mcfarlane prospect

OverviewWe see the US oil and gas sector pushing opportunities and investments across the value chain. This shows the market’s ability to adapt and build a more robust portfolio as they position operations for the future. Our research echoes this and predicts a more positive outlook for the US market in the year ahead. By providing our Subscribers with a built-in exit strategy Kingfisher allows Unit Holders to monetize their Unit positions for cash, stock or tailored combination of both.

McFarlane ProspectWest Texas, 3 Wells

www.kingfishercorp.com

2173 Salk Ave., Ste. 250, Carlsbad, CA 92008

(877) 258-0406

www.kingfishercorp.comMcFarlane Prospect | West Texas, 3 Wells 1 2

Our PositionKingfisher Corporation stands ready to meet the energy needs of the re-emerging Oil & Gas Sector. With prices stabilizing and industry confidence on the rise, Kingfisher Corporation offers 3 - 5 times R.O.I. within a durable low-risk high-yield environment, created to ensure that our many “Subscribers” are protected from market fluctuations. How? By focusing on diversification and a disciplined Field Operating Process.

The OpportunityKingfisher Corporation has distinguished itself as an all-inclusive investment option, by skillfully incorporating initial Working Interest Units and their advantages (including the tax consequences), the intrinsic long-term cash flow, as well as the ability of the investor to participate in an array of opportunities beyond one Well. Kingfisher Corporation delivers a sustainable income stream, short-term high-yield play, or a multi-year rock solid security. Kingfisher is compatible with many short, mid & long term portfolio objectives.

Dear Colleague,

Kingfisher Corporation has entered into a Joint Operating Agreement for an exclusive (3) well drilling program with CWO Energy, LLC. The Texas Railroad Commission keeps all regulatory filings for CWO Energy, LLC (#195776) as a bonded operator in the State of Texas.

The U.S. Energy Information Administration (E.I.A.) recently issued reports of a bullish forecast over the next several Fiscal Quarters. Analysts anticipate WTI Crude Oil Pricing to pace itself at well above $72.00 per barrel by the Fall of 2019. Kingfisher Corporation recognizes the opportune economic climate we are in and is eager to position it’s Financial Partners for success during this unique era. With the technical expertise of CWO Energy, LLC. we are ready, willing & able to move forward with a bold agenda of completing all (3) Wells in Summer of 2019. With competitive Offtake Agreements in place as well as a managed decline in Exploration & Production expenditures, the time to drill is NOW!

Callahan County’s reputation for oil riches started to be earned in the 1920’s. In September of 1929, “THE SWAB”, monthly publication noted that Callahan County was an “Independent Operator’s Paradise.”

Kingfisher (3) Well McFarlane Prospect has an abundance of oil reserves in place to drill and develop over the next few years; the adjourning lease east of J.W. McFarlane (06172) in Section #23 operated by AdenRyen Ltd. Co. has produced over 689,420 barrels of oil since 1957 from 320 acres. 60 years of oil production, $40.00 average cost would have generated over $26 million dollars of oil.

CWO Energy has acquired 290.5 acres +/- JW McFarlane lease in Callahan County the McFarlane lease has accumulated 8,390 barrels of oil. New millennium has brought forth new technology to bring oil to surface, high efficiency downhole pumps, long stroke pumping units, water flooding improves hydrocarbons flow in formation.

Kingfisher Corporation / CWO Energy will finalize permitting on location and drill (3) new wells, this approach has been proven to diversify and minimize risk for dry hole. CWO plans to drill more shallow wells and possibly drill a deep Ellenburger well within the next two years, CWO has deep rights to explore potentially all pay zones, Ellenburger, Barnett Shale, Marble Falls, Strawn, Caddo, Jennings Sand. The oil reservoir runs on east and west trend. Our Financial Partners will benefit significantly as we continue to grow & experience success.

All exploration drilling programs carry some degree of risk. We encourage you to thoroughly review the information provided for the purpose of ensuring that you have a comprehensive understanding about these Prospects and gain comfort in the fact that our professional approach will produce reasonable and achievable results.

