Project Drilling

Investment Memorandum
June 2022

Strictly Private and Confidential

Important Notice

Volt Energy, LLC. (“The Company”) is dedicated to the exploration and production of oil (condensate) and gas. IS Capital
(“ISC”) and the Company have prepared an Investment Memorandum, in partnership, to raise capital or debt for the
project. The project entails the exploration, drilling and commercialization of wells denominated “Bison” located in Willacy
County and Hidalgo County, Texas (‘The Project”).
This document (the “Investment Memorandum” or the “Memorandum”, indistinctively) is strictly confidential and has
been shared with a limited number of interested parties (“the Parties”), after the execution of a Confidentiality Agreement
(the “Confidentiality Agreement”) with the sole purpose of facilitating the decision-making process to such Parties. Within
this context, the addressees hereof agree to use it exclusively for such purpose.
Neither this Memorandum (or the contents thereof), nor the delivery thereof to the interested Parties, nor any other
information delivered, or the comments given during the negotiations, constitute an invitation to invest in the Project.
Neither this Memorandum nor the contents hereof shall be considered a commitment from Volt Energy or IS Capital to
proceed with the Transaction, and they reserve the right to cancel the sharing of data or to cancel the possible Transaction
at any time.
This Memorandum has been prepared by Volt Energy and IS Capital, and is subject to modifications, expansions or
amendments without the need of prior notice.
The information contained herein shall not constitute a promise or representation regarding the Project performance or
profits for past, present or future times. In this sense, only those representations and warranties included in the definite
agreement shall be valid; therefore, each of the parties shall perform its own analyses and inquiries before executing such
agreement. Under no circumstances shall IS Capital or Volt Energy assume any responsibility for the costs or expenses
incurred regarding the Project analysis, or for any other costs or expenses incurred by the potential investors regarding the
analysis of the Project and therefore, the possible Transaction. The Parties acknowledge and agree that IS Capital is not a
registered broker-dealer in the United States of America.
Confidentiality Agreement
Both this Memorandum and all additional information delivered at a later time are subject to the Confidentiality
Agreement executed by the addressee and therefore, they shall be handled in accordance with the terms hereof.

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Table of Contents

1. Project Highlights and Transaction Description

2. Company Profile
A. Oil & Gas Related Experience
B. Legal Structure
C. Organization Chart
D. Management Team
E. Business Model
3. The Project
A. Background and Summary
B. Drilling Area
C. Geological Studies
D. Development and Execution

E. DCP Agreement

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1. Project Highlights & Transaction Description

Strictly Private and Confidential

Project Highlights and Transaction Description

Volt Energy, LLC. (“Volt Energy” or the “Company”, indistinctively) is structuring the development and execution of a project
consisting in the exploration, drilling, and exploitation of oil and gas wells (the “Project”).

Project Highlights

• The Company obtained a lease agreement of a property for the • As part of the Project, the Company will bring to production Bison
exploration and drilling of wells. The property includes three Well #1 and drill 39 additional wells within the Ranches. The
ranches located in Willacy County and Hidalgo County, Texas (“the location of the additional wells is yet to be determined. The
Ranches”). Additionally, the Company acquired information estimated drilling depth will be between 12,000 ft. and 16,500 ft.
consisting in a previously developed 3D Seismic study, done by
Seismic Exchange, of the Ranches; the acquired information covers • The key aspects of the Project are the following:
an area of 11,540 acres.
Key Aspects
• The studies and the drill of the Bison exploration well confirm the Location Willacy County and Hidalgo County, Texas
existence of reserves in this zone.
Acreage 5,000 +/- acres
.
• The property includes three ranches located in Willacy County, Formation Frio / Vicksburg
Hidalgo County and Kenedy County (the “Ranches”), South Ranch, No. of wells Currently 1 + 7 wells planned
and North Ranch with a total area of +/- 5,000 acres. The Ranches
are located approximately 9.9 miles west of Raymondville and near Drilling depth* 12,000 - 16,500 ft.
to McAllen, Texas. Reserves per 41.6 to 65.0 BCFa of natural gas / 384,000
well* to 600,000 barrels of condensate oil
• Volt Energy will drill the wells in the Ranch (Willacy County) and the
South Ranch (Hidalgo County). Daily production 8,000 MCFb average of natural gas / 400
per well* barrels of condensate oil average
• Bison Well #1 has proved the existence of hydrocarbons and 1.6 TCFc of natural gas / 30 Million barrels of
Field Reserves
reserves in the field. This well need a small completion procedure condensate oil
to get to commercial production. The company has invested more
(*) Preliminary figures; (a) billion cubic feet; (b) thousand cubic feet;
than $14 million dollars in the project and the field.
(c) trillion cubic feet.

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Project Highlights and Transaction Description

Project Advantages Financial Summary

The Project has great advantages derived from the following factors: • The Company estimates the Project could generate net profit
after capital reinvestment during the first 5 years of $7.4M,
• Bison Well #1 has confirmed the presence of hydrocarbons,
$45.8M, $80.2M, $118.3M and $178.9M respectively.
which assures the success of the project, and has the current
commercial production of around 500 MCFPD. • The projects estimated gross revenues of $25.0M, $91.3M,
• The area has great productivity potential as Texas is one of the $142.9M, $203.6M and $275.1M per year.
largest producers of oil and gas worldwide. • Full operations of the 18 wells is considered starting in year 5.
• The existence of productive wells in the area where the Ranches
are located assure the presence of hydrocarbons. BUSINESS PLAN BASED ON A $12.5M USD INVESTMENT
(With Reinvestment from Revenues)
• The existing infrastructure (of both the work area of the (Figures in USD M)
Ranches and the state of Texas) enables efficient distribution
$300
and production for local and international consumption/sale. $275.1
• Potential customers are located in the area: more than 25
$250
refineries, power plants, and consumers in the cities of
Houston, San Antonio, Dallas and Austin. Gas pipelines cross the $203.6
Ranches for transportation and distribution. $200
$178.9
• Related projects of natural gas production exist in the area as
$142.9
well as sale of sub-hydrocarbon products. $150
• Financially, the oil & gas industry in Texas is benefited with tax $118.3
$100 $91.3
incentives to producers: the Intangible Drilling Costs1 are 100%
deductible in the year incurred. $80.2
$50 $45.8
$25.0

