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Nighthawk holds an 80% interest in the Devon Oilfield waterflood project, located in Bourbon County, Kansas, covering an area of 1,764 acres. Running Foxes is the operator and holds the remaining 20% of the project.

The Devon Oilfield is located within the Cherokee Basin, a prolific shallow oil and gas producing area from Pennsylvanian, Mississippian, and Ordovician reservoirs from less than 4,000 feet.

In this region, the reservoirs are generally underpressured and as a result have little primary production. Following reservoir modelling a water injection plant has been constructed and water injection has been initiated over the project area and is expected to take approximately four months for its effect to be seen.

There are currently 21 wells under primary production, without waterflood, producing approximately 10-15 barrels of oil per day in aggregate. The fact that primary production is occurring, without the effects of waterflood, is a major positive for the project. When the waterflood takes effect the production rates are expected to increase by a factor of between 2 to 10 times current production per well. Typical recovery is expected to be 20 to 50% of oil in place.

Some 850 barrels of oil has been trucked and sold and 250,000 cubic feet of gas sold via a third party held pipeline.

The drilling programme is ongoing, construction and expansion of gathering facilities is progressing to plan and further successful appraisal wells await hook up for primary production and waterflood.

The Cherokee Basin is located in south eastern Kansas and north eastern Oklahoma and is a shallow inter-cratonic basin. The oldest strata is the Cambrian sandstones and carbonates that lie directly on the Pre-Cambrian rocks. Overlying the Cambrian sediments are the Arbuckle Group of Ordovician age which consist of interbedded dolomites and limestones with minor shales.

Overlying the Arbuckle Group are the Mississippi Limestones which can be a significant hydrocarbon producer.

The Cherokee Group of Pennsylvanian age overlies the Mississippian strata and is composed of predominantly shales and sandstones with minor limestones and coals. The Cherokee Group also represents a deltaic sequence that extends across all of the Cherokee Basin. There are several sandstones that are found within the group, however the Bartlesville Sandstone reservoir has produced the majority of hydrocarbons in the basin.

Xenia

Nighthawk holds a 50% interest in the Xenia project, covering 1,959 acres located approximately 10 miles west of the Devon Oilfield in Kansas.

The Xenia project has eight shut in wells, including tank batteries and pump jacks within its land base and produced gas historically for a local municipality. The project was abandoned by previous operators during the 1990s due to low product prices.

The Bartlesville sandstones are the primary target. Based on core analysis of the previously drilled wells, there is an average of 25 feet of primarily oil saturated net pay per well at depths of less than 700 feet. Secondary targets are the Riverton Coal and the Excello Shale which are significant gas producing zones on acreage adjacent to the Xenia project. Separate wells will be drilled to produce these zones. Running Foxes, the operator, as part of the planned development programme has staked eighteen wells and a

12 mile pipeline is under construction.

The first two wells of the development programme, the Stewart 5-54D and Stewart 6-34 have been drilled. The wells encountered 22 and 28 feet of pay respectively with good oil saturation at an approximate depth of 600 feet. In addition, at least three coals or shales in each well flowed gas and production pipe has been run.

Buchanan Group Projects

Nighthawk holds a 50% interest in the Buchanan Group projects, located in Vernon and Bates Counties, Missouri. The operator, Running Foxes holds the remaining interest.

The projects cover in excess of 40,000 acres and lie within the Cherokee Basin.

As a result of a successful summer drilling campaign, Nighthawk and Running Foxes embarked on a proactive land acquisition programme and the Buchanan Group projects’ land base expanded from approximately 7,000 acres to approximately 40,000 acres. The project areas are located on the Missouri side of the prolific Cherokee Basin, known for shallow oil saturated sandstones. For optimum recovery the Buchanan Group projects require waterflooding in order to drive the hydrocarbons from the reservoir into the production well bore. The water is introduced by a number of injector wells drilled within the project area on a “five spot pattern”, one injector well and four production wells.

The eastern side of the Cherokee Basin is estimated to contain between 1.8 and 8 billion barrels of oil in place based on published reports from the USGS and Missouri Department of Natural Resources survey estimates.

Following analysis of the drilling results and other data we now have an increased understanding of the characteristics of the project acreage which has demonstrated that there are several unrelated reservoirs present. As a result, the Buchanan Group projects, which were previously referred to as the Buchanan and Worden projects,

have now been divided into six separate development entities, Buchanan, Celtic, Farragut, Porter, Roundtop, and Worden.

To date, a total of 36 wells have been drilled and cased for production on ten acre spacing. The wells all targeted the McClouth and Upper and Lower Bartlesville formations.

Through petrophysical and core analysis, Running Foxes conservatively estimates the average oil in place to be 250,000 barrels for each ten acres with individual pay zone intervals ranging from 8 to 70 feet at depths of between 250 and 500 feet. The average oil in place per well will vary as wells are now also being drilled to define the limits of each reservoir. The wells presently producing are estimated to have each, between 300,000 to over 650,000 bbls of oil in place with an estimated recovery of between 20-50% expected. Continuing core analysis indicates excellent porosity and permeability with an API oil gravity ranging from 28 to 33.

A gas distribution line has been connected to a third party tap for the sale of gas. An extensive gathering system is planned to be constructed by Nighthawk and Running Foxes and will be designed to accommodate the wells within the Buchanan Group project areas.