Sofi Michigan Offering Book : simplebooklet.com

1 Executive Summary ALFREDO MANZUR GONZALEZ President CEO Sof Exploration Alfredo M Gonzalez is the President and CEO of Sofi Exploration Mr Gonzalez is a sought after influential leader For the last 10 years his forte is offering proficient Good Practice Guidance aligning high production Asset Development opportunities in the Oil and Gas sectors with sophisticated investors who are in the market to expand their Cash Flow and Tax Advantage positions His corporate Vision for Sofi Exploration is to be the energy company most admired for its people partners and performance His corporate mission is to build successful partnerships based on 7 established pillars High Performance Integrity Transparency Trust Verification and Protecting Partners and the Environment His immense knowledge and innovative counsel regarding asset development programs in the industry confirms the confidence of vigorous partnerships and superior offerings from the industry s leading and selective Operators Drilling Corporations and Completion Companies Mr Gonzalez continues to develop an extensive vetting process compelling industry leaders to perform at the highest levels for investor participation and production achievement The corporate goals are capital development drilling completion production success and continuous liquidity development for his associates and partners Alfredo M Gonzalez President C E O Alan Giradot President CEO Rush Creek Resources Alan Girardot 36 president and CEO of Rush Creek Resources is an independent Texas and Oklahoma energy entrepreneur who established Rush Creek Resources in 2014 during the initial shockwave of the most recent oil crash Prior to establishing Rush Creek Mr Girardot served as a senior executive in both private equity venture management and operations management within the upstream oil and gas sector He founded Rush Creek to capitalize on the bear energy market that he believed would facilitate the largest transfer of mineral wealth Americans have seen in a generation Since 2014 Rush Creek has expanded from an idea to 4 000 mineral acres 125 wellbores and a vertically integrated low cost operating company during an elongated period of basement oil prices Additionally Mr Girardot graduated from Texas Tech University with a B A in political science while simultaneously serving as a United States Marine during Operation Iraqi Freedom Tristan W McKinney Marketing Director Olivia M Gonzalez Executive Director

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2 Goelogical Summary MICHIGAN DEVELOPMENT CREEK COUNTY OKLAHOMA ACQUIRED BY RUSH CREEK RESOURCES IN 2017 FROM PREVIOUS OPERATOR OF RECORD ASPART OF A DISTRESSED PRODUCTION ACQUISITION PACKAGE THROUGH RESEARCH FROM AFFILIATED PRODUCTION MANAGEMENT SUBCONTRACTORS OF THE PREVIOUS OPERATOR OF RECORD WE DETERMINED THE PRODUCTION FROM THIS WELLWATERED OUT AFTER A ENGINEERING RECOMMENDATION WAS MADE TO TEST WELL FOR SHALLOW CASING LEAK AND TUBING SWAB POST PACKER SETTING TO ISOLATE PERFORATIONS AND DETERMINE WHETHER WATER PRESENT WAS DUE TO CASING LEAK OR WATERED OUT ZONE PACKER WAS SET AND BACKSIDE PRESSURED UP IN 2018 PRESSURE HELD DID NOT BREAK IT IS DETERMINED THAT THE CASING IS INTACT AND NO CASING LEAK EXISTS PACKER SET IN 2018 TO ISOLATE BOTH BOOCH AND DUTCHER IN THIS WELLBORE AND TUBING SWAB WAS CONDUCTED TO DETERMINE WATER PRODUCTION OF DUTCHER AND BOOCH FORMATIONS BOTH FORMATIONS HAD LEAD OF OIL AND HIGH VOLUMES OF WATER IT IS DETERMINED THAT BOTH OIL RESERVOIRS IN THE BOOCH AND DUTCHER HAVE WATERED OUT IN THIS WELL THIS WELL HAS BEEN PERFORATED IN THE RED FORK SAND WITH EXCELLENT OIL AND GAS SHOWS AWAITING FRACTURE STIMULATION THIS IS A VIRGIN RED FORK DISCOVERY NO OTHER RED FORK PRODUCTION HAS OCCURRED WITHIN THIS LEASE ICC DEDUCTIONS OF 120 000 00 SCHEDULE 179 DEDUCTIONS FOR EQUIPMENT 30 000 00 EXISTING INFRASTRUCTURE AND NATURAL GAS TIE IN ON ENERFIN IS GATHERER OFFSETTING MICHIGAN 25 1 VIRGIN DUTCHER DISCOVERY REDFORK SAND WAS MORE PROLIFIC IN THE MICHIGAN 25 2 THAN ANY OTHER WELL IN THE DEVELOPMENT NOTEREVENUE INCLUDED HEREIN AT COMPARABLE OIL PRICES AS THE MODEL FOR EXPECTATIONS OF THE WELLBORE 75 NRIFRACTURE TO BE PERFORMED BY STIMULATION PUMPING SERVICES OUT OF BLACKWELL OKLAHOMA FORMERLY BASIC ENERGY 40 50K LB CROSS LINK POLYMER GEL FRAC This document was issued by Rush Creek Resources

