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Drilling & Acquisition Fund, LLC

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The document summarizes an investment opportunity in the Opportunity Drilling & Acquisition Fund, LLC. The Fund will acquire existing production from 4 wells and drill 12 new wells targeting oil and gas. Projected revenue from the existing wells and new drilling is shown under different production scenarios. The Fund is seeking to raise $12 million total from 50 investment units of $240,000 each. Projected net yearly disbursements per unit range from $33,487.52 to $192,072 depending on production assumptions.

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OPPORTUNITY DRILLING & ACQUISITION FUND, LLC
EXECUTIVE OPPORTUNITY DRILLING & ACQUISITION FUND, LLC SUMMARY The “Opportunity Drilling & Acquisition Fund, LLC” (the “FUND”) is an SEC Registered Investment Vehicle designed to provide security through the acquisition of currently existing early stage production, with the upside long term profit potential of new wells being drilled in primarily developmental properties. ACQUISITIONS The “Fund” has, under contract, through its Supervisory Operator, the rights to purchase a 50% Working Interest in 4 producing wells in Weld County, Colorado. These wells, located just outside of Greeley, Colorado, are drilled & completed in the prolific Wattenberg Field of the D & J Basin. The wells are producing from the Niobrara, and the Codell formations at a depth of 8600 feet. Wells producing from these formations have a historic production rate of between 25 and 30 years. The Interest to be purchased is less than 2 years old, they all produce both oil & natural gas, and have contracts for the sale of same for both. Plains Marketing, Inc. is the buyer for the oil and the natural gas is sold to DCP Midstream, a division of Duke Energy, Inc. The purchase of these interests will allow for a secure asset stream and early startup to the Fund. DRILLING ACTIVITY There will be a total of 12 new wells for the Fund. All are in direct off-set developmental locations. Two of the wells will be drilled in the Colorado D&J Basin, Adams County, Colorado, and the remaining ten wells will be drilled in Pickett County, Tennessee. These locations are direct off-sets to numerous commercial wells. The Colorado D&J Basin wells will be drilled to a total depth of approximately 8700 feet and will target the Dakota Sands (deepest), the J-1 and the J-2 Sands respectively, and the Codell. All of these formations are active, producing formations in this area, making the probability of success (*90% plus) extremely high. These wells are expected to produce BOTH oil & natural gas. These sands are typically stimulated with hydraulic fracturing with great success. Purchasers for both are competitive and readily available for both in this market. The 10 Pickett County, Tennessee wells are “shallow” wells, 2000 feet. These wells will target the Knox (deepest) the Stones River, the Sunny Brook and the Murfreesboro formations. These wells also are to be drilled on leases that are currently producing and will be direct off-sets to commercial wells. Current commercial success rate in the immediate area is over 75% and is typically completed with nitrogen, foam stimulation treatment for enhanced recovery. Barrett Oil Transport and Coomer Oil are the current active purchasers and transporters in this area. Our Supervisory Contractor, Leland Energy, Inc. has a 100% success rate in Colorado and a 75% commercial success rate on its drilling activity in Tennessee. Additionally, based on its high success rate and long standing (35 years) experience in the oil & gas industry the Supervisory Contractor will provide, as part of its contracted services, an Energy Production Deficiency Protection Plan. Through a financial pledge agreement, the “Plan” will secure up to 100% of all monies invested in the Fund. For more information, see the Pledge Agreement Section of this booklet. 2
