Imperial Posts Reserve Report for Stateline Project

Imperial has conducted an evaluation and has obtained a reserve report on its Stateline infill development project ("Stateline") in the existing Sawyer Field, located in Lea County, New Mexico.

Imperial has obtained a right to earn acreage by drilling wells in the undrilled portion of the lease which is held in its entirety by existing production. The acreage is sufficient to accommodate four vertical infill wells under current acreage spacing requirements in the Sawyer Field, targeting the San Andres Formation.

The Company believes gross recoverable reserves from the first well are in the order of 64,274 barrels of oil and 104,540 mcf of gas. The Company will earn a 90% WI in the first well, with the Farmor retaining a 10% working interest, upon completion. The Company has to carry the Farmor on the Stateline Prospect for its 10% through the casing point on the first well only. After that point, the Farmor pays 10% of all costs associated with completing the first well and all operating expenses.

On any of the other wells that may be elected to be drilled by the Company in the Prospect there is no carry, the Farmor having to pay its 10% contribution of all costs associated with those wells.

The Company estimates that the three further wells will also have gross recoverable reserves in line with the estimates for first well, resulting in total reserves for the four Stateline wells in excess of 250,000 barrels of oil and 400,000 mcf of gas, subject to adjustment after analysis of and taking into account the results of the first well and a third party reservoir analysis report which the Company intends to obtain from an independent registered petroleum engineer.

The Stateline reserves are classified as Proven Undeveloped Reserves (also referred to as 1P or P90), at the very lowest end of industry risk. The Company's capital expense for the first well is expected to be around $635,000.

The Company believes that the wells offer a rapid payback of investment (under two years from first production at an $85 oil price model) coupled with a long productive life.

Stateline fits nicely with the Company's objective to exploit niche, low risk oil and gas opportunities in the onshore U.S. with the potential to deliver cash flows normally associated with higher risk projects, but without exposure to high risk failure rates.

Imperial believes that Stateline offers the Company a low entry cost complementary opportunity (subject to the commercial success of the infill wells) to build significant production and reserves as the Company progresses, in concert, its planned transformational Oklahoma Resource Play.

Rob Durbin, CEO of Imperial, said, "Stateline fits with our profile, as low a risk as possible and a nice potential return. Find something that works and do it again and again. The area around Stateline has proved to be successful in the past and should be again and again."


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