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Kerogen Oil Production Group, LLC

K PGK PG1. KOPG is an early stage start up company engaged in the design and

licensing of process technology to produce kerogen oil (liquid similar to crude oil) from surface mined oil shale in an economic and environmentally responsible manner.

2. KOPG’s process is based upon a “unique assemblage” of previously proven technologies, and thus is considered to be patentable.

3. A provision patent submission was made in May 2012, and a Patent Cooperation Treaty submission (int’l patent protection) will be made in November 2012.

4. Our goals in our discussion with you include:A. Sharing our plans and vision B. Soliciting your thoughts, and C. Gauging your interest as a possible participant in KOPG’s future

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Kerogen Oil Production Group, LLC

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CEO: Chuck Keracik• COO Red Leaf Resources• Exec Officer Abu Dhabi National Energy Co• 30+ yrs with BP Amoco• BS ChE University of Pittsburgh• MBA Houston Baptist University• Amoco Research Petrophysics Program

CFO: Murray Air• Senior Advisor, The Taffrail Group• VP, British Petroleum• CFO, Ok Tedi Mining (Papua New Guinea)• 30+ yrs with BP Amoco• BS Ind. Mgt. Georgia Tech• MBA Harvard Business School

COO: Evan Jones• Principal Talbot and Webster, LLC• 30+ yrs with BP Amoco• BA Knox College, Chemistry and Math• MBA Indiana University• Research, Montana State University

The information in this document was prepared by representatives or associates of the Kerogen Oil Processing Group (KOPG). The information herein, and the sources of the information, are believed by KOPG to be reliable, but neither KOPG nor its representatives or associates make representation and/or warranty as to the accuracy or completeness of such information. All amounts, discussions etc are considered to be illustrative and cannot be assured to be indicative of actual facts, amounts or results. Any use, disclosure, distribution, dissemination, copying or reproduction of this document without the prior written consent or approval from KOPG is strictly prohibited and also governed by the provisions of signed Non-Disclosure Agreements where applicable.

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Oil Shale Resource Potential

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The Resource: Kerogen

• The solid organic material found in organic rich shale, aka oil shale

• Oil shale is the sedimentary rock from which all naturally occurring oil has been derived

• Over geologic time, some shale is “thermally matured” with depth of burial, and the kerogen is “cracked” to generate oil and gas that migrates to fill oil and gas reservoirs or remain in the shale

• Not all shale gets buried deep enough to thermally mature – it is these near surface shale deposits that are the target for KOPG technology

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Resource: Shale Play Types as a function of depth / thermal maturity

Shale

Dry gas

BarnettE. Marcellus

Wet gas

Eagleford

Mostly oil

BakkenNiobrara

<300 ft

Ex-situHeating at

Surface

Earth’s Surface

~1,000 ft

In-situHeating of Subsurface

.

Thermally Immature

Shale

Targeted niche ofKOPG technology

Thermally Mature Shale

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Resource: Scope of US Oil Shale • ~1 trillion barrels recoverable via pyrolysis from near

surface shale (USGS)

• These resource have been recognized to be strategic since 1912 (Office of Naval Petroleum and Oil Shale Reserves)

• >>100 yr supply

• Prospective global oil shale potential of 3 to 4 trillion barrels

• Significant DOE and industry effort to commercialize oil shale since 1970s oil crisis

• Today there is no commercial US oil produced from surface shale

• Process nut has yet to be cracked due to::– Technology

– Economics

– Environment

• Without processing technology which meets these criteria, this enormous untapped resource is Moose Pasture

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US Oil Shale vs Conventional Resources

US Oil Shale Technically Recoverable Resource

Bill

ions

of B

arre

ls

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Why has surface oil shale not been exploited?