Respectfully,

John W. Powell III Sr. Managing Partner

May 15, 2019

West Texas 3 Well J.V. , Callahan County, TexasINVESTMENT DISCLAIMER

THE UNIT OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES ACT, AND ARE BEING OFFERED PURSUANT TO EXEMPTIONS FROM SUCH REGISTRATIONS. NO INTEREST MAY BE RESOLD OR OTHERWISE DISPOSED OF BY AN INVESTOR UNLESS, IN THE OPINION OF COUNSEL FOR CWO ENERGY, L.L.C. REGISTRATION UNDER SUCH SECURITIES ACT IS NOT REQUIRED.


Project Summary

TOTAL WELLS 3

NEW DRILLS 3

LOCATION WEST TEXAS

COUNTY CALLAHAN

SURVEY E.T.R.R. CO. SURVEY SECTION 24, A-1632

OPERATOR CWO ENERGY, LLC. RRC #195776

LEASE NAME J.W. MCFARLANE, ACRES: 290.5

TOTAL PROJECT $1,500,000

PER UNIT COST $30,000

WORKING INTEREST 100.00%

NET REVENUE INTEREST 70.00%

(W.I.) PER UNIT 2.00% (IN EACH WELL)

(N.R.I.) PER UNIT 1.40% (IN EACH WELL)

TOTAL UNITS 50

PAYOUT IN MONTHS 5.95%

RETURN ON INVESTMENT (ROI) 201.64%

WELLS 3 CWO ENERGY, LLC OPERATOR #195776 CALLAHAN COUNTY

WELL: LEASE NAME 42-059 API WELL # DESCRIPTION ACRES +/- 290.5

J.W. MCFARLANE SURVEY #24 ABSTRACT #1632

1 32155 JW MCFARLANE 15 NEW DRILL



Kingfisher 3 Well J.V.

OIL WELLS 3

OIL PER WELL & PER DAY (BOPD) 60

DAILY OIL PRODUCTION (3 WELLS) 180

DAYS 30

MONTHLY OIL PRODUCTION 5,400

PRICE OF OIL $50

MONTHLY OIL REVENUE $270,000

STATE SEVERANCE TAX 4.61% $12,447

MO. SUB TOTAL $257,553

MONTHLY EXPENSES $5,500

MONTHLY REVENUE $252,053

ANNUAL REVENUE 12 $3,024,636

Estimated Monthly Lease Operating Expenses

PUMPER $2,000

ELECTRICITY $1,800

CHEMICALS $1,200

ADMINISTRATION $500

MONTHLY EXPENSES $5,500 $5,500

ANNUAL EXPENSES $66,000 $66,000

EXPENSE PER UNIT $366.67 $367

Annual Revenue

KINGFISHER 3 WELL J.V. 100.00% $3,024,636

NET REVENUE INTEREST 70.00% $2,117,245

Turnkey Cost And Cost Per Unit

KINGFISHER 3 WELL J.V. $1,500,000 $1,500,000

(UNITS) COST PER UNIT 50 $30,000

W.I. (ANNUAL INCOME) 2.00% $60,493

N.R.I. (NET INCOME) 1.40% $42,345

MONTHLY INCOME $5,041.06

PAYOUT 5.95

ROI 201.64%

The about conversion table is for illustrations purposes only. It is not intended to be a forecast or a projection. It is only intended to be used as an if/then scenario. Monthly operating expenses (Est. 5% of gross sales) and oil severance tax (4.6%) have not been deducted from monthly income estimates. Figures assume a 30 day month and a one unit investment. All amounts were rounded up to the nearest dollar for clarity sake.


Kingfisher Illustration (Kingfisher 3 Well J.V.)

