Phase 4: Drilling of Multiple 5-Spot Locations

Phase 4 of the Blue Water development plan calls for drilling additional 5-Spots on the Blue Water lease acreage. Drilling permits [APD’s] have already been issued by the BLM to test 2 more 5-Spot locations in Section 21-T5S-R25E and Section 10-T5S-R25E in Big Horn County, MT. These 2 new locations are within 2 miles of the original 5-Spot in Section 22-T5S-R25E. Another injection well has also been applied for in Section 21 as part of the initial EPA injection permit application for the #51122 Tribal injection well in Section 22.

After drilling and proving the viability of 5-Spots in Sections 10 and 21 it may prove prudent to develop a pipeline to deliver the crude oil to the nearby county road, saving 7 miles of transportation. The oil would be trucked to refineries in nearby Billings [Conoco-Phillips and Exxon] or Laurel, MT. [Cenex]

MAP SHOWING WELLS, PIPELINES & ROAD FOR INITIAL 5-SPOT

The infrastructure will need to be developed in pace with the drilling program. The need to get oil production to the refinery is a primary concern, and good facilities and pipelines are a necessity for any major project like the Blue Water project. Additionally, winter weather factors in the region will demand good efficient infrastructure.

With production potential of between 100-200 BOPD per well, and the possibility of 200-250 wells being drilled to fully develop the potential of heavy oil production, the facilities will eventually be needed to support the possible production of 20,000-40,000 BOPD.

The Blue Water project, currently in Phase 2 of development, stands ready to join the major oil fields of Montana and make a significant positive impact on the Crow Indian Reservation and Big Horn County, MT.