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What are the total tax write-offs including intangible costs (able to be expensed in the year incurred) and tangible costs (able to be amortized over the allowable life of the equipment)? (Please see the project AFE spreadsheet projecting revenues and costs for 49 months) All domestic corporate partners and international partners will if part of an LLC experience complete pass through of net profits. Intangible writeoffs will be taken in the year incurred against profit and taxes owed by the LLC will be paid to the IRS in the United States 60% of participation costs are intangible drilling and completion costs able to be expensed in the year incurred and 40% are tangible drilling and completion costs that will be amortized or written off over 7 years and not expensed in the year incurred.

Are the IDC's (intangible drilling costs) assigned pro rata based on the % ownership of the well? Yes, Even though the sharing arrangement changes after complete payout (100% before payout and 50/50 after payout) our CPA will assign IDC's based on the initial sharing arrangement. Therefore, the largest share of the write-off will apply to the largest share of the income during 2010 and 2011. For Example, a $500,000 non-operator contribution would generate $300,000 in an expense write-off for 2010. On the other hand, the 40% of the costs which are tangibles would be written off over 7 years.

Who has the mineral rights and when do the leases expire? Ames Oil Corporation of Texas has leased the mineral rights. Royalty rights on both leases paid to the mineral rights owner who is also in both cases the surface land holder are 25% which is now common. It used to be 12.5% in the 80's. In some cases one may still find 12.5% or 1/8th royalty burden but generally those are wildcats or high risk drilling prospects.

How many wells are on the lease now? There are three wells on the Willis Lease (Salem Project) which have produced out of the Aux Vas sand formation. The lease was dormant until we took it over in 2005 but it has averaged over the life of the wells, approximately 25,000 total barrels of oil per well from primary production. In the last 4 years we have removed approximately $300,000 in oil. Estimates are that there should be another 250,000 barrels generated from the results of a water-flood which we hope to do in the future. Indeed, the President of a very successful oil company who wanted our lease said that the field if converted to water-flood mode could generate 500 barrels a day of fluid of which 300 could be oil. However, the Salem Project, will be pumping out of a different zone or strata. The Salem is 900 feet deeper than the Aux Vas. Ames has farmed out the Salem formation (which is proven) and the McClosky formation, both with no depletion, to our Salem Project Group. There are no other wells that have tested the Salem formation in the lease. There was one test approximately a mile away on the Grey acreage. It was dry for all zones and plugged.

There are also two wells producing on the northern edge of the Richeson Lease producing out of the Cyprus and the Hardensburg formations. However, both wells hit the Aux Vas proving its existence and produced under 5,000 barrels back in the 80's from a combination of formations. Both wells having Aux Vas, Hardensburg and Cyprus shows are down dip from the junction fault in the south east portion of the lease. The up-thrown side of the fault on our lease block is 113 feet higher according to information provided by the coal company which ran cores on the Richeson lease to determine where the coal went when they hit the fault mining coal from the lease just east of us. The wells that will be drilled adjacent to the fault have been projected by a geologist to come in at approximately 160-200 plus barrels a day. However, we have estimated the IP initial production at 139 barrels for the first month and declined that figure by 30% for two months and 10% per month thereafter until a settled production state of 5 barrels a day is achieved and that should continue for 2-4 decades if we do not water flood the zone.

How much has Ames Oil spent on the Leases comprising the Salem Project? Ames Oil has already spent $410,000 purchasing outfitting and reworking the Aux Vas portion of the Lease Block.

What about guarantees? The word guarantee except in vary rare cases is not appropriate and should be deleted from all Oil related jargon. Our spreadsheets are projections which are optimistic, pessimistic or most likely scenarios concerning future expenses, price of oil, cost of casing, tubing and rods and finally net cash-flow. It should be noted, projections are always wrong. The actual cash flow will be either above or below. If the net cash flow exceeds estimates we will be termed too conservative and if it is below estimates we will be categorized as puffing and labeled promoters. That said, a projection is necessary to get an estimate of what most likely may be expected under reasonable circumstances and assuming oil remains in a reasonable range $60-$85 per barrel. Forward looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended covering cash inflows and expenses are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward looking statements describe future expectations, plans, results or strategies and are generally preceded by words such as may, future, plan or planned, will or should, expected, anticipates, draft, eventually, or projected. YOU ARE CAUTIONED THAT SUCH STATEMENTS ARE SUBJECT TO A MULTITUDE OF RISKS AND UNCERTAINTIES THAT COULD CAUSE FUTURE CIRCUMSTANCES EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED IN THE SPREADSHEETS AND IN ADDITION THOSE STATEMENTS INCLUDED ON THIS WEBPAGE MAY DIFFER MATERIALLY FROM ACTUAL RESULTS AS A RESULT OF A MULTITUDE OF UNPREDICTABLE FACTORS AND RISKS.

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