$1,500,000 100% KINGFISHER DRILLING PROGRAM

TOTAL WELLS 3 WELLS

PRICE OF OIL BOPD $50 $60 $70 $80

(BOPD) BARRELS OIL PER DAY 60 3 180 180 180 180

OIL PRODUCTION FROM 3 WELLS 3 180 180 180 180

DAYS & MONTHLY OIL PROD. 30 12 5,400 5,400 5,400 5,400

MONTHLY OIL REVENUE (GROSS) $270,000 $324,000 $378,000 $432,000

STATE SEVERANCE TAX 4.61% $12,447 $14,936 $17,426 $19,915

MONTHLY EXPENSES (ESTIMATED) $5,500 $5,500 $5,500 $5,500 $5,500

MONTHLY REVENUE (NET) $252,053 $303,564 $355,074 $406,585

(BOPD) & ANNUAL INCOME 180 $3,024,636 $3,642,763 $4,260,890 $4,879,018

SECOND YEAR (40%) 108 $1,944,000 $2,332,800 $2,721,600 $3,110,400

THIRD YEAR (30%) 76 $1,360,800 $1,632,960 $1,905,120 $2,177,280

FORTH YEAR (30%) 53 $952,560 $1,143,072 $1,333,584 $1,524,096

FIFTH YEAR (30%) 37 $666,792 $800,150 $933,509 $1,066,867

DECLINE CURVE

1-(100%) 64,800 BOPD

2-(40%) 38,880 108

3-(30%) 27,216 76

4-(30%) 19,051 53

5-(30%) 13,336 37

5 YEARS OF OIL PRODUCTION 5 YEAR ANNUAL REVENUE

163,283 $8,164,152 $9,796,982 $11,429,813 $13,062,643

(ROI) IN 5 YEARS 5.44 6.53 7.62 8.71

PRICE PER BARREL $50 $60 $70 $80

ESTIMATED MONTHLY (PAYOUT) 5.95 4.94 4.22 3.69

ESTIMATED (ROI) 201.64% 242.85% 284.06% 325.27%

The above conversion table is for illustrations purposes only. It is not intended to be a forecast or a projection. It is only intended to be used as an if/then scenario. Monthly operating expenses and oil severance tax (4.6%) have been deducted from monthly income estimates. Figures assume a 30 day month and investment of $1,500,000. All amounts were rounded up to the nearest dollar for clarity sake. Check with your CPA or accountant for advice.

Direct InvestmentIn Phase 1, is all about direct investing, generating cash flow, and rolling over investor capital 3-5 times.

ProductionIn Phase 2, is exploration and production (E&P). Companies focus on finding hydrocarbon reservoirs, drilling oil and gas wells, producing and selling these materials to be refined later into products such as gasoline.

Benefits:

• Direct Investment

• Cash Flow-High Rates of Return

• Leverage Overall Growth in Energy Markets

Diversified Project Portfolio:

• Multi-State Strategy

• Well Defined & Prolific Field

• Multiple wells-Proven Production

ConversionIn Phase 3, our Financial Partners are able to transition from Working Interest Unit value positions into stock, cash or a tailored combination of both.

Exit StrategyIn Phase 4, Kingfisher intends to issue an IPO, under Reg A, for a new Publicly Traded company as soon as 6 months from first barrels flowing into the tanks.

In Phase 1 investors will have an opportunity to convert all or part their working Interest Units into Cash, Stock, or a tailored combination.

Benefits of Converting:

• Securitize Working Interest Units

• Convert at Premium to Original Principle Plus Stock

• Participate In An Appreciating Asset

Balanced Portfolio Strategy:

• Tax Efficient Investment

• Potential for High Yields

• Growth in the lucrative Energy Sector

Advantages Of Direct Investing:

• Monthly Cash Flow

• Tax Advantages

• Generate 3-5 Return on Investment (ROI)

Long Term Strategy:

• Healthy Asset Allocation

• Durable Long-Term Investment Vehicle

• Oil & Gas Investment = Hedge Against Inflation


The following subsections provide technical justification for the continued development and investment in the J.W. McFarlane lease.

Existing Production from Multiple Zones

Currently Phase 1 development has resulted in economic production from both the L. Frye and M. Tannehill formations; the 3D has resumed production from the M. Tannehill, while the new drill #7 has initiated production from the L. Frye, corroborating the oil show seen while drilling. The #8 and #9 have yet to be completed, so production values have yet to be established, although they also had oil shows while drilling. In addition, records indicate commercial U. Tannehill oil production from the 2D, giving three known pay zones on the J.W. McFarlane lease, with three other potential pay zones (L. Tannehill, Saddle Creek and Cook.)

Structural Trap

Based on the well logs from Phase 1 development and previous development, structural and isopach maps were constructed, indicating a structural high point with trapping faults in the northeast portion of the lease. All six of the shallow sands (L. Frye, U. Tannehill, M. Tannehill, L. Tannehill, Saddle Creek, and Cook) exist in the northeastern quarter of the lease in significant thicknesses, providing up to six different targets, and greatly reducing the risk of wells drilled in this area.

