About the Region

The Piceance Basin and Uinta Basin are two of the America’s premiere oil and gas resource regions. An article in The Oil & Gas Investor (November 2006) states that the overall drilling activity in the Rocky Mountain basins, where the Piceance and Uinta basins are dominant, will exceed 43,000 wells in the next 5 years representing an industry investment of over $25 billion. It is also part of the most active gas production region in the US, where proven reserves and daily production rates now exceed those of the Gulf of Mexico.

Currently, over 100 rigs are active in the Basin at 100% utilization. Major players include EnCana Oil & Gas (USA) Inc., The Williams Cos., Bill Barrett Corp., ExxonMobil, ConocoPhillips, Occidental and Marathon. According to an October 24, 2006 report authored by an independent petroleum consulting firm, 14 of the 18 Brownstown/Dejour/Retamco joint venture properties in this region have the potential for 4.107 Trillion Cubic Feet (TCF) of natural gas and 2.055 Billion Barrels of Oil to the 100% interests - of which Brownstone owns 10% participating interest.

Mesaverde formation – The basin-centered gas trap in the upper Mesaverde formation is the primary drilling target in the Piceance and Uinta Basins. The Williams Fork is the formation name used for the upper Mesaverde sand interval in Colorado. The Williams Fork formation is 2,500’ to 3,800’ thick. It is a stacked fluvial sand sequence deposited by meandering river systems. The lower 1,000’ to 2,000’ is gas bearing and is completed by perforating the productive intervals and fracturing each zone individually. In the lower Mesaverde formation, called the Iles Formation in Colorado, other stratigraphic traps are formed in the Rollins, Cozzette, Corcoran, and Sego sands. Operators use modern artificial fracturing technology to develop the tight, discontinuous sands on ten acre well spacings. Multiple bottom-hole locations are generally directionally drilled from a single surface location pad-site. Estimate Ultimate Recovery (EUR) is estimated to be 1.5 to 5+ BCF per well and 100+ BCF per section, depending upon the depth of the reservoir;

Mancos “B” – The Mancos “B” is a tight, fractured shaly sand interval which responds favorably to modern fracturing techniques. Mancos production occurs in the two basins from as shallow as 1,000’ down to 7,000’. The Mancos represents a proven resource play similar to the Barnett shale in the Ft. Worth Basin. EUR for an average well is 0.5 to 1+ BCF.

Dakota and Morrison Formations – The Dakota and Morrison formation are lower Cretaceous sand intervals which have been an exploration target for many years in the Piceance and Uinta basins. Stratigraphic traps in these sands have produced reserves of 1.0 to 5.0+ BCF per well;

Curtis, Entrada, Wingate, and Deeper Targets – The Entrada and Wingate formations are stratigraphic, dune sand traps, as seen at the Flat Rock, Bar-X and San Arroyo fields. These zones are thick, highly productive and contain very large reserves. The deep Jurassic dune sand play is one of the hottest gas plays in this part of Utah and Colorado. Curtis, Entrada and Wingate traps can be seen on seismic data and amplitude anomalies. Prolific production can exceed 5 to 15 BCF per well;

Weber – The Weber is a Pennsylvanian age sandstone which generally produces from thrusted structural type traps. The producing fields are found along the northern flank of the Uinta and Piceance basins. Two fields which have produced from the Weber are Rangely (1 billion barrels of oil) and Ashley Valley (25 million barrels of oil). ROI has a deep sub-thrust prospect in the Weber with a potential of 1-3 billion barrels of oil.