Corsicana Project Detail

The Corsicana Field is notable because it was the first Texas oil field to produce oil and gas in commercial quantities. American Well and Prospecting Company, a water-well contractor, discovered it accidentally on June 9, 1894, while seeking a new water source for the city of Corsicana. Between 1896 and January 1, 1993, the field produced nearly 44 million barrels of oil.

ReoStar Energy Corporation, Inc. has leasehold totaling 4,010 acres in our core area and an additional 4,000 acres in and around the core area.

Management has considerable experience in the redevelopment of mature, shallow oil fields and possesses a sophisticated background in technologies and reservoir characteristics. The Corsicana leasehold is one of the best redevelopment opportunities in Texas due to the extraordinary amount of in-place reserves. This project is a shallow depth, unconsolidated sand, producing field that includes a number of deeper productive areas each with distinctive production characteristics and histories. This refers to the Mildred (Elm Ridge) Pool, which is the geological formation describing the Corsicana Field whose depth ranges from 800 to 1,000 feet.

Probable reserves are estimated to be 10M to 20M bbls recoverable through enhanced oil recovery techniques “EOR”. The high amount of reserves remaining is primarily due to the fact that much of the shallow production in this field was discovered and developed in the late 1800’s during the infancy of the oil industry. The lack of geological knowledge and in particular, fluid flow mechanics greatly decreased the efficiency of production resulting in a high percentage of reserves remaining in place.

Based on previous experience with the Field and third-party engineering studies, it has been concluded that the most effective recovery technology for maximum oil production would be the implementation of an alkaline-surfactant-polymer (ASP) flood. In June 2007, the Company implemented an ASP flood for its pilot project in the Corsicana field. Currently, the project is pumping 600 barrels of fluid into six injection wells on a daily basis. Injection pressures have remained steady, which is a good sign and anticipate some type of results during the first quarter of the next fiscal year.

In conjunction with the ASP flooding technology application, the Company will consider drilling new horizontal wells to facilitate more efficient drainage of the reservoir and greater production results. Horizontal drilling is particularly effective in this situation because the well bore can extend through greater portions of the reservoir creating higher volumes of production.

Currently, ReoStar has 114 producing wells in the Corsicana field, most of which have been enhanced and put back online by ReoStar. To date, we have also drilled 7 enhanced recovery six injection wells all of which are producing.

In the future, ReoStar plans to:

• Implement enhanced oil recovery on entire field
• Drill up to 1000 wells with an average production per well of 15 BOPDE and a lifting cost of $8/BOE
• Initiate a 3D seismic shoot to explore for deeper reservoirs on the existing leasehold