Black Dragon Participates in KEP's Devt Project in Texas

Black Dragon has executed an agreement with Kingdom Energy Partners (KEP) for a 25% working interest (18.75% net revenue interest) in an oil development project in the Humble Field in Harris County, Texas. KEP is a privately held oil and gas company with a unique alliance with exclusive Patented and proprietary chemical technology called "Coriba(tm)" related to Enhanced Oil Recovery (EOR).

The Humble Field was discovered in 1905 and has yielded more than 150 million barrels of oil. The oil was initially produced by Humble Oil Company, which subsequently became the anchor property for present day Exxon. The field is a major icon in the oil history of Texas, and Black Dragon is poised to join in that legacy.

This project is located in a low risk, proven salt dome reservoir with existing offset production. The lease covers 70 acres with 50 drillable acres. The program with KEP will involve drilling five wells to establish the EOR pattern. After initial production is established from these five wells, one will be converted to an injector for the introduction of Coriba. The project estimates initial production from 10-20 barrels per day per well under normal pumping conditions increasing to 25-80 BPD per well per day with EOR. With EOR this project could eventually result in the four production wells yielding between 100 and 300 BPD (3000 to 9000 BPM) to the 100% interest. Live Oak Operating will handle all drilling and daily operations.

According to Dr. Gerald Bailey, CEO of BDGR, EOR technology has the potential to be a major contributor in existing holdings for improving the recovery of thousands of barrels of previously by-passed oil in stripper fields of the type operated by Black Dragon.

Technical analysis by KEP estimates the Humble project could have recoverable reserves between 300,000 and 500,000 barrels of oil with the initial drilling and EOR program. Bill Hamm, President of KEP, said there is additional spacing in the lease covered by this agreement to replicate the initial four production wells with two more four well programs. BDGR will have first rights to participate in these next programs. This could bring total production to as much as 1000 BPD.

Dr. Bailey said that the first wells should be drilling by the end of October as the project is ready to start, and first production should occur before year end. Meanwhile Dragon will continue to explore the possibility of taking even a larger percentage in the project. Participation in Humble could be a potentially huge profit center for Dragon. Production for Dragon could be doubled. In addition there are several other acreage positions in the field that Dragon will have access to, including another 500 acres on the cap rock of the dome.