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3 Michigan Prospect Report The presence of oil and gas in any zone can be determined in a number of ways While the well is being drilled the actual rock cuttings are circulated up in the air stream or in the drilling mud These samples are analyzed by the geologist or mud logger using a microscope chemicals and a black lightbox They are looking not only for the rock s reservoir characteristics but for oil or gas in the rock s pore spaces or fractures If a mudlogger is used the natural gas and oil residue in the drilling mud is captured and recorded in graph form Once a well has reached its total depth a series of electric logs are run These logs give us much information such as the lithology and porosity of the rock and the resistivity of the various fluids or gas in the rock pore space The basic information from the logs lets us calculate a saltwater percentage of the formations of interest Although not a hard number this saltwater percent gives us a basic idea of the presence of hydrocarbons in the formation A very high saltwater percent will indicate all saltwater and a low saltwater percent usually indicates hydrocarbons Logging technology has advanced greatly in the interpretation of good data but it is not an exact science There is still a great deal of art and local experience involved in evaluating and determining if wells should be or can be completed for production Local knowledge of each formation and its reactions to the various stimulation treatments is essential in the successful completion and production of oil and gas wells The primary target of this well was one or more of the Gilcrease sands The premise for this prospect was to get on trend with a number of good Gilcrease producers These Gilcrease sands tend to line up in parallel narrow elongate sand bar type deposits If you can get into an area with multiple stacked sand bodies you increase your odds of finding a good clean porous sand stratigraphically trapped with oil and gas It appears we are in such an area of multiple stacked Gilcrease sand reservoirs We in fact found two separate Gilcrease sand bodies which appear to be productive of oil and gas We cut the deepest Gilcrease sandstone section from 2942 to 2960 The samples showed to be medium to large grained shaly quartz grained sand We also noted slight brown oil staining with a slight oil odor and cut The logs showed the sand to be shaly with porosity ranging from 12 to 18 percent This is good porosity in the mid continent region The sand also showed a peak of 12 ohms resistivity giving a saltwater calculation of 55 This sand appears to be the ragged edge of the clean sand bar that is currently producing in the MSR Michigan 1 well I think this sand would be productive of small amounts of oil and gas but I do not think it is worth completing at this time The upper sand we saw was cut from 2888 to 2895 feet I did see very good looking sand in this interval that showed to be clean silica sand with very dark oil stain good fluorescence and a very strong oil cut The electric logs show a clean sand bed with 16 percent porosity and 21 Ohms resistivity This section will calculate 36 to 42 percent SW This log is a classic looking Gilcrease sand body I think it will be productive of oil and gas after fracture stimulation When producing these thinner sand beds the big question is how thick is the sand 10 or 50 feet away from the wellbore Some thin sands will produce for years because we think they are on the edge of a much thicker sand body some zones are a flash in the pan because the sand has little extent The answer will only come after producing the zone for a while This calculates 36 SW The logs also showed micro log permeability and a good SP You can tell from the logs that this is clean sand in a larger overall sand body The Booch sand is generally a very good producer

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4 Michigan Prospect Report Normally it can be found in much thicker and sometimes as much as 100 feet thick with the production coming from the top few feet In this case it looks like the sand is an edge well of a thicker sand body and appears to be entirely above the oil water contact This all looks very positive and I think this zone will produce lots of oil and gas and maybe be the best productive zone in the well The next zone of interest is the Red Fork sand that we cut from 2226 to 2300 This is the main body of the Red Fork sand and can be a very good producer of oil and gas in this area In fact there is a million barrel field in sections one and two of this township that was developed in the 1950s that covers over 400 acres In our well we saw nice samples from the top of this big sand that had oil staining with both odor and a weak oil cut While cleaning the samples a small oil sheen could be seen floating on my wash bucket We noted a small gas show from this section while drilling through it The logs show a uniform good porous streak of 15 16 percent in the top 22 feet then a tighter 30 foot streak separates the top from the wet sand at the base The top 22 feet showed 8 to 9 Ohms resistivity This is considered a productive reading in the Red Fork sand The top 22 feet calculate 48 to 53 percent saltwater I think that this sand will be productive in the top 22 feet if we get a good cement job that can isolate the top of the sand from the thick wet section below it There are no Red Fork wells offsetting this well so it should be a virgin reservoir These sand samples and logs remind me of a Red Fork producer the Babs 17 1 just north of Bristow Completed 6 months ago they perforated 28 feet of sand with very similar looking logs After a fracture treatment that well has settled at over 30 barrels of oil per day It sure looks to me like we have an identical situation in this well The Skinner Sand appeared to become increasingly shaly and tight with porosities from 8 to 12 It looks like this well missed the clean sand channel and will not be productive in the Skinner The surprise in this well came in very shallow sand At 840 feet the tool pusher noted clean live oil blowing into the pit The logs show clean sand from 837 to 860 feet Resistivity started at 6 Ohms in the top 2 feet then graded to 2 Ohm s at the base Porosity was 23 in the top 2 feet then 28 below It could be either that the top 2 feet is oil bearing and the rest is water or it could be that the top 12 feet are oil bearing and the bottom 10 feet is wet At any rate the driller liked the looks of the oil show and this section bears looking into and is worth testing at some point in the future Overall I am very pleased with Michigan 2 and this whole prospect area I feel at least one of the Gilcrease sections will be a very good producer and it will not be depleting any of the same formations as the Michigan 1 well The Booch sand looks to be very good and could be the best pay zone in the well A small 2 to 4 Booch well field could yield over 100000 barrels of oil The Red Fork looks almost exactly like the Red Fork producing in the Babs well and that well has turned out to be an exceptional producer I think this area might have room for several Red Fork producers if this sand produces as well as I expect it to My opinion is that when sand looks as good as this does it must have been deposited in a high energy environment and thus part of a bigger thicker sand bar that we have just penetrated the edge of We cut a very nice looking Booch sand from 2788 to 2796 feet The samples showed the sand to be medium grained clean friable sand with brown oil staining strong odor good fluorescence and a very good oil cut The logs show the sand to be clean with 16 porosity and 16 Ohms resistivity Respectfully Submitted By Kim Drew Lead Geologist Rush Creek Resources This document was issued by Rush Creek Resources

