Sofi Black Bear II Joint Venture : simplebooklet.com

EXECUTIVE SUMMARYALFREDO MANZUR GONZALEZPresident/CEO, Sofí ExplorationAlfredo M. Gonzalez is the President and CEO of Sofi Exploration.Mr. Gonzalez is a sought-after influential leader. For the last 10years, his forte’ is offering proficient Good Practice Guidancealigning high production Asset Development opportunities in theOil and Gas sectors with sophisticated investors who are in themarket to expand their Cash Flow and Tax Advantage positions. Hiscorporate Vision for Sofi Exploration is to be the energy company“most admired for its people, partners and performance”. Hiscorporate mission is to build successful partnerships based on 7established pillars: High Performance, Integrity, Transparency,Trust, Verification, and Protecting Partners and the Environment. His immense knowledge and innovative counsel regarding assetdevelopment programs in the industry confirms the confidence ofvigorous partnerships and superior offerings from the industry’sleading and selective Operators, Drilling Corporations, andCompletion Companies. Mr. Gonzalez continues to develop anextensive vetting process compelling industry leaders to perform atthe highest levels for investor participation and productionachievement. The corporate goals are capital development, drilling,completion, production success, and continuous liquiditydevelopment for his associates and partners. Alan Giradot President/CEO, Rush Creek ResourcesAlan Girardot 36, president, and CEO of Rush Creek Resources is an independentTexas and Oklahoma energy entrepreneur who established Rush Creek Resourcesin 2014 during the initial shockwave of the most recent oil crash. Prior toestablishing Rush Creek, Mr. Girardot served as a senior executive in both privateequity venture management and operations management within the upstream oiland gas sector. He founded Rush Creek to capitalize on the bear energy marketthat he believed would facilitate the largest transfer of mineral wealth Americanshave seen in a generation. Since 2014 Rush Creek has expanded from an idea to4,000 mineral acres, 125 wellbores, and a vertically integrated low-cost operatingcompany, during an elongated period of basement oil prices. Additionally, Mr.Girardot graduated from Texas Tech University with a B.A. in political sciencewhile simultaneously serving as a United States Marine during Operation IraqiFreedom. Alfredo M. GonzalezPresident & C.E.OTristan W. McKinneyChief Operating Officer Olivia M. GonzalezExecutive Director1Kim DrewGeologist Kim Drew has worked mainly in vertical drilling and improving secondary recovery projectsbut have also developed several horizontal ideas in new target formations. Additionalresponsibilities include managing regulatory filings such as permitting operations , spacingand pooling expert testimony hearings and disposal well applications.

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2CREEK COUNTY HISTORYAt 1907 statehood Creek County had 18,365 residents, and Sapulpa was designated as the county seat. OnAugust 12, 1908, an election was held to permanently locate the government offices. A bitter struggle ensuedbetween Bristow and Sapulpa until August 1, 1913, when the Oklahoma Supreme Court ruled in favor ofSapulpa. The present courthouse, completed in 1914, is listed in the National Register of Historic Places (NR85000679).Creek County's economy has been primarily based on agriculture, livestock raising, and the oil and gas industry.The principal crops have included cotton, wheat, corn, and oats. In 1907, 23,419 acres produced 9,833 bales ofcotton. In 1912, 22,500 bales were ginned, compared to 18,010 in 1928–29. Cotton production continued todecline, and by 1963 only 450 acres were planted in cotton. In 1907, 37,631 acres yielded 484,978 bushels ofcorn, compared to 1,500 acres producing 19,300 bushels in 1963. However, the number of acres planted in wheatincreased from 275 in 1907 to 1,500 in 1963. By 2001 5,500 acres of wheat returned 57,000 bushels. In 1930Creek County had 3,555 farms, comprising 364,323 acres. By the turn of the twenty-first century Creek Countyhad 1,475 farms, comprising 351,400 acres. With the development of the Glenn Pool Field after 1905, theboomtowns of Mounds and Kiefer sprang into existence. Other oil-boom towns such as Oilton, Drumright, andShamrock developed after the 1912 opening of the Cushing-Drumright Field. With prosperity in the area, Syrian-Lebanese entrepreneurs settled in Drumright and Oilton and established dry goods and grocery stores. In theearly twentieth century other railroads linked the oil-boom towns of Drumright, Kiefer, Mounds, Shamrock,Slick, and Oilton to outside markets. The Tulsa-Sapulpa Union Railway, an interurban, continued in operationuntil 1960. An interurban connected Mounds with Tulsa. At the turn of the twenty-first century motorists usedInterstate 44, Historic Route 66, Alternate U.S. Highway 75, and State Highways 16, 33, 48, 51, 53, 56, and 66.