$0 $7.4
(1) Approx. 70%-80% of the investment required for the development of an oil & gas well is Year 1 Year 2 Year 3 Year 4 Year 5
considered as Intangible Drilling Costs (IDC). IDC include everything but the actual drilling (2 wells) (6 wells) (10 wells) (14 wells) (18 wells)
equipment: labor, chemicals, mud, grease, among other items.
Gross Revenue Net Income
(*) EBITDA Margin calculated over Gross Revenue
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Project Highlights and Transaction Description
Proposed Transaction

Total Investment The Project’s total investment amount is USD $12.5M

Investor’s Up to date, the Company has contributed USD $14M and is seeking for debt or capital for each phase or the whole
Contributions project.

The Company has worked and will continue to work with the best companies in the field. Some of the companies which
EPCs we have current Master Service agreements, and have worked with, are; Haliburton, Schlumberger, Baker Hughes, C&J
Services, among others.

The Company has signed an offtake agreement with Gulf Mark and DCP Midstream for the whole production of the
The Off taker
well. DCP Midstream is a Fortune 500 company and one of the largest producers of NGLs and one of the largest
(Purchaser)
natural gas processing companies in the U.S.

The Company accomplished satisfactorily the due diligence required by an International Bank in order to obtain a
Loan Facility. All the loan requirements and processes were concluded with the approval for $22M, however, its
execution was put on standby due to the conflicts of the trade war between China and the United States.
Independently of that, the Company passed all the filters and requirements in order to give certainty to any further
transaction:
Due Diligence • Holland and Knight and Haynes and Boone has conducted a legal opinion in Mexico and in the USA.
• Nexia Accounting firm has conducted a fiscal opinion for the international environment of the loan.
• CI Banco has created a trust structure for the facilitation of the loan.
• External technical opinion was conducted by Smart Digital Energy.
• The company has been gone through three “KYC” processes.

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2. Company Profile

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Company Profile
Company Description
• Petromex was founded in 2012 and is registered as an operator
with the RRC (Railroad Commission) which is the entity governing
the oil and gas industry in the State of Texas.
• The main activity of Petromex is related to the exploration,
drilling and exploitation of oil and gas wells.
• Since its foundation, Petromex has explored several oil and gas
opportunities and formed alliances with established companies
in this industry.
• The Company’s management team has on average 15 years
of experience in the industry.
• In May 2015, Petromex signed a lease agreement with the
mineral owner allowing Petromex to explore and drill wells in the
Ranches located in Willacy, Hidalgo, and Kennedy Counties,
Foundation of
Texas. Petromex and
The final acquisition Exploratory well is
drilled and proves the
Exploratory well
became Bison #1 and
of the main block of presence of
registration with the established
leases is signed.
• Petromex acquired part of a 3D Seismic study that was prepared RRC. hydrocarbons. continuous production

by El Paso Corp in an area that included the Ranches. The 3D

Seismic information proves that the area where the Ranches are
located has a large reserves of hydrocarbons. 2012 2014 2015 2016 2017 2018 2020 2021

• Petromex began drilling the Bison #1. The well proved the
presence of Hydrocarbons but needs an additional completion
procedure to become commercial. LGT Performs an Petromex beings the Smart engineering Looking for final funds to
performs independent reach commercial
independent study preparations for consulting for funding production and trigger the
• An external engineering firm, Smart Energy , confirmed the of the 3D seismic. drilling Bison #1. round. exploitation of the field
potential projected revenues for Bison Well #1. This study was
done for the purpose of raising additional funds.

• The headquarters of Petromex are located in McAllen, Texas.
• Petromex has established continuous production and is now
looking for the final funds to reach commercial production.
As of today, Petromex has drilling rights on over
approximately 5,000 acres in the State of Texas.
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Company Profile – Oil & Gas Related Experience

Petromex has experience developing oil & gas projects involving exploration, drilling, and exploitation of
wells.

Aug. 2012 June 2014 Sept. 2014 April 2015 May 2015 July 2017 - Present

Garza-Saenz ETAI Roberto Garza & Los Indios West Carlos Garza Jr. / Hughes #1 Bison Well #1 and
#1 Brother Lease Field The Garza Ranches Bison Field

Since 2012, Petromex has been involved in projects related to the exploitation of oil & gas wells. The following table lists the main
projects that Petromex has initiated:
Total
Project Date Acres Status Investment Activity
(USD)

Exploitation of well: daily production of 20 barrels of

Garza-Saenz #1 August 2012 – present 40 Re-entry1 440,000
condensate (well with more than 20 years of production).
Los Indios West Analysis and Exploitation: in association with Fargo Oil & Gas LLC, to
September 2014 160 620,000
Field Evaluation re-entry 8 wells in Hidalgo, TX.
Exploitation: package of 70 wells in production. Petromex
Laredo Energy (Bid) 2014 - Not Assigned 1,200,000
did not win this bid.
Roberto Garza y Drilling and exploitation of wells: acres near La Sara
June 2014 3,322 Exploration 1,661,000
Hermanos Lease Field.
Carlos Garza Jr. / Drilling and exploitation of wells: acres near La Sara
May 2015 4,265 3D Analysis 2,980,000
The Garza Ranches Field.

Hughes #1 May 2015 120 Production 130,000 Exploitation: well in production, over 21 barrels per day.

Exploratory well, Bison Drilling and Exploitation of well: Petromex acquired two potential gas
well #1 and Bison Field July 2017 – present 5,000 14,000,000
Completion fields for explorations.

(1) Re-entry refers to the recent technique of revitalization of ageing fields through the tapping of bypassed oil and gas pockets.
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Company Profile – Legal Structure

According to public records filed with Texas Secretary of State, US Petromex Oil and Gas, LLC
registered as a Domestic Limited Liability Company (LLC) in the State of Texas in September 2012.

