CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM EXHIBIT F SOFI PRESCOTT Bossier Parish Louisiana HAYNESVILLE RE FRAC STIMULATION WITH CURRENT PRODUCTION PROVEN RESERVES ACTIVE CASH FLOW EXISTING FACILITIES AND PIPELINE
1 EXECUTIVE SUMMARY ALFREDO MANZUR GONZALEZ President CEO Sof Exploration PHIL MARTIN President CEO New Century Exploration Inc 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 Mr Martin is President and CEO of New Century Exploration Inc an active operator in Texas and Louisiana He began his career at Union Texas Petroleum and has managed many E P programs for over 30 years Phil has presented at many industry groups regarding oil and gas exploration development production and economics especially regarding unconventional resources Phil is a member of various professional organizations including Houston Producers Forum Houston Energy Finance Group ADAM Houston IPAA and TIPRO AAPL AAPG SIPES and the LSU Foundation Phil earned a Bachelor of Science in Geology from LSU and a Master of Science in Geology from the University of Louisiana He is involved with various community and charitable organizations and serves on the board of the Pearl Fincher Museum of Fine Arts and the Centrum League Alfredo M Gonzalez President C E O RYAN SESSIONS Senior Petroleum Engineer Mr Sessions Petroleum Engineer is responsible for all of New Century Exploration Inc s drilling completion and production operations He has a Bachelor of Science degree in Engineering from Texas A M and has worked at New Century for 6 years He has significant experience in the Cotton Valley and Haynesville trends of East Texas and North Louisiana the Eagle Ford and Austin Chalk trends of Central Texas and multiple Gulf Coast trends He is an expert at most oil industry technology and software including PhdWin Kingdom IHS TGS DrillingInfo and Spotfire He is an active member of the Society of Petroleum Engineers Tristan W McKinney Chief Operating Officer Olivia M Gonzalez Executive Director
2 OPERATIONAL SUMMARY KEY SUCCESS FEATURES Proven Reserves Long Life Existing producing well pipeline facilities Remaining net reserves 5 6 BCF Gas 29 400 000 7 MCF 1st year ROR 170 ROI 327 Payout 7 months New Century plans to significantly increase existing gas production by re fracking a currently producing well that was one of the first completed in the Haynesville Trend The 1H Prescott originally flowed 5 200 MCF d of gas IP24 but declined rapidly due to inadequate fracture stimulation Significant remaining reserves can be produced after a re frac using newer frac technology A large location pad production facilities frac pond and an active natural gas sales line are in place and active Since its discovery by Chesapeake in 2008 the Haynesville has grown to become the second largest natural gas play in the US It is strategically positioned with existing infrastructure high natural gas prices big take away capacity and access to natural gas export facilities The 1H Prescott has produced since 2009 It is located in an attractive geologic and petrophysical environment and a re frac with modern frac technology should be very rewarding Comstock Resources a big Haynesville operator with assets close to New Century recently completed 15 new wells with an average IP of 29 MMCF day average lateral length of 10 115 This is a unique opportunity to greatly increase production from a flowing gas well in a top trend using state of the art frac technology This document was issued by New Century Exploration INC
3 HAYNESVILLE PRODUCTION Frac Technology Hydraulic frac technology is essential for oil and gas recovery in shales It takes 100 days for a gas molecule to travel 1 meter in 100 nano darcy shale rock Organic shales like the Haynesville were always known to be source rocks filled with hydrocarbons but almost 100 of the flow depends on induced fractures in the impermeable rock matrix The effectiveness of frac stimulation depends upon i Perforation cluster spacing stimulation density smaller is better re frac will be 24 vs 64 for the original Chesapeake well ii Stage length frac power concentration smaller is better re frac will be 150 vs 452 original iii Proppant load keeps fractures open for production larger is better re frac will be 3 500 lbs ft vs 717 lbs ft for the original The 1H Prescott was completed in 2009 and tested 5 200 MCF d gas IP24 but was under stimulated and rapidly declined 80 of Chesapeake s frac stages failed screened out leaving the majority of reserves in the ground New frac technology delivers much greater flow rates and reserve recoveries A recent Conoco study found 85 less recovery in wells with 50 or greater cluster spacing the original Prescott frac This document was issued by New Century Exploration INC
