WOLFBERRY CONVENTIONAL RESOURCE PLAY AND SPRABERRY DEVELOPMENT

(PERMIAN BASIN)

Where is the Wolfberry Located? The Wolfberry trend is regionally located in the Midland Basin, a part of the prolific West Texas Permian Basin.

Permian Basin Facts: • Second Largest producing oil and gas region in the US. • Underlies SE New Mexico and W. Texas (250 miles wide and 300 miles long). • Multiple producing horizons. • Over 340 rigs currently drilling (150 Wolfberry wells drilling ).

Basin & Plays in Texas

What is the Wolfberry?

The term “Wolfberry” trend is used to characterize the completion method of perforating, fracture stimulating and comingling for production, the various Spraberry and Wolfcamp intervals and more recently deeper intervals, including the Strawn and Mississippian.

Contributing Reservoirs Include:

Spraberry Facts: •1.3 Billon BO produced, 18,842 wells, 68 MBO/well average. • Spraberry is the 5th largest oil field in the US onshore.

Wolfcamp Facts: •3.37 TCF & 590 MMBO produced in Texas since 1951 •4292 total wells, 2072 active wells, 785 MMCF & 137 MBO/well average

Wolfberry Play Midland Basin, Texas

Gail

Today’s Wolfberry Evolution (2007-2010) • • • •

The costs to drill and complete have decreased as operators have focused on reducing drilling time and implementing Implementing advanced fracture stimulation technology to increase Initial Potential Rate and over-all well performance. Operators have begun perforating more intervals within the Spraberry and Wolfcamp sections, Drilling deeper, in order to add additional potential hydrocarbon producing zones, including the Strawn and Mississippian (Atoka).

This is a “Rate of Return Play”: • •

Incremental reserves and constant cost maintenance are extremely important. Increased number of potential contributing zones, each incremental increase in reserve potential is economically significant.

WOLFBERRY PRODUCTION TREND 2007-CURRENT (Selected Operators)

Why is the Permian the hottest play in the US? •

Conventional Resource Play: Lower risk, rate of return and multiple well developments.

•

Vertical Wells:

Reduce mechanical risk and lower, quantifiable drill cost.

•

Multiple Comingled Object:

Increased (i) IP rate, (ii) EUR and (iii) ROI.

•

Hydrocarbons Present:

Located in existing Oil and Gas Fields (Midland Basin).

•

Infrastructure:

Oil and Gas operations currently exist.

•

Long production life:

Average 10-20 year well production life.

•

Downsizing proration units:

Current spacing is 40Ac. Drainage less than 20Ac.

•

PUDS:

Each successful well establishes 4 PUD locations.

•

Fracture Stimulation:

Highly effective, low cost at 50K-70K per frac.

Active Companies in Wolfberry

• Pioneer Nat. Resources • El Paso • Concho Oil and Gas • Element • Cobra Oil and Gas

• • • • •

Chesapeake Linn Energy Mariner Apache SM Energy

APCLARK FIELD CONVENTIONAL RESOURCE PROJECT

Apclark Field Facts

• Blacksands has a 18.75%-70% Gross Working Interest in approx. 8,300 acres. • Located 5 miles east of Jo Mill Spraberry Field which has produced 125 MMBOE. • Discovery well drilled in 1950 and additional wells drilled in the 70’s and 80’s. • Field has produced over 345MBO from 15 wells (per well production 11MBO-51MBO) prior to improved frac technology.