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24 TAX INCENTIVES Congressional Incentives Encourage Domestic Petroleum Development Oil and Natural Gas from domestic reserves helps to make our country more energy self sufficient by reducing our dependence on foreign imports In light of this Congress has provided tax incentives to stimulate domestic natural gas and oil production financed by private sources Drilling projects offer many tax advantages and these benefits greatly enhance the economics The incentives are not Loop Holes they were placed in the Tax Code by Congress to make participation in oil and gas ventures one of the best taxadvantaged investments Intangible Drilling Cost Tax Deduction The intangible expenditures of drilling labor chemicals mud grease etc are usually about 65 to 80 of the cost of a well These expenditures 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 in the year the money was invested even if the well does not start drilling until March 31 of the year following the contribution of capital See Section 263 of the Tax Code Tangible Drilling Cost Tax Deduction The total amount of the investment allocated to the equipment Tangible Drilling Costs TDC is 100 tax deductible In the example above the remaining tangible cost 25 000 may be deducted as depreciation over a seven year period See Section 263 of the Tax Code Active vs Passive Income The Tax Reform Act of 1986 introduced into the Tax Code the concepts of Passive income and Active income The Act prohibits the offsetting of losses from Passive activities against income from Active businesses The Tax Code specifically states that a Working Interest in an oil and gas well is NOT a Passive Activity therefore deductions can be offset against income from active stock trades business income salaries etc See Section 469 c 3 of the Tax Code Small Producers Tax Exemption The 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 not available to large oil companies retail petroleum marketers or refiners that process more than 50 000 barrels per day The Small Producers Exemption allows 15 of the Gross Income not Net Income from an oil and gas producing property to be tax free Lease Costs Lease 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 Tax Prior to the 1992 Tax Act working interest participants in oil and gas ventures were subject to the normal Alternative MinimalTax to the extent that this tax exceeded their regular tax This Tax Act specifically exempted Intangible Drilling Cost as a Tax Preference item Alternative Minimum Taxable Income generally consists of adjusted gross income minus allowable Alternative Minimum Tax itemized deduction plus the sum of tax preference items and adjustments Tax preference items are preferences existing in the Code to greatly reduce or eliminate regular income taxation Included within this group are deductions for excess Intangible Drilling and Development Costs and the deduction for depletion allowable for a taxable year over the adjusted basis in the Drilling Acreage and the wells thereon

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25 TAX BENEFITS EXAMPLE THE 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 related costs for the prospect well Including but not limited to drilling contractors professional services and others The total amount of IDC is reported to each participant at the end of the year Please consult with your tax advisor for further details 2 TANGIBLE DRILLING COSTS Approximately 20 of the amount of costs to drill the well constitutes Tangible Drilling Costs TDC This includes but is not limited to all well equipment piping storage tanks wellhead equipment lease expenses and others The exact amount will be determined after the well is drilled This portion of an investment is depreciated over a seven year period Please consult with your tax advisor for further details ESTIMATED TAX INVESTMENT EXAMPLE A 20 000 x 80 16 000 571 16 571 B C 16 571 x 35 5 800 20 000 5 800 14 200 Investment Amount Intangible Drilling Costs estimate 1st year deductions of intangible drilling costs estimate 1st year depreciation deduction estimate 20 000 x 20 divided by 7 years TOTAL FIRST YEAR TAX DEDUCTIONS estimate Total Deduction estimate Maximum Income Tax Bracket TOTAL FIRST YEAR CASH VALUE OF DEDUCTIONS estimate Investment Amount Actual Cash Savings from Tax Deductions estimate AFTER TAX CASH INVESTMENT estimate 3 DEPLETION ALLOWANCE Currently the depletion allowance is 15 This means that fifteen cents of every dollar is tax free Please consult with your tax advisor for further details 4 STATE INCOME TAXES State income taxes could add substantial additional savings however they may vary from state to state Please consult with your tax advisor for further details

Sofi Michigan Offering Book

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