Joshua and Alford Prospects

The Joshua and Alford prospects are adjacent shallow, Oligocene Frio tests in the Cologne/Coletto Creek Field complex in Victoria County, Texas 140 miles southwest of Houston. The two fields are broad structural closures with several shallow Miocene and Frio pays and cumulative production in excess of 115 BCF of natural gas and 20 million barrels of oil since 1970. Joshua and Alford, at a depth of 4,000 feet, are stratigraphic traps defined by modern 3D seismic and have amplitude anomalies analogous to offsetting production.

Potential reserves for Joshua net to KEI are 1.72 to 2.06 BCF equivalent. Potential reserves for Alford net to KEI are .89 to 1.08 BCF equivalent. KEI will have 100% working interest in both wells before casing point and 75% in the completions and all subsequent operations. KEI's proportionate estimated costs are US$161,000 for land, US$731,675 drilling and US$362,250, if successful, for completion of both wells.