Mannon Oil500 N Congress Avenue, Suite D , Evansville, Indiana, United States

Mannon L. Walters, Inc. (MLW) and Mannon Oil are private oil and gas companies with interests in oil and gas wells in Arkansas, Illinois, Indiana, Kentucky, Louisiana, Mississippi, Oklahoma and Texas.  MLW was founded by Mannon L. Walters in Evansville, Indiana, in 1992.  While studying Petroleum Engineering at Rice University in Houston, he realized that the Illinois Basin held a great deal of untapped potential. He became so passionate about the Illinois Basin that he relocated there and helped local producers drill some excellent wells before striking out on his own and making a major new oil discovery based on proprietary 3D seismic that he obtained in 1994. Harts Oil and Gas World magazine named one of his wells "well of the month" in October 1995. He drilled 11 oil wells in the Hamilton County region between 1995 and 2000 with no dry holes.  The challenge was that oil prices were low, reaching $12 per barrel in 1998. Importantly, Mannon proved he could run a profitable oil company even at those prices. However, as an avid student of world economics, Mannon was convinced oil and gas prices would rise, so he strategically set out to secure as much acreage as possible while prices were low, in preparation for an oil boom. That boom has of course come to pass with oil prices reaching $75 per barrel in July 2006, and exceeding $140 per barrel in July of 2008, during which he drilled an additional 22 oil wells in the Hamilton prospect without a dry hole.  Although the price has fluctuated since that time, there is a general consensus among forecasters that oil prices will continue to rise over time as a result of growing worldwide demand, especially from China and India.  The decision was made in 2004 to ramp up significantly, diversify the acreage, utilize the many excellent industry relationships Mannon had built over the years and build an excellent team. Todays drilling successes, portfolio diversity and access to some of the best minds in the business are the results of his vision and insight.  Mannon made a second new discovery in the Illinois Basin in 2005 - deep gas in the New Albany Shale. In 2005, Mannon began expansion through the use of limited partnerships by forming Mannon Oil, LLC.  In the first year, Mannon Oil raised approximately $28 million for exploration and production projects.  Because of the initial successes, Mannon Oil raised an additional $27 million in 2006 and 2007.  MLW continues to offer investment opportunities through various deals.  

Acquisition of this technology license enables us to:

• Reduce the risk of drilling dry holes,
• Prioritize future drilling efforts to focus on optimum risk/reward scenarios,
• Identify new geographic areas of opportunity,
• Avoid participation in areas with limited upside potential,
• Assist in the interpretation of seismic features with hydrocarbon content.

Mannon L. Walters is the Founder, President and sole shareholder of Mannon L Walters, Inc. which has explored for and produced oil and gas in Illinois since 1991.  He also is President of Mannon Oil, LLC that serves as Managing General Partner for various partnerships.     Developing and managing natural resources has been the family business for three generations.  Mr. Walters grandfather, Garland Anthony, founded Anthony Timberlands Inc. in 1907, the largest timber production and sawmill operation in Arkansas.  During the 1940s the family business expanded into oil & gas exploration, headed by Mannon Walters, Sr.  Since childhood, Mr. Walters has been involved in oil & gas operations, earning his first royalty interest at 8 years old as payment for helping in the oil field.  Mr. Walters is an active participant in Flying High Aviation, LLC, a company established to calculate prospective oil reserves through patented aerial examination technology.    Mannon Walters has been a principal in a number of oil and gas production companies, including F. E. Moran Oil Company, Owensboro, Kentucky, which owns and operates over 30 wells in Kentucky and has produced over 1,000,000 barrels of oil.  Simultaneously, from 1997 to 2000, he was Vice-President of Lone Wolf Exploration, a subsidiary of a publicly traded company.  From 1992 to 1997, Mr. Walters also acted as a consultant to the CEO of Energy Exploration Technologies, a company that tested new alternative oil finding technologies.  From 1982 to 1986, Mannon Walters was in charge of lease acquisition and regulatory compliance for Black Star Petroleum Corporation, Oceanside, New York.  He subsequently became a field operations manager.  Black Star explored and produced oil in Utah, Kansas, Oklahoma, Illinois and Kentucky.  From 1978 to 1982, Mr. Walters was Vice-President of Go-Cat, Inc. (Gas, Oil, Coal and Trucking), a company which mined, processed, marketed and trucked coal from its leases to end-users.  From 1974 to 1978, Mr. Walters served as technical advisor to Garland Anthony Exploration and Production.  He also served as an advisor to his fathers company, Big Creek Gas Company.  From 1973 to 1974, he assisted Garland Anthony in running oil & gas drilling completion and production operations.  Mr. Walters is a member of the American Association of Petroleum Landmen, and the American Society of Petroleum Engineers.  Mannon Oil, LLC is a member of the Better Business Bureau.  Mr. Walters attended Rice University and St. Thomas University from 1974 to 1975 and University of Oklahoma from 1975 to 1977 where he majored in Petroleum Engineering and minored in Economics.  He is a Member of the American Association of Petroleum Geologists.

The recently patented technology involves utilization of a passive geophysical prospecting method and apparatus that operates in both ground and airborne configurations to identify hydrocarbon reservoirs by remote sensing of transient electromagnetic pulses. As presented by the inventor of the technology at the 2006 AAPG Annual Meeting, over 30 discovery wells had been documented as being drilled on positive transient-pulse anomalies with, to the inventors knowledge, no dry holes drilled on any of the positive anomalies. The technology works over land and water and has been extensively tested in the US and Canada, as well as in the North Sea by MLW and Australia by the inventor. MLW spent millions of dollars in acquiring and implementing the technology throughout our drilling program to identify and confirm new areas of opportunity and to mitigate risk.  We expect the technology to significantly impact our success over the long term.

The technology is designed as a reconnaissance tool and can be used stand-alone in certain circumstances to discover new potential hydrocarbon deposits. However, the technology is also used very effectively in conjunction with other technologies and conventional geological and geophysical interpretation methods to offset inherent uncertainties in these methods and to provide additional insight into the presence and extent of hydrocarbon deposits.  

MLW is actively developing acreage in Louisiana, Texas, Mississippi, Oklahoma and the Illinois Basin.  MLWs corporate strategy is to acquire and develop primarily low risk oil and gas interests with significant upside potential to generate a foundation of steady cash flow along with a limited number of moderate risk, high impact, high potential opportunities to maximize returns.  MLW strives to use all available technology and resources to increase the probability of success and to mitigate risk.  The low risk development projects will be focused on the recovery of Proven and Probable reserves, with an emphasis on oil (75%) over gas (25%).  The geographic areas of exploration and development will focus primarily on the coastal and upper-coastal areas of Louisiana, Mississippi and Texas, where there is a high likelihood of stacked reservoirs and well developed pay sands with high producing rates and rapid payout.  Other geographic areas will be considered on the basis of strong reserve potential, low risk, and near term cash flow potential. MLWs success is the result of a disciplined and focused effort based on the following objectives: 

• Be a proactive company, generating its own growth opportunities in house, as well as acquiring third-party generated prospects. MLW will strive for majority interest in each project and will function as the operator of each project, whenever possible.
• Focus on projects and trends where it has a better competitive advantage and where standards for high profitability and minimal risk can be achieved.
• Achieve and maintain technical proficiency in each geographic area of activity. Build upon the individual experience and capabilities of internal staff, heavily utilizing the knowledge and experience of key local and regional technical experts.
• Minimize overall company risk by focusing approximately the majority of efforts on development projects with low-risk, proven reserves and with upside potential, and a limited amount on select high impact exploration projects.
• Reduce and mitigate risk, using all practical technology to assess the relative merits and potential of each prospect and to minimize the risk of dry holes.
• Incentivize professional and technical partners to maximize the opportunities for success in each project.
• Strive to keep operating costs and overhead low to maintain maximum operational flexibility.
• Utilize the tax code to minimize the tax impact on Investors.

Securing Leases 

Under US law, the ownership of land includes surface rightsand mineral rightsfor any minerals which may be below ground. Mineral rights may be severed from the surface rights. As a result, the owner of a piece of land might have the surface rights but not own the right to the minerals below ground (minerals ownership).  The owner of the mineral rights has the right to explore for, and to produce (remove) oil and/or gas, or other minerals from their property even though they dont own the surface rights. They also have the right to access the surface of the land in order to explore and produce the minerals.  Once an area has been selected, the right to drill must be secured by the producer. The right to drill usually involves leasing the mineral rights of the desired property.  A lease agreement creates two specific interests: a royalty interest and a working interest  The royalty interest is the right to receive a certain portion of the proceeds without sharing in the costs incurred in producing oil, such as drilling, completion, operating or production costs. The royalty interest is the interest of the mineral rights owner. The costs incurred in producing oil and gas are borne by the holder of the lease, which is referred to as the working interest.

Drilling 

After the leases are secured then drilling can begin. One of the most common methods of drilling is the rotary method. With rotary drilling, a hole is drilled by the continuous turning of a drill bit.  The most common bit looks like a cluster of gears. The bit, which is hollow, is attached to the drill stem. The drill stem is hollow pipe which is lowered down the well by adding lengths of pipe.  The drilling fluid is called mud Mud is circulated down the center of the pipe, through the bit and goes back up towards the surface. The mud removes cuttings from the hole, lubricates and cools the bit and prevents a blow out if a high pressure area is punctured.

Oil Production 

Getting natural gas from a well can be a fairly straightforward operation - just like letting air out of a balloon. Gas which is compressed in the formation expands as it flows to the surface.  Getting oil from a well is usually more involved as oil is heavier than gas. Greater pressure is usually needed to force the oil to the surface using a variety of techniques or it can be lifted to the surface, using the same principles as old fashioned waterwells. The equipment at the surface which is lifting the oil from the well is called a pump jack Pump jacks are what most people think of as an oil well.

Selling Oil And Gas

  Oil is usually accompanied by water which is separated at the surface. The oil is pumped into collection tanks where it is picked up periodically and then sold in the market.