4 GAS PRODUCTION MAP Gas Production Before After Refrac Prescott Thrash Wells This document was issued by New Century Exploration INC
5 CORE EXPANSION Haynesville Shale This document was issued by New Century Exploration INC
6 CORE EXPANSION 2022 Haynesville Re Frac This document was issued by New Century Exploration INC
7 POROSITY TREND Haynesville Shale This document was issued by New Century Exploration INC
8 TOTAL ORGANIC CONTENT Haynesville Shale This document was issued by New Century Exploration INC
9 TOTAL ORGANIC CONTENT Haynesville Production This document was issued by New Century Exploration INC
10 REGIONAL PRODUCTION Surrounding Production Activity This document was issued by New Century Exploration INC
11 REGIONAL ANALOGS A IP30 Original Vs Re Frac This document was issued by New Century Exploration INC
12 REGIONAL ANALOGS B IP30 Original Vs Re Frac This document was issued by New Century Exploration INC
13 MONTHLY PRODUCTION Active Monthly Production This document was issued by New Century Exploration INC
14 WELLBORE DIAGRAM Wellbore Trajectory This document was issued by New Century Exploration INC
15 COMPLETION REPORT 2009 Chesapeak Completion Report This document was issued by New Century Exploration INC
16 PRODUCTION PROFILE This document was issued by New Century Exploration INC
17 PRODUCTION PROFILE This document was issued by New Century Exploration INC
18 PRODUCTION PROFILE This document was issued by New Century Exploration INC
19 EXECUTED LEASE This document was issued by New Century Exploration
20 EXECUTED LEASE This document was issued by New Century Exploration
21 GOOGLE EARTH SATELLITE VIEW Easy access to main road This Document Was Created By Sofi Exploration Rd Sofi Prescott J V ake Swan L Duck Water Landing
22 GOOGLE EARTH SATELLITE VIEW Complete Location View Frac Pond Utilized for frac fluids This Document Was Created By Sofi Exploration
23 LOCATION PHOTOS Current Well Head This Photo Was Taken By Sofi Exploration
24 LOCATION PHOTOS Production Facilities This Photo Was Taken By Sofi Exploration
25 LOCATION PHOTOS Oil Water Tankers On Location This Photo Was Taken By Sofi Exploration
26 LOCATION PHOTOS Active Production This Photo Was Taken By Sofi Exploration
27 A F E This document was issued by New Century Exploration INC AFE is subject to change depending upon market conditions
28 TERMS ECONOMICS This document was issued by New Century Exploration Any additional markup or promotion is not officially calculated on these terms You will find the current markup or promotion located in our CIM
29 ESTIMATED PARTNERSHIP ECONOMICS WORKING INTEREST PARTICIPATION Working Interest W I 1 Unit 1 Net Revenue Interest N R I 1 Unit 0 675 Participation Unit W I N R I 1 1 0 675 1 2 0 5 0 3375 1 4 0 25 0 16875 1 8 0 125 0 084375 Up To 40 Units Total Unit Price 1 120 000 1 2 60 000 1 4 30 000 1 8 15 000 TOTAL CAPITALIZATION Up To 4 800 00 00
30 POTENTIAL REVENUE PROJECTIONS RICH NATURAL GAS P 50 Estimated Results 8 000 MCF X 8 00 64 000 IPD 64 000 IPD X 30 4 Days 1 945 600 IPM 13 132 80 1 945 600 IPM X 0 675 N R I 13 132 80 Gas Proceeds Per Month estimated MCF p d 7 000 8 000 9 000 Income L O E 7 00 8 00 9 00 Monthly Income 10 054 80 11 491 20 12 927 60 Estimated Operating Expenses L O E 4K TO 100 4K TO 100 4K TO 100 Monthly Income 11 491 20 13 132 80 14 774 40 Estimated Operating Expenses L O E 4K TO 100 4K TO 100 4K TO 100 Monthly Income 12 927 60 14 774 40 16 621 20 Estimated Operating Expenses L O E 4K TO 100 4K TO 100 4K TO 100 Annual return 10 50 Potential Natural Gas Payout 24 monthly distribution These 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 EXPENSES these 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
31 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 120 000 x 80 96 000 2 742 85 98 742 85 B C Investment 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 98 742 85 x 35 34 560 00 Total Deduction estimate Maximum Income Tax Bracket TOTAL FIRST YEAR CASH VALUE OF DEDUCTIONS estimate 120 000 34 560 85 440 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
32 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
33 K 1 FORM EXAMPLE
INDUSTRY PARTNERS REFERENCES New Century 34 PHIL MARTIN PRESIDENT CEO Exploration Inc PHILMARTIN NEWCENTURYEXP COM O 281 684 7000 D 713 857 0119 ALFREDO MANZUR GONZALEZ PRESIDENT CEO ALFREDO SOFIEXPLORATION COM O 469 802 0332 D 214 514 9022 REFERENCES KITTELSON LAW OFFICE DOUG KITTELSON DOUG KITTELSONLAW COM WWW KITTELSONLAW COM O 214 734 2700 C 214 704 5721 CATHY GRUEN CATHY HENSLEYCPAS US WWW HENSLEYCPAS US O 214 390 9071 C 972 977 5678 MINDY GAYER BUSINESS DEVELOPMENT MANAGER MGAYER THEENTRUSTGROUP COM O 615 569 9122
35 INDUSTRY TERMS
36 INDUSTRY TERMS
CERTIFICATE OF INSURANCE This document was issued by New Century Exploration 37
1H Prescott 1880 West Prosper Trail Prosper Texas 75078 469 802 0332 Alfredo sofiexploration com