Conclusion

Based on the data available from Phase 1 development and previous area development, further Phase 2 development of the J.W. McFarlane lease is recommended; the presence of up to six shallow target formations allows for attractive returns while having a much lower risk profile relative to other oil and gas investments. This opportunity is compounded by the current advantageous pricing environment for oilfield services, allowing for economical drilling, completion, and installation of production facilities. When compared to other oil and gas investments, this stands out due its low cost of constructing many wells, combined with the risk reduction of targeting multiple proven oil producing formations.

Personal Background

I have a diverse background over the past five years of professional and academic experience in the various aspects of upstream petroleum engineering including drilling, log analysis, completions and stimulation, reservoir estimation, and production. Currently, I am employed as a drilling engineer at Baker Hughes Inc. in the turnkey drilling operations department, working abroad mainly in Saudi Arabia on development drilling in conventional reservoirs, with work primarily centered on well design and optimizing wellsite operations. Previously, working for shale gas operator Exco Resources LLC, I performed hydraulic fracturing optimization for Marcellus shale assets, resulting in optimizations to the fracturing technical design and flowback practices. Prior to Exco, I worked for Stonebridge Operating Co. LLC where I studied reservoir injectivity for various Appalachian basin formations, allowing for optimization of disposal wells. This experience is curtailed by a B.S. in petroleum engineering from Marietta College in 2014, where I gained practical knowledge of petrophysics, geology and log interpretation, reservoir estimation, and conventional reservoir stimulation.

Regards,

Mark Wieferich Consulting Petroleum Engineer on behalf of CWO Energy LLC

March 19, 2017

Historical Brief: Callahan County Oil & Gas Activity


Frye

The Frye sand is immediately above the Stockwether Lime and varies in thickness from 0-12 feet. Production from this zone exists to the north of the lease and had IP values of over 100 BPD. The Frye Sand trend continues onto the McFarlane lease and may represent a potentially new production zone in the north-east quarter of the lease. The Frye is prospective in the north-central portion of the McFarlane lease and in the section to the North as shown on the map with yellow polygons.

Upper Tannehill

The Upper Tannehill sand is immediately below the Stockwether Lime and varies in thickness from 0-30 feet. Production from this zone exists in the northwest quarter and south eastern portions of the lease and has had IP values of over 500 BPD. This zone is also a major productive interval in the Section 22 immediately to the east. This zone has been shown to produce in Section 24 in well #4-24 with an IP of 24 BPD. This interval has been the primary reservoir for the McFarlane lease and has been in production since 1930. This sand can be expected to produce hydrocarbons wherever it has structural or stratigraphic closure in this area. The prospective areas for the Upper Tannehill are outlines in yellow on the map.

Middle Tannehill

The Middle Tannehill Sand appears to be an east-west trending channel and varies in thickness from 0-25 feet. Production from this zone exists in the northwest quarter and south eastern portions of the lease and has had IP values of up to 40 BPD. This zone is also productive in the Section 24 immediately to the west. Three prospective areas are outlined in yellow on the maps. These areas may have sufficient sand and either structural closure or stratigraphic changes capable of trapping hydrocarbons.

Lower Tannehill

The Lower Tannehill Sand is immediately below the Middle Tannehill Sand unit and varies in thickness from 0-40 feet. This unit represents a primary productive reservoir in Section 22 and has had IP values of 36 to 74 BPD. This unit exists as a broad channel that winds across the central and southern portion of the McFarlane lease. Three potentially productive areas that may have significant sand development and structural closure are outlined in yellow.

Saddle Creek

The Saddle Creek Sand is immediately below the Tannehill Sand units and varies in thickness from 0-30 feet. Production from this zone exists in the northwest quarter of Section 23 (well #13-23) and the southwestern portions of Section 22 with IP values of 28 to 103 BPD. The Saddle Creek is similar to the lower Tannehill sands with being deposited as discontinuous channels that trend generally east-west across the McFarlane Lease area. There are four prospective areas that may have sufficient sand with structural closure outlined in yellow on the map.

