Sofi Newby II Joint Venture : simplebooklet.com

EXECUTIVE SUMMARYALFREDO MANZUR GONZALEZPresident/CEO, Sofí Exploration Alfredo 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 Resources Alan 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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GEOLOGICAL SUMMARYKim DrewGeological Opinion 3This document was issued by Rush Creek ResourcesFirst off, the sand body appears to nose out to the east and has shaled out both to the north and south. This looks to be the case based on the data we havebut there are no definitive dry holes to the northeast, east, or southeast to provethe extent of the field. In other words, the sand deposit and thus a additionalportion of the productive field could lay in any of those directions. Regional dip inthis area is to the northeast and it looks as if the top of the sand body follows thispattern with the highest structural position being to the east. That well theVanorsdol# 2 was originally dry holed as too shaly in 1959 but in 1964 it wasreentered and converted into a saltwater injection well. For years geologists haveprospected by drilling up dip from waterfloods and have found many very goodproducers where the water has forced oil to bank up in the highest parts of theup dip pinch outs. The second thing I noticed is that originally the wells we mostly perforated in justthe very cleanest part of the sand body. These wells would probably have beenfracture treated in the early 1960's using less than 200 barrels of fluid and 6,000to 8,000 pounds of sand pro pend. Recent work on Skinner sand producers showthat perforating the entire sand body and performing larger sand fracturestimulations prove effective in getting additional oil reserves. Fracture treatmentsof 600 barrels or more of fluid with 25,000 to 40,000 pounds of sand are nowcommon in Skinner sand completions. It may be possible to perforate additionalfootage in the producing wells and re-frack the wells using much high pump ratesand aid flakes to divert the fracture into the less porous but still oil saturatedsandstone. This may solve the problem of why this waterflood has not producedas much oil as has been calculated to be present and producible.

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POTENTIAL REVENUE PROJECTIONSOil Production Estimates6.68 BPD X$80=$534.40 IPD$534.40 IPD X 30.4 Days=$16,245.76 IPM$16,245.76 IPM X 2.8125% N.R.I.=$456.91$456.91 Gross Oil Proceeds Per Month (estimated)Annual return: 10 – 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 $75 $80 $856.68Monthly Income (Gross)Does Not Include L.O.E $428.35$456.91 $485.4615Monthly Income (Gross)Does Not Include L.O.E $961.87 $1,026$1,090.1225Monthly Income (Gross)Does Not Include L.O.E $1,603.12 $1,710.00 $1,816.871450Monthly Income (Gross)Does Not Include L.O.E$3,206.25 $3,420.00 $3,633.75

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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 spuddate A.P.I #Waiting On Permit OperatorRush Creek ResourcesStateOklahomaOPERATOR NUMBER:(OKLAHOMA 734825) (TEXAS 23895)Sofi Three HillsJoint Venture 2023, Funded, Waiting on spuddate A.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 Newby II Joint Venture

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