Marketing program

We believe that an opportunity exists for Earth Energy Reserves, Inc. to acquire oil and gas leaseholds for its benefit and the benefit of other small independent oil and gas operating companies.

Participation in prospects as a non-operator

Our plan is to acquire leasehold and fee interests in oil and gas properties selected by our team or in properties selected by an operator for joint operations. Our compensation is an interest in the joint operation. The interest received could be a royalty or carried interest or working interest in the prospect or equity or convertible debt in the operator. If the operator goes public, we are positioned to participate in the upside potential of the operator’s stock.

Negotiated acquisitions of properties
We may acquire producing properties based on our view of the pricing cycles of oil and natural gas and available exploitation opportunities of proved, probable, and possible reserves. We may retain producing properties or turn them to other small independent oil and gas operation companies and retain an interest.

Income tax consideration
When we incur the leasehold cost of a prospect, the operator is free to spend its available funds for drilling and completing the prospect. For income tax purposes, leasehold costs are capital costs and are recovered through depletion, but intangible drilling costs incurred by an operator are currently deductible and its equipment costs are depreciated. Since percentage depletion is available without respect to leasehold cost, the operator is at a disadvantage when it incurs a leasehold cost.

Areas of interest
Our principal areas of interest are Texas, Oklahoma, New Mexico and the Rocky Mountain region. Our current concentration is the Permian and Palo Duro Basins.

Oil and gas completion money

After wells are drilled and proven productive, Earth Energy Reserves, Inc. has completion money available.