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Mining Costs Killed Oil Shale in the 70s/80s

Dramatic Increase in Nominal Oil Price(versus Early 80s)

Dramatic Increase in Mining Efficiency(versus Early 80s)

0

5

10

15

20

25

30

1983 1993 2003

Surface Mine Productivity (Coal)

Prod

uctiv

ity (t

ons/

man

-hr)

Sources: Annual Coal Report, (and predecessor report titles), DOE/EIA-0584 (years 1993-2003), DOE/EIA-0118 (years 1976-1992) Energy Information Administration.

Oil Price ($/bbl) Mining ($/bbl) %Revenue Mining ($/ton) 1983 $29 $26 ~90% ~$13*2012+ $100 $20 ~20% ~$10*

* Nominal price of sub-bituminous PRB coal

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Industry has been Pre-occupied with Processes that Combust or Burn Shale

• Many kerogen oil extraction technologies involve the burning of kerogen residue (char) to provide the heat source for pyrolysis reactions– This heat is derived from either combustion gases or– From hot recycled shale particles

• These methods were favored during the late 70s/ early 80s• Examples: Paraho I, Kviter, Fushun, Enefit, Petrosix, ATP, etc.• Today these processes account for all global production (20,000 bopd)• Problems:

– Often lower yield (part of oil product is consumed)– Often lower API– High emissions and poor carbon footprint– Spent shale can be an environmental problem (due to high temperature)– Water often consumed to cool hot shale– Complex retort apparatus required (all are continuous processes)

• Despite improvements in surface mining efficiency, these technologies still have not been embraced due to economic and environmental drawbacks

• In its conception, the KOPG Process has been designed to avoid these problems

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KOPG’s Process Technology

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KOPG’s Unique Process TechnologyKey Characteristics:• Surface facility in which crushed shale is

heated in a steel vessel, aka retort kettle• Super-heated steam is used as heating

medium• Batch Process, whereby a volume of

crushed shale sequentially undergoes a:– Pre-Heating Phase– Peak Heating Phase– Cooling Phase– Empty & Recharge Phase

• Multiple retort kettles are laid out in an array, each with batches of shale operating at different phases of heating & cooling

Super Heated Steam Injected @ 750F to 900F

Insulation

Steam & Pyrolysis Vapors @400-700F

Perforated Distributor Plate

Chute

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KOPG Technology Advantages• Mechanically and operationally simple• Employs proven physical principles• Low Capex/bbl and high ROCE versus typical E&P projects• 100% of solid kerogen in the rock is converted to products • ~7% of the energy in the oil and gas produced is required to heat the rock to pyrolysis

temperatures (KOPG recycles this thermal energy)• Suitable for remote areas

– Energy Self Sufficient (produced gas is used for fuel)– Net Water Producer (native water is liberated from raw shale)

• Carbon footprint lowered by using produced gas (>50% hydrogen)• Spent shale, returned to mining site for reclamation, has been steam cleaned and

water washed • All processing is done in contained facility where emissions can be minimized /

managed• Ideal candidate for Cogeneration (electricity and steam) • No wellbores, no fracking, no aquifer pollution risk

In sum, KOPG technology is capable of satisfying relevant technical, commercial & environmental design criteria

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Economics of KOPG Process

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KOPG’s Business Model

KOPG TechnologyLicensing

Preferred Mining Contractors

Preferred EPCM / O&M Contractors

Preferred EPC Contractors

Transportation

Refining

Profits, Royalty & Gov Take

KOPG ORI

Drives Licensee Return

Drives KOPG Investor Return

Revenue to Licensees$1 trillion barrels

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Example Commercial Development(Single 10,000 barrels per day unit)

• 20 yr Project• 73 mmbo• $350 million Capex ($5/bbl)

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Return for KOPG Licensee (Single 10,000 barrels per day unit)

Attractive Pre-tax Income

Benefits:• Massive Reserve & Production Adds / Replacement (73mmbo & 10,000 bpd for each unit development)• Low Capex ($5/bbl) • Attractive Pre-tax Income ($20/bbl) • High ROCE • Significant Upsides with Scale