Cook

The Cook Sand is below the Saddle Creek and Flippen Lime units and varies in thickness from 0-25 feet. Production from this zone exists in the eastern half of Section 24 and has had IP values of over 190 BPD. This zone is prevalent across the southern portions of the McFarlane lease. The yellow polygon highlights where the Cook Sand has a thickness of 15-25 feet and have either structural closure or potential stratigraphic pinch-out thereby creating prospective opportunities.

Onsite Active Shale Formations


Lower Tannehill

Middle Tannehill

Upper Tannehill

Stockwether

Lower Frye

Based on information from the cuttings analysis and the electric logs, the following interval(s) have been identified for completion and production for new oil wells slated to be drilled

Formation Formation Top Depth

Formation Bottom Depth

OWC Depth

Net Pay

Shale Volume Fraction Vsh

Uncorrected Porosity

Corrected Porosity

Corrected Sw

Lower Frye 1286 ft 1292 ft 1292 ft 5.0 ft 26.7% 18.0% 13.2% 50.0%

Middle Tannehill 1390 ft 1392 ft 1392 ft 2.0 ft 30.0% 18.0% 12.6% 52.5%

Middle Tannehill 1398 ft 1402 ft 1400 ft 2.0 ft 20.0% 24.0% 19.2% 59.0%

One of the 6+ target zones of the J.W. McFarlane lease is the Middle Tannehill Sand, which has been a proven producer on the central portion of the lease, with the 3D having a measured IP of 45 BOPD, and the #9 having an IP of 10 BOPD.

Significant portions of the lease remain undeveloped, as existing development has been concentrated in the central portion of the lease.

Structurally, the Middle Tannehill Sand dips northeast up to an inferred fault, providing two structural trapping mechanisms, and numerous locations for future development drilling.

Middle Tannehill Sand

Another of the target formations is the Frye Sand, which has also been a proven producing formation, with #7 having an IP of 7 BOPD without any type of frac or acidizing well stimulation (frac planned to further increase production from Frye).Very little of the Frye has been developed on this lease, presenting lucrative opportunities for further development.

Structurally, the Frye Sand dips to the east and north up until the fault, presenting two clear areas of structural trapping, and many potential drilling locations for the Frye either as a standalone drilling target, or to be completed concurrently with other formations.

Frye Sand


J.W. McFarlane Lease Called 290.5 AC Known Casing Depth

15 16www.kingfishercorp.comWest Texas 3 Well J.V.

CWO Energy TeamJames Gorman and Jeff Chester teamed up in July 2015 to incorporate CWO Energy, LLC. Oil prices dipped to a 30 year low and the economic downturn created an enormous amount of opportunities to buy proven undeveloped oil properties during a time that the major oil companies were heavy in debt and re-allocating assets. Jim’s, experience in finance domestically and with overseas markets, Mr. Gorman’s expertise in the Financial Fields along with his contacts in the oilfield parts industry, will lead CWO Energy, LLC to yield higher margins with cost effective savings in oilfield parts, supplies and equipment. Mr. Chester’s leadership, in acquisitions of oil leases, heavy machinery knowledge, drilling expertise, roustabout, and completion in oil wells.

Our vision was embraced, and the two have combined their proven talents to take advantage of these market conditions, to develop low risk drilling projects in proven un-developed (PUD) fields. The vision for CWO Energy, LLC, after gathering data along with continuous consulting with industry professionals, is to take the J.W. McFarlane Lease to the next level in oil production. CWO Energy, LLC operates a 4 man crew on our workover rig; which keep expenses at the lowest operating levels possible, along with the ability to continuously operate and complete our wells. CWO’s goal for 2019, is to upgrade downhole and surface pumps, acidize/frac to stimulate and remove scale and corrosion in already producing wells, while drilling new wells to increase the daily production. In June or July, CWO energy, LLC will begin sending revenue checks out to the Joint Venture partners after all of the wells are up and running.

(Pictured left to right) Kody Chester, Ryan Williams, Kehl Chester, Wesley Holson, Mark Weiferich, Jim Gorman, Jeff Chester.