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GEOLOGICAL SUMMARYKim DrewGeological Opinion3This document was issued by Rush Creek ResourcesIt looks as if we have found good oil and gas production from the Skinner sand inthe Black Bear# 25-2 well. The oil and gas shows during the initial phase of thewell completion are some of the best I have seen in years. I am recommending that we proceed prudently with our completion. By this Imean that we should test pump the well for a few weeks prior to doing ourfracture treatment. I have found this technique to be the most effective inensuring a good fracture treatment and the best long term production results.We have discovered through trial and error that it is best, if possible, to let theformation produce any contaminated fluids from the drilling, perforating andacidizing process. This cleans them from the near well bore formation andreduces the chances of the fracture treatment driving the contaminants back intothe formation. It is also key that once the well is fracture treated it be put on productionimmediately upon the recovery of the fracture fluid. In essence once you get thefrack coming back you want to keep it moving. Any prolonged down time appearsto be detrimental so having all the equipment in place and test run helps reducedown time. Now as far as the geology goes it looks as if we have found the up dip pinch outof the Skinner that we had hoped to find. Both the upper and lower Skinnersands appear to be pinching out up dip from the massive waterfloods to the west.This is very encouraging and it indicates that we may have a charged-up reservoir.I have enclosed my updated maps and they indicate that a second drill sitelocated to the north of the Black Bear# 25-1 should be as good or better than theBlack Bear# 25-1. I would recommend that a second well be drilled in the C SWNE NW of section 25.

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GEOLOGICAL SUMMARYKim DrewGeological Opinion4This document was issued by Rush Creek ResourcesThis drill site should have over thirty feet of pay in both the upper and lowerSkinner sands as well as twenty to twenty eight feet of pay in the Pure sand uphole. As with any drilling venture I can not be certain of what we will find in theBlack Bear# 25-2 well. However, I fully expect to find over thirty feet of Skinnersand with both better porosity and resistivity than we found in the first well.porosity and resistivit than we found in the first well. And concerning the Prue sand This formation also appears to be pinching outsome where east of the Black Bear lease and before you get to the Ohles # 1 wellin the SW NE Section 25. So, we are clearly up dip from the large Top SailWaterflood to the west in Sections 27, 26 and 35. We found twenty-four feet ofgood clean sand with up to seventeen percent porosity and eighteen Ohmsresistivity in the 25-1 well. I expect that we will find a similar sandstone in the #25-2 well bore. It should also be noted that the closest pure Prue sand produceris the Susan # 1-25 well located just off the south line of the Black Bear leasedescribed as the NE NW SW Section 25. This well was drilled in 1988 just to thePrue sand. It was completed for 100,000 cubic feet of gas per day. The well hasbeen producing only natural gas for over thirty years but was reported to havevery recently started producing oil. This looks to be a clear indication that the Top Sail Waterflood is beginning tohave an effect on the formations by pushing oil up dip. These up dip lands ofcourse include the Skinner and Prue sands underlying the Black Bear Prospect. Top Sail has only been actively recharging their Skinner and Prue Waterflood for5- 6 years so we could be just on the beginning over a decades long push of oiland gas into the Skinner and Prue sandstones on the Black Bear lease. I wouldrecommend that you drill the Black Bear# 25-2 as soon as possible to get the oiland gas moving toward the well bore and maximize the push effect from thewaterflood.

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POTENTIAL REVENUE PROJECTIONSOil Production Estimates6.68 BPD X$85=$567.80 IPD$567.80 IPD X 30.4 Days=$17,261.12 IPM$17,261.12 IPM X 2.85% N.R.I. =$491.94$491.94 Gross Oil Proceeds Per Month(estimated)Annual return: 0 – 50% (Potential) Oil ProductionPayout: 24 + month paymentThese are estimated figures only upon production.BPD = BARRELS PER DAY MCF = MILLION METRIC CUBIC FEET IPD = INCOME PER DAY IPM = INCOME PER MONTH IPU = INCOME PER UNIT L.O.E. = LEASE OPERATING EXPENSESthese numbers were formulated based on first annual rate of return without expenses and depletion rates. These calculations are estimates only and do not reflect any guarantees Oil Income $80 $85 $906.68Monthly Income (Gross)Does Not Include L.O.E$463.00$491.94 $520.8725Monthly Income (Gross)Does Not Include L.O.E$1,732.80 $1,841.10$1,949.4050Monthly Income (Gross)Does Not Include L.O.E$3,465.60 $3,682.20 $3,898.8017100Monthly Income (Gross)Does Not Include L.O.E$6,931.20 $7,364.40 $7,797.60

