Green River Basin  - Niobrara Shale Oil, CBM and Conventional Oil and Gas

The Green River Basin (GRB) Niobrara Shale Oil play is an emerging oil play in the Rocky Mountains. Similar to the recently proved DJ Basin Niobrara oil play some 150 miles to the east, conventional Niobrara oil and gas production has been established in the GRB from vertical wells in several fields close to Emerald's acreage, e.g. Sierra Madre and Buck Peak. Companies which successfully proved similar shale plays in the Bakken, Eagleford , Marcellus, Haynesville and Barnett shales then applied horizontal well drilling and fracture stimulation completion technology to unlock the potential of the DJ Niobrara, resulting in it becoming one of the largest shale oil plays in the US. Industry attention is now turning to the GRB Niobrara with a number of large independent E&P companies planning vertical well GRB appraisal drilling programs in 2011, in preparation for horizontal development well programs to follow.

In May 2011, Emerald purchased New Frontier Energy Inc's 45% working interest (WI) in the Green River Basin Joint Venture (GRBJV). The GRBJV is operated by Entek Energy (55% WI) and owns approximately 80,000 gross acres (60,000 net acres) of mineral leases in Colorado and Wyoming located in the oil window of the Niobrara Shale continuous oil accumulation, Coal Bed Methane (CBM) production from a partially developed CBM field and production infrastructure including a 19 mile gas gathering pipeline to a Questar gas sales point at Baggs, Wyoming.

Aggregate Niobrara oil pay in the GRBJV area is more than 5 times thicker than the corresponding section in the DJ Basin, with up to 5 potentially productive intervals, including 4 Niobrara 'benches" or brittle reservoir intervals and naturally fractured igneous intrusives.

In addition to the unconventional Niobrara shale oil play, conventional oil and gas accumulations in the formations immediately above and below the Niobrara section and shallower CBM also exist, making this area very prospective, with multiple drilling targets in each well.

An appraisal program consisting of 3 Vertical wells is planned during 2011 to gather information necessary to identify horizontal Niobrara drilling targets and to design optimal development wells and completions planned for 2012.

Appalachian Gas Production

Emerald's area of interest in the Appalachian Basin is in Eastern Kentucky (Magoffin County.) Hundreds of shut in shallow gas wells exist in the area, stranded by lack of basic field operating capability, gas gathering infrastructure and sour gas treatment. Individual well productivity is generally less than 100 Mcfd, but wells in some localized areas are capable of producing several hundred Mcfd.

In late 2009 Emerald formed a new company, Kentucky Energy Partners LLC (KEP), with Slone Production LLC. Emerald holds a 75% interest in the new company and provides capital funding, with Slone owning the remaining 25% and providing operating capability.

The KEP business model is to identify and selectively acquire mineral leases where relatively high well productivity can be demonstrated with well tests and then connect these wells to KEP's gathering infrastructure.

To date, KEP has secured 2500 lease acres with 21 wells potentially capable of gas production. Aggregate well production potential from flow tests on 15 of these wells is in excess of 2,000 Mcfd and plans are being progressed to tie these wells into the KEP production system. KEP's Beetree Project, comprising a new 10 mile long, 4 inch gathering line with sour gas treatment at the gas sales point was completed during the first half of 2011. It is currently producing several hundred Mcfd gas, with plans to progressively add wells to increase this to over 1,000 Mcfd by the end of 2011.

Texas Onshore GOM - Shallow Gas Exploration

Emerald holds 35% Working interest in approximately 2800 gross acres covered by a 55 square mile NW Alice 3D seismic survey in Jim Wells County, near the town of Alice, Texas. Detailed review of the 3D seismic data of the acreage indicates several potential shallow drilling targets prospective for both gas and oil.

Future Growth Opportunities

Emerald continues to seek entry to substantial oil and gas exploration and acquisition opportunities in the USA, particularly targeting shale oil or liquids rich shale gas opportunities in the Rocky Mountain Region.