Michael S. (Mickey) Fulp www.MercenaryGeologist.com [email protected] Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

Disclaimer I am not a certified financial analyst, broker, or professional qualified to offer investment advice. Nothing in a technical report, commentary, interview, presentation, this website, and other content constitutes or can be construed as investment advice or an offer or solicitation to buy or sell stock. Information is obtained from research of public documents and content available on the company’s website, regulatory filings, various stock exchange websites, and stock information services, through discussions with company representatives, agents, other professionals and investors, and field visits. While the information is believed to be accurate and reliable, it is not guaranteed or implied to be so. The information may not be complete or correct; it is provided in good faith but without any legal responsibility or obligation to provide future updates. I accept no responsibility, or assume any liability, whatsoever, for any direct, indirect or consequential loss arising from the use of the information. The information contained in a technical report, commentary, interview, presentation, this website, and other content is subject to change without notice, may become outdated, and will not be updated. A technical report, commentary, interview, presentation, this website, and other content reflect my personal opinions and views and nothing more. All content of is subject to international copyright protection and no part or portion of this website, technical report, commentary, interview, presentation, and other content may be altered, reproduced, copied, emailed, faxed, or distributed in any form without the express written consent of Michael S. (Mickey) Fulp, Mercenary Geologist. Copyright © 2012 Mercenary Geologist. All Rights Reserved.

Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

What’s Up (or Down) with the Natural Gas Market? Vancouver January 2012

Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

Henry Hub Spot Price Henry Hub Gulf Coast Natural Gas Spot Price ($/MMBTU) 14 12

$/MMBTU

10 8 6 4 2 0

Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

WTI Crude Spot Price WTI at Cushing (U.S. Dollars Per Barrel) 160 140 120

$/Barrel

100 80 60 40 20 0

Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

Oil versus Gas : Energy Produced • 1 Barrel of Oil = 5.6 Mcf of Natural Gas • Oil and Gas Reserves = Barrel of Oil Equivalent

• BOE for Financial Statements and Resources: – IRS = 5.8

– USGS = 6.0 Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

Oil : Gas Price Ratio Oil to Gas Ratio 45 40 35

Oil/Gas

30 25 20 15 10

5 0

Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

Why is Natural Gas Depressed? • Shale Gas Technologies • Low Risk / High Reward • Transportation Infrastructure

• Storage Capacity Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

Why is Natural Gas Depressed? • Processing Capacity • Power Plant Capacity • Environmental Opposition

• Land Access Michael S. (Mickey) Fulp, M.Sc., C.P.G.

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January 2011 – 2012 Price & Rig Counts • Oil Price: Up 10 % • Oil Rigs: Up 54 % • Gas Price: Down 45 % • Gas Rigs: Down 14 % Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

Oil vs Gas Rig Counts US Oil Rig Count

US Gas Rig Count

1400

1800 1600

1200

1400

800 600 400

1200 Rig Count

Rig Count

1000

1000 800 600 400

200 0

Michael S. (Mickey) Fulp, M.Sc., C.P.G.

200 0

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Oil : Gas Price & Rig Ratios Oil/Gas Price & Rig Ratio 40.00 35.00

2.00 Price Ratio Rig Ratio

Price Ratio

30.00 25.00

1.80 1.60 1.40 1.20 1.00

20.00 15.00

0.80 0.60

10.00

0.40

5.00

0.20

0.00

0.00

Michael S. (Mickey) Fulp, M.Sc., C.P.G.

Rig Ratio

45.00

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United States Energy Budget 2008

2010 Hydroelectric, Biofuels, 2% Other 2% Renewables, Wood, 2% Nuclear, 9% 2% Petroleum, 37% Coal, 21%

Natural Gas, 25%

Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

Natural Gas Demand 1990 - 2035

Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

USA Shale Gas Plays

Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

Domestic Natural Gas Demand • Residential & Commercial Heating: 22 % • Industrial: 38 %

• Electrical Generation: 37 % • Transportation: 3 % Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

United States Natural Gas Resources • World’s Largest Gas Producer • World’s 6th Largest Reserves

• 110 Yrs of Resources at Projected Demand • Self – Sufficient in Natural Gas Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

Domestic Energy Imports • 30 % of Daily Energy Budget • 9.4 Million Barrels Oil Per Day • At $ 100 / bbl = $940 Million Per Day

• $343 Billion Per Year Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

USA Energy Independence • Uranium • Natural Gas

• Coal • Renewable / Green Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

Monday Morning Musings from Mickey the Mercenary Geologist

Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com

www.MercenaryGeologist.com Copyright 2012 [email protected]

Michael S. (Mickey) Fulp, M.Sc., C.P.G.

www.MercenaryGeologist.com