Ann: Drilling Update , page-5

davo i agree the utica could possibly the big bonanza. eeg reason we have about 5 tcf ( read http://www.empireenergygroup.net/investor-information/investor-presentations) in the utica to give you some idea how much gas this is here is an explanation of tcf

"What is a Mcf, MMcf, Bcf or Tcf?
Natural gas is sold in units of thousand cubic feet, (Mcf, using the Roman numeral for one thousand). Units of a mil- lion cubic feet (MMcf), billion cubic feet (Bcf), or trillion cubic feet (Tcf) are used to measure larger quantities. The United States currently consumes about 22 Tcf annually. A Tcf is enough natural gas to:
? Heat 15 million homes for one year ? Generate 100 billion kilowatt-hours of electricity ? Fuel 12 million natural-gas-fired vehicles for one
year " incredible!

also some our marcellus shale is wet gas which actually sells for 75% more than dry gas which again gives our marcellus significant value

AS for our valuation with out the marcellus and utica i can only refer to the reasons rb milestone gave us a value of 27.5 cents


1 EEG has an impressive track record in acquiring oil & gas assets. After acquisitions in the Appalachian Basin and in Kansas, EEG?s EPS rose from -0.1 cents in December 2009 to 2.68 cents in December 2010. By 2015, EEG intends to increase production by 4,500 boe/d through acquisitions. Its past acquisition record underscores our confidence in EEG?s management and we believe that the company has the requisite skills to source and acquire value accretive assets

2 Robust Price Outlook for Oil & Gas: EEG has plans to raise its production from current levels of 1,520 boe/d to 2,500 boe/d by end of 2012. The U.S. Energy Information Administration (EIA) has forecasted an average price of US$103 and US$107 per barrel for WTI crude in 2011 and 2012, respectively, whereas for natural gas the EIA is expecting an average price of US$4.24 per MMBtu in 2011 and US$4.65 per MMBtu in 2012. EEG?s rise in production, coupled with the firm crude oil prices in 2011 and 2012, will give a significant boost to the company?s revenues and cash flows

3 Attractively Valued: The company is trading at 5.6x based on EV/2P reserve basis against the industry average of 22.56x, a steep discount of 75%. Even after adjusting for oil/gas mix, the company?s target EV/2P reserves ratio should be 7.8x. Hence we believe that EEG is considerably undervalued at this juncture