Sofi KMF 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. PHIL MARTIN President/CEO, New Century Exploration, Inc.Mr. Martin is President and CEO of New Century Exploration, Inc. an activeoperator in Texas and Louisiana. He began his career at Union Texas Petroleumand has managed many E&P programs for over 30 years. Phil has presented atmany industry groups regarding oil and gas exploration, development, production,and economics, especially regarding unconventional resources Phil is a member ofvarious professional organizations including Houston Producers Forum, HoustonEnergy Finance Group, ADAM Houston, IPAA, and TIPRO, AAPL, AAPG,SIPES, and the LSU Foundation. Phil earned a Bachelor of Science in Geologyfrom LSU and a Master of Science in Geology from the University of Louisiana.He is involved with various community and charitable organizations and serves onthe board of the Pearl Fincher Museum of Fine Arts and the Centrum League.Jake MartinOperations Manager, New Century ExplorationMr. Martin is responsible for all of New Century Exploration’s drilling,completion and production operations. He has a B.S. from University ofLouisiana and has worked at New Century for 5 years. He has significantexperience in the Gulf Coast Trend of Texas and Louisiana, the EastTexas and North Louisiana trends, and the Central Texas Trend. He isexpert at oil industry technologies including IHS, Kingdom, TGS,PhdWin, Spotfire, and multiple other Enverus technologies. He is anactive member of AAPG and the Society of Petroleum Engineers.Alfredo M. GonzalezPresident & C.E.O Sofi Exploration1Phil Martin President & C.E.O New Century Exploration Jake Martin Operations Manager New Century Exploration

Page 3

2JIM HOGG COUNTY HISTORYJim Hogg County is in the Rio Grande Plain region of South Texas twenty-eight miles north of theMexican border and sixty-six miles west of the Gulf Coast. The county, named for Governor JamesStephen Hogg, is bordered by Webb, Duval, Jim Wells, Brooks, Starr, and Zapata counties. Itscenter lies at 27°05' north latitude and 98°43' west longitude. Hebbronville, the largest town andcounty seat, is at the junction of State highways 16, 285, and 359, in the north central part of thecounty. Other communities include Agua Nueva, Altavista, Guerra, Randado, and Thompsonville.The county comprises 1,136 square miles of flat to gently rolling terrain vegetated with mesquite,scrub brush, grasses, and chaparral. Elevations range from 200 to 800 feet. In the east, soils aresandy, with areas of light color, or have loamy surfaces over very deep reddish or mottled clayeysubsoils. The rest of the county has loamy surfaces over deep reddish or mottled clayey subsoils,with limestone near the surface in some areas. In the early 1990s more than 90 percent of the landwas devoted to farming and ranching, with 2 percent of the farmland under cultivation and 21percent irrigated; only 1 percent of the land in the county is considered prime farmland. Mineralresources include caliche, clay, uranium, oil, and gas. Temperatures range from 44° F to 69° inJanuary and 73° to 99° in July; the average annual temperature is 73°. Rainfall averages twenty-three inches a year, and the growing season lasts 305 days. The area of Jim Hogg County has beenthe site of human habitation for perhaps 11,000 years. Among the oldest artifacts found in theregion are stone implements and human remains dating from the Paleo-Indian period (9200 to 6000B.C.). During the Archaic period (6000 B.C. to A.D. 1000) the local Indian population seems tohave increased, and many hunter-gatherers apparently spent time in the area.

Page 4

GEOLOGICAL SUMMARY3This document was issued by New Century Exploration. INCThe New Century Exploration #2 KMF (Kenedy Memorial Foundation) is the seconddevelopment well targeting shallow oil reserves at Prado Field in Jim Hogg County, Texas.Over 23 million barrels of oil and 32 BCF of gas were produced at Prado Field from 1956through the 1970’s. Detailed research reports from the Bureau of Economic Geology, USDepartment of Energy, and others determined that recovery was insufficient and thatsizable additional oil reserves could be recovered with redevelopment. Most of the 23million barrels of oil produced at Prado Field were from the Middle Loma Novia Sand at3,700’. The trapping mechanism is stratigraphic with 4-way closure. The reports determinedthat 10-acre or smaller spacing was necessary for proper drainage due to the complex sandbody geometry. The Middle Loma Novia Sand is an amalgamation of rapidly depositednear-shore facies including barrier-bar, tidal-inletfill, and back-barrier-bars. Although theoverall sand interval is consistently thick, this depositional complexity resulted in anassemblage of individual compartments separated by mud stone beds with small drainageradii. Individual sand units are small and isolated but high quality with average 34%porosity and 906 millidarcies permeability. Wells had an average IP of ~90 BOPD andEUR of ~92,000 BO (P50 of 75,000 BO and 80 BOPD were used for economics herein).Most Middle Loma Novia wells at Prado Field were developed on 10-acre spacing but NewCentury has identified and acquired a portion of the field developed on 20-acre spacing thatcontains 6 additional undeveloped 10-acre locations. The proposed location is in the centerof 4 wells with multiple interbedded oil zones. Only a few zones were perforated, somultiple unproduced oil zones are anticipated. In addition, the well is outside the 10-acredrainage areas of the surrounding wells and high to all those wells so there are likelyundrained reserves in the zones that were perforated. Title is simple with 100% of theminerals owned by the Kenedy Memorial Foundation (KMF). This is a unique opportunityto develop an estimated 75,000 barrels of bypassed oil reserves. Total well cost for 1%interest is $14,000 ($10,357 drilling cost plus $3,642 for completion) with payout estimatedat 9 months.