Railroad Commission

Petromex is registered as an operator with the Railroad

Commission (RRC). RRC is the entity governing the oil and
gas industry in the state of Texas.

• Operator number: #879307

The operator number was filed under the RRC’s

Organization Report: Form P-5.

The Form P-5 required Petromex to complete the

execution and filing of a financial assurance (bond, letter of
credit or cash deposit):

• Total amount: $25,000

Lexon Insurance Company issued the bond required by

RRC (Bond number: 1149129). The stated expiration date
of this instrument is September 2022.

RRC’s filing Date of acquisition

Operator April 2017

Individual & blanket performance bond April 2017

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Company Profile – Organization Chart

Fernando Solloa
CEO & President
Petromex has the following
organizational structure:
IS Capital
Financial Advisor

Alegre and
Rodrigo Solloa Pablo Kuri Erica Guerra Tin Man Energy
Associates
COO CRO CMO Attorney
Accounting

Exoprop Iñaki Solloa

Completion Office Affairs

Smart Digital Energy

Geology and
Engineering

Lee Valdez
Field
Operations External

The owners of Petromex have decided to hire experts in different areas that comprise its business model. As of today,
Petromex has MSA (Master Service Agreements) with companies such as Haliburton and Schlumberger (both oilfield
drilling, equipment, and services companies) for any project that comes along.

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Company Profile – Management Team

Volt Energy has an experienced and effective management team.

President Vice-President
Fernando Solloa Pablo Kuri

• Mr. Fernando Solloa is owner and president of the Company.
• He has more than 5 years of experience in the industry and more than 20 as an
entrepreneur, having developed several businesses successfully such as: Restcorp
LLC (food services – owns the “Rodizio Franchise”), 1131 BLDC, LLC (construction),
83 Citrus Grove, LLC (real estate development – more than 50 acres of commercial
real estate developed), and Solloa & Associates (real estate development – over 150
residential housing units and 50 acres of commercial real estate).
• In 2011 Mr. Solloa and Mr. Kuri acknowledged the potential that exists in the oil &
gas business. First, in the rental of transportation equipment for oil companies, and
subsequently in the leasing of heavy equipment to companies such as Chesapeake
and EOG.
• Before relocating to the U.S., Mr. Solloa worked for 5 years in Mexico as the
Commercial Director for STOR S.A. (construction) and Corrugados Uvaza S.A.
(wholesale foods and distribution).
Executive team
Erica Guerra Victor Carrera (Exoprop)
• Mr. Pablo Kuri leads the Vice-President of the Company.
• He holds a MBA from Universidad Cuauhtemoc of Puebla.
• He has more than 5 years of experience in the industry and more than 20 as an
entrepreneur, having developed several businesses including Ecofrutas, Inc. (food and
beverage imports), 83 Citrus Grove, LLC (real estate development – more than 50 acres
of commercial real estate developed), and Restcorp, LLC. (food services – owns the
“Rodizio Franchise”), and Solloa & Associates (real estate development – over 150
residential housing units and 50 acres of commercial real estate).
• In 2011 Mr. Kuri and Mr. Solloa acknowledged the potential that exists in the oil & gas
industry. First, in the rental of transportation equipment for oil companies, and
subsequently in the leasing of heavy equipment to companies such as Chesapeake and
EOG.
• Before relocating to the U.S., Mr. Kuri worked for 7 years in Mexico as President of
Operations for Frutas y Verduras del Sureste (Agribusiness) and as Commercial Director
for a small airline based in Puebla, Mexico.
Lee Valdez Rodrigo Solloa

• Mrs. Erica Guerra is the Chief Marketing
Officer.
• She has experience in multiple
marketing department activities
including gas scheduling, marketing
accounting, contract negotiation and
administration,commercial marketing,
financial reporting, and special projects
within the oil & gas industry.
• Before Petromex, she worked at Eagle
Rock Energy Partners (oil and gas
exploitation, development,and
production firm) for 8 years.
• She has more than 9 years of
experience in the oil & gas industry.
• Mr. Victor Carrera has more than 20
year of experience in the Oil & Gas
Industry.
• He worked for Halliburton as President
of Operations in Latin America for
more than 8 years.
• He founded and sold his well
completion company of 10 years to
Corelab.
• Currently, he works as an independent
consultant with his company Exoprop
USA, LLC , along with a team of well
analysis experts, financial professionals
and completion specialists with an
average of more than 20 years of
experience.
• Mr. Lee Valdez is the external
consultant for field operations.
• He has experience in safety and operation
management.
• Before Petromex, he worked at Stric-
Lan Companies (oil and gas drilling
services – 4 years), Rockin R Gasworks
(oil well services – 3 years), and Marshall
Lancaster & Associates (land surveying –
1 year).
• He has 9 years of experience in the oil
& gas industry in the companies
mentioned previously.
• Mr. Rodrigo Solloa is the Chief
Operating Officer for the company.
• He’s worked in the oil industry for
more than three years.
• Has an BA from the University of Texas
at Austin.
• He’s worked in operations for 5 years
at a construction and commercial
development firm.
• He’s worked in the public sector
before, at the House of
Representatives and the Consulate of
Mexico.

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Company Profile – Business Model (1/3)

Business Model
The core business of Volt Energy is the exploration and production of new areas/leases. Volt Energy and its shareholders have explored
the oil and gas industry for 7 years and have made alliances with established companies with many years of experience. Volt Energy
executes its business processes through the management of subcontracted services on a competitive
basis.
Schlumberger Smart Energy
Exoprop

Exploration Geology

Tin Man Energy Nabors /

Haliburton /
Business Model Orion /
Legal Drilling
Pioneer
Petromex subcontracts
leading companies in the
oil & gas industry for the
exploration,
drilling, and exploitation
Gulfmark of wells DCP / Upstream
/ Conocophillips
Oil Distribution Gas
Distribution

Measurement Others

L&B Oil Field

Texas Gas
Services
Measurements

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Company Profile – Business Model (2/3)

Business Model – Subcontractors (1/2)

As of today, Petromex has contracts and MSA’s with more than forty companies. Petromex continuously evaluates the service
proposals of diverse companies in distinct areas in order to strengthen its operations.
Business
Company Status Description of services
Process
Exoprop provides services in the fields of geology, geophysics, project management, and
Exploration Exoprop Contracted completion consulting. Exoprop has worked with the best companies and has even
developed completion equipment.

