ViaLogy Successful in First Phase of Oil Reservoir Analysis

ViaLogy LLC, has completed the initial phase of its pilot project with Atascosa Exploration LLC to apply its QuantumRD technology for geoseismic applications to determine the location and characteristics of underground oil deposits.

With reference to a prospective Texas drilling site, the QuantumRD analysis confirmed the location of an oil trap, and mapped its size, shape, and predicted porosity. Atascosa estimates that this finding will save them
over $500,000 by relocating the drill site to an optimal location some 700 feet from the site originally planned. In addition, ViaLogy's analysis discovered a second, deeper gas and oil trap of at least equal size. Work to drill both wells will begin in the coming weeks.

"We are very encouraged by ViaLogy's report, although final confirmation must await the results of drilling," said Atascosa CEO, John D. Mullins. "Our production engineering and geophysicist team is particularly impressed by the analysis tools Vialogy brings to bear in its novel approach to accurately characterizing reservoir prospects using existing datasets. We will look to grow our strategic collaboration with ViaLogy in analytical facets of reservoir modeling, water injection planning and enhanced recovery. The discovery of the new reservoir is remarkable, and could prove a significant find."

Atascosa confirmed that as payment for its QuantumRD work Vialogy is to receive a no-cost 5% working interest (WI), subject to existing agreements, royalty interest (RI), and overriding royalty interests (ORRI) in the wells drilled for each sand after payout of lease costs, geology, engineering, drilling, and other operational expenses. At each well payout, Atascosa will execute and deliver assignments to Vialogy sufficient to vest Vialogy with ownership of its 5% WI in the initial well in each sand and its right to participate in additional wells on the same basis as the other owners and as covered by the Operating Agreement.

The company estimates that this could produce approximately $8 million for Vialogy over the life of the wells. ViaLogy President and CEO Robert W. Dean stated; "We are very pleased to partner with Atascosa to commercialize our technology in the energy market. Atascosa's domain expertise will help us reach a broader problem and customer set. Geoseismology is an excellent vertical for us, as we will be able to realize a higher margin and performance premium for our disruptive technology. We are working with the Atascosa team to identify additional growth areas that we can address in the near-term."