Apclark Resource Play Economics Anticipated Results (one well) Oil Rate: 80BOD Gas Rate: 90MCFD Decline Rate: 30% (1st year)

Oil Price: $75 (5% Esc. Max $90) Gas Price: $4.5 (5% Esc. Max $7)

Drill/Complete Cost (Vertical Well To 9200’): $1.9MM ($1.2 MM to 6700’) Operating Costs: $4K/Month (Max $6K/M) Payout: 17 Months

SM Energy 9,450' TVD

SM ENERGY APACHE

APACHE CHESAPEAKE AMI

CHESAPEAKE

APACHE

E VER

ETT 1

EVERETT #3

H

JACK

SON 1

791700

796700

801700

Blacksands Petroleum Project: West Texas

Project Location: Borden County, Texas Land Map

741700

746700

751700

756700

761700

766700

771700

776700

781700

EVERETT `A`

35

J.N.PR

1 9100

INCE

40

.R.CO . A-2 72

A-1576

786700

41 T.&

EVERETT D

9800

J.N.PR

37

. .R. CO T.& P.R A-277

A-1 310

COLEMAN FARMS

A-335

.R. T.& P.R

25 6672 1

44

A-337

WILLIAMS STERLING WESTBROOK ROSS 9811 1 MITCHELL,WD JR 48

A-3 38

ICE S.D.PR

43

.R. T.& P.R

A-279

9740

T.C

BEAVER VALLEY RANCH

.SMITH

T.& P.

JOHNSON D JR 1 WESTBROOK

TCHC S.A .HA

8311 1-47 9721 .CO. P.R.R

HULL

T.& P.R

HULL

S HULL, OA TE J W. P.C

36 7240 1 A- 1094

9850

BEAVERHEAD

.R.CO. T.& P.R A-2 35

1

A-341

2

H ROUG J.C.KINB A-796

9800

CLAYTON-JOHNSON A 3

CLAYTON RANCH

1

T.& P.R

9638

. .R. CO A-295

CLAYTON-JOHNSON C 1 T.& P.R

.R.

1

A-296

CLAYTON RANCH

9644

397800

RR W.B.HA

IS

11 A-938

1 9675

1

9

4 9523 9000

9912

T.& P.R

CLAYTON RANCH

.R. CO.

22R

A-300

9500 8

W.N.W

ADDE LL

11 9540

1

18

T.& P.

13

T.& P.R

9400

14

. R.R.CO

T.& P.

7020

T.& P.R

CLAYTON

402800

.R.CO. A-238

1 OATES A- 1093

13

9214 14

16 4 8393

HAM I.E.DUR A-1113

15

37 9047 1

16 J.F

.R.CO

.

A-2 39

397800

ES .CO AT A-906

CLAYTON-JOHNSON T.& P.

1

O. R.R.C A-2 40

24

9104

AT ES J.F.CO A-907

23

CLAYTON-JOHNSON

. .R. CO A-241

1

22

ERS J.ROG A-995

A-2 99

. R.R. CO A-175

10

15

1

392800

9058

11

T.& P.R

29 6685

12

1

2

JACKSON,O.D. .R. CO. T.& P.R 1 A-23 6 JACKSON, O.D. 6688 JACKSON 2 LOC 17 1 EVERETT 7 6800 EVERETT,W.D. 9500 1H 9000 2 EVERETT,W.D. COATES 6800

CLAYTON RANCH 13-32

A-1031

CLAYTON

TE S J.F.COA A- 905

A- 819

15

CLAYTON DDEL L RANCH W.N. WA CLAYTON RANCH A-1029 1

10 CLAYTON & JOHN 10

45 9450 1 10106

9513

5 12000 RANCH CLAYTON 3 9451

407800 LI LONG EST C

9

5

18

HAM I.E.DUR A-1112

OATES A-1 092

JACKSON,O.D. EVERETT 7 7 JACKSON . HULL, J 3 1 P.R.R.CO 1H T.& ROPER,JR A-237 JACKSON EVERETT 1 6766 9500 6800 1 1 12 EVERETT I.N1.HOWARD 6780

27

AM CLAYTON

LARK

W. P.C

W. P.C

37

9795 JOHNSON & CLAYTON CO.

5

.C.D.

