | —   |   |
|      Unproved                                  |   |   | 756,000   |   |   |   | 313,000   |   |
|                                                               |   |   |      |   |   |   |      |   |
| Total costs of development, exploration and acquisition activities |   | $      | 2,729,000 |   |   | $      | 2,156,000 |   |

----

|                                                                                                                           |   | March 31, 2011 |                      |    | March 31, 2010 |   |           | March 31, 2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|----------------|---------------------------|---------|----------------|--------|----------------|----------------|--------|
|                                                                                                                           |   | Oil(Bbls)      |                      |    | Gas(Mcf)       |   |           | Oil(Bbls)      |   |   | Gas (Mcf) |   |   | Oil(Bbls) |   |   | Gas(Mcf) |   |
| Proved reserves:                                                                                                               |   |           |                      |    |           |   |           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, beginning of year                                                                                                     |   |           | 818,000                   |    |           |   | 912,000        |           |   |   | 638,000 |   |   |   | 936,000 |   |   |   | 1,074,000 |   |   |   | 1,120,000 |   |
|      Revisions of previous          estimates1 |   |           |  167,000             |    |           |   |  (106,000 |  )   |   |   |  275,000 |   |   |   |  195,000 |   |   |   |  (429,000 |  )  |   |   |  (262,000 |  ) |
|      Extensions and discoveries2                                                                 |   |           | 62,000                    |    |           |   | 39,000         |           |   |   | 4,000 |   |   |   | 10,000 |   |   |   | 86,000 |   |   |   | 253,000 |   |
|      Improved recovery                                                                                |   |           | 6,000                     |    |           |   | 61,000         |           |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|      Purchase of reserves                                                                             |   |           | 55,000                    |    |           |   | 1,000          |           |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|      Production3                                                                                 |   |           | (93,000                   | )  |           |   | (172,000       | )         |   |   | (99,000 | ) |   |   | (229,000 | )  |   |   | (93,000 | )  |   |   | (175,000 | )  |
|                                                                                                                           |   |           |                      |    |           |   |           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, end of year                                                                                                           |   |           | 1,015,000                 |    |           |   | 735,000        |           |   |   | 818,000 |   |   |   | 912,000 |   |   |   | 638,000 |   |   |   | 936,000 |   |
|                                                                                                                           |   |           |                      |    |           |   |           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proved developed reserves:                                                                                                     |   |           |                      |    |           |   |           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, beginning of year                                                                                                     |   |           |    727,000 |    |           |   | 912,000        |           |   |   | 587,000 |   |   |   | 907,000 |   |   |   | 1,074,000 |   |   |   | 1,120,000 |   |
|                                                                                                                           |   |           |                      |    |           |   |           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, end of year                                                                                                           |   |           | 1,015,000                 |    |           |   | 735,000        |           |   |   | 727,000 |   |   |   | 912,000 |   |   |   | 587,000 |   |   |   | 907,000 |   |
|                                                                                                                           |   |           |                      |    |           |   |           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proved undeveloped   reserves:                                                                                  |   |           |                      |    |           |   |           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, beginning of year                                                                                                     |   |           | 91,000                    |    |           |   | —        |           |   |   | 51,000 |   |   |   | 29,000 |   |   |   | — |   |   |   | — |   |
|                                                                                                                           |   |           |                      |    |           |   |           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, end of year                                                                                                           |   |           | —                   |    |           |   | —        |           |   |   | 91,000 |   |   |   | — |   |   |   | 51,000 |   |   |   | 29,000 |   |

|   | 1   | Revisions of Previous Estimates – Estimates reflect steady increases in oil and gas prices since December 2008, when prices reached a 5-year low.  Changes in performance constitute less than 10% of the total amount of revisions of previous estimates. |
|--------|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2   | Extensions and Discoveries – Eleven wells represent extensions and discoveries during the year ended March 31, 2011, in North Dakota (7), Montana (2), Colorado (1) and Texas (1).  Additions during the year ended March 31, 2010, consisted of 2 new wells in Colorado and 1 new well in North Dakota.  Additions during the year ended March 31, 2009, pertained to the 16 wells drilled in Colorado. |
|--------|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3   | Production – Volumes of oil and gas that were produced were removed from reserves during the year. |
|--------|--------------------|----------------------------------------------------------------------------------------------------------|

