m

TESTERS, INC.

COMPANY BLUEGRASS ENERGY INC. TEST DATE 01/18/06

LEASE SIMPSON CANYON UNIT "4027 D.S.T. NO. 1
WELL NO. #1 TEST TKT. NO. 23463
FIELD BLUEGRASS INVOICE NO. 21564
COUNTY/STATE CROCKETT / TEXAS ORDER NO.

FORMATION : WOLFCAMP HOLE SIZE (in) : 7.875 ANCHOR LENGTH (ft): 77

INTERVAL (ft) : 5635 TO 5712 DRILL PIPE ID (in) : 3.82 TOOL LENGTH (ft) : 56
TOTAL DEPTH (ft): 5712 DRILL COLLAR ID(in): 2.25 TOOL O.D. (in) :5
ELEVATION (ft) : 2407 DRILL COLLAR feet : 711 PACKER SIZE (in) : 7.00

RECORDER DATA
AK-1KUSTER / ZI PROBE
TOP RECORDER: IN BOTTOM RECORDER: OUT
RECORDER NO. : 50014 RECORDER NO. : 6232
CAPACITY (psi): 10000 CAPACITY (psi): 6975
DEPTH (ft) : 5642 DEPTH (ft) : 5709
CLOCK NO. : 50014 CLOCK NO. : 18405
DURATION (hrs): 99 DURATION (hrs): 24

MUD PROPERTIES
MUD TYPE S.GEL & STARCH WATER LOSS (cc) 19.5 CHLORIDE PPM : 42000
MUD WT. (#/gal) 8.90 FILTER CAKE (in) 1/32 RESISTIVITY(ohm-m): .092
VISCOSITY (sec) 38

EQUIPMENT DATA
CONVENTIONAL YES ROTARY JARS YES MULTIFLOW NO
STRADDLE NO NO. OF PACKERS 2 MILEAGE NO
SELECTIVE ZONE NO SAFETY JOINT YES OPERATOR TIME NO
SAMPLE CHAMBER YES CIRCULATING SUB YES OTHER YES
GAS ANALYSIS NO REVERSED OUT YES ZI ELECTRONICS (2)
SUCCESSFUL YES PACKER FAILURE NO TOOL PLUG NO
DECIDED NOT TO TEST : NO FAIL TO REACH BOTTOM : NO

TIME INTERVAL DATA (min)

TOOL OPENED 8:40 PM TOTAL TEST TIME: 218
INITIAL FLOW 15 INITIAL SHUT-IN: 30
SECOND FLOW 55 SECOND SHUT-IN : 119
THIRD FLOW THIRD SHUT IN :
TEST TOOL OPERATOR: TOMMY WILLIAMS
 TESTERS INC
BLUEGRASS ENERGY INC. SIMPSON CANYON UNIT "4027 # 1
D.S.T. NO. :1
CORRECTED READING FIELD READING
A INITIAL HYDROSTATIC 2725 PSI 2725 PSI
B-l INITIAL FIRST FLOW 437 PSI 437 PSI
B-2 FINAL FIRST FLOW 650 PSI 650 PSI
C FIRST SHUT-IN 2659 PSI 2659 PSI
D-l INITIAL SECOND FLOW 380 PSI 371 PSI
D-2 FINAL SECOND FLOW 592 PSI 592 PSI
E SECOND SHUT-IN 2656 PSI 2656 PSI
H FINAL HYDROSTATIC 2680 PSI 2680 PSI

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ZH
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RECOVERY DATA
PIPE RECOVERY B.H. TEMP, (deg F) : 116 SAMPLE CHAMBER
GAS TO SURFACE 4 MIN. INTO INITIAL SHUT-IN PERIOD - 500 LBS. OF PRESSURE
PULLED 26 STANDS & REVERSED OUT INTO FRAC TANK- 1.25 CU. FT. OF GAS
12 BBLS. OF FREE OIL (36 GRAVITY & 60 DEGREES) 1400 CC'S OF FREE OIL
3 BBLS. OF OIL & PARRIFIN (20% OIL) 36 GRAVITY (P 60 DEGREES
120 FT. OF OIL & GAS CUT MUDC10* OIL)-BELOW CIRC SUB

