Bringing Yesterdays Oil To Todays Markets

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Bringing Yesterdays Oil To Todays Markets
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UNDISPUTABLE FACTS!

• More oil remains in North American reservoirs
  than is expected to be produced from Saudi Arabia
  and Venezuela combined.
• On average only 15 of the easy-oil is
  recovered from most medium and heavy crude oil
  reservoirs.
• Production is low and Sweep Efficiency is minimal
  after the easy-oil is extracted.
• Tens of thousands of wells are capped due to low
  production but 70 to 80 of the oil remains in
  the formation/reservoir.
• In 1998 SAG-D or Steam Assisted Gravity Drainage
  system was introduced in Canada to enhance
  production from Oil Sands and Heavy/Medium oil
  reservoirs.
• Within two years over 3.4 Billion in commercial
  ventures licensing the SAG-D system were in play
  in North America.
• SAG-D system improved production and reservoir
  sweep efficiency by 15 to 20.

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Petrostar takes the SAG-D system to another level
with the patented Vertizontal Recovery System
(VRS) and its proprietary Down Hole Tool or DHT

• VRS is a patented combination of both Vertical
  and strategically placed Horizontal well bores
  that can increase sweep efficiency and oil
  production by as much as 40.
• Opposite to the SAG-D system which uses new
  Horizontal well bores for steam injection and oil
  recovery, VRS utilizes existing Vertical well
  bores for recovery and one or more Horizontal
  wells for water injection.
• SAG-D injects steam from the surface which
  creates heat loss the further the steam travels
  into the reservoir thereby reducing its
  efficiency. Petrostars proprietary Down Hole
  Tool (DHT) traverses back and forth through the
  Horizontal well bore heating as it goes
  eliminating heat loss and maximizing bottom
  hole pressure, sweep efficiency and production.
• The DHT is computer controlled from the surface
  and can be digitally driven to each location
  within the reservoir where the Horizontal well
  bore intersects with the existing Vertical
  recovery wells creating optimum Vertical oil
  recovery. The DHT has a sub-surface operating
  range of 1,000 meters and can be transported
  easily by truck to any location.

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Petrostar Creates Producing Demonstration Site
for VRS and the DHT.

• June 2005 Petrostar purchased 100 of 320 acres
  of prime heavy/medium oil producing leases and
  existing production equipment in Northern
  Saskatchewan, Canada known as The Maidstone Oil
  Formation.
• Within the 320 acre land parcel there are two
  primary heavy/medium crude oil formations The
  McClaren with 5.2 million proven barrels of
  original oil in place and the Waseca Formation
  with an additional 800,000 barrels-unproven
  (located 18 meters below the McClaren Formation).
  
• Presently, there are 8 producing Vertical wells
  drilled into the McClaren formation in 1979.
  They are producing between 70 and 120 barrels of
  medium crude oil per day.
• The Maidstone property and existing vertical
  wells are ideal for implementing the Vertizontal
  Recovery System and utilizing the DHT Technology.
• Petrostar has 3 Million available and will
  complete the VRS work-over program as quickly
  as possible.

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The VRS Work- Over Program

• On site preparation for the Vertizontal Recovery
  System has been underway for 3 months and
  includes upgrading existing Vertical wells with
  new generators, pumps, additional storage tanks
  and surface equipment.
• Top oil drilling engineering and production firms
  have been contracted and the primary drill
  location and the design of the system has been
  completed to insure maximum recovery and success
  within a minimum environmental footprint.
• The Work-Over Program is designed to increase oil
  production as each phase of the Four Phase
  Program is completed.
• Phase One Drilling a duel producing Vertical
  Well 520 meters into both the McClaren and Waseca
  Formations. Production is expected to increase by
  up to 150 additional barrels a day
• Phase Two Drilling the first 1,100 meter
  Vertizontal Well and the 1,300 meter Water
  Injection Well into the McClaren Formation.
  Production is expected to increase by up to 400
  additional barrels a day.

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VRS Work Over Program Cont

• Phase Three Drilling the second Vertizontal Well
  into the McClaren Formation. Production is
  expected to increase by up to 200 additional
  Barrels a day.
• Total Production from McClaren up to 850 BOPD
• Phase Four Drilling one Water Injection Well and
  One Vertizontal Well into the Waseca Formation.
  Production is expected to increase by up to 500
  BOPD.
• Total Production from Maidstone Project expected
  to reach 1,200 to 1,400 BOPD or 78,000 per day
  in Gross Revenue (based on second quarter 06
  Heavy Crude Market Price of 60 per barrel).
• Final stage of the project is the construction of
  a short feeder pipeline to Husky Oils main
  Heavy Oil Pipeline located in the immediate area.
  The feeder pipeline will cut storage and
  distribution costs by as much as 35 or approx.
  21 per barrel of oil recovered.