Page 5

LOCATION MAP & FEATURES This document was issued by New Century Exploration. INCKEY SUCCESS FEATURES4Infield development of Prado Field, South Texas: redevelopment of shallowoil field, 23 million barrels produced from 1956 through 1970’s, averageEUR = 92,000 BO, IP = 90 BOPDResearch reports by Bureau of Economic Geology, U.S. EnergyDepartment and University of Texas concluded that the field wassignificantly underproduced and additional development shouldyield substantial new oil reservesThe Middle Loma Novia Sand is the primary oil zone at 3,700’, withan average 75’ of net sand and lateral drainage limited by complexinternal stratigraphyEconomics: EUR = 75,000 BO, IP = 80 BOPD, ROI = 342%, 1st yearROR = 133%, Payout = 9 months

Page 6

Page 7

Page 8

Page 9

Page 10

Page 11

Page 12

Page 13

Page 14

Page 15

Page 16

Page 17

Page 18

Page 19

Page 20

Page 21

Page 22

Page 23

INITIAL POTENTIAL REVENUEPROJECTIONSOil Production Estimates80 BPD X$85=$6,800 IPD$6,800 IPD X 30.4 Days=$206,720 IPM$206,720IPM X 2.25% N.R.I. =$4,651.20$4,651.20 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 $9060Monthly Income (Gross)Does Not Include L.O.E$3,283.20$3,488.40 $3,693.6080Monthly Income (Gross)Does Not Include L.O.E$4,377.60 $4,651.20$4,924.80100Monthly Income (Gross)Does Not Include L.O.E$5,472.00 $5,814.00 $6,156.00220Non Commercial Non Productive Zero Income(100% Tax Write Off)

Page 24

Page 25

COMPANY PORTFOLIO(TEXAS, LOUSIANA) 24Sofi 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 26

COMPANY PORTFOLIO (TEXAS, LOUSIANA)25Sofi 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 27

COMPANY PORTFOLIO (OKLAHOMA)26Sofi Newby IIJoint Venture 2023, FundedA.P.I #Waiting On Permit OperatorRush Creek ResourcesStateOklahomaOPERATOR NUMBER:(OKLAHOMA 734825) (TEXAS 23895)Sofi Newby IIIJoint Venture 2023, FundedA.P.I #Waiting On Permit OperatorRush Creek ResourcesStateOklahomaSofi NewbyJoint Venture 2023, Finalized, Funded,ProducingA.P.I #037-29503OperatorRush Creek ResourcesStateOklahomaSofi Black BearJoint Venture 2023, Finalized, Funded ProducingA.P.I #037-29511OperatorRush Creek ResourcesStateOklahomaSofi Black Bear IIJoint Venture 2023, FundedA.P.I #Coming SoonOperatorRush Creek ResourcesStateOklahomaSofi Gunsight HillJoint Venture 2023, FundedA.P.I #Coming SoonOperatorRush Creek ResourcesStateOklahoma

Page 28

COMPANY PORTFOLIO (OKLAHOMA)27Sofi 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 #037-29522OperatorRush Creek ResourcesStateOklahoma

Page 29

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 PARTICIPATION EXAMPLEA$50,400x 80% $40,320+ $1,440$41,760Investment Amount Intangible Drilling Costs (estimate) 1st year deductions of intangible drilling costs (estimate) 1st year depreciation deduction (estimate) (50,400 x .20 divided by 7 years)TOTAL FIRST YEAR TAX DEDUCTIONS (estimate)B$41,760x 35%$14,616Total Deduction (estimate) Maximum Income Tax BracketTOTAL FIRST YEAR CASH VALUE OF DEDUCTIONS (estimate)C$50,400- $14,616$35,784Investment 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.28

Page 30

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.29

Sofi KMF II Joint Venture

Page 1

Page 2