412800

A-1 464

8

4X

ADDE LL W.N.W A-1030

W. K.C

CLARK, B

9520

4

.R.CO . T.& P.R A- 233 TH J.A.SMI A-1506

.R.CO. A-234

26 8507 1-A

10 6700 1 MITCHELL 13 9270 1

COLEMAN FARMS .R.CO. T.& P.R

22 9252 1

5

1

6

A-9 46

ITH C.P.SM A-886

CLARK,B

A-1147

1

TE R

THER K.WAL A-832

3

4

6

W.R.JE

2

34 6710 1

4 8600 1

O. R.R.C A- 278

OCK

HELL J.K.MITC A-1 200

9135

9200

A-3 42

NESTE-COLEMAN FARMS

LL ER

MRS.E

1

4501

A-828

47

A-1309

TTON J.T.PA A-1450

KEEN,WO

CO.

1

9800

.

T.&

. D ET.AL J.REE

W. C. MI

PSON R.E.SIM A- 1013

UNG V.W.YO A- 1597

1

LL .MITCHE MRS.L A-1306

45

. .R. CO A-213

HAMILTON ROLAND .R. CO. T.& P.R A-2 80

WILLIAMS, STERLING

CO.

40

402800

A-1 448

9180

45

TH C. B.SMI A-10 05

46

T.& P.R

LARK

1 46

39

407800

W. K.C

TRI-APCOT

38

9903

.R.CO

ON RGUS 47 F.C.FE A-1472

A- 10

1-48

2

T.& P.R

48

9170

ITH J.R.SM JOHNSON, CLAYTON A 04

1 10200

TT Y J.A.PE A-804

NCT-1

INCE A- 1611

42

ICE S.D.PR

412800

JOHNSON,JT

A- 276

1

.R. CO. A-336

1 Apclark Field Lower Spraberry 9700 (Jo Mill) Production (MBO) T.& P.R

O. P.R.R.C

417800

43 A- 12 27

LL .MITCHE MRS.L A-13 08

COLEMAN FARMS

796700 A-1 325

34

33

791700

E

417800

T.& P.R

R I NC J.W .P 3 A -1 57

X/Y: Feet

T.& P.R

J.R CLAYTON 8015 997 1A9131

21

.R.CO.

S OG ER

392800

.R.CO. T.& P.R A-2 44 A-939

JB CLAYTON 15

CLAYTON RANCH 9820

T.& P.R

1

1

9657 16

D.

.R. CO. A-30 1

20

19

A-93 0

T.& P.

CLAYTON RANCH 1 17

9692

T.& P.R

387800

ERS

25

A-9 96

. R.R. CO A-243

26

24 .R.CO.

J.ROG

A-302

ERS

27

A-9 94 23

IS G. HARR A-9 19

T.&

22 T.& P.R

J.ROG

EVERETT #3

IS W. HA RR

.CO P.R.R

T.& P.R

28

A-2 42

VE L.R.LO A-11 81

J.DOW

.R.CO.

29

A-7 90

A-303

. .R.CO A-245

.

. .R.CO T.& P.R A-2 46 21

20

741700

T.& P.

ARRIS D.W.H A-932

746700

751700

. R.R. CO A-306

25 CLAYTON RANCH 25

JERE

756700

ROW H. S.MOR A-12 07

30

761700

1

766700

CLAYTON-JOHNSON 'J'

771700

T.& P.R

35

.R.CO. A-247

34

776700

781700

786700

791700

796700

Blacksands Petroleum Project: West Texas

Project Location: Borden County, Texas Apclark Field--Cumulative Production Lower Spraberry (Jo Mill)

387800

250 MM Market Cap?

• We have approximately 100 drillable locations on 40 acre spacing. • Three (3) producing Spraberry wells drilled since 2008 within currently held leasehold. • EUR from Spraberry is expected to be 40 MBO per location or 4 MM BO. • What will be the EUR of the additional horizons below the Spraberry, such as the Mississippian producing in nearby analog Mesquite Creek field, current per well production of 30 MBO-70 MBO.

Blacksands Facts • Overhead covered by current production. • BSPE has minimal debt. • Apclark Spraberry field has approximately 100 locations on BSPE net leasehold. • 8 Properties (4 Producing). • Executing exploration strategies now (no waiting). • Blacksands is moving toward making application to a nationally recognized exchange.