2. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC
EXECUTIVE SUMMARY
The “Opportunity Drilling & Acquisition Fund, LLC” (the “FUND”) is an Investment Vehicle
designed to provide security through the acquisition of currently existing early stage
production, with the upside long term profit potential of new wells being drilled in primarily
developmental properties.
ACQUISITIONS
The “Fund” has, under contract, through its Supervisory Operator, the rights to purchase a 50% Working Interest in 4 producing wells in
Weld County, Colorado. These wells, located just outside of Greeley, Colorado, are drilled & completed in the prolific Wattenberg Field of
the D & J Basin. The wells are producing from the Niobrara, and the Codell formations at a depth of 8600 feet. Wells producing from these
formations have a historic production rate of between 25 and 30 years.
The Interest to be purchased is less than 2 years old, they all produce both oil & natural gas, and have contracts for the sale of same for
both. Plains Marketing, Inc. is the buyer for the oil and the natural gas is sold to DCP Midstream, a division of Duke Energy, Inc. The
purchase of these interests will allow for a secure asset stream and early startup to the Fund.
DRILLING ACTIVITY
There will be a total of 12 new wells for the Fund. All are in direct off-set developmental locations. Two of the wells will be drilled in the
Colorado D&J Basin, Adams County, Colorado, and the remaining ten wells will be drilled in Pickett County, Tennessee. These locations are
direct off-sets to numerous commercial wells. The Colorado D&J Basin wells will be drilled to a total depth of approximately 8700 feet and
will target the Dakota Sands (deepest), the J-1 and the J-2 Sands respectively, and the Codell. All of these formations are active, producing
formations in this area, making the probability of success (*90% plus) extremely high. These wells are expected to produce BOTH oil &
natural gas. These sands are typically stimulated with hydraulic fracturing with great success. Purchasers for both are competitive and
readily available for both in this market.
The 10 Pickett County, Tennessee wells are “shallow” wells, 2000 feet. These wells will target the Knox (deepest) the Stones River, the
Sunny Brook and the Murfreesboro formations. These wells also are to be drilled on leases that are currently producing and will be direct
off-sets to commercial wells. Current commercial success rate in the immediate area is over 75% and is typically completed with nitrogen,
foam stimulation treatment for enhanced recovery. Barrett Oil Transport and Coomer Oil are the current active purchasers and
transporters in this area.
Our Supervisory Contractor, Leland Energy, Inc. has a 100% success rate in Colorado and a 75% commercial success rate on its drilling activity in Tennessee.
Additionally, based on its high success rate and long standing (35 years) experience in the oil & gas industry the Supervisory Contractor will provide, as
part of its contracted services, an Energy Production Deficiency Protection Plan.
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4. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC
OVERVIEW OF THE LEASES
The Opportunity Drilling & Acquisition Fund, LLC (The “Fund”), is a financial investment designed
specifically for today’s economic environment. It combines current “in place” producing reserves with
the upside of millions of dollars in developmental production.
WELD COUNTY, COLORADO
The Fund has under contract through its Supervisory Operator, the rights to purchase a 50% Working Interest in 4 producing wells in Weld
County, Colorado where the ever expanding DJ Basin is the leading productive field and the 7th largest oil & natural gas field in the U.S. There is
currently an average of 19,000 active wells in the field. The formations, Niobrara, Codell, and J Sands 1 &2 are tight sands and shales that
collectively produce both oil and gas and typically stimulated with hydraulic fracturing, and have a success rated of over *90.0% (plus). The
Codell wells have a history of producing 25 – 30 years and more.
With new technology in fracturing these wells, they can be re-fractured after several years of production which can increase production, in some
cases, higher than the original flush production. The purchase of these interests will allow for a secure asset stream and early startup to the Fund.
ADAMS COUNTY, COLORADO
The Fund has also attained the rights, through its Supervisory Operator, to two new wells in Adams County, Colorado. Also located within the
prolific Wattenberg Field, the Adams County location has potential for successful drilling & completion. What makes these locations so exciting
is that they are a direct off-set to some very good wells. More detailed information on these wells is located in the Adams County section of this
booklet.
In addition, we will get a premium price for our gas because of its rich content. Even more great news is that, in the well logs reviewed of off-sets
to the new locations, there are 2 additional pay zones that show future commercial options, and possible behind the pipe assets and revenue.
PICKETT COUNTY, TENNESSEE
The Fund through its Supervisory Operator, has the rights for the drilling & completion of 10 “new” wells in Pickett County, Tennessee, all to be
drilled at a minimum to the Knox Formation. The developmental projects, the Larry Storie Lease & the H. Johnson Lease, are 800+ acres in the
Parker Etter Field which is located in the very prolific Moodyville Quadrangle.
These are all “infill” locations, which places them at direct off-set to our current proven producing wells. These wells will be drilled & completed
using today’s sophisticated engineering techniques & completion treatments to insure maximum recovery and production. Given the “off-set”
and “infill” locations, the probability for hitting a commercially successful well is better than 90%.