– Lower Oil Price Penalty– Lower Assumed Transport Cost

Netback Price

Quality Discount

Capex

Mining Opex

Process Opex

Transportation

0

20

40

60

80

100

Revenue Cost ORI to KOPG Profit & GovernmentTake

$/bbl

- =-

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Return for KOPG Investors Revenue Drivers: • Initial licenses issued in 2014/15 • First license in commercial production by 2017• Assumes only thirty 10,000 barrel per day licenses by 2028• KOPG receives 5% ORI on 2.2 billion barrels

Cost Drivers: • $27mm for 3-Phase Work Program & Organization Costs to point of

positive cash flow in 2017• Thereafter, minor Organization and R&D expenses

Net Cash Flow: • Cash Flow of $10mm p.a. in 2017 steadily rises to $250mm p.a. in 2028 • Enterprise NPV10 approaching $1 billion• Significant multiple on initial investment possible, i.e. 10x to 100x

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Timeline and Next Steps

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KOPG Timeline2012 2013 2014

Phase 1 Phase 3

Period of Organizational Expansion

Provisional Patent Filed

License #1

2015

Phase 2

KOPG EstablishedJoin HTCInt’l Patent Sub

University & Nat Lab Engaged

Preferred Global EPCM Contractor Engaged

Initial Capital Raise

License #2

2016Final US and Country Patent Submissions

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Phase 1A $0.3mm

Phase 1B $3mm(University & Nat Lab)

Phase 2 $6mm(Global EPCM Contractor)

Phase 3 $7mm(Global EPCM Contractor)

Other $11mm(KOPG)

Technical & Commercial Feasibility Study

Lab Analysis & Simulation Tools (Design Basis)• Kinetics (reaction rate) • Fluid Properties Characterization• Equation of State Model (EOS)• Thermodynamics & Heat Transfer• Compositional Finite Difference (CFD) Simulator• Materials & Metallurgy• Environmental Analysis (spent shale)

Pilot Demonstration Apparatus • 1/10 scale for critical engineering dimensions

Single Full Scale Retort Prototype• Establish operational reliability

Business Operation• Business Development• Office & Administration• Legal: patent, licensing, etc.• Of this, $7 spent in 2016 (Success Case)

KOPG Funding Needs For Front-end Loading Thru 2016

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Purpose of the Work ProgramPhase 1 technical work is being undertaken to calibrate modeling tools used to forecast oil, gas and water production rates, oil quality, steam requirements, etc. These tools will be used to size prototypes and optimally size a commercial scale development system.

Phases 2 & 3 technical work includes the construction of a reduced scale prototype and single full scale retort kettle to demonstrate, for the avoidance of any doubt, that a commercial scale operation will work as intended.

Our project management focus is therefore directed toward eliminating investment risk arising from:• Cost• Schedule• Production Rate & Operability

The work program is not designed to prove that the technology will work, but rather to properly “front end load” a common solution applicable to all future development projects.

Technical elements of the KOPG process which have been previously proven include: • Pyrolysis• Phase behavior of hydrocarbon systems• Thermodynamics and heat transfer• Fixed / expanded bed reactor technology• Gravel bed filtration • Steam generation facilities• Production facilities• Mining operations• etc.

The primary risk is considered to be the operating reliability of a commercial scale retort kettle. As this is a manufacturing operation, each retort kettle will need to be efficiently emptied of spent shale and reloaded with raw shale approximately 2 times per day. This risk can be readily mitigated by the work program.

In sum, KOPG Process is a unique assemblage of previously proven technologies.

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Process Design Considerations

Environmental Responsibility• Contained Surface Processing• No Water Required• Energy Self Sufficient• >50% H2 fuel gas

Commercial Viability• Vast Resource• Low Capital Requirements (on per barrel basis) • Exceptional Returns

TechnicalFeasibility• Hydrous Pyrolysis Proven• Work Program to Validate Process

KOPGSuccess

KOPG InvestorCapital

KOPG Investor ReturnsLicensee Project

Returns

Land Reclamation(to high standard)