TEST REMARKS
TOOL OPENED WITH GOOD BLOW ON 1/4" CHOKE IN 3 MIN. & BUILT TO 12 LBS AT
END ,OF THE 15 MIN. FIRST FLOW. GAS TO SURFACE 4 MIN. INTO INITIAL SHUT-IN
REOPENED TOOL ON 1/4" CHOKE WITH 12 LBS.(39 MCFPD)'IN 10 MIN 15 LBS (43
MCFPD) IN 17 MIN., BEGAN DECREASING IN 22 MIN. TO 13 LBS (40 MCFPD) IN 30
MIN., 12 LBS.(39 MCFPD) IN 40 MIN.,10.5 LBS.(37 MCFPD) IN 50 MIN & 9 LBS
(34 MCFPD) AT END OF THE 60 MIN. FINAL FLOW PERIOD
(CHARTS INDICATE PLUGGING ACTION DURING FIRST FLOW PERIOD)
 Company Name BLUEGRASS ENERGY INC
Well Name SIMPSON CANYON UNIT "4027" #1
zecU t-
•OtuSonsy
Type of Test DST #1 (5635-5712 FT ; WOLFCAMP)
zed./
solutions
Date(s) of Test 1-18-06

RIG TESTERS, INC. RECORDER* 50014

3000 120.0

112.5

2400

105.0

.1800

1200

75.0

600

1.75 3.50 5.25 7.00 8.75

Cumulative Time (hr)
 Company Name BLUEGRASS ENERGY INC
Well Name SIMPSON CANYON UNIT "4027" #1
zed./ C>/ Type of Test DST#1 (5635-5712 FT.; WOLFCAMP)
zed./ M/
solutions/
solutions /
Date(s) of Test 1-18-06

RIG TESTERS, INC. RECORDERS 9628

2750 120.0

112.5

2200

105.0

.1650
D)

to

1100

550

•60.0
1.75 3.50 5.25 7.00 8.75 10.50 12.25
Cumulative Time (hr)
 TESTERS, INC.
RigTesters, Inc.
Well Test ABILENE - MIDLAND - GRAHAM
Report
BLUEGRASS ENERGY INC. SIMPSON CANYON UNIT "4027" #1

» I'll l U l l l l l l l l i l l l l M I

Well ID SIMPSON"4027"#1 Well location N. IRAAN

County/District CROCKETT State, Country TEXAS
Company BLUEGRASS ENGY Division TULSA, OK

Prod/Inj fluid , OIL GOR 500:1

Water cut 0% Condensate yield UNKNOWN
API gravity 36.0 Gas spec. grav. 0.7
Viscosity 1.1573 cp Pseudo-critical T 382.97 deg R
Pseudo-critical P 664.37 psia H2S mole fraction UNKNOWN
CO2 mole fraction UNKNOWN N2 mole fraction UNKNOWN
Compressibility(t) 15.071 e-6/psi Formation vol factor 1.2605 RB/STB

Reservoir properties
Porosity 0.12 frac Formation thickness 20 ft
Wellbore radius 0.32813 ft Prod-observer distance N/A
Water-Oil Contact UNKNOWN Gas-Oil Contact N/A
Gas-Water Contact N/A Rock compressibility
Reservoir temperature 116 deg F Pressure for properties 2660 psia

Comments
THE DERIVATIVES INDICATE A RESERVOIR WITH GOOD PERMEABILITY AND HIGH
BUT IMPROVING SKIN. THE SLOW DOWNWARD TREND ON BOTH SHUT-IN PERIODS
PERIODS DURING MID & LATE TIME DATA IS INDICATIVE OF SPHERIAL FLOW (PART-
IALLY PENETRATED POROSITY OR POSSIBLE DUE TO VERTICAL FRACTURING. A RE-
GRESSION VERIFIED MODEL ANALYSIS WAS PERFORMED TO BETTER DETERMINE
FORMATION PARAMETERS AND IS REPRESENTED BY A SOLID LINE PLOTTED OVER
ACTUAL DATA WITH CONFIDENCE INTERVALS (MARGIN OF ERROR) SHOWN NEXT TO
MAJOR PARAMETERS. A PORTION OF THE SKIN FACTOR IS ATTRIBUTABLE TO THE
LIMITED FLOW FROM PARTIAL PENETRATION. THE FIXED PARAMETERS USED WERE
AN EST. 12% POROSITY, 20 FT. OF NET PAY REPORTED AND AN AVERAGE (TIME WEI-
GHTED) PRODUCTION OF 187 BBLS. OF OIL FOR THE FINAL FLOW. THE RATES WERE
BASED ON DENSITY OF FLUID RECOVERED VS. FLOWING PRESSURES. THE TOTAL
RADIUS OF INVESTIGATION CALCULATED TO APPROX. 243 FT. FROM WELLBORE.

