Figure Four Natural Gas Project

Piceance Basin, Colorado, USA

Drilling and Development Agreement
The Company obtained the Figure Four property through a farm-out agreement with EnCana, signed in August, 2006. West Hawk Energy (USA) LLC (WHE) has a 100% working interest in the first 32 wells completed, known as the earn-in wells. EnCana has the option to participate in the in-fill wells, which will be drilled after the first 32 wells are completed.

Prospective Resource

		Gas		Condensate

Low estimate	383 BCF		1.2 MMBO

Best estimate	529 BCF		1.6 MMBO

High estimate	700 BCF		2.2 MMBO

The Property
The Figure Four project plan is based on drilling 256 wells on the property. Each well drilled is expected to produce for 34 years. The Figure Four Property is located in the Piceance Basin of Colorado, known to be one of the largest natural gas field in North America, containing an estimated 300 trillion cubic feet of recoverable natural gas. The project area encompasses over 5,120 acres, in an 8-square mile area that is adjacent to EnCana Oil and Gas' Figure Four Federal Unit. The realization of recoverable gas production from the Piceance Basin is considered to be a technical play rather than a discovery play, as significant gas zones are present, and none of the holes that have been drilled by other producers in the area (more than 1,000) have been dry holes.

Also see:
Rockies Express Pipeline



Economics
The Project economics are primarily dependent upon the recoverable amount of gas, the drilling cost of each well and natural gas prices. The project generates a significant return on investment that is enhanced by the extremely low entry costs that WHE was able to realize by obtaining the farm-out agreement with EnCana. Recent purchases of oil and gas property in the Piceance Basin by companies such as Marathon Oil and Berry Petroleum have averaged approximately $43,000 per acre. Based on this value, WHE avoided approximately over $200 million in land acquisition costs.

The Market
WHE signed a project life time Gathering Agreement and Sales Agreement with EnCana for the processing and sales of 100% of the natural gas from the Project. The Sales Agreement provides for the ability to sell the gas to other customers. Wells 1,2 and 3 are currently connected to EnCana's gathering pipeline system, and WHE will be paid for the gas produced on a monthly basis. EnCana has completed the necessary pipeline connections that tie the gas produced from the Figure Four property to the main east-west gas line that crosses the northern and central plains in the United States, connecting to all major metropolitan areas.