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COMPANY PORTFOLIO (OKLAHOMA)19Sofi Fox Joint Venture 2022,Finalized, Funded,ProducingA.P.I #35037044673503704466OperatorRush Creek ResourcesStateOklahomaSofi Carr Joint Venture 2022,Finalized, Funded,Producing A.P.I #3503704457OperatorRush Creek ResourcesStateOklahomaSofi DrakeJoint Venture 2022,Finalized, Funded,ProducingA.P.I #3503704457OperatorRush Creek ResourcesStateOklahomaSofi MichiganJoint Venture 2022,Funded, Non Commercial Transfer A.P.I #35037291380000OperatorRush Creek Resouces StateOklahomaSofi Carr IIIJoint Venture 2023, Funded, waiting on spuddateA.P.I #Waiting On Permit OperatorRush Creek ResourcesStateOklahomaOPERATOR NUMBER:(OKLAHOMA 734825) (TEXAS 23895)Sofi Three HillsJoint Venture 2023, Funded, Waiting on spuddateA.P.I #Waiting On Permit OperatorRush Creek ResourcesStateOklahoma

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COMPANY PORTFOLIO(TEXAS, LOUSIANA) 21Sofi Gold I, II,IIIJoint Ventures 2021,Finalized, Funded, ProducingA.P.I #42-239-33959OperatorNew CenturyExplorationStateTexasSofi BlueJoint Venture 2021,Finalized, Funded,Producing A.P.I #42-239-33958OperatorNew CenturyExplorationStateTexasSofi PrimeJoint Venture 2020,Funded, Non Commercial TransferA.P.I #17-015-24570OperatorNew CenturyExplorationStateLousianaSofi 7Joint Venture 2022, Funded, TransferA.P.I #Not ApplicableOperatorNew CenturyExplorationStateTexasSofi Elite III Joint Venture 2022,Finalized, Funded,ProducingA.P.I #42-203-35452 OperatorNew CenturyExplorationStateEastTexasSofi Elite II Joint Venture 2022,Finalized, Funded,ProducingA.P.I #42-203-35452 OperatorNew CenturyExplorationStateEastTexasOPERATOR NUMBER:(LOUSIANA N099) (TEXAS 606055)

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COMPANY PORTFOLIO (TEXAS, LOUSIANA)22Sofi Victoria MarieJoint Venture 2018,Funded, Non CommercialA.P.I #42-391-33187OperatorMillennium ExplorationStateTexasSofi Gold CoastJoint Venture 2017, Funded, Non Commercial A.P.I #42-089-32747OperatorMillennium ExplorationStateTexasSofi Tyler Joint Venture 2019,Finalized, Funded,ProducingA.P.I #42-457-30557 OperatorNew CenturyExplorationStateTexasSofi SandsJoint Venture 2019,Interest Released A.P.I #42-241-33187 OperatorNew CenturyExplorationStateTexasSofi LivJoint Venture 2020, Funded, Non Commercial Transfer A.P.I #42-419-314220OperatorNew CenturyExplorationStateTexasSofi PhoenixJoint Venture 2019,Interest Released A.P.I #42-203-35385OperatorNew CenturyExplorationStateTexasSofi Elite IJoint Venture 2018, ,Finalized, Funded,ProducingA.P.I #42-203-35314OperatorNew CenturyExplorationStateTexasOPERATOR NUMBER:(LOUSIANA N099) (TEXAS 606055)

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TAX BENEFITSTHE BASIC TAX CONSIDERATIONS INVOLVED IN AN OIL & GAS INVESTMENT 1. INTANGIBLE DRILLING COSTS:Up to 80% of the investment amount constitutes what is known as intangible Drilling Costs (IDC), and is deductible against active, passive or portfolio income in the first year incurred. This includes all labor-relatedcosts for the prospect well. Including, but not limited to, drilling contractors, professional services, and others. Thetotal amount of IDC is reported to each participant at the end of the year. Please consult with your tax advisor forfurther details. 2. TANGIBLE DRILLING COSTS:Approximately 20% of the amount of costs to drill the well constitutes Tangible Drilling Costs (TDC). Thisincludes, but is not limited to, all well equipment, piping, storage tanks, wellhead equipment, lease expenses, andothers. The exact amount will be determined after the well is drilled. This portion of an investment is depreciatedover a seven year period. Please consult with your tax advisor for further details.EXAMPLEESTIMATED TAX INVESTMENT EXAMPLEA$45,000x 80% $36,000+ $1,028.57$37,028.57Investment Amount Intangible Drilling Costs (estimate) 1st year deductions of intangible drilling costs (estimate) 1st year depreciation deduction (estimate) (91,000 x .20 divided by 7 years)TOTAL FIRST YEAR TAX DEDUCTIONS (estimate)B$37,028.57x 35%$12,960Total Deduction (estimate) Maximum Income Tax BracketTOTAL FIRST YEAR CASH VALUE OF DEDUCTIONS (estimate)C$45,000- $12,960$32,040Investment Amount Actual Cash Savings from Tax Deductions (estimate)AFTER TAX CASH INVESTMENT (estimate) 3. DEPLETION ALLOWANCECurrently, the depletion allowance is 15%. This means that fifteen cents of every dollar is tax-free. Please consultwith your tax advisor for further details. 4. STATE INCOME TAXESState income taxes could add substantial additional savings, however, they may vary from state to state. Pleaseconsult with your tax advisor for further details.23

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TAX INCENTIVESCongressional Incentives Encourage Domestic Petroleum DevelopmentOil and Natural Gas from domestic reserves helps to make our country more energy self-sufficient by reducing our dependence onforeign imports. In light of this, Congress has provided tax incentives to stimulate domestic natural gas and oil production financedby private sources. Drilling projects offer many tax advantages and these benefits greatly enhance the economics. The incentives arenot “Loop Holes” – they were placed in the Tax Code by Congress to make participation in oil and gas ventures one of the best tax-advantaged investments.Intangible Drilling Cost Tax DeductionThe intangible expenditures of drilling (labor, chemicals, mud, grease, etc.) are usually about (65 to 80%) of the cost of a well. Theseexpenditures are considered “Intangible Drilling Costs (IDC)” which are 100% deductible during the first year. For example, a$100,000 investment could yield up to $80,000 in tax deductions during the first year of the venture. These deductions are available inthe year the money was invested, even if the well does not start drilling until March 31 of the year following the contribution ofcapital. (See Section 263 of the Tax Code.)Tangible Drilling Cost Tax DeductionThe total amount of the investment allocated to the equipment “Tangible Drilling Costs (TDC)” is 100% tax-deductible. In theexample above, the remaining tangible cost ($25,000) may be deducted as depreciation over a seven-year period. (See Section 263 ofthe Tax Code.)Active vs. Passive IncomeThe Tax Reform Act of 1986 introduced into the Tax Code the concepts of “Passive” income and “Active” income. The Act prohibitsthe offsetting of losses from Passive activities against income from Active businesses. The Tax Code specifically states that aWorking Interest in an oil and gas well is NOT a “Passive” Activity, therefore, deductions can be offset against income from activestock trades, business income, salaries, etc. (See Section 469(c)(3) of the Tax Code.)Small Producers Tax ExemptionThe 1990 Tax Act provided some special tax advantages for small companies and individuals. This tax incentive, known as the“Percentage Depletion Allowance”, is specifically intended to encourage participation in oil and gas drilling. This tax benefit is notavailable to large oil companies, retail petroleum marketers, or refiners that process more than 50,000 barrels per day. The “SmallProducers Exemption” allows 15% of the Gross Income (not Net Income) from an oil and gas producing property to be tax-free.Lease CostsLease costs (purchase of leases, minerals, etc.), sales expenses, legal expenses, administrative accounting, and Lease Operating Costs(LOC) are also 100% tax-deductible through cost depletion.Alternative Minimum TaxPrior to the 1992 Tax Act, working interest participants in oil and gas ventures were subject to the normal Alternative MinimalTax tothe extent that this tax exceeded their regular tax. This Tax Act specifically exempted Intangible Drilling Cost as a Tax Preferenceitem, “Alternative Minimum Taxable Income” generally consists of adjusted gross income, minus allowable Alternative MinimumTax itemized deduction, plus the sum of tax preference items and adjustments. “Tax preference items” are preferences existing in theCode to greatly reduce or eliminate regular income taxation. Included within this group are deductions for excess Intangible Drillingand Development Costs and the deduction for depletion allowable for a taxable year over the adjusted basis in the Drilling Acreageand the wells thereon.24

Sofi Black Bear II Joint Venture

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