This company analyzes the geology and geography of faults and formation maps of producing
Geology Smart Energy Contracted zones. Smart engineer performed an independent well evaluation. This evaluation was performed
with no intervention from Petromex. They also evaluated the field.

This group provides operations support and assistance to oil, gas, and pipeline
Tin Man companies. The company also provides the preparation, review, and submission of ongoing or
Legal Energy , LLC Contracted
special permit needs with the Texas Railroad Commission. These are some of the many services
provided by this legal firm.

Texas Gas This company provides a chromatography analysis of the chemical components of the
Field Services Measurements, LLC MSA
gas.

L&B Oil Field MSA L & B Oilfield Services provides an array of consulting and operating services as well as a long
Field Services
Services, LLC relationship with local vendors and services companies.

Nabors Nabors offers drilling and rig services with technology like PACE-X ( technology for multi-
Drilling Completion & MSA well drilling). They also provide drilling software (RACKIT, REVIT, REGWATCH and
production Co. DRILLSMART).

Halliburton This company provides drilling services with programs focused on recoveries and lower
Completion Proposal
Company costs by minimizing non-productive times.

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Company Profile – Business Model (3/3)

Business Model – Subcontractors (2/2)

As of today, Petromex has contracts and MSA’s with more than forty companies. Petromex continuously evaluates the service
proposals of diverse companies in distinct areas in order to strengthen its operations.
Business
Company Status Description of services
Process
Orion is a drilling company with the necessary tools to hit TD. The Manufacturing and
Drilling Orion Proposal Fabrication Facility is equipped to construct the rigs with API-certified substructures, masts,
and crowns. Every rig in the Orion fleet is equipped with a top drive, automatic catwalk, and
EDS controls.

Gulfmark This company offers competitive crude oil marketing and transportation services from
Oil Distribution Contracted
Energy, Inc. petroleum producing companies to the refining community.

Purchase DCP is engaged in the marketing, processing, and transportation of natural gas and
Gas Distribution DCP Agreement the provision of risk management services on behalf of owners of natural gas producing
interests.

Texas Gas This firm provides full gas composition management services including gas sample
Measurement Contracted
Measurem analysis and data management tools.
ents, LLC

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Company New Structure (1/3)

New Corporate Structure of Petromex Oil & Gas and Volt Energy
February 2020
Initially, US Petromex Oil and Gas, LLC (“Petromex as Operator”) was the only company participating in the Bison field
development and investment project.
The main reasons for this are due to the fact that Petromex:
▪ It was the only operator (research, planning, exploration, drilling, production and exploitation) that were
carried out in the field.
▪ In order to participate in operations related to the exploration and exploitation of hydrocarbons (E&P),
companies must have the registration, permit and authorization of the State of Texas, as well as comply
with all the operating regulations and obligations that this entails, such as the contracting of insurance and
surety. One of these permits is P5, which empowers the company as the exclusive operator of the field or
wells.
▪ It is the owner of the mineral rights, as well as their collection rights. This allows to exploit and sell the
hydrocarbons to third parties. The United States accounting law allows these rights to be considered as an
asset that is recorded in the financial statements of the company.
▪ It has the exclusivity agreed under the E&P lease contract of the lands where the hydrocarbons are being
exploited. As well as the exclusivity of selling hydrocarbons.
▪ Additionally, by operating since 2012, it has the oldest credit history, and can participate in bank loans, as
well as in raising institutional capital.
However, based on the recommendation of a group of expert advisers in the field of hydrocarbon exploration and
exploitation (E&P), as well as legal experts in the matter, particularly from the State of Texas, it was decided to
migrate from the previous scheme to a new one, which will give greater legal, fiscal, financial and operational
benefits.

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Company New Estructure (2/3)

New structure
To meet the recommendation of the advisory group, the company Volt Energy, LLC (“Volt”) is created as a “holding
company”. In this way, Volt keeps all the assets of the project and separates itself from any obligation or liability with
an operating contract with Petromex. Under this new configuration the following is established:
▪ Petromex remains the exclusive operator of the project, retains its P5 permit, as well as insurance and
bonds.
▪ The company Volt Energy signs an operation contract (provision of services), leaving the operator solely
responsible for any risk associated with operations in the field, as well as maintaining the insurance and
permits necessary to carry out the operation successfully. Legally shielded from Volt Energy and its partners
for the disassociation of operations in the field.
▪ The company Volt Energy acquires the mineral rights and the collection rights. Therefore, the holding
remains with the exclusivity to collect and exploit mineral rights, obtaining the right to sell hydrocarbons
produced from the field.
▪ The company Volt Energy signs hydrocarbon sales contracts with the two main off takers for natural gas and
condensed oil.
▪ The company Volt Energy, being the new owner of the mineral rights, obtains the right to record said asset
on its balance sheet, giving the company a very high value.
▪ Volt begins to create a new credit history, with a simpler legal and accounting structure.
▪ Reporting only income from the sale of hydrocarbons, expenses for the purpose of contracting Petromex
and distribution of dividends to partners.

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Company New Estructure (3/3)

Conclusion
▪ The new structure protects 100% of the company's assets.
▪ Eliminates the risks associated with the operation of the field.
▪ Simplifies the legal and accounting structure of the company's assets.
▪ All the benefits of this new structure are transmitted directly to the partners.

