Gulf Onshore's Oil Production Rises Over 40%

Gulf Onshore, Inc. has increased its oil production by over 40% from June to July as a result of its Re-Work/Development Program on leases in Throckmorton Co. and Shackelford Co., Texas. A total of four oil wells were restored to production under the Plan in July, with two additional wells re-committed and permitted as injector wells for water disposal.

Gulf Onshore produced 635 BO and sold 674 BO (reflecting carryover May 2008 production) for gross revenues of nearly $90,000 during June 2008. The Company produced 913 BO in July 2008. Sales figures for July, which are based on the purchaser's posted price plus bonus, will be available mid-month.

Gulf Onshore recently re-negotiated its purchaser agreement; oil sales prices for the next 12 months will be based on the monthly weighted NYMEX price, plus a $1.80 per barrel bonus. These increases will go into effect for oil purchased after August 1, 2008.

Gulf Onshore has the capacity to add up to three additional wells per week, based on work-over rig and equipment availability, and Texas Railroad Commission regulations. The Company's inventory of production equipment, including pumps, pump jacks and tubing are maintained on-lease, avoiding delays and expense.
Since acquiring these properties on June 1, 2008, water disposal challenges have been addressed by adding injector wells, allowing the Company to increase production from existing wells and add additional producing wells. Gulf Onshore currently has two more injector wells in the final permitting stages, both of which should be available for use in August 2008.

Some of the wells the company is putting back into production qualify under the State of Texas' Inactive Severance Tax Incentive. Under provision of the Incentive, qualifying wells that have been inactive for two years or more can receive a 10-year exemption from the State's 4.6% (oil) severance tax