OPPORTUNITY DRILLING & ACQUISITION FUND, LLC PROFORMA PROJECTION Adams Cty @20bbls/well Adams Cty @35bbls/well and 1450 mcf Adams Cty @50bbls/well and 3000 mcf *Pro-Forma Production Revenue Pickett Cty @5bbls/well Pickett Cty @8bbls/well Pickett Cty @10bbls/well 1 Num ber of Wells to be Drilled in Adam s Cty 2 2 2 2 2 2 2 2 2 Assumed Cumulative Total Daily Production (bbl) 2 40 40 40 70 70 70 100 100 100 (Post Completion) Assumed Cumulative Total Daily Production (mcf) 3 1600 1600 1600 2900 2900 2900 6000 6000 6000 (Post Completion) 4 Num ber of Wells to be Drilled in Pickett Cty 10 10 10 10 10 10 10 10 10 Assumed Cumulative Total Daily Production (bbl) 5 50 50 50 80 80 80 100 100 100 (Post Completion) 6 Assum ed Total Production All Wells (bbl) 90 90 90 150 150 150 200 200 200 7 $/bbl $75.00 $85.00 $105.00 $75.00 $85.00 $105.00 $75.00 $85.00 $105.00 8 Assum ed Total Production All Wells (m cf) 1600 1600 1600 2900 2900 2900 6000 6000 6000 9 $/m cf $2.00 $4.00 $6.00 $2.00 $4.00 $6.00 $2.00 $4.00 $6.00 10 Gross (Net Revenue Interest) Per Day $9,950.00 $14,050.00 $19,050.00 $17,050.00 $24,350.00 $33,150.00 $27,000.00 $41,000.00 $57,000.00 11 75% NRI (100% WI) Per Day $7,462.50 $10,537.50 $14,287.50 $12,787.50 $18,262.50 $24,862.50 $20,250.00 $30,750.00 $42,750.00 12 Days Per Month 26 26 26 26 26 26 26 26 26 13 Monthly Working Interest $194,025.00 $273,975.00 $371,475.00 $332,475.00 $474,825.00 $646,425.00 $526,500.00 $799,500.00 $1,111,500.00 Less Monthly State Tax and Op. Exp. 14 (approx. 10% of WI) $19,402.50 $27,397.50 $37,147.50 $33,247.50 $47,482.50 $64,642.50 $52,650.00 $79,950.00 $111,150.00 15 Net Monthly Revenue $174,622.50 $246,577.50 $334,327.50 $299,227.50 $427,342.50 $581,782.50 $473,850.00 $719,550.00 $1,000,350.00 16 Net Yearly Revenue $2,095,470.00 $2,958,930.00 $4,011,930.00 $3,590,730.00 $5,128,110.00 $6,981,390.00 $5,686,200.00 $8,634,600.00 $12,004,200.00 17 Net Yearly Disbursement to Fund (80% WI) $1,676,376.00 $2,367,144.00 $3,209,544.00 $2,872,584.00 $4,102,488.00 $5,585,112.00 $4,548,960.00 $6,907,680.00 $9,603,360.00 18 Per Unit Participation $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 19 Number of Units in Fund 50 50 50 50 50 50 50 50 50 20 Total Fund Raise $12,000,000.00 $12,000,000.00 $12,000,000.00 $12,000,000.00 $12,000,000.00 $12,000,000.00 $12,000,000.00 $12,000,000.00 $12,000,000.00 21 Existing Prod. 50% 4 Wells Per/year/unit $5,129.80 $5,129.80 $5,129.80 $5,129.80 $5,129.80 $5,129.80 $5,129.80 $5,129.80 $5,129.80 22 Net Per Unit Yearly Disbursem ent (New + Exist) $38,657.32 $52,472.68 $69,320.68 $62,581.48 $87,179.56 $116,832.04 $96,109.00 $143,283.40 $197,197.00 23 Net Per Unit Monthly Disbursem ent $3,221.44 $4,372.72 $5,776.72 $5,215.12 $7,264.96 $9,736.00 $8,009.08 $11,940.28 $16,433.08 24 Annual Rate of Return on Investm ent 16.11% 21.86% 28.88% 26.08% 36.32% 48.68% 40.05% 59.70% 82.17% 25 Tax Considerations** 26 Capital Contribution (1 unit) $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 27 Amount to Write Off (Assuming 70% Eligible) $168,000.00 $168,000.00 $168,000.00 $168,000.00 $168,000.00 $168,000.00 $168,000.00 $168,000.00 $168,000.00 28 Tax Bracket 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 29 Dollar Amount Deduction $58,800.00 $58,800.00 $58,800.00 $58,800.00 $58,800.00 $58,800.00 $58,800.00 $58,800.00 $58,800.00 29 Actual Dollar Amount of Investment $181,200.00 $181,200.00 $181,200.00 $181,200.00 $181,200.00 $181,200.00 $181,200.00 $181,200.00 $181,200.00 30 Percent annual ROI based on tax-adjustm ent 21.33% 28.96% 38.26% 34.54% 48.11% 64.48% 53.04% 79.07% 108.83% *The Pro- Forma c alc ulator is a tool designed solely to assist in valuing the possibilities of this program, and is in no way a guarantee of produc tion. Furthermore, no tax advic e is being given, and applic able tax regulations vary from individual to individual. Individuals should seek independent tax advic e regarding the tax benefits of this program. 3 **Ac tual perc entage may c hange based on the total of intangible benefits made available through drilling, c ompletion, and status of already existing wells.