Before After

Petromex US Petromex Volt Energy

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3. The Project
A. Background and Summary

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The Project – Summary (1/4)

The Project consists of the exploration, drilling, and exploitation of nine oil and gas wells located in Willacy and Hidalgo
Counties, Texas
Drilling area • The State of Texas is considered within the 10 major oil & gas producers worldwide.
• Texas represents 24% of the total oil reserves in the US.
Location of the • Willacy County and Hidalgo County, both in Texas.
wells
• The drilling prospect lies approximately 9.9 miles west of Raymondville, Texas.

• In May 2015, Petromex signed two lease agreements for a series of properties
comprising 4,295 acres. The acreage is divided between the two agreements as follows:
• The leased properties include 3 Ranches (the “Ranches”) that cover the agreements’ total acreage:
Lease • The Ranches have existing infrastructure that will facilitate the startup of the Project:
Agreement &
• Road access: The land has clean access roads covered with gravel and caliche.
the Ranches
• Electricity: The property offers electrical energy to cover power needs.
• Hydrocarbon transportation: Two gas pipelines cross the Ranches carrying gas supplies from New
York to Mexico.

Project • The Project will be developed in the area comprised under the Mineral Lease Agreement and adjacent land.
Acreage • Total area of 5,000 acres.

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The Project – Summary (2/4)

The Project consists of the exploration, drilling, and exploitation of nine oil and gas wells located in Willacy and Hidalgo
Counties, Texas

• Frio / Vicksburg.
Formation
• Hydrocarbons such as natural gas and condensate oils are located in these formations.
• Petromex will drill between 12,000-16,500 ft. Bison Well #1 was drilled at 16,500ft.
Drilling depth
• Drilling will be through the Vicksburg formation.

• According to geological studies, estimated reserves in the entire field area could hold as much as 1.596 trillion
Prospect Area /
cubic feet (TCF) of gas plus some 30 million barrels of condensate oil.
Estimated
• The studies indicate over 10 productive zones, capable of reaching a production in excess of 400 barrels average
Reserves
per day (BO/D) and 8,000 million cubic feet average per day of gas (MCF/D).

• In 2004, a 3D Seismic study was prepared by El Paso Corporation (“El Paso Corp”) in an area that
covered part of the Ranches. El Paso Corp was exploring the opportunity to obtain a lease agreement for
the Ranches.
• Geologists from Austin Exploration Inc. analyzed the 3D Seismic developed by El Paso Corp and confirmed
Geological the existence of minerals in the area:
study – 3D • Reserves of 1.596 TCF of gas and 30 million barrels of condensate oil an area considering 4,440 acres.
seismic
• In 2007, based on the El Paso Corp’s 3D Seismic study, the consulting firm in geology and
geophysics, Lucius C. Greer & Associates certified the existence of reserves in the area of the
Ranches.
• Total certified reserves: 640,000 MMCF of gas and 13,000 Mbbl. of condensate oil in an area
considering 1,778 acres.
Current • Bison Well #1 has already been drilled and needs a completion process for the commercial quantities to flow. Once the
Status commercial flow is stablished, this well will provide essential information for the next.

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The Project – Summary (3/4)

The Project consists of the exploration, drilling, and exploitation of nine oil and gas wells located in Willacy and Hidalgo
Counties, Texas

• In 2014, Petromex hired LGT Corporation to develop a QuickLook study (KwiQLook). The QuickLook study is
the first step to obtain confirmation of presence of hydrocarbons.
Additional • Exoprop performed an independent evaluation of the prospective zones of Bison Well #1. They saw prospective
geological areas at XXXX ft, XXXX ft, XXXX ft. The zone at XXXX ft. has already proved the presence of hydrocarbons. Exoprop
surveys has recommended the procedures outlined in this proposal.
• Smart Energy evaluated the well and the field with very positive feed back. They agree with Exoprop’s
evaluation, plus found additional zones.

• The area where the Ranches are located is surrounded by successful wells drilled by other
companies. As an example, the Petru wells operated by Dominion Expl. & Prod., Inc:
• Petru #3: The initial production was 1,063 BO/D and 17,955 MCF/D. Once stabilized, the average
production was 322 BO/D and 8,624 MCF/D
• Petru #5: The initial production was 922 BO/D and 16,031 MCF/D. Once stabilized, the average
Other wells production was 389 BO/D and 7,270 MCF/D
near the
• The six Petru wells produced an aggregate of 1,052,457 barrels of oil and 23,904,631,000 cubic
prospect area
feet over a period of 30 months
• Companies like ExxonMobil, Texaco, Amoco, Tenneco, Sanchez, Shell, El Paso, Chevron, and more
recently Chesapeake, OXY, EOG, and XTO have drilled more than 15,000 oil and gas wells in
Hidalgo, Willacy, Kenedy, Brooks, and Starr Counties.
• ExxonMobil has drilled the wells located in the Tordilla Field, located less than two miles away.

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The Project – Summary (4/4)

The Project consists of the exploration, drilling, and exploitation of nine oil and gas wells located in Willacy and Hidalgo
Counties, Texas
Petromex drilled one well in the ranch and is waiting to finish the completion procedure. An additional seventeen wells well be drilled
in the 5,000 acres plot. According to INEXS, Smart and Exoprop geologists’ recommendation, the drilling depth for all four wells will be
between 12,000 - 16,500 ft. The drilling will be through the Vicksburg formation.
Preliminary Drilling Schedule Preliminary Estimated Reserves and Production*
The preliminary estimated reserves for each well
The drilling is schedule to occur in the in the following order,
considering the previous work developed by El Paso Corp, and
dates indicate the month the wells are expected to be
completed and producing: Schlumberger could be the following:

Mineral Prelim. Estimated Reserve

Natural Gas 41.6 – 65.0 BCF
Condensate Oil 384 – 600 thousand barrels

The preliminary average production per day for each well

could be the following according to Smart Engineering and
adjacent wells:
Mineral Average Estimated Production
Natural Gas 8,000 MCF/D
Condensate Oil 400 BO/D

The commercial life of a well is calculated to be in the

Dates are subject to changes: the drilling schedule will be range of 15 and 20 years. The 3D Seismic study and finding
defined once funding is received and Smart concluded in the Bison #1 confirmed the existence of 140 different
second stage of drilling plan concludes the analysis of the types of sands, supporting the estimated life of the wells.
3D Seismic information.

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3. The Project
B. Drilling Area

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The Project – Drilling Area: United States

World’s Total Crude Oil Production World’s Total Natural Gas Production
About 100 countries produce crude oil. In 2014, 49% of the world’s total In 2014, the US natural gas production represented 21.4% of the world’s
crude oil production came from five nations, the US being the top producer total production, positioning itself as the top producer followed by Russia
(15% of the world’s production). with 16.7%.

2014 Crude oil production 2011 Marketed natural gas production*

(Thousand barrels per day) (Billion cubic feet)
Country Production Share Country Production Share
1 United States 13,973 15% 1 United States 24,036 19.3%
2 Saudi Arabia 11,624 12% 2 Russia 23,686 19.1%
3 Russia 10,853 12% 3 Iran 6,078 4.9%
4 China 4,572 5% 4 Canada 5,743 4.6%
5 Canada 4,383 5% 5 Qatar 5,272 4.2%
6 United Arab Emirates 3,471 4% 6 Norway 3,679 3.0%
7 Iran 3,375 4% 7 China 3,629 2.9%
8 Iraq 3,371 4% 8 Saudi Arabia 3,616 2.9%
9 Brazil 2,950 3% 9 Algeria 3,453 2.8%
10 Mexico 2,812 3% 10 Indonesia 2,892 2.3%
11 Rest of the world 31,633 34% 11 Rest of the world 42,173 33.9%

13,973
24,036 23,686
11,624
10,853

4,572 4,383
3,471 3,375 3,371 2,950 6,078 5,743
2,812 5,272
3,679 3,629 3,616 3,453 2,892

United Saudi Russia China Canada UAE Iran Iraq Brazil Mexico United Russia Iran Canada Qatar Norway China Saudi Algeria Indonesia
States Arabia States Arabia

In 2014, the US recorded the largest increase in oil production in the world,
becoming the first country ever to increase average annual productionby at least (*) Most recent year with sufficient data for ranking
1 million barrels per day for three consecutive years. Source: U.S. Energy Information Administration

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The Project – Drilling Area: Texas

Texas Production Companies In Texas

Within the US, Texas is the state with the largest production of oil and gas. In In 2014, the company with the largest production of crude oil in the state of
2014, crude oil production was 3,171 thousand barrels per day. Texas was EOG Resources, Inc. with 9.7% of the total production.
Chesape
ake
2014 Crude oil production 2014 Crude oil production Operatin
(Thousand barrels per day) (Thousand barrels per day) EOG g, LLC;
Resource 4.9%
State Production Share Other Company Production s, Inc.;
States 9.7%
Texas 3,171 44% EOG Resources, Inc. 239
North Dakota 1,087 15% 27% Chesapeake Operating, LLC 121
Texas Occident
California 560 8% 43% Occidental Permian Ltd. 115 al
Devon Energy Production Co, LP 109 Permian
Alaska 497 7% Ltd.;
Other States 1,959 27% Alaska Other companies 1,103 Other 4.7%
7% companie
Califor s; 44.7%
nia North
8% Dakota Devon
Energy
15% Productio
n Co, LP;
4.4%

In 2013 the total natural gas production in Texas was 7,545,401 million In 2014, the company with the largest production of natural gas in the
cubic feet. state of Texas was Xto Energy, Inc. with 11.0% of the total production.
2013 Marketed natural gas production 2014 Natural gas production
(Million cubic feet) (Million cubic feet per day) Xto
ergy
State Production Share Company Production
Texas 11.0%
Texas 7,545,401 31% Other Xto Energy Inc. 1,870 Devon
States 31% Energy
Pennsylvania 3,259,042 13% Devon Energy Production Co. 1,634 Productio
37%
Louisiana 2,406,834 10% Chesapeake Operating, LLC 1,363 n Co, LP;
9.6%
Oklahoma 2,143,999 9% Anadarko E&P Onshore LLC 1,176 Chesape
Other
Other States 9,026,356 37% Other companies 6,881 companies;
ake
Penns 40.5%
Operatin
g, LLC;
Oklaho ylvania 8.0%
ma Louisia 13%
9% na Anadarko
E&P Onshore
10% LLC;
6.9%
Source: U.S. Energy Information Administration Source: Railroad Commission

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The Project – Drilling Area: Southern Texas (1/2)

Other Wells in the Area

Petromex has studied and confirmed the productivity of the area where the Ranches are located. Leading companies in the industry
like ExxonMobil, Texaco Shell, El Paso, and more recently Chesapeake, OXY, EOG, and XTO have successfully developed wells in the
vicinity of the Ranches.
The Petru wells Oil Production Gas Production
(BO/D) (MCF/D)
Dominion Expl. & Prod., Inc. has exploited since 2003 the 17,955
1,063
denominated Petru wells. These wells are located 4 miles east
of the Ranches and are the nearest to the site location. 922
16,031

13,225
The initial production and the average production, once
stabilized, of the Petru wells is detailed below:

Oil (BO/D) Gas (MCF/D) 8,624

Initial Average Initial Average 7,270
389
Petru #3 1,063 322 17,955 8,624 322
253
Petru #5 922 389 16,031 7,270
2,927
Petru #1 253 53 13,225 2,927
Petru #4 53
393 55 7,541 1,191
Petru #2 186 7 6,094 419
Petru #3 Petru #5 Petru #1 Petru #3 Petru #5 Petru #1
Petru #6 489 9 9,475 Initial Average Initial Average
16
The six Petru wells produced an aggregate of 1,052,457 In 2015 “The King Ranch” announced the successful
barrels of oil and 23,904,631 MCF over a period of 30 months; completion of their last well (located two miles from the
in average 175,413 BO and 3,984,105 MCF over the same Ranches), drilled at 14,000 ft. depth in the Tordilla field. As of
period per well. July 2015, its production exceeds 450 billion cubic feet.

Source: Drilling Info, Inc.

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The Project – Drilling Area: Southern Texas (2/2)

Other Wells in the Area

A significant number of companies have exploited and confirmed the productivity of areas near the Ranches. As an example, the
ExxonMobil Corp operates the Stillman wells and the Wagner Oil Company operates the Cox, B.F. wells.
The Stillman Wells
These wells are operated by the Exxon Corp. and are located in the Tordilla Field within Willacy County.
700
Stillman Historical Monthly Production(1993 – 2011)
600
500
400
MMCF

Well #76
300
Well #88
200
100
0

The Cox, B.F.

These wells are operated by the Wagner Oil Company and are located in the La Sal Vieja Field within Willacy County.

3,500 The Cox, B.F. Historical Monthly Production (2008 – Present)

3,000
2,500
2,000 Well #4
1,500 Well #12
BBL

1,000
500
0

Source: Railroad Commission

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3. The Project
C. Geological Studies

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The Project – Geological Studies

Introduction
Over the last few years, a series of geological and geophysical studies have been performed on the location of the Ranches in order to
determine the existence and volume of hydrocarbon reserves.

3D Seismic Study Certification of Reserves Smart Energy

Date of Study Date of study Date of Study

2004 2007 2018
Background Background Background
This initial study was performed by El Paso The purpose of this study was to validate the Petromex requested this study in order to
Corp. as it explored the opportunity to sign a value of reserves and minerals in the area, verify the volumes of production and to
lease agreement for the Ranches. No based on the previous 3D Seismic study. verify the financial projections.
agreement was reached.
Performed by Performed by
Performed by Lucius C. Greer & Associates Smart Energy
Performed by El Paso Corporation and
interpreted by Austin Exploration

Main Findings Main Findings Main Findings

Austin Exploration recommended to drill at The market value of the oil and gas reserves Confirmed the financial projections
12,500 ft. and concluded that the area located in an area of 1,778 acres was of the company and the viability of
(4,440 acres1) could hold 1.596 TCF of gas estimated at USD 3,449 million. the well and field.
and 30 million barrels of condensate oil.

As part of the execution of the Project, Petromex will continue to do more studies and additional 3D surveys to better place
next wells from even better productions.

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The Project – Geological Studies: 3D Seismic (1/3)

3D Seismic by El Paso Corp

In 2004, El Paso Corporation developed a 3D Seismic study in an area (35,000 acres approx.) that partly covered the
Ranches as this company was exploring the opportunity to obtain a lease agreement for the Ranches.

Austin Exploration analyzed (i) the seismic cross section from the 3D Seismic survey recorded by El Paso Corp, (ii) a location map for the
seismic traverses and (iii) time slice seismic maps for various times of interest.

• Austin Exploration analyzed the formations observed at 10,000 ft. and 12,000 ft. and recommended drilling at 12,500 ft.

Austin Exploration’s results and conclusions:

In June 2008, Austin Exploration Inc. presented the following conclusions and findings after analyzing the 3D
Seismic developed by El Paso Corp:

Frio Structure Maps Evaluation of the area Sands

• The CD of the 3D Seismic data was used to
make profiles of the individual
seismograph. This data and two
conventional seismic profiles were used to
construct the enclosed Frio Structure
Maps. One map shows the structure at
approximately 10,000 ft.
and the other shows the structure at
approximately 12,000 ft..
• The analyzed studies showed the
structure, sand percentages, porosity and
permeability of the Frio sand surrounding
the subject area. Several attached well
logs were used in the evaluation of the
area. These were all used to estimate
the production capability at the
structures mentioned previously.
• The thick, shaly sand series in these two
micro-paleontological zones total several
hundred feet net of sands as seen in the
Tordilla Field well logs that can produce
from 30, 45, and 65 million cubic feet to
208 million cubic feet per day of gas as
Tordilla Well #88 open flow tested.

The entire field area could hold as much as 1.596 trillion cubic feet (TCF) of gas plus some 30 million barrels of
condensate oil.

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The Project – Geological Studies: 3D Seismic (2/3)

3D Seismic by El Paso Corp

Willacy 3D Survey Coordinates Seismic Stratigraphic / Timeslice

Seismic Cross Section –Mineral Project

Xline- Inline Location 500 ft. thick sands full of

gas. At 2MM CFG/AC FT
Sands are almost 2 miles
long by 500 ft. thick 4000
ft. deep

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The Project – Geological Studies: 3D Seismic (3/3)

3D Seismic by El Paso Corp

2D Seismic Profile Indicates Potential Reservoir Modeling Map

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The Project – Geological Studies: Certification of Reserves (1/2)

Certification of Reserves: Estimated Mineral Value

In November 2007, based on the 3D Seismic study developed by El Paso, Lucius C. Greer certified the reserve estimates. The future
estimated income and production were classified according to the Society of Petroleum Evaluation Engineers (SPEE) as proved
undeveloped (“PUD”) as there is no proved developed producing (“PDP”) or proved behind pipe (“PBP”) reserves; no wells have been
drilled in order to obtain an estimate of these SPEE classifications of gas production. The following table, summarizes the net
estimated reserves and cash flow values of the various economic categories.

Net Salable Interest – Non Escalated – 100% at $3.56 avg.

Net of Carbonates (liquids with Gas & dry)
Reserve
Gas Oil Gas Cash Oil Cash Total
Category Lease
PV/80% (MMCFa) (Mbblb) (USD m) (USD m) (USD m)

PDP - - - - - -

PBP - - - - - -

Hidalgo /
380 x 103 7,500 $1,353 $675 $2,028
Kennedy
PUD
Willacy 260 x 103 5,500 $926 $495 $1,421

Total 640 x 103 13,000 $2,279 $1,170 $3,449

Total Mineral Value (USD million) = 2,279 + 1,170 = 3,449

The methods considered appropriate in the analysis of each reservoir were chosen based on the experience of Mr. Olen T. Adams, a geophysical consultant (40 years
experience with Conoco-Phillips), and Lucius C. Greer & Associates, a geology & geophysics consulting firm, both from Houston. They identified faulted structures
and Lower Frio sands that can have the expected gas reserves. Tom Austin interpreted the 3D verticals and identified the mid-gas (10,000 to 12,000 feet) inclines on
plots. The El Paso Engineering Department provided the horizontal slice of sands in color engineering maps explained by their expertise in the area, maturity of field
development, quantity/quality, completeness of data, and historical production of nearby fields.

(*) Preliminary figures; (a) MMCF: Million Cubic Feet; (b) Mbbl: Thousands of Barrels

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The Project – Geological Studies: Certification of Reserves (2/2)

P1 P2

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The Project – Geological Studies: Smart Energy Survey

Smart Energy
The Smart Energy provides a study marketed as Technical Assistance Survey of Economical Viability which is designed to evaluate the
technical and economical aspect of the well and field.
In 2018, the Smart Energy was contracted by Petromex to perform the study in the Ranches and Bison Well #1 in order to evaluate the
tecno-economical viability of the project. The conclusions of the analysis are described below:

• In their opinion, the Bison Well #1 is expected to be a very profitable and financially rentable investment.
They expect the Bison #1 to produce about 5.3 MMCPD and 146.9 BDP. The well is expected to produce for
12 years.
Principal
Conclusions of • They additionally reviewed which other potential formations can be exploited in the well.
the Study
• Smart has also concluded a full study of the rest of the Bison Field. Additionally, they have located even
better zones for the next well that promise higher production rates.

In conclusion, Smart sees the Bison Well #1 as highly profitable and the field as very promising and
highly probable to produce even more profitable wells.

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3. The Project

D. Development and Execution

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The Project – Development and Execution: Bison Well #1

Bison Well #1

The key aspects of this phase consider the following:

Bison #1 Budget : $5.6M USD
Description: The completion of the Bison Well #1 (Numbers might vary depending of price changes)
and planning for the next well. The following table contains the estimated cost of the completion of
the Bison #1 stage.
Estimated time: January 2022 - May 2022
Exoprop, Smart, Haliburton, Orion,
Subcontractors:
Schlumberger, etc…

1. The planning and scheduling of the

completion procedure.
Main activities: 2. The planning of the next well. Total $ 5,643,751.21
3. The Bison #1 will be brought to
1. Planning and Scheduling:
production.
Plan, schedule and execute the Bison Well #1 completion stage.

2. Planning of next wells:

During the completion of the Bison Well #1, the planning of the
next well will begin to take place. This will be to maximize the use of
time.

3. Bison #1 Production:
The Bison #1, once completion is finished, will be brought to
production. This means that the well will begin to generate
revenue.

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The Project – Development and Execution: Bison Well #2

Bison Well #2

The key aspects of this phase consider the following:

Bison #2 & #3 Budget: $6.8M USD
The drilling and completion of the Bison
Description: (Numbers might vary depending of price changes)
Well #2, and planning for the next wells
The following table contains the estimated cost of the drilling and
completion of the Bison #2 stage.
Estimated time: June 2022 – December 2022
Exoprop, Smart, Haliburton, Orion,
Subcontractors:
Schlumberger, etc…
6,000,000.00
Main activities: 500,000.00
1. Finalizing and scheduling of the 200,000.00
procedures. 110,650.00
2. Drilling and completion of the well. Total $ 6,810,650.00
3. Planning of the next two wells.
1. Finalizing of Procedure:
4. The Bison #2 will be brought to
production. Finalizing and scheduling of the procedure of Bison #2.

2. Drilling and Completion:

Drilling and completion of the well. This entails the whole drilling
procedure which should not vary in timing. The completion will vary
the most, depending of findings.

3. Planning and Production:

While the new well is being drilled and completed, the planning of
the next two wells will be commenced. Bison #2 will be brought to
completion and begin to generate revenue.

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3. The Project

E. DCP Agreement

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The Project – DCP Agreement (Off-taker Agreement) (1/2)
DCP South Central Texas LLC
5718 Westheimer Road
Suite 1900
Houston, TX 77057

713-735-3600

June 26, 2018

Petromex Oil and Gas, LLC

Attn: Ms. Erica Guerra
200 S. 10th Street, Suite #905
McAllen, Texas 78501-4866

Re: Gas Purchase Contract dated July 1, 2018,

Buyer’s File No. LAG1567PUR;
Hidalgo County, Texas

Dear Ms. Guerra:

Enclosed for your consideration are two revised originals of a proposed Gas Purchase Contract
(“Contract”) under which DCP South Central Texas LLC (“DCP SCT”) would purchase gas your
company owns or controls in Hidalgo County, Texas. This Contract was revised to change the Contract
Date from January 1, 2018 to July 1, 2018

Please review the enclosed Contract, and if you have any questions or wish to discuss its terms, please
feel free to contact me at the number below. If the Contract is acceptable, please have an authorized
representative of your company execute the signature page of both originals and return both to this
office. Please type or print the name and title of the person executing beneath each signature. After
approval and final execution by DCP SCT, we will return a fully executed Replacement Contract for
your file.

Unless the parties agree upon and enter into a different contract for DCP SCT’s purchase of your
company’s gas, if your company has not returned a signed Contract, and yet makes deliveries of gas to
DCP SCT at the Delivery Points identified in the enclosed Contract after your receipt of this letter and
the enclosed Contract proposal, your company will be accepting on a day to day basis the prices and
terms and conditions in the Contract as to the gas actually delivered, and until further notice, DCP SCT
will rely on that acceptance and perform accordingly.

If you have any questions, please contact me at (713) 735-3644.

Sincerely yours,

Scott Ballard
Commercial Supply Representative

SB:ds
Enclosures
cc: Contract File

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The Project – DCP Agreement (Off-taker Agreement) (2/2)

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Further information

José de Jesús Gómez

Sófocles No. 150, Col. Polanco

Ciudad de México C.P. 11540
Tel. +52 (55) 7098-9696
Cel. +52 (55) 5419-8418
jjgomez@iscapital.mx

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