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Maidstone Oil Field - 320 Acres - 8 Producing
Wells. Petrostar Purchased 100 of lease and
Equipment in June, 2005.
Well13-6
Well14-6
Well15-6
Well16-6

• To date 5.3 or 292,000 barrels of oil of the
  5.52 million barrels of original oil in place
  (OOIP) have been produced from the McLaren
  Formation.
• Depth to reservoir 500 meters. All 8 wells are
  vertically drilled wells and were drilled in
  1979.
• Located in West Central Saskatchewan, over 100
  vertical wells surround the 320 acre lease.

Well12-6
Well11-6
Well10-6
Well9-6
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MAIDSTONE OIL FIELD - 320 ACRES WELL
IDENTIFICATION AND GRID ON PROPERTY
Well13-6
Well14-6
Well15-6
Well16-6

• Wells 13-6, 14-6, 16-6, 12-6, 11-6 and 10-6
  producing approx. 40 barrels of oil per day
  (BOPD).
• Well 15-6 re-completed by Petrostar and brought
  into production Oct. 14/05 at 60 to 65 BOPD.
• Petrostar re-opened Well 9-6 Feb. 23/06 and
  produced 125.8 Barrels of Oil during a 24 hour
  test and was immediately put onto production.

Well12-6
Well11-6
Well10-6
Well9-6
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Phase 1 Drill First New duel producing
Vertical Well 520 Meters into both the McLaren
Waseca Oil Formations. New VRS Drill Pad for
Vertizontal Collection and Injection Wells.
Drill pad

• All 9 vertical wells are producing, project is
  now ready for Phase Two Drilling the first VRS
  Collection Well into the McLaren Oil Formation.

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Phase 2 First Vertizontal Collection Well, 1100
Meters into McLaren Oil Formation Linking
Producing Vertical Wells.
Drill Pad
Oil to Surface
Oil to Storage

• First Horizontal well is expected to double
  daily production.
• Stage one of the Vertizontal Recovery System
  (VRS).

Oil to Storage
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Phase 3 Horizontal Water Injection Well, 1300
Meters into McLaren Oil Formation. Maintain and
increase oil production and bottom hole pressure.
Drill Pad
Oil
Oil
Water
Injection
Well
Oil
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Phase 4 Final Horizontal Collection Well, 1100
Meters into McLaren Oil Formation. Increasing oil
production and completing VRS
Drill Pad
Oil
Oil
Water
Oil
Oil to surface
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Vertizontal Recovery System (VRS) is completed
creating maximum production and maximum sweep
efficiency from McLaren Formation.
Drill Pad
Property Boundary (North)
Oil
Oil
Water
Oil
Oil
Property Boundary (South)
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The Numbers

• Total cost of Vertizontal Project approx 4.11
  million (CDN).
• Expected time to completion 12 to 18 months
  (sooner subject to financing).
• It is estimated 2.28 million barrels of the
  McLaren Formations 5.2 million barrels of oil
  (41) can be recovered using the Vertizontal
  Recovery System or VRS.
• At a conservative constant base price of 35 a
  barrel the McLaren projected undiscounted cash
  flow is estimated at 41.5 Million.
• Additional reserves - Waseca Formation -
  (Estimated at up to 2.6 million Barrels of Oil)
  located 18 meters below the McLaren Formation and
  covers approx. 230 of the 320 acre lease.
  Independent 51-101 Reserve Report under way to
  confirm proven reserves in Waseca.
• Vertical Drilling into the Waseca Formation
  expected to commence once reserve report is
  completed.
• Total production once both the McLaren and Waseca
  drill programs are completed 800 to 1000 BOPD.

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Summary

• 100 ownership of producing Heavy/Medium Crude
  Oil leases.
• Over 5.2 million barrels of proven Original Oil
  In Place (McClaren Formation) and a potential 1.5
  to 2.5 additional million barrels in Waseca
  Formation.
• 20.5 owner of Patented Vertizontal Recovery
  System (VRS) and first Company to utilize VRS and
  develop producing demonstration model.
• Development of proprietary Down Hole Tool or DHT
• Down-hole testing of DHT technology scheduled for
  summer of 2006.
• A 3 Million VRS drilling and Work-Over Program
  to commence summer of 2006.
• Oil production expected to increase from present
  production of 120 BOPD to over 1,200 BOPD once
  VRS and Work-Over program is complete.
• World-wide revenue opportunities from
  implementing and/or licensing of VRS and DHT
  Systems and Technology to Global Heavy/Medium Oil
  Producers.