Rocky Mountain Region – Paradox, Piceance, Wind River, Central Utah Hingeline and Denver-Julesburg Basins

In the Rocky Mountains, our primary activities are currently focused in five basins that provide a multi-year inventory of core development drilling locations and exploration ventures.

Paradox Basin. In the Paradox Basin there are five prospect areas. Two of the prospects, the Greentown and Salt Valley in Grand County, Utah, have been drilled with successful exploratory wells and are now development projects.

    Greentown. The Greentown project area has had two exploratory wells drilled that encountered economic recoverable reserves totaling 8.5 Bcfe gross in proved developed producing reserves as of December 31, 2006. These two wells resulted in gross proven reserves of 42 Bcfe (24 Bcfe net) over a 400 acre area. The wells are seven and a half miles apart, yet appear very analogous. The Greentown project is representative of the Company's strategy of targeting reservoirs that demonstrate consistent geologic attributes that exist over large areas. The Company has a 70% working interest in 43,000 gross acres, 29,100 net acres virtually all of which are prospective. In addition, we are currently planning for and staking a 25 mile natural gas pipeline that will service both the Greentown and Salt Valley project areas. We will construct, own and operate the pipeline.

    Salt Valley. The Salt Valley project area has had one exploratory well drilled and encountered gross proved producing reserves totaling 200 Mbo (117 Mbo net) and total proven reserves of 1 MMbo (585 Mbo net) over a 200 acre area as of December 31, 2006. We have a 70% working interest in 7,100 gross acres, 4,900 net acres. Additional subsurface information suggests that this project area should have consistent geologic characteristics across the Company's leasehold.

Piceance Basin. We are currently focusing our development efforts on the Vega Unit in Mesa County and the Garden Gulch Field in Garfield County, Colorado. These fields are consistent with our strategy of targeting reservoirs that demonstrate predictable geology over a large area. The Williams Fork member of the Mesaverde formation is the primary producing interval and has been successfully developed throughout the Piceance Basin.

    Vega Unit. We have an interest in 3,800 net acres with a 100% working interest. During fiscal 2006 the Company increased proved reserves almost 100% to 97.6 Bcfe. During 2006 production from the field was curtailed due to a lack of pipeline capacity. The new Collbran Valley pipeline was completed in late 2006 and has provided an additional 60 MMcfg per day of pipeline capacity. This will allow us to increase current drilling activity to two DHS rigs running full time with the intention of further increases during 2007.

    Garden Gulch. We have an interest in 1,200 net acres with an 18.74% non-operated working interest. The operator of the project currently has two rigs running full time and has identified plans to increase activity in the second half of 2007.

Wind River Basin. The Wind River Basin is characterized by a depositional environment that resulted in thick packages of tight gas sands producing at depths that range from 7,000 to 20,000 feet. We will be focusing our efforts on the shallower Lower Fort Union Formation which produces in numerous fields throughout the Wind River Basin.

    Howard Ranch. In 2006 we recompleted two of our deeper wells to the Lower Fort Union reservoir with economic production results. As of December 31, 2006 the two wells had proved reserves of 1.3 Bcfge and 1.9 Bcfge from the Lower Fort Union. This formation exhibits consistent geologic characteristics across a large area. At year end we owned an interest in 6,300 net acres with an average working interest of 90%. Subsequent to year end we have acquired an additional 38,570 net acres, most of which is concentrated in the Howard Ranch area.

Central Utah Hingeline. The central Utah Hingeline region is an overthrust belt located in central Utah. We have an average 55% working interest in approximately 118,000 net acres. The Company drilled the first of its 21 geologic features in late 2006. The Joseph #1 well was drilled to a total depth of 13,500 and was plugged and abandoned as a dry hole. We are acquiring additional geophysical and aero magnetic data on the remaining 20 geologic features and plan to drill a second well later this year.

Denver-Julesburg (“D-J”) Basin. Our leasehold in the D-J Basin focuses on the Niobrara, "D" sand and "J" sand formations at depths of between 2,800' and 8,000'. We have an interest in 480,500 net acres with a 100% working interest. Our proved reserves in this project area are 1.9 Bcfe as of December 31, 2006.