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5. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC
WELD COUNTY, COLORADO
The Fund has, under contract through its Supervisory Operator, the rights to
purchase a 50% Working Interest in 4 producing wells in Weld County
Colorado, in the New Winsor area that adjoins the northern portion of the
Wattenberg field which is in the ever expanding DJ basin (See Figure 1).
There are currently over 19,000 active wells in the area. The Formations are
Cretaceous aged deposits covering large portions of the Eastern Plains of
Colorado. The Formations are tight sands and shales that collectively
produce both oil and gas, which are typically stimulated with hydraulic
fracturing.
Figure 2 – DJ Basin formations graphic depicting
field in various depths and stimulation(s).
The majority of wells in the Wattenberg field are re-fractured
or re-stimulated using an elliptical model, for greater recovery
of reserves (See Figure 2). Re-fracturing and the use of low
cost "slick-water fracs" (as opposed to a conventional "gel-
Figure 1 - Regional Well Map of the Wattenberg Field based fracs") further the economic feasibility of these wells.
*See Larger Map of Existing Well(s) Drill Site on Following Page 5
7. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC
ADAMS COUNTY, COLORADO
The Adams County lease is just outside the city of Brighton, about 30 miles north of Denver.
The primary off-set is the North – York #3, permit # 901120 which was spud in on October of 1990. It was
completed in the J-Sand at 8352’ to 8430’ Its Initial flow rates were as follows over a 24 hour period: 43 Bbls
of Oil and 2392MCF of gas. (See attached copy of the “Completion Report” filed with the state of Colorado in
December of 1990 on following pages).
Currently, our average price paid on the Weld County wells are $4.25 per MCF and $80 per Bbl. Due to the
proximity of the fields and similarity of the formations, it is likely that we will get the same quality gas from
the new wells and receive the higher gas payment amount. That would be equal to revenues of $13,606 per
day at today’s prices; 43 Bbls. of oil times an $80 net per Bbl = $3,440 on oil, and 2392MCF times $4.25 =
$10,166 on gas. That’s a total in excess of $353,000 per MONTH in today’s pricing!
The additional great news is that in the well logs reviewed on this and other off-sets, there are 2 additional
pay zones that show commercial options and possible behind the pipe assets and revenue: the Codell (above
the J-Sand) at around 7900’, and the Dakota (below the J-Sand) at approximately 8560” to 8580’, both being
oil & gas bearing formations.
Another off-set, the Barlow, was re-completed in 1978 in the Dakota formation. Keep in mind the treatment
(fracing) techniques were not nearly as sophisticated as they are today. That well generated 26 Bbls of oil and
500MCF over its 24 hour test. Again, at today’s pricing that’s 26 times $80 = $2,080, and the 500MCF times
$4.25 = $2,125 per day in gas revenue. That times 26 production days a month = over $109K in monthly
revenue! (Completion Report on following pages).
Our 2 new locations need to have 1 currently expired permit sent in for renewal. We can expect a 60 day (or
more) period for the re-issuing of the permits, after which we will commence drilling.
*See Map of Surrounding Area on the Following Page 7
9. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC
FORMATION CROSS-SECTION: ADAMS COUNTY, COLORADO
As referenced in the detailed description of Adams County, please see above a diagram of the
additional pay zones pertaining to the 2 wells to be drilled. 9
10. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC
PICKETT COUNTY, TENNESSEE
The proposed new wells are locations offsetting and between known producers. All the wells drilled on
this acreage were drilled on ten acre spacing, in compliance with spacing laws in Tennessee. The State
of Kentucky determined several years ago the Knox formation was very dense and not porous enough
to effectively drain ten acres. Tennessee followed suit and changed the spacing law for three counties
in Tennessee, Pickett County being one of them because most of the production was from the Knox
formation.
They concluded that Knox wells should be drilled on five acre spacing, due to their fractured porosity
within the producing zones. This lease offers new locations between producing wells that have retained
most of its virgin pressures. All IP’s for current existing wells are between 27 – 50 Bpd.
In comparing this lease with Leland’s known Knox lease located 1 mile south of The H. Johnson / Storie
Prospect Lease (see following pages for Proven Production & Proven Reserves for more information),
you can see some of the production history. Two (2) existing wells we treated produced in excess of
1200 bbls of oil within a 30 day period.
We have also included in the following pages a structure map on the Knox formation, note the same
structural features. There is every reason to believe, through the reserve report and by the comparison
with a known Knox lease, we have the potential to reach the same production numbers or exceed
them.
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16. PROVEN PRODUCTION & RESERVES
WELD COUNTY, COLORADO
Above:
Well Fracing & Completion work, Weld County, CO 2011
Left Top & Bottom:
Completion Process: Pumps, Tanks, and Fracing Equipment,
Weld County, CO 2011
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17. PROVEN PRODUCTION & RESERVES
WELD COUNTY, COLORADO
Bottom Left & Right:
Well Caps in place awaiting treatment, Weld County, CO 2011
Top Right:
Natural gas line for tap in, Weld County, CO 2011
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18. PROVEN PRODUCTION & RESERVES
THE H. JOHNSON LEASE: PICKETT COUNTY, TENNESSEE
Top & Right:
Nitrogen Foam Frac Treatment set up for H.
