Flowtex MAGA Joint Venture

Asset type: Producing wells, Wells, Drilling programs, Workover/re Entry/shut In · Location: Texas

Project Summary: This package includes five components: Component 1: ORRI in Arriola Field Current Production: 41 wells producing ~75 BOPD. Income Stream: Begins immediately as the purchaser takes ownership of the ORRI the first day of the month following the purchase. Benefits of ORRI: Considered a Real Estate asset, filed in the courthouse forever, transferable, and pays out before field expenses. Field Potential: Over 200 wells drilled with an estimated 100 more needed to fully produce the field. Each well averages 40-175 BOPD, potentially adding ~$750 in monthly income per well drilled. Historical Production: Wells have averaged about 65,000 barrels over their lifetime. At current oil prices, each well could pay this ORRI package ~$30,000 over its life. Own this forever and get income from every new well drilled by any operator but never have to make ANY capital contributions ever. Component 2: Well Recompletion in Arriola Field Recompletion Plan: Identify and recomplete 12 out of 41 wells to produce from new zones. Expected Increase: 75-150 BOPD added to field production. Historical Success: In 2021, 8 recompletions increased field production by ~30%. Timeline: Recompletion to start in August, with the first four wells completed by the end of September. Possible to complete all 12 wells by the end of the year. Component 3: WI in Patriot #1 Frio Prospect Prospect Details: Seismic generated, keying off a producing well from the 70s averaging 63 BOPD. Location: Approximately 100’ updip of the key well. Expected Production: At least 63 BOPD with a realistic chance of 150-200 BOPD. Success Rate: Generated by Glen Granata, with 18 out of 19 wells being productive since 2014. Chance of Success: 85-90%. Component 4: WI in Buckeye Well Drilling Date: Tested on July 22. Log Results: Payzone as expected, similar to other five producers in the field (40-500 BOPD). Expected Production: 40-100 BOPD. Completion Date: Online and producing around the last week of August. Tax Deductions Deductible Amount: $195,000 coded to drilling, resulting in a real dollar tax saving of $77,000 this year. Net Purchase Price: $223,000 after tax savings. Reason for Divesture Development Funding: Allows Flowtex to fast track development, drilling 3-5 wells per year, aiming for ~400 BOPD production rate within 18 months.