Tax Advantages of Oil and Gas Drilling Congressional Incentives Encourage Domestic Petroleum Development Oil and Natural gas from domestic reserves helps to make our country more energy self-sufficient by reducing our dependence on foreign imports. In light of this, Congress has provided tax incentives to stimulate domestic natural gas and oil production financed by private sources. Drilling projects offer many tax advantages and these benefits greatly enhance the economics. These incentives are not “Loop Holes” -- they were placed in the Tax Code by Congress to make participation in oil and gas ventures one of the best tax advantaged investments.

Intangible Drilling Cost Tax Deduction (See Section 263 of the Tax Code) The intangible expenditures of drilling (labor, chemicals, mud, grease, etc.) are usually about (65 to 80%) of the cost of a well. These expenditures are considered “Intangible Drilling Cost (IDC)”, which is 100% deductible during the first year. For example, a $100,000 investment would yield up to $75,000 in tax deductions during the first year of the venture. These deductions are available in the year the money was invested, even if the well does not start drilling until March 31 of the year following the contribution of capital (See Section 461 (i) (2) of the Tax Code).

Tangible Drilling Cost Tax Deduction The total amount of the investment allocated to the equipment “Tangible Drilling Costs (TDC)” is 100% tax deductible. In the example above, the remaining tangible costs ($25,000) may be deducted as depreciation over a seven-year period. (See Section 263 of the Tax Code.)

Active vs. Passive Income The Tax Reform Act of 1986 introduced into the Tax Code the concepts of “Passive” income and “Active” income. The Act prohibits the offsetting of losses from Passive activities against income from Active businesses. The Tax Code specifically states that a Working Interest in an oil and gas well is not a “Passive” Activity, therefore, deductions can be offset against income from active stock trades, business income, salaries, etc. (See Section 469(c)(3) of the Tax Code).

Small Producers Tax Exemption The 1990 Tax Act provided some special tax advantages for small companies and individuals. This tax incentive, known as the “Percentage Depletion Allowance”, is specifically intended to encourage participation in oil and gas drilling. This tax benefit is not available to large oil companies, retail petroleum marketers, or refiners that process more than 50,000 barrels per day. It is also not available for entities owning more than 1,000 barrels of oil (or 6,000,000 cubic feet of gas) average daily production. The “Small Producers Exemption” allows 15% of the Gross Income (not Net Income) from an oil and gas producing property to be tax-free.

Lease Costs Lease costs (purchase of leases, minerals, etc.), sales expenses, legal expenses, administrative accounting, and Lease Operating Expenses (LOE) are also 100% tax deductible through cost depletion.

Alternative Minimum TaxAlternative Minimum Tax Prior to the 1992 Tax Act, working interest participants in oil and gas ventures were subject to the normal Alternative Minimum Tax to the extent that this tax exceeded their regular tax. This Tax Act specifically exempted Intangible Drilling Cost as a Tax Preference Item. “Alternative Minimum Taxable Income” generally consists of adjusted gross income, minus allowable Alternative Minimum Tax itemized deduction, plus the sum of tax preference items and adjustments. “Tax preference items” are preferences existing in the Code to greatly reduce or eliminate regular income taxation. Included within this group are deductions for excess Intangible Drilling and Development Costs and the deduction for depletion allowable for a taxable year over the adjusted basis in the Drilling Acreage and the wells thereon.

Tax Bill Gives Incentive to Marginal Wells the US Senate and House of Representative have passed a tax incentive bill to help small oil and gas producers. This bill provides a tax credit of up to $9 per well per day for marginal wells. A typical marginal well pumps 15 barrels of crude or 90 thousand cubic feet of gas per day. There are 650,000 “marginal” or “stripper” oil and gas wells in the USA. Marginal wells provide as much as 25 percent of the nations’ crude supply (on par with Saudi Arabia) and about 10 percent of gas stocks. In 2002 alone, 17000 oil and gas wells were permanently plugged with cement (13,600 oil wells and 3,900 gas wells). This tax bill will act as a safety net to save many of these wells, thereby reducing our reliance on the Middle East. The tax credit phases-in if the average crude price for a year is less than $18 a barrel or $2 per thousand cubic feet of gas. The maximum tax credit is $3 a barrel for the first three barrels of crude produced if prices plunge below $15 a barrel and 50 cents per thousand cubic feet if gas prices average less than $1.67 per thousand cubic feet. Crude oil is now above $54 a barrel on the New York Mercantile Exchange and gas futures are near $7 per thousand cubic feet.

