Rocky Mountains

Rocky Mountain Region

Our Rocky Mountain operations include assets in the states of North Dakota, Montana, Colorado, Utah, Wyoming and California. As of December 31, 2006, our estimated proved reserves in the Rocky Mountain region were 53.2 MMBOE (70% oil), which represented 21% of our total estimated proved reserves. Approximately 51% and 31% of the proved reserves of our Rocky Mountain operations are related to assets in North Dakota and Wyoming, respectively.

Robinson Lake Bakken Play

The Bakken Formation is a low permeability, unconventional reservoir consisting of highly oil saturated shale, dolomite and fine grained sand. Horizontal drilling and advanced stimulation techniques have been successfully employed in the drilling of hundreds of wells in the Elm Coulee field in Montana and more recently in the North Dakota portion of the Williston Basin. In early 2005, we embarked on an aggressive leasing program and have since acquired approximately 116,000 gross (81,000 net) acres primarily in Mountrail County, North Dakota for the purpose of developing a Bakken resource drilling program. To date, we have drilled and completed two exploratory wells. We are encouraged by our Bartleson State #44-1H well, which is currently flowing oil and appears to be an economic well. We are currently drilling our third well and conducting a 98 square mile 3-D seismic survey in order to assist in our selection of future drilling locations.

Red River Gas Drilling Program

In 2004 we began acquiring 3-D seismic data over several Red River Formation prospects in the deeper, gas bearing part of the Williston Basin for the purpose of defining structure and reservoir distribution. To date we have acquired seven 3-D surveys in Billings, McKenzie and Williams Counties totaling 165 square miles which we have used to target eight new wells. Eight of these wells have resulted in successful completions with average initial rates of 3,100 Mcf/d. We currently plan to drill four to eight wells during 2007.

Billings Nose Drilling ProgramBillings Nose Drilling Program

We have established a high concentration of producing wells in the Billings Nose area of Billings County, North Dakota. These assets include the Big Stick Madison Unit and North Elkhorn Ranch Unit along with much of the acreage located between these two fields. We have acquired 99 square miles of 3-D seismic data in this area and have since identified multiple opportunities in a variety of reservoirs including the Red River, Duperow, Bakken and Mission Canyon Formations. In 2006, we drilled one Mission Canyon well in the Big Stick Unit and three horizontal Mission Canyon wells in North Elkhorn Ranch. Additional drilling is planned in both of these units in 2007.

Nisku A Drilling Program

We made a significant exploration discovery in 2004 in western Billings County, North Dakota in the Nisku A zone and drilled ten wells in 2004. In 2005 we drilled eight casing-exit wells and drilled or participated in 13 grass-roots horizontal wells. During 2006 we participated in 20 grass-roots horizontal wells. We plan additional development drilling in the area and are studying the potential for additional recovery through the implementation of a waterflood.

Green River Basin—Siberia Ridge

Siberia Ridge is within the greater Wamsutter Arch area of Sweetwater County, Wyoming and produces from a continuous-phase gas accumulation in the Cretaceous Almond Formation at 10,500 feet. In 2004, the spacing rules governing the well density in the Siberia Ridge field were adjusted to allow for up to two wells per 160 acres. This new configuration resulted in a total of 44 additional potential locations on our acreage. Because of lease stipulations on this Federal acreage, drilling operations can be initiated August 1st and must end by February 1st of the following year. We have been able to maintain a single well drilling program by moving the rig between Anderson Canyon (described below) and Siberia Ridge.

Our development program commenced in mid-2005 and continued in 2006 with the drilling of ten new wells. We have implemented a focused effort on the identification, selective perforation and stimulation of the various natural gas productive zones within the Almond Formation in order to optimize production. Completion operations are currently underway with encouraging initial rates.

Green River Basin - Anderson Canyon

Anderson Canyon, North Anderson Canyon, Bird Canyon, and McDonald Draw fields are all located on the LaBarge Platform in Southwest Wyoming. We drilled six wells in 2006 and plan to drill ten wells in 2007. Initial results are positive with initial production rates ranging from 500 Mcf/d to over 1,000 Mcf/d. We believe the remaining potential is primarily in the Frontier formation at 8,800 feet.

Sulphur Creek-Boies Ranch Area, Rio Blanco County, Colorado

The Sulphur Creek Area in the North Central Piceance Basin has the potential to be a focal point of our activity through 2009. We acquired the majority of 16,813 gross (3,638 net) acres in the 2004 Equity Oil Company acquisition. We are currently supplementing our leasehold in the area. Drilling by third parties near our leasehold has demonstrated the presence of a continuous-phase gas resource in the Williams Fork Formation with up-hole potential in the Wasatch Formation. We finished the drilling of the first well on the Boies Ranch acreage in early 2007, and we have planned three additional wells for the remainder of the year. An additional 73 Williams Fork locations are planned assuming typical 20 acre spacing. On the Boies Ranch acreage we own the acreage in fee, meaning we own the surface and minerals and there are minimal landowner burdens. As a result, we have a 50% average working interest with a 49% average net revenue interest in the Boies Ranch acreage.

Utah Hingeline

We own a 15%, non-operated, working interest in approximately 170,000 acres of leasehold in the central Utah Hingeline play. This acreage covers several prospect leads which have been identified along trend with the recent Covenant Field discovery in Sevier County, Utah. As part of our acquisition of this property, the operator will pay 100% our drilling and completion costs for the first three wells in the project. The first of these three has been drilled but did not find commercial quantities of hydrocarbons. The remaining two wells will likely be drilled during 2007.