Automate v1.41"- RigTesters, Inc. - 01/19/06 15:11:25

 BLUEGRASS ENERGY INC. SIMPSON CANYON UNIT "4027" #1
Pressure and flow rate vs time during test sequence
STB
Id

200 2000

ml

i
3
col

100 1000

hours
DST#1 5635-5712 FT. WOLFCAMP
Automate vl.41 • RigTesters, Inc. • 01/19/06 13:59:39
 BLUEGRASS ENERGY INC. SIMPSON CANYON UNIT "4027" #1
Diagnostic plot (pressure <& time)
psia

1000

100

m
m
3D
to
o

Permeability, m 68.72
Skin 51.72
Storage, STB/psi 2.508e-4
Omega 0.3778
Lambda 1.092e-5

le-3 le-2 0.1 hours

INITIAL SHUT-IN PERIOD DST#1
Automate vl.41 • RigTesters, Inc - 01/19/06 15:03:32
 BLUEGRASS ENERGY INC. SIMPSON CANYON UNIT "4027" #1
Variable rate Horner plot (pressure & time)
Transition Storage
Spherical flow

D~D a a a"
° a

Semi-log slope-!, psi/cyc 31.24

Permeability, md 68.72
Skin 51.72
p*, psia 2666
Slope, psi/cyc -11.76
Intercept, psia 2662
I I I

10 f(q,t)
INITIAL SHUT-IN PERIOD DST#1
Automate vl.41 • RigTesters, Inc. • 01/19/06 15:03:45
 BLUEGRASS ENERGY INC. SIMPSON CANYON UNIT "4027" #1
Diagnostic plot (pressure & time)
psia

1000

100

ml
col
331
0)1

10

Storage and skin well model

Exponentially changing storage
Double-porosity pseudo-steady sta
Infinite-acting

Storage, STB/psi 7.193e-5 ±8.3%

Skin 50.48 ±5.5
alfa sub D 8.534
Early/late stora 689.8
Permeability, 75.61 ±9.8%
Omega 9.638e-2
Lambda 2.978e-6
Ink pressure, psia 2659 ±0.71

le-3 le-2 0.1 1 hours

FINAL SHUT-IN PERIOD DST#1 REGRESSION VERIFIED MODEL
Automate vl.41 • RigTesters, Inc. - 01/19/06 14:42:26
 BLUEGRASS ENERGY INC. SIMPSON CANYON UNIT "4027" #1
Variable rate Horner plot (pressure & time)
psia Spherical flow

3000

2500

2000

Storage and skin well model

Exponentially changing storage
Double-porosity pseudo-steady state
Infinite-acting
1500
Storage, STB/psi 7.193e-5 ±8.3%
Skin 50.48 ±5.5
alfa sub D 8.534
Early/late storage 689.8
Permeability, md 75.61 ±9.8%
Omega 9.638e-2
Lambda 2.978e-6
Init pressure, psia 2659 ±0.71

10 100 f(q,t)
FINAL SHUT-IN PERIOD DST#1 REGRESSION VERIFIED MODEL
Automate vl.41 - RigTesters, Inc. • 01/19/06 14:57:59
 BLUEGRASS ENERGY ESC. SIMPSON CANYON UNIT "4027" #1
Cartesian plot (pressure & time)

Storagi
Transition

3000

2500

ml
m

2000

Storage and skin well model

Exponentially changing storage
Double-porosity pseudo-steady state
Infinite-acting
1500 i
Storage, STB/psi 7.193e-5 ±8.3%
Skin 50.48 ±5.5
alfa sub D 8.534
Early/late storage 689.8
Permeability, md 75.61 ±9.8%
Omega 9.638e-2
Lambda 2.978e-6
Init pressure, psia 2659 ±0.71

1.5 2.5 3 3.5 hours

FINAL SHUT-IN PERIOD DSTtfl REGRESSION VERIFIED MODEL
Automate vl.41 • RigTesters, Inc. - 01/19/06 14:59:51