REPUBLIC ENERGY

Republic Energy (Republic) is a privately owned oil and gas company which has focused on the acquisition and development of low to medium risk oil and gas prospects since 1984. The company is a “full service” independent oil and gas company with strong geological, geophysical, engineering, operations, and administrative staffs located in its Dallas headquarters and its associated Decatur field support office. Its technical team has a total of 200+ years combined experience in the oil and gas industry with 75% of that experience directly in the Fort Worth Basin. Its 20-plus year record of success has been primarily the result of a geographic specialization in the Fort Worth Basin of North Central Texas and the development of technical expertise in drill-site selection, completion optimization, and production performance. Since its formation, Republic has drilled or participated in over 500 wells and has achieved an economic success rate of over 90% on total invested capital in excess of $200,000,000. In the Fort Worth Basin alone, Republic has drilled more than 350 Barnett Shale and Bend Conglomerate wells. During the past ten years, the company has focused on the development of the Barnett Shale, drilling over 250 wells, of which 98% were successfully completed.

Republic initiated a multi-year Barnett Shale development drilling program in 1997. In its first monetization in early 2003, Progress Fuels Corp., a wholly owned subsidiary of Progress Energy (NYSE: PGN), acquired the majority of Republic’s Barnett Shale asset base. Progress subsequently engaged Republic to operate the purchased assets for a period of one year.

Following this sale, Republic’s management believed that, given the technical expertise and infrastructure it had developed, their continued focus on the Barnett Shale enabled them to capture the highest potential economic returns of any on-shore domestic oil and gas development project available. This belief was supported by the increasing success area operators were achieving through the initial use of horizontal drilling technology and the resulting expansion of Barnett Shale development beyond its early defined field boundaries. For these reasons, Republic’s owners committed over $14 million of equity to support a new leasehold acquisition program and drilling plan focused on prospective Barnett Shale areas in and outside the traditional field boundaries.

Executing the same multi-year Barnett Shale development and divestment program as before, Republic acquired and developed a 45,000 net acre Barnett Shale asset base over approximately a two and a half year period which culminated in a second monetization in July of 2005.

Republic continues to utilize its “best of breed” technical team to acquire and develop natural gas asset portfolios in the unconventional plays throughout the United States. Currently, Republic is focused on the development and growth of its Appalachian Basin Marcellus Shale position while continuing to acquire and develop spot opportunities in the Barnett Shale.

Report: THE BARNETT SHALE: NOT SO SIMPLE AFTER ALL