----

|                                                       |   |   | For the Years EndedMarch 31, |    |
|------------------------------------------------------------|--------|--------|------------------------------|---------|
|                                                       |   |   | 2011                         |    |   |   | 2010 |   |   |   | 2009 |   |
|                                                       |   |   |                         |    |   |   |   |   |   |   |   |   |
| Future cash inflows                                        |   | $      | 81,053,000                   |    |   | $ | 55,991,000 |   |   | $ | 31,793,000 |   |
| Future cash outflows:                                      |   |   |                         |    |   |   |   |   |   |   |   |   |
|      Production cost                   |   |   | (41,185,000                  | )  |   |   | (29,065,000 | ) |   |   | (17,924,000 | )  |
|      Development cost                  |   |   | —                      |    |   |   | (991,000 | ) |   |   | (490,000 | ) |
|      Future income taxes               |   |   | (6,545,000                   | )  |   |   | (3,361,000 | ) |   |   | (2,100,000 | )  |
|                                                       |   |   |                         |    |   |   |   |   |   |   |   |   |
| Future net cash flows                                      |   |   | 33,323,000                   |    |   |   | 22,574,000 |   |   |   | 11,279,000 |   |
| Adjustment to discount future annual net cash flows at 10% |   |   | (15,826,000                  | )  |   |   | (10,060,000 | )  |   |   | (4,080,000 | )  |
|                                                       |   |   |                         |    |   |   |   |   |   |   |   |   |
| Standardized measure of discounted future net cash flows   |   | $      | 17,497,000                   |    |   | $ | 12,514,000 |   |   | $ | 7,199,000 |   |

|                                                                                                                                                                       |   |   | For the Years EndedMarch 31, |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------|---------|
|                                                                                                                                                                       |   |   | 2011                         |    |   |   | 2010 |   |   |   | 2009 |   |
|                                                                                                                                                                       |   |   |                         |    |   |   |   |   |   |   |   |   |
| Standardized measure, beginning of period                                                                                                                                  |   | $      | 12,514,000                   |    |   | $ | 7,199,000 |   |   | $ | 24,960,000 |   |
|      Sales of oil and gas, net of production cost                                                                                                 |   |   | (5,204,000                   | )  |   |   | (4,284,000 | )  |   |   | (5,808,000 | )  |
|      Net change in sales prices, net of production cost                                                                                           |   |   | 5,886,000                    |    |   |   | 6,279,000 |   |   |   | (25,977,000 | ) |
|      Discoveries, extensions and improved recoveries, net of          future development cost   |   |   |  1,567,000              |    |   |   |  154,000 |   |   |   |  2,298,000 |   |
|      Change in future development costs                                                                                                           |   |   | —                      |    |   |   | 467,000 |   |   |   | — |   |
|      Development costs incurred during the period that reduced          future development cost |   |   | —                      |    |   |   | — |   |   |   | — |   |
|      Sales of reserves in place                                                                                                                   |   |   | —                      |    |   |   | — |   |   |   | — |   |
|      Revisions of quantity estimates                                                                                                              |   |   | 3,806,000                    |    |   |   | 5,280,000 |   |   |   | (4,745,000 | ) |
|      Accretion of discount                                                                                                                        |   |   | 1,874,000                    |    |   |   | 720,000 |   |   |   | 4,279,000 |   |
|      Net change in income taxes                                                                                                                   |   |   | 3,685,000                    |    |   |   | (1,582,000 | )  |   |   | 16,594,000 |   |
|      Purchase of reserves                                                                                                                         |   |   | 1,408,000                    |    |   |   | — |   |   |   | — |   |
|      Changes in timing of rates of production                                                                                                     |   |   | (8,039,000                   | )  |   |   | (1,719,000 | ) |   |   | (4,402,000 | )  |
|                                                                                                                                                                       |   |   |                         |    |   |   |   |   |   |   |   |   |
| Standardized measure, end of period                                                                                                                                        |   | $      | 17,497,000                   |    |   | $ | 12,514,000 |   |   | $ | 7,199,000 |   |

