1. “Perspectives on Montana’s Petroleum Industry” MREA-MPA-MONTAX “Bridges to the Future” Conference October 15, 2009 Dave Ballard President Ballard Petroleum Holdings LLC Billings, Montana

2. Presentation Overview Industry Overview and Economic Contribution Meet the Producers Producing Areas and Trends Geologic Elements of an Oil Field Regional Geology Field Examples and the Technology of Discovery and Production Have We Reached Peak Production?

3. Field Examples and the Technology of Discovery and Production Surface Geologic Mapping Subsurface Geologic Mapping Seismic Mapping Shallow “Tight” Gas Frac Stimulation Horizontal Drilling and Frac Stimulation Waterflood Enhanced Oil Recovery CO 2 Flood Enhanced Oil Recovery Sensitive Environment Operations

4. Cedar Creek Anticline Oil and Gas Field near Baker, MT

5. –120 miles long by as much as 6 miles wide –Over 4 billion barrels of oil in place Red River over 75% Stony Mountain 10% Interlake 10% Madison 5% –Recovery of over 460 million barrels to date; 11% of oil in place (mainly from Red River) –Production from up to 35 different zones in over 2800 feet of interval Cedar Creek Anticline Potential Mission Canyon Interlake Red River Stony Mountain Red River U4 Zone Red River U6 Zone Red River U8 Zone Lodgepole

6. Cedar Creek Anticline, Carter County, Montana Waterflood Projects as of March, 2008 From: Encore Acquisition Company 8-K Report for 3/4/08 Downspaced to 40 acres Waterflood Response Current Rate 2,746 BOEPD Encore purchased from Shell Waterflood Response Current Rate 2,341 BOEPD Coral Creek Gross Production Pennel B Gross Production

7. Enhanced Oil Recovery: Carbon Dioxide Flooding

8. Schematic of the Carbon Dioxide Process in the Reservoir WaterCO 2 Water + Oil CO 2 Mixing Zone CO 2 + Oil + Water Oil Bank Alternating cycles of water and CO 2 injectionInjectionProduction

9. CO 2 Reserves Potential in the Rockies Nebraska Existing CO2 Lines Potential CO2 Lines Greencore Pipeline (2011) EAC Operated Fields Other Fields CO2 Sources Existing Proposed Power Plants Ethanol Plants Coal to Gas or Liquids

10. Cedar Creek Anticline CO 2 Probable/Possible Reserves