ENERGY PRODUCTION DEFICIENCY PROTECTION PLAN
ENERGY PRODUCTION DEFICIENCY PROTECTION PLAN ABOUT PETROLEUM MUTUAL RESERVE, LLC 5
ENERGY PRODUCTION DEFICIENCY PROTECTION PLAN ILLUSTRATION: THE PETROLEUM MUTUAL RESERVE PROGRAM 6
ENERGY PRODUCTION DEFICIENCY PROTECTION PLAN OIL APPROVAL LETTER 7
ENERGY PRODUCTION DEFICIENCY PROTECTION PLAN PLEDGE AGREEMENT (PART I) 8
PRODUCTION DEFICIENCY PROTECTION PLAN PLEDGE AGREEMENT (PART II) 9
OVERVIEW OF THE LEASES
OPPORTUNITY DRILLING & ACQUISITION FUND, LLC OVERVIEW OF THE LEASES The Opportunity Drilling & Acquisition Fund, LLC (The “Fund”), is a financial investment designed specifically for today’s economic environment. It combines current “in place” producing reserves with the upside of millions of dollars in developmental production. WELD COUNTY, COLORADO The Fund has under contract through its Supervisory Operator, the rights to purchase a 50% Working Interest in 4 producing wells in Weld County, Colorado where the ever expanding DJ Basin is the leading productive field and the 7th largest oil & natural gas field in the U.S. There is currently an average of 19,000 active wells in the field. The formations, Niobrara, Codell, and J Sands 1 &2 are tight sands and shales that collectively produce both oil and gas and typically stimulated with hydraulic fracturing, and have a success rated of over *90.0% (plus). The Codell wells have a history of producing 25 – 30 years and more. With new technology in fracturing these wells, they can be re-fractured after several years of production which can increase production, in some cases, higher than the original flush production. The purchase of these interests will allow for a secure asset stream and early startup to the Fund. ADAMS COUNTY, COLORADO The Fund has also attained the rights, through its Supervisory Operator, to two new wells in Adams County, Colorado. Also located within the prolific Wattenberg Field, the Adams County location has potential for successful drilling & completion. What makes these locations so exciting is that they are a direct off-set to some very good wells. More detailed information on these wells is located in the Adams County section of this booklet. In addition, we will get a premium price for our gas because of its rich content. Even more great news is that, in the well logs reviewed of off- sets to the new locations, there are 2 additional pay zones that show future commercial options, and possible behind the pipe assets and revenue. PICKETT COUNTY, TENNESSEE The Fund through its Supervisory Operator, has the rights for the drilling & completion of 10 “new” wells in Pickett County, Tennessee, all to be drilled at a minimum to the Knox Formation. The developmental projects, the Larry Storie Lease & the H. Johnson Lease, are 800+ acres in the Parker Etter Field which is located in the very prolific Moodyville Quadrangle. These are all “infill” locations, which places them at direct off-set to our current proven producing wells. These wells will be drilled & completed using today’s sophisticated engineering techniques & completion treatments to insure maximum recovery and production. Given the “off-set” and “infill” locations, the probability for hitting a commercially successful well is better than 90%. 11