From Houston Chronicle

THIS REPORT IS FOR EDUCATIONAL PURPOSES ONLY AND IS BEING PROVIDED TO ACCREDITED INVESTORS AT THEIR REQUEST.

Assignment and Bill of Sale

McFarlane Prospect | West Texas, 3 Wells 17 18www.kingfishercorp.com

Kingfisher Worksheet Estimations

Number of oil wells 3

Production from each well 60

Barrels of oil per day 180 BOPD $50 cost p/BBL $9,000 per day

Production @ 30 days $270,000 /month

Deduct: Severance Tax 4.60% $12,420 /month

Gross oil revenue $257,580 /month $257,580 /month

Revenue to royalty owners @ 25.00% $64,395 /month

Revenue to working interest owners 100.00% $193,185 /month

Monthly operating expenses @ 4.00% $7,727 /month

$185,458 /month

Net revenue Interest owner 70.00% $185,458 /month

Investment cost, based on Turnkey cost $30,000 $30,000 2.00%

Working interest ownership (per unit) 2.00% $5,400 /month

Working Interest Ownership 100.00%

Estimated payback time 5.56 months

Estimated Tax Attributes

Total Ownership 100.00% $1,500,000

Working interest ownership (per unit) 2.00% $30,000

Based on Turnkey - I.D.C. tax write-off 80% $24,000

Amount to be capitalized over 7 years $6,000

I.D.C. write-off $24,000

Tax rate 35.00%

Tax savings based on 35.00% tax rate $8,400

Capitalized amount $8,400

Yearly depreciation rate (1/7) 0.1429

Depreciation amount $1,200.36

Tax rate 35.00%

Tax savings based on a 35.00% tax rate $420

Cost of a 2.00% working interest after first-year tax savings $8,820 $21,180

Monthly income to a 2.00% working interest ( from section above ) $5,400 /month

Estimated payback time 3.92 /month

NOTES:

These computations do not consider the tax attributes of the depletion allowance. All income from Oil & Gas production is subject to a 15.00% depletion allowance. All equipment is capitalized and depreciated over 7 years. All operational expenses are available for 100% write-off for tax purposes These computations are at best only estimates. Please seek independent legal, tax and geological advice as to this prospect’s geologic value and tax aspects.

Example Tax Worksheet

KINGFISHER 3 Well J.V. (Investment Amount) $30,000 Line 1 Approximate amount of intangible drilling cost Multiply Line 1 by 80% $24,000 Line 2 Approximate amount of leasehold Multiply Line 1 by 5% $1,500 Line 3 Tangible Equipment Deduction Multiply Line 1 by 15% $4,500 Line 4

Pursuant to IRS Sec. 179 Total Tax Deductions

Add Lines 2, 3 & 4 $30,000 Line 5

Include Federal, Medicare, & State (if applicable) Enter your overall Tax Bracket 39% Line 6

First Year Tax Savings Multiply Lines 5 & 6 $11,700 Line 7

Net Out of Pocket Investment Subtract Line 7 from Line 1 $18,300 Line 8

NOTE:

The above example is not and should not be considered tax advice. Please consult with your tax professional prior to making a decision to participate.

Example Investor Tax Worksheet

KINGFISHER 3 Well J.V. (Investment Amount) Line 1 Approximate amount of intangible drilling cost Multiply Line 1 by 80% Line 2 Approximate amount of leasehold Multiply Line 1 by 5% Line 3 Tangible Equipment Deduction Multiply Line 1 by 15% Line 4

Pursuant to IRS Sec. 179 Total Tax Deductions

Add Lines 2, 3 & 4 Line 5

Include Federal, Medicare, & State (if applicable) Enter your overall Tax Bracket Line 6

First Year Tax Savings Multiply Lines 5 & 6 Line 7

Net Out of Pocket Investment Subtract Line 7 from Line 1 Line 8

2173 Salk Ave., Ste. 250, Carlsbad, CA 92008(877) 258-0406

www.kingfishercorp.com

God Bless America

mcfarlane prospect

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