----

----

----

----

| (a)    |   | Documents filed as part of this Annual Report on Form 10-K.                   |
|--------|--------|------------------------------------------------------------------------------------|
|   |   |                                                                               |   |   |
|   |   | (1)                                                                                |   | Financial Statements |
|   |   |                                                                               |   | All financial statements as set forth under Item 8 of this report. |
|   |   |                                                                               |   |   |
|   |   | (2)                                                                                |   | Supplementary Financial Statement Schedules |
|   |   |                                                                               |   | None. |
|   |   |                                                                               |   |   |
|   |   | (3)                                                                                |   | Exhibits |
|   |   |                                                                               |   | See (b) below. |
|   |   |                                                                               |   |   |
| (b)    |   | Exhibits                                                                           |
|   |   |                                                                               |   |   |
|   |   | The following exhibits are filed pursuant to Item 601 of Regulation S-K: |
|   |   |                                                                               |

| Exhibit No. |   | Document                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|-------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3(i)a       |   | Restated Certificate of Incorporation of Earthstone Energy, Inc., effective May 12, 1981, as amended by (i) Certificate of Amendment of Certificate of Incorporation, effective November 20, 1986; (ii) Certificate of Amendment of Certificate of Incorporation, effective July 1, 1996; and (iii) Certificate of Designations of Series A Junior Participating Preferred Stock, effective February 5, 2009, incorporated by reference to Exhibit 3(i) of our Quarterly Report on Form 10-Q for the quarter ended December 31, 2009, filed with the SEC on February 17, 2009.                                                                                                                                                                                                                                                                                                         |
| 3(i)b       |   | Amended and Restated Certificate of Incorporation as approved by shareholders of the Company at the Company’s 2009 Annual Meeting of Shareholders and the amendments to the Company’s Certificate of Incorporation previously disclosed in the Company’s proxy statement on Schedule 14A filed with the Securities and Exchange Commission on November 5, 2009, incorporated by reference to Exhibit 3(i) on Form 8-K filed with the SEC on March 3, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 3(i)c       |   | Certificate of Amendment to Certificate of Incorporation dated December 20, 2010 are incorporated by reference to Exhibit 3(i) on Form 8-K filed with the SEC on January 4, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 3(ii)a      |   | Bylaws of Earthstone Energy, Inc., dated July 15, 1986, as amended by First Amendment to Bylaws, dated February 4, 2009, incorporated by reference to Exhibit 3(ii) of our Quarterly Report on Form 10-Q for the quarter ended December 31, 2009, filed with the SEC on February 17, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 3(ii)b      |   | Amended and Restated Bylaws reflecting changes made to the Company’s Certificate of Incorporation to remove certain outdated and redundant provisions that existed in our prior Bylaws with respect to corporate governance, shareholder and director meeting procedures, and indemnification procedures.  Changes to the Bylaws include, among other things: (i) amendments to reflect the new name of the Company; (ii) expansion of certain provisions with respect to shareholders’ meetings and record dates; (iii) amendments in respect of corporate governance, board committees, and board meetings; (iv) amendments to certain provisions in respect of officers and their duties; (v) amendments to certain provisions in respect of share certificates; and (vi) removal of indemnification provisions are incorporated by reference to Exhibit 3(ii) on Form 8-K filed with the SEC on March 3, 2010. |

----

| 4.1   |   | Rights Agreement, dated February 4, 2009, between Earthstone Energy, Inc. and Corporate Stock Transfer, Inc., incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K, filed with the SEC on February 5, 2009.                                                                                                                                               |
|-------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.2   |   | Specimen Stock Certificate of Earthstone Energy, Inc., filed herewith.                                                                                                                                                                                                                                                                                                                              |
| 10.1* |   | Oil and Gas Incentive Compensation Plan, dated April 1, 1980, as amended, incorporated by reference to our Annual Report on Form 10-K for the year ended March 31, 1985, filed with the SEC.                                                                                                                                                                                         |
| 10.3* |   | Performance Bonus Plan, dated effective April 1, 2007, incorporated by reference to Exhibit 10.3 of our Amended 10-K/A, filed with the SEC on October 9, 2009.                                                                                                                                                                                                                                 |
| 10.4* |   | Director Compensation Plan, dated effective April 1, 2007, incorporated by reference to Exhibit 10.4 of our Amended 10-K/A, filed with the SEC on October 9, 2009 as amended by board resolution dated March 31, 2010, incorporated by reference to Exhibit 10.4 of our Annual Report on Form 10-K for the year ended March 31, 2010, filed with the SEC on June 18, 2010. |
| 10.5* |   | Form of Restricted Stock Agreement pursuant to the Director Compensation Plan, incorporated by reference to Exhibit 10(ii) of the Annual Report on Form 10-KSB for the year ended March 31, 2008, filed with the SEC on July 11, 2008.                                                                                                                                          |
| 10.6* |   | Part-Time Employment and Confidentiality Agreement, effective March 31, 2008, between Joseph Young and Earthstone, incorporated by reference to Exhibit 10.6 of our Amended 10-K/A, filed with the SEC on October 9, 2009.                                                                                                                                                                          |
| 10.7* |   | Financial Consulting Agreement, effective March 16, 2011, between QAS, LLC and Earthstone, filed herewith.                                                                                                                                                                                                                                                                                          |
| 14.1  |   | Code of Business Conduct and Ethics, incorporated by reference to Exhibit 14.1 of our Annual Report on Form 10-KSB/A for the year ended March 31, 2004, filed with the SEC on May 11, 2005.                                                                                                                                                                                                         |
| 21    |   | Subsidiary List, incorporated by reference to Exhibit 21 of our Amended 10-K/A, filed with the SEC on October 9, 2009.                                                                                                                                                                                                                                                                              |
| 31.1  |   | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Ray Singleton, President and Chief Executive Officer).                                                                                                                                                                                                                                                                |
| 31.2  |   | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Jim Poage, Interim Chief Financial Officer).                                                                                                                                                                                                                                                                          |
| 32.1  |   | Certification Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Ray Singleton, President and Chief Executive Officer).                                                                                                                                                                                                                   |
| 32.2  |   | Certification Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Jim Poage, Interim Chief Financial Officer).                                                                                                                                                                                                                             |
| 99.1  |   | Nominating Committee Charter, adopted September 28, 2009, incorporated by reference to Exhibit 99.1 of our Amended 10-K/A, filed with the SEC on October 9, 2009.                                                                                                                                                                                                                                   |
| 99.2  |   | Compensation Committee Charter, adopted September 28, 2009, incorporated by reference to Exhibit 99.2 of our Amended 10-K/A, filed with the SEC on October 9, 2009.                                                                                                                                                                                                                                 |
| 99.3  |   | Report of Ryder Scott Company, filed herewith.                                                                                                                                                                                                                                                                                                                                                      |

| * |   | Indicates management contracts or compensatory plans or arrangements required to be filed as exhibits pursuant to Item 15 of Form 10-K. |
|---|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                 |   |          |
|------------------------------------------------------|--------|---------------|
|                                                 |   | Date          |
|                                                 |   |          |
| By: /s/ Ray Singleton                                |   | June 15, 2011 |
| Ray Singleton, President and Chief Executive Officer |   |          |
|                                                 |   |          |
| By: /s/ Jim Poage                                    |   | June 15, 2011 |
| Jim Poage, Interim Chief Financial Officer           |   |          |
|                                                 |   |          |

|                              |   |          |
|-----------------------------------|--------|---------------|
| Name and Capacity                 |   | Date          |
|                              |   |          |
| By: /s/ Ray Singleton             |   | June 15, 2011 |
| Ray Singleton, Director           |   |          |
|                              |   |          |
| By: /s/ Richard K. Rodgers        |   | June 15, 2011 |
| Richard K. Rodgers, Director and  |   |          |
| Compensation Committee Chairman   |   |          |
|                              |   |          |
| By: /s/ Monroe W. Robertson       |   | June 15, 2011 |
| Monroe W. Robertson, Director and |   |          |
| Audit Committee Chairman          |   |          |
|                              |   |          |
| By: /s/ Andrew P. Calerich        |   | June 15, 2011 |
| Andrew P. Calerich, Director      |   |          |
|                              |   |          |

----