West Virginia Projects

Preston County Project

Preston County ProjectStandard Energy’s business plan focuses on rapid revenue growth by identifying and developing projects that will return immediate revenue and profitability. This would include the development of the natural gas production business in West Virginia that will include shale gas coalbed methane (CBM) and coal production. This effort includes the expansion of its current property position as leases that offer favorable upside development opportunities to maximize future growth for the Preston County, Virginia. The currently 100% owned West Virginia property located in Preston County includes more than 17,000 acres coal and will be the site of the development of unconventional Marcellus Shale Gas development and coalbed methane (CBM), conventional shallow gas as well as an evaluation of the coal development opportunities.

Engineering and geologic analysis indicate that the project contains a substantial potential for deep Marcellus gas discovery potential as well as a significant coal reserve/resource of high quality thermal coal 14,000 btu within seven (7) coal seams on this property. There is considerable opportunity to expand the coal resource base in this area to support future coal resource and potential coalbed gas (CBM) to facilitate substantial future growth.

The growth of the Shale gas (Marcellus/Utica shale) program in this area could add significant gas reserve growth. This program would include the acquisition of production and development from our competitors to initiate the development of the Marcellus shale project.

This project is considered to be a low risk development program that will drill and produce natural gas from the Marcellus formation and coal bed methane gas from the coal beds. The shale gas (these wells test the Marcellus formation at a depth of 6,000+ feet plus and are usually horizontally drilled and completed. There are other formations within the stratigraphic section that could be gas bearing intervals will be evaluated. The coal beds are well known from previous coal mine development, mining and drilling on and adjacent to the company’s property position. The expectations of a positive future is based to a large degree on the competitor activity in this area were major capital investments into the Shale gas, conventional shallow and CBM gas development in this area over the past 7-10 years.

Natural Gas Pricing Projections

The gas price projections are sensitive to commodity prices and production rates. However, we believe that the future for natural gas indicates excellent growth and a stable pricing structure into the future. This is due primarily to the basic infrastructure and new industry development in the petrochemical industry, other domestic industry growth (electric utility conversions to natural gas) and natural gas (LNG) export markets. A production life of 10+ years is expected. The overall development program will continue to maintain the production stream and make modifications to the operation to enhance production and profitability and growth. This effort will include selective infill drilling within the more productive areas and the use of horizontal drilling to increase production. Horizontal drilling has the potential to achieve considerable (several fold) increases in the daily production rates of vertical wells on a per well basis within the project area. This has been proven to be the case in the CBM and Shale gas development programs.

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