The Los Angeles Basin is one of the most prolific oil-producing basins in the world, with over 7.4 billion barrels of oil having been produced since the late 1800s. For the year ended December 31, 2005, California ranked third among U.S. states in crude oil production, behind only Texas and Alaska, and accounted for approximately 12% of total production in the United States. As of December 31, 2004, California ranked third among U.S. states in crude oil reserves, behind only Texas and Alaska, and accounted for 16% of total reserves in the United States.

In addition to oil and gas exploration activities, California is a major refining center for West Coast petroleum markets with over 20 refineries and a combined crude oil distillation capacity totaling more than 2 million barrels per day, ranking as the third highest state in the nation in crude oil refining capacity.

The State of Wyoming has a long history of oil and gas production, and its producing basins remain some of the most active in terms of current drilling activity and production. Oil wells were first drilled in Wyoming during the late 1800\\\\\\\\\\\\\\\'s, beginning in 1884 at Dallas Dome in central Wyoming. For the year ended December 31, 2005, Wyoming ranked seventh among U.S. states in oil production, accounting for approximately 3% of U.S. production, and fifth among U.S. states in oil reserves as of December 31, 2004. The largest oil producing regions in Wyoming are the Powder River Basin, the Green River Basin, the Big Horn Basin, the Overthrust Belt, and the Wind River Basin.

In addition to oil, the state is a major producer of natural gas and led the nation in coal production in 2004. For the year ended December 31, 2004, Wyoming ranked second and third in reserves and production, respectively, among U.S. states in natural gas.

The Company’s second largest property in the Los Angeles Basin is the Rosecrans Field. The Company operates 40 wells in the Rosecrans Field and owns a 99.5% working interest and a 91.0% net revenue interest. The Company’s current production is approximately 402 Boe per day and its estimated proved reserves as of December 31, 2005 were 2.3 MMBoe.The Company third largest property in the Los Angeles Basin is its interest in the Brea Olinda Field. The Company operates the Brea Olinda property. The Company’s current production is approximately 234 Boe per day and its estimated proved reserves as of December 31, 2005 were 1.9 MMBoe.

The Company’s properties in the Wind River and Big Horn Basins were acquired in March 2005. The Company operates 56 wells in the Black Mountain Field and holds a 98.39% working interest and 86.68% net revenue interest. Production is from the Tensleep, Amsden and Madison formations with the producing zones as shallow as 2,000 feet and as deep as 4,500 feet. Current production is approximately 485 Boe per day and the Company’s estimated proved reserves as of December 31, 2005 were 4.6 MMBoe.

The Company operates 70 wells in the Gebo Field and holds a 100% working interest and 85.83% net revenue interest. Production is from the Tensleep formations from 3,000 to 5,000 feet deep. Current production is approximately 666 Boe per day and the Company’s estimated proved reserves as of December 31, 2005 were 3.3 MMBoe. The Company operates 23 wells in the North Sunshine Field and holds a 100% working interest and 87.43% net revenue interest. Production is from the Phosphoria at 3,000 feet and the Tensleep at about 3,500 feet. Current production is approximately 282 Boe per day and the Company’s estimated proved reserves as of December 31, 2005 were 2.7 MMBoe.

The Company operates 38 wells in the Hidden Dome Field and holds a 100% working interest and 90% net revenue interest. Production is from the Frontier and Tensleep formations with the producing zones as shallow as 1,200 feet and as deep as 4,500 feet. Current production is approximately 185 Boe per day and the Company’s estimated proved reserves as of December 31, 2005 were 1.0 MMBoe.

Total expenses were $41.4 million for the six months ended June 30, 2006 and $24.8 million for the six months ended June 30, 2005, an increase of 67%.

Operating costs were $22.2 million for the six months ended June 30, 2006 and $14.0 million for the six months ended June 30, 2005, an increase of 58%.

Interest and other financing costs, net were $1.7 million for the six months ended June 30, 2006 and $521,000 for the six months ended June 30, 2005, an increase of 226%.

Net income was $8.9 million for the six months ended June 30, 2006 and $11.7 million for the six months ended June 30, 2005, a decrease of 24%.