OPPORTUNITY DRILLING COUNTY, WELD & ACQUISITION FUND, LLC COLORADO The Fund has, under contract through its Supervisory Operator, the rights to purchase a 50% Working Interest in 4 producing wells in Weld County Colorado, in the New Winsor area that adjoins the northern portion of the Wattenberg field which is in the ever expanding DJ basin (See Figure 1). There are currently over 19,000 active wells in the area. The Formations are Cretaceous aged deposits covering large portions of the Eastern Plains of Colorado. The Formations are tight sands and shales that collectively produce both oil and gas, which are typically stimulated with hydraulic fracturing. Figure 2 – DJ Basin formations graphic depicting field in various depths and stimulation(s). The majority of wells in the Wattenberg field are re-fractured or re-stimulated using an elliptical model, for greater recovery of reserves (See Figure 2). Re-fracturing and the use of low cost "slick-water fracs" (as opposed to a conventional "gel- Figure 1 - Regional Well Map of the Wattenberg Field based fracs") further the economic feasibility of these wells. *See Larger Map of Existing Well(s) Drill Site on Following Page 12
OPPORTUNITY DRILLING & ACQUISITION FUND, LLC DRILL SITE: WELD COUNTY, COLORADO 13
DECEMBER 2012 REVENUE - WELD COUNTY, OPPORTUNITY DRILLING & ACQUISITION FUND, LLC COLORADO Please notice the revenue check on this page. This check is from Plains Marketing (the Oil Purchaser) and represents production in the month of November, 2012, by the 4 wells the fund is acquiring interest in. The bottom left hand corner of the check shows the year to date gross totals for 2012. This figure was used to calculate what 50% interest will potentially contribute to the fund as a minimum giving a bottom line to an investment in the project. The checks are issued to Leland around the 25th of each month, and upon receipt Leland immediately issues payment to the Fund who in turn distributes to the LLC Members. *Past Performance is no guarantee of future success. 14
OPPORTUNITY DRILLING & ACQUISITION FUND, LLC ADAMS COUNTY, COLORADO The Adams County lease is just outside the city of Brighton, about 30 miles north of Denver. The primary off-set is the North – York #3, permit # 901120 which was spud in on October of 1990. It was completed in the J-Sand at 8352’ to 8430’ Its Initial flow rates were as follows over a 24 hour period: 43 Bbls of Oil and 2392MCF of gas. (See attached copy of the “Completion Report” filed with the state of Colorado in December of 1990 on following pages). Currently, our average price paid on the Weld County wells are $4.25 per MCF and $80 per Bbl. Due to the proximity of the fields and similarity of the formations, it is likely that we will get the same quality gas from the new wells and receive the higher gas payment amount. That would be equal to revenues of $13,606 per day at today’s prices; 43 Bbls. of oil times an $80 net per Bbl = $3,440 on oil, and 2392MCF times $4.25 = $10,166 on gas. That’s a total in excess of $353,000 per MONTH in today’s pricing! The additional great news is that in the well logs reviewed on this and other off-sets, there are 2 additional pay zones that show commercial options and possible behind the pipe assets and revenue: the Codell (above the J-Sand) at around 7900’, and the Dakota (below the J-Sand) at approximately 8560” to 8580’, both being oil & gas bearing formations. Another off-set, the Barlow, was re-completed in 1978 in the Dakota formation. Keep in mind the treatment (fracing) techniques were not nearly as sophisticated as they are today. That well generated 26 Bbls of oil and 500MCF over its 24 hour test. Again, at today’s pricing that’s 26 times $80 = $2,080, and the 500MCF times $4.25 = $2,125 per day in gas revenue. That times 26 production days a month = over $109K in monthly revenue! (Completion Report on following pages). Our 2 new locations need to have 1 currently expired permit sent in for renewal. We can expect a 60 day (or more) period for the re-issuing of the permits, after which we will commence drilling. *See Map of Surrounding Area on the Following Page 15
OPPORTUNITY DRILLING & ADAMS COUNTY, LOCATION AREA: ACQUISITION FUND, LLC COLORADO 16
OPPORTUNITY DRILLING & ACQUISITION FUND, LLC FORMATION CROSS-SECTION: ADAMS COUNTY, COLORADO As referenced in the detailed description of Adams County, please see above a diagram of the additional pay zones pertaining to the 2 wells to be drilled. 17
