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How To Evaluate Oil and Gas Deals

    Unless you are a geologist or geophysicist this could be very daunting task. However, there is a simple method to help get you started. I always recommend that to properly evaluate an oil and gas proposal, ask three very important questions:

1.         Is the offering from a well established company?

             Companies that are relatively new may have to change names every few years due to bad reputations or have just started up because of the recent rise in oil prices. Older established companies can remain in buisness because of good reputations and have weathered the ups and downs of prices over the years.

2.         Is the company making the offering the operator of the prospect?

              If the company making the offering is not the operator of the prospect, then they are just selling you a piece of someone else's deal. Why put a middleman between you and the prospect? This just adds additional costs as well as making accounting for the revenues very difficult.

3.         Do you recieve an assignment of interest filed in the courthouse in the county in which the prospect is located?

              First of all, would you buy a car without a title? Or a house without a deed? Then why spend this much money for a piece of oil wells without proof of ownership. With an assignment of interest you will become part of this legal chain of ownership to that prospect and you will recieve your revenues directly from the refinery or pipeline company. This is something that can never be taken away from you without your signing off.

     If you can anwser yes to all three questions then it is probably a good deal worth looking into. Now call references, such as the purchaser of the oil, the geologist, local oil and gas associations, etc. Check on the reputation of the company with these folks. They may not be able to tell you the veracity of the prospect, but good deals come from good companies.



EFFINGHAM COUNTY, ILLINOIS - MDM ENERGY, INC. Addison, Texas, are busy this week building infrastructure preparing to production test the Salem in their #1 Pike, located 330'FSL 990'FWL NW NE in section 25-8N-5E. A WEBER DRILLING & EXPLORATION rotary rig drilled the Pike #1 to a total depth of 2820' last month and casing was set to bottom. This is southwest of a test MDM ENERGY, INC. drilled and completed in June 2007 with their #1 Pike-Root Community, located 330'FNL 390'FEL NE NE in the same section. The #1 Pike-RootCommunity was drilled to a T.D. of 3920' and 5 1/2" casing was set to 2830'. The Salem porosity interval 2786-94' was perforated and initialed for 65 barrels of oil and no water per day after acid stimulation.The result of an extensive 3D seismic program, the #1 Pike-Root Community was the discovery well for the Effignham West Field. This is five miles northeast of the Watson West Field and twelve miles east of production on the Louden anticline. Effingham, Illinois is one mile to the east. PHIL CASEROTTI is the geologist/geophysicist on this project.