Johnson Wells #3 and #11
19. PROVEN PRODUCTION & RESERVES
THE H. JOHNSON LEASE: PICKETT COUNTY, TENNESSEE
Left:
Oil into the pits from Well #6L
Top Right:
Inside one of the Logging Truck on the H. Johnson Lease
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20. PROVEN PRODUCTION & RESERVES
THE H. JOHNSON LEASE: PICKETT COUNTY, TENNESSEE
#6L Tank Battery & 1st Pick up by Barrett Oil Purchasing
Pickett County, TN 2012
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22. WORLD ENERGY MARKETS
WORLD GROWTH
WORLD GROWTH
In most past "dips" (recession, depression), there
has been one primary in world economic growth.
Whether it was the prevailing world power such
as the United States or a combination of nation
states, there has NEVER been the pending
demand for essential commodities as there are
today.
China has clearly accommodated a "capitalistic"
stance to its supposedly communist system of
governing.
India has become a "land of opportunity"
different from even its own recent past.
Both of these countries are just now giving birth
to a massive middle class, a class that will
demand goods and services unprecedented in
the history of the world.
Russia is also flexing its muscles as an economic
power and is eager to compete on the world
stage after many, many years of being a closed
society.
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23. WORLD ENERGY MARKETS
WHY INVEST IN DOMESTIC ENERGY?
Profitability: Evaluation, location & information
technology can greatly limit downside risk &
maintain huge upside potential.
Consistency: Long term necessity & ongoing world
demand for product (oil & natural gas).
Peace of Mind: Long term revenue stream helps
eliminate portfolio volatility.
Tax Benefits: Unique & significant as compared to
most ALL other investments. (See more details in
the box to the right of this page).
Job Creation: Domestic drilling & operating Tax Benefits of Investing in Energy
DIRECTLY create ongoing, good paying, long term
• Intangible Drilling Cost Tax Deduction
employment for U.S workers.
• Tangible Drilling Cost Tax Deduction
Direct Participation: Total transparency as to how • Active vs. Passive Income
your money gets put to work for you. - Lease Costs
Communication with experienced & accessible - Alternative Minimum Tax: 100% of the
principles & management. intangible drilling costs can be written off
in the first year (depending on tax status)
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24. WORLD ENERGY MARKETS
WHY INVEST IN DOMESTIC ENERGY?
Without question, we need to develop our oil and natural gas resources here at home. Not only is this crucial in
moving us towards energy independence, domestic production of oil and natural gas creates Americans jobs!
The oil and gas industry contributes to OUR economy, from producing to refining, from processing to
transportation, and from storage all the way to distribution and retailing.
It also has indirect economic benefits to other industries. The oil and
natural gas industry has a widespread economic impact thought-out
all sectors of the economy an across all 50 states. Not to mention
Job Creation: Domestic drilling & operating DIRECTLY creates increasing revenues for local state governments.
ongoing, good paying, long term employment for U.S. Workers.
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26. DOMESTIC OIL & GAS DEVELOPMENT EXPERIENCE
LELAND ENERGY, INC.
Leland has been committed to Domestic Energy Resource Development for over 35 years
Leland Energy, Inc. is an independent energy resource company primarily involved in the drilling, operating, and
development of oil and natural gas. The company has been around since 1975, when it was originally
incorporated as a Texas corporation under the name "Leland Petroleum, Inc.”
In the years since then, it has continued to be solely owned by the Thompson family, and has been subsequently
renamed and re-incorporated as a Nevada corporation; the current name of Leland Energy Inc., more clearly
reflecting the focus of the business.
Kentucky Well Tour, 2009
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27. DOMESTIC OIL & GAS DEVELOPMENT EXPERIENCE
LELAND ENERGY, INC.
By putting together small and intermediate size blocks within a County,
we can still benefit by the economy of scale that allows us to keep
expenses within industry acceptable parameters, and at the same time,
begin to accumulate an ever expanding portfolio of producing
properties with excellent long range profits along with substantial in
the ground reserves to be developed over the coming years.
(90% Oil Cut Well #2, Codell) 85% Treatment
Weld County, CO
Engineers on a Drill Rig platform Weld County, CO 2011
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28. DOMESTIC OIL & GAS DEVELOPMENT EXPERIENCE
LELAND ENERGY, INC.
Most of the drillers and operators in this area have no "exit
strategy" and, like all businesses, need the infusion of capital
to continue to grow and expand.
Most independents would not dream of looking at a lease
with 4 producing wells and only 1000 acres remaining for
development. We will!
??
Partner Visit to Block Battery Tanks
Green County, KY, 2009
Rig with Drill Pipe, Weld County, CO, 2011
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29. Newly Painted Tank Battery, Well #12L - Pickett County, Tennessee
The energy resource business will continue to be a vital component in the growth and security of our
nation. Even in this very erratic economic climate, energy commodity prices have maintained a strong
market price. While we here at Leland Energy, Inc. are not "experts" in world economics, we believe
that energy commodity prices will continue to climb.
