ny update from statesman

12/12/06

At the South Buena Vista prospect, also located in the southern San Joaquin basin, testing of the uppermost (fourth) zone in the North Yowlumne No. 1-26 exploration well has been suspended until a service rig capable of perforating and testing the zone can be secured.

Testing to date has confirmed oil saturation in all three lower zones and indicated pressure communication between these and the productive zones of the adjacent field. The drilling was completed to test a large oil prospect on the South Buena Vista prospect thought by management to be analogous to the immediately adjacent Yowlumne field, which has produced over 110 million barrels of oil and 95 billion cubic feet of gas.

The fourth zone is not interpreted by management as being analogous to the reservoirs of the adjacent field, but rather as a separate submarine sand-channel deposit. It is believed to be potentially productive between 12,140 and 12,400 feet, based on high resistivities on the electronic well logs.