OPPORTUNITY DRILLING & ACQUISITION FUND, LLC COMPLETION REPORT 1: ADAMS COUNTY, COLORADO 18
OPPORTUNITY DRILLING & ACQUISITION FUND, LLC COMPLETION REPORT 2: ADAMS COUNTY, COLORADO 19
OPPORTUNITYPICKETT& ACQUISITION FUND, LLC DRILLING COUNTY, TENNESSEE The proposed new wells are locations offsetting and between known producers. All the wells drilled on this acreage were drilled on ten acre spacing, in compliance with spacing laws in Tennessee. The State of Kentucky determined several years ago the Knox formation was very dense and not porous enough to effectively drain ten acres. Tennessee followed suit and changed the spacing law for three counties in Tennessee, Pickett County being one of them because most of the production was from the Knox formation. They concluded that Knox wells should be drilled on five acre spacing, due to their fractured porosity within the producing zones. This lease offers new locations between producing wells that have retained most of its virgin pressures. All IP’s for current existing wells are between 27 – 50 Bpd. In comparing this lease with Leland’s known Knox lease located 1 mile south of The H. Johnson / Storie Prospect Lease (see following pages for Proven Production & Proven Reserves for more information), you can see some of the production history. Two (2) existing wells we treated produced in excess of 1200 bbls of oil within a 30 day period. We have also included in the following pages a structure map on the Knox formation, note the same structural features. There is every reason to believe, through the reserve report and by the comparison with a known Knox lease, we have the potential to reach the same production numbers or exceed them. 20
OPPORTUNITY DRILLING & ACQUISITION FUND, LLC DRILL SITE(S): PICKETT COUNTY, TENNESSEE 21
STORIE LEASE: ADJACENT TO H. FUND, LLC OPPORTUNITY DRILLING & ACQUISITION JOHNSON LEASE 22
23 OPPORTUNITY DRILLING & ACQUISITION FUND, LLC PICKETT COUNTY, TENNESSEE Stratigraphic Section for the Moodyville Prospect & Surrounding Vicinity
OPPORTUNITY DRILLING & ACQUISITION FUND, LLC PICKETT COUNTY, TENNESSEE 24
OPPORTUNITY DRILLING & ACQUISITION FUND, LLC ACTUAL CHECK RECEIVED FROM OIL PURCHASER: PICKETT COUNTY, TENNESSEE 25 *Past Performance is no guarantee of future success.
OPPORTUNITY DRILLING & ACQUISITION FUND, LLC ACTUAL CHECK RECEIVED FROM OIL PURCHASER: PICKETT COUNTY, TENNESSEE 26 *Past Performance is no guarantee of future success.
PROVEN PRODUCTION & RESERVES
PROVEN PRODUCTION & RESERVES WELD COUNTY, COLORADO Above: Well Fracing & Completion work, Weld County, CO 2011 Left Top & Bottom: Completion Process: Pumps, Tanks, and Fracing Equipment, Weld County, CO 2011 28
PROVEN PRODUCTION & RESERVES WELD COUNTY, COLORADO Bottom Left & Right: Well Caps in place awaiting treatment, Weld County, CO 2011 Top Right: Natural gas line for tap in, Weld County, CO 2011 29
THE H. JOHNSON LEASE: & RESERVES PROVEN PRODUCTION PICKETT COUNTY, TENNESSEE Top & Right: Nitrogen Foam Frac Treatment set up for H. Johnson Wells #3 and #11
THE H. JOHNSON LEASE: & RESERVES PROVEN PRODUCTION PICKETT COUNTY, TENNESSEE Left: Oil into the pits from Well #6L Top Right: Inside one of the Logging Truck on the H. Johnson Lease 31
THE H. JOHNSON LEASE: & RESERVES PROVEN PRODUCTION PICKETT COUNTY, TENNESSEE #6L Tank Battery & 1st Pick up by Barrett Oil Purchasing Pickett County, TN 2012 32
WORLD ENERGY MARKETS
WORLD ENERGY MARKETS WORLD GROWTH WORLD GROWTH In most past "dips" (recession, depression), there has been one primary in world economic growth. Whether it was the prevailing world power such as the United States or a combination of nation states, there has NEVER been the pending demand for essential commodities as there are today. China has clearly accommodated a "capitalistