Page 8 - PennProject

could save thousands of dollars in taxes by investing in Oil & Gas Working Interests.
We always suggest consulting with a tax advisor regarding the tax benefits for your
specific situation.

OIL & GAS REVENUE PAYMENT SCHEDULE

Below is what investors can expect with regard to monthly oil & gas revenue payments
with a successful well.

As soon as a well is put into production, we will begin selling the oil and/or gas to a local
buyer which is BML Inc.. When the oil storage tanks are near full, we will notify the
company that buys the oil and they will send a tanker truck to the well to pump out the
oil and meter it. Each time they pick oil up from our tank(s), we receive a “run ticket”
showing the date and amount of oil picked up. At the end of each month, the buyer
begins the process of preparing the payment to us for the oil picked up that month.

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We will usually receive the buyer’s payment on the 20 of the month. Once we receive
the payment, we reconcile it against our run tickets to make certain it is correct. We then
input the oil revenue into a program we run on the computer called “Wolfpack”. We also
input the expenses for the well which normally are the operator fee, pumper fee, electric
bill, and any other expense such as water disposal or well repairs (if any).

The Wolfpack software will then calculate each working interest owner’s portion of the
revenue and expenses and print out itemized statements. These statements along with
checks are then mailed to you.

Any gas produced is sold to a local company which is Embridge Energy and is
transported via pipeline. The gas revenue will be included in your statement.

To recap, we will receive the payment from the buyer on June 20 for the oil & gas
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produced and sold to them in May. We then prepare the statements and checks and
mail them resulting in a 30 lag on your first check.