Page 11 - Petrospex_Elaine Prospect

RISK FACTORS

Oil and gas exploration and development activities are inherently dangerous and involve
significant risks of losses and liabilities to third parties. In addition to encountering these risks,
purchasers will encounter other significant risks peculiar to ownership of Working Interests.
Investment in Working Interests are suitable only for those persons who fully understand and can
afford to bear such risks and who have no need for liquidity from such investments, i.e.
accredited investors. Prospective Purchasers are urged to analyze the risk factors discussed
below as well as other risks factors attendant to investments in Working Interests and to consult
with their own legal, tax and financial advisors concerning these matters prior to purchasing
Working Interests. You are also encouraged to ask questions of the Operator.
There is no assurance that the proposed activities herein will be successful or even if they are
that it will be in sufficient quantities of oil and/or gas to enable purchasers to recoup a part or all
of their investments.

Drilling or developing activities may be curtailed or delayed as a result of delivery delays,
weather and shortages of drilling rigs, equipment, materials and supplies. There is no assurance
that delays or shortages will not be encountered in the project.

Prospective Purchasers must recognize that the Working Interests have neither been, nor will
they be, registered under the securities act of 1933, as amended, or any states’ securities laws.
Therefore, no regulatory authority has reviewed the terms of this offering and thus purchasers do
not necessarily have any of the protection afforded by applicable federal and state securities
laws.

There is no market for the Working Interests and none is likely to develop; accordingly no
Purchaser should expect to be able to readily liquidate his/her investment in case of emergency.

The Operator expects to own and acquire other oil, gas and mineral prospect and interests therein
and contemplates developing these interests for its own account and/or jointly with others.
Purchasers will acquire no interest in these prospects or tracts or any minerals other than those
found in the prospect by virtue of purchasing Working Interests offered hereby. The Operator
will devote only so much of its time to the activities of the project as in its judgment is
reasonably required.

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