Sofi Gunsight Hill 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.

Page 3

2OKFUSKEE COUNTY HISTORYLocated in east-central Oklahoma, Okfuskee County is bordered by Creek County on thenorth, Okmulgee and McIntosh counties on the east, Hughes and Seminole counties on thesouth, and Lincoln and Pottawatomie counties on the west. Organized at 1907 statehood, thecounty is named for a former Creek town in present Cleburne County, Alabama. In 2010incorporated towns included Bearden, Boley, Castle, Clearview, IXL, Paden, Weleetka, andOkemah (the county seat). Formerly part of the Creek Nation, Indian Territory, OkfuskeeCounty has 628.91 square miles of land and water. Lying within the Sandstone Hillsphysiographic region, the county is drained by the Deep Fork of the Canadian River in thenortheastern corner and by the North Canadian River, which forms its southern boundary withSeminole County. Okfuskee County lies within a region that has been little studied byarchaeologists. However, a 1983 published archaeological survey reported forty known sites,of which one has been tested.Prior to the removal of the Creek from Alabama and Georgia to Indian Territory in the 1830s,this area was occupied by the Quapaw and Osage, who ceded the land to the United States in1818 and 1825, respectively. In the 1830s the Creek established Greenleaf and Thlopthloccotribal towns in the Deep Fork District of the Creek Nation, within the boundaries of presentOkfuskee County. Thlopthlocco had a Methodist Episcopal church and was locatedapproximately eight miles southeast of present Okemah. Greenleaf, a trade center with aschool and a Baptist church, was situated about five miles northwest of Thlopthlocco.

Page 4

GEOLOGICAL SUMMARYKim DrewGeological Opinion3This document was issued by Rush Creek ResourcesThe Gunsight Hill Prospect is a relatively low risk attic oil drilling of an old, veryprolific Wilcox field. The prospect consists of 160 acres described as the SW SE &SE SW of Section 21 and the NW NE & NE NW of Section 28 in Township 13 NorthRange 10 East Okfuskee County Oklahoma. If the play develops as I expect then itcould end up covering over 320 acres. Overall this area is in the Northern end of the Seminole uplift where it abuts theCherokee Platform. This area is the flexure point that created an abundance ofsmall structural anomalies that form the Wilcox oil fields. This area of OkfuskeeCounty also has good oil and gas production from an additional a dozenformations ranging from 600 to 3800 feet deep. The primary target of this play is the Wilcox sandstone. The Wilcox is anOrdovician age blanket type deposit that covers this area and ranges from adozen feet to over 80 feet in thickness. The sand only produces where it is foundin structural dome type traps. Wilcox fields can be found in small tight or broadgentle structures that cover 30 to 350 acres in extent. Even a small 40 acre fieldcan hold as much as 1 million barrels of producible oil. An example of a smalltight field is the Eastok Morgan field in Section 9 Tl2N RUE. This 50 acre field hasproduced over 1.2 million barrels of oil to date from a 30 foot structure. Anexample of a broad feature would be a field in Section 32 and 33 of T14N RlOE.That 300 acre field has been estimated to have produced over 2.3 million barrelsof oil. This particular Wilcox field has produced almost 200,000 barrels of oil so far fromtwo wells before it was abandoned and plugged. I feel that as much as 230,000barrels of oil remains in the Wilcox formation alone. If we are lucky and find theGilcrease to be productive also then that figure could rise to over 300,000 barrelsof oil.

Page 5

GEOLOGICAL SUMMARY(CONTINUED)Kim DrewGeological Opinion4This document was issued by Rush Creek ResourcesThe basis of this prospect is to drill for the attic oil in this old Wilcox field. Thistechnique of attic oil drilling old fields was taught to me by an old friend andgeologist over 38 years ago. He had great success in the 80's looking for the tiptop of old fields and getting what is called attic oil. Imagine your home is filledwith oil and old wells produced the oil that was in the main floor. Now we drillone or two wells at the very peak of the roof to drain the oil that remains in theattic area. This technique works best in water drive reservoirs where the originalfield was drilled in the 20's to 40's. This is when wells were completed naturally orwith nitro glycerin shots and produced as hard and fast as possible. In thesecases, much oil was left behind when saltwater encroached on the well boreprematurely. Since saltwater flows much easier than oil when you over produce awater drive reservoir such as the Wilcox sand the salt water tends to bypass theoil and make its way to the well bore, this is referred to as coning to water. Thesewells are then prematurely plugged leaving behind thousands, or hundreds ofthousands of barrels of oil. Over decades these zones heal themselves as the oil slowly forces its way upstructure and forces the saltwater back below a newly formed oil / water contact.The saltwater continues to try to move up in essence recharging the reservoir.The trick is then to look at very old fields and find drilling locations that you can getjust a few feet up structure from, or in between the highest old wells. Red Fork Production LLC did this in their Newby 6-1 well (Sec 6, 14N 9E). This well after only being perforated was put on a pump and has been making 13-15 barrels of water free oil per day for years. This attic oil well was drilled in a verysmall two well Wilcox field. Imagine what this well might do after a fracturetreatment. And imagine what our Gunsight Hill well might do completed up dip ina much more prolific Wilcox field.

Page 6

GEOLOGICAL SUMMARY(CONTINUED)Kim DrewGeological Opinion5This document was issued by Rush Creek ResourcesThe Gunsight Hill Prospect is a perfect case for attic oil drilling. The original wellswere drilled in 1940's and were completed without the benefit of modernhydraulic fracturing. The wells initial production rates of as much as 75 barrels ofoil per day indicate that the wells were produced hard and fast. These Wilcoxwells were plugged in the 60's when oil prices were very low. This gives us over 50years of oil migration and formation healing. The steep structure would leave alarge volume of bypassed oil to migrate back up structure to the tip top. I feel thatthis structure has at least 3 good attic oil drilling locations. I would recommendthat the first well be drilled in @ the C S/2 SW SE Section 21. The key well in this prospect is the Lauder# 1 drilled by Lease InvestmentCompany and completed in November of 1938 the well reportedly produced 75barrels of oil per day and no salt water from the Wilcox sand naturally. The reportstates that the Wilcox sand was drilled from 3584 to 3615 feet and then pluggedback to 3612 feet. This indicates that the Wilcox sand contained oil from 3584 to@3613-15 feet as they would have plugged the well back a few feet above theoil/water contact. Then in May of 1939 a company called Martin, Wesby andGreen who happened to have the exact same address as Lease InvestmentCompany drilled the Parsons# 1 directly south of the Lauder# 1. This wellencountered Gilcrease production at 2864 to 2882 feet and recorded fifty barrelsof oil per day. This well also recorded free oil from 2756 to 2759 feet in theBartlesville sand. In October of 1940 this well was deepened and encountered theWilcox sand from 3584 to 3599 feet noting a tightening of the sand at 3594 feet.The well was reported as producing thirty five barrels of oil per day from theWilcox sandnaturally. This indicates ten feet of productive Wilcox sand. Both ofthese wells had slowed down and in the 1960's when oil was at a very low pointthese two wells were plugged.

Page 7

GEOLOGICAL SUMMARY(CONTINUED)Kim DrewGeological Opinion6This document was issued by Rush Creek ResourcesIn 1985 Eastok Petroleum drilled the Tyler# 1 north and east of the Lauder# 1.They plugged the well with out testing any formations. You will note that this isthe same company that drilled the Eastok Morgan field I described above. I thinkthis well was to far to the east but could possibly have been productive. However,they had the big Morgan Wilcox field being drilled at the time so they did not tryto complete this well. According to my mapping the Lauder# 1 well is on the eastern edge of theproductive Wilcox high. I think the highest point on the structure will be just tothe west and south of this well. (See Wilcox structure map) I feel that there arethree good Wilcox locations on the prospect area. Although this is not a bigstructure, I think it will have over thirty feet of Wilcox pay and that should beenough for a very nice oilfield. Of secondary importance in this area is the Gilcrease sandstone. This sandrepresents an offshore bar type deposit consisting of laminated sand, shale, andlimes. It is generally a stratigraphically trapped reservoir that is found all aroundthis area. Some of these wells can be very prolific producers. Although hard tomap over a large area where found over lapping or lapping up against a Wilcoxhigh these zones can be excellent producers with from zero to four or fiveseparate sand bodies. These sands come and go as locations. As you can seefrom the area map there are several Gilcrease wells in the mapped area. Thesewells had initial production rates of fifteen to one hundred fifty barrels of oil perday. I think most, if not all of this prospect will have productive Gilcrease sand init. Up hole several shallower sands have good potential in this area. TheBartlesville sand has been overlooked in this area but has been found productiveof oil nearby. This formation appears to have low resistivity on the logs but hasbeen found to be very productive. It should be noted that the Parsons # 1reported free oil in the Bartlesville sand.

Page 8

GEOLOGICAL SUMMARY(CONTINUED)Kim DrewGeological Opinion7This document was issued by Rush Creek ResourcesThe shallow Calvin sand has also been found to be productive of gas in severalnearby wells at just 700 feet deep. A list of the potentially productive targets in this prospect are listed below. Calvin Sand Red Fork Sand Bartlesville Sand Booch Sand Upper & Lower Gilcrease Sands Union Valley Limestone Cromwell Sand Mississippi Lime Misener Sand Hunton Lime Viola Lime Wilcox SandThis report and the accompanying maps are based on the best geologic dataavailable to me and are my interpretations of that data. They can in no way beconsidered one hundred percent accurate as we are dealing with formationslaying thousands of feet underground. My maps and report are presented forindividuals with a working knowledge of oil and gas exploration and its significantinherent risks. That being said, I have searched for just such a Wilcox field re drill for years. Ithink this is an outstanding Wilcox sand attic oil prospect. It has all the ingredientswith the think original oil column, the age of the wells, the five decades since theywere abandoned. I truly believe that there is over two hundred thousand barrelsof oil left in the ground for us to produce. And we also have bail out potential inthe Cromwell, Gilcrease, Bartlesville, Red Fork, and Calvin sands.

Page 9

Page 10

Page 11

Page 12

Page 13

Page 14

Page 15

Page 16

POTENTIAL REVENUE PROJECTIONSOil Production Estimates25 BPD X$90=$2,250 IPD$2,250 IPD X 30.4 Days=$68,400 IPM$68,400 IPM X 2.8125% N.R.I. =$1,923.75$1,923.75 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 $85 $90 $9525Monthly Income (Gross)Does Not Include L.O.E$1,816.87$1,923.75 $2,030.6275Monthly Income (Gross)Does Not Include L.O.E$5.450.62 $5,771.25$6,091.87125Monthly Income (Gross)Does Not Include L.O.E$9,084.37 $9,618.75 $10,153.1215200Monthly Income (Gross)Does Not Include L.O.E$14,535.00 $15,390.00 $16,245.00

Page 17

Page 18

COMPANY PORTFOLIO (OKLAHOMA)17Sofi 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

Page 19

Page 20

COMPANY PORTFOLIO(TEXAS, LOUSIANA) 19Sofi 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)

Page 21

COMPANY PORTFOLIO (TEXAS, LOUSIANA)20Sofi 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)

Page 22

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$52,500x 80% $42,000+ $1,500$43,500Investment Amount Intangible Drilling Costs (estimate) 1st year deductions of intangible drilling costs (estimate) 1st year depreciation deduction (estimate) (52,500 x .20 divided by 7 years)TOTAL FIRST YEAR TAX DEDUCTIONS (estimate)B$43,500x 35%$15,225Total Deduction (estimate) Maximum Income Tax BracketTOTAL FIRST YEAR CASH VALUE OF DEDUCTIONS (estimate)C$52,500- $15,225$37,275Investment 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.21

Page 23

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.22

Sofi Gunsight Hill Joint Venture

Page 1

Page 2