Current News Period of 6 Nov 2006 to 15 Jul 2007

We are currently in an intense struggle to bring profitability and positive cash flow back into the company.  While there are many factors at play here, the bottom line is that our production revenue is not offsetting expenses.  Our debt is mounting and time is running out.  We have good commodity prices, that is not the problem.  The main problem is that we have had so many breakdowns and weather issues this winter spring and summer, that it has made it difficult to to keep the production going.  With so many break downs the leases have been slow to come back on production and because of the nature of the breakdowns took months to repair in some cases.

Here is a list of some of the issues I have had to contend with during the past 19 months:

The untimely death of my wife Cindy Anne Hanks 13 Jan 2006

Our pulling unit crew quitting in February 2006

Dating and Courtship via Bartlesville to Boise Idaho March 2006 - May 2006

Wedding planning and preparation and honeymoon July 2006 - August 2006

Major back injury causing me excruciating pain and loss of work for 3 weeks in Sept 2006

Sep 06 - May 07 Gear boxes on 3 pumping units stripping their gears on Brown & Sheets Leases, causing weeks of repair and down time and thousands of dollars of expenses.  Saltwater pumps also cratered and had to be repaired at a cost of thousands of dollars each.

The disposal well on the Holland lease completely plugging, causing down time and lost revenue of $7000/mo from Nov 2006 - Apr 2007

By the time the wedding was over I was completely behind on accounting and had to take many days out to catch up on the prior years accounting, then had to turn right around and begin work on the current years accounting back to back.  This has consumed nearly every spare moment of my time, and has not given me any leeway as to optional use of my "brain time".

The drilling program started in November 2006 and continue through January 2007 became very costly, and many of our plans were thwarted by hitting metal in the old clean out holes.  The time invested drilling, was time away from fixing wells, and this led to severe financial losses and lost production.  Now because of the extra expenses, lost production, and time delays, we no longer have funds available to complete the wells we just drilled.

The weather has dished out incredible storms and complications beginning in November 2006 and has been relentless as late as last week with extreme flooding and destruction of property.  Snow and ice storms started in November 2006, with major storms coming nearly every three weeks through the winter.  Then in May 2007 the rains started and hasn't really stopped.  At times in June we were being rained on twice a day, and the ground became so saturated, no vehicle could be moved in the field without causing extreme damage.

When the weather was good, and the ground conditions were right, I parked the ditch witch by a tree for 1 day, I came back the next day and a squirrel or rat got in the dash board and literally stripped the electrical wires clean.  Then snow storm after snow storm, and other breakdowns one after another left me little time to put the ditch witch back together.  It took several months to get it going again, but by then the ground was too wet and the storms just kept coming.

In May 2007 the Scovel disposal well completely plugged up and caused the entire lease to be shut down, the saltwater pump cratered, and we are still trying to fix, clean out and repair that lease and have been loosing $5,000/month due to those problems.

We have had hostile and demanding land owners which have required me to take "fixing time" and turn it over to "cleaning time".  While the land owner gets happier, my profits get lower and my losses compound.

So here I am in the precarious time.  While I am making progress on all fronts mentioned above, time is my enemy.  We only have so much time left before everything goes to hell, and then I don't know what will happen.  But I don't want to find out, especially since I believe it is in my power to prevent the feared disaster.

We have good potential to improve cash flow and ultimately succeed and improving all financial aspects of the company, but right now I am swallowed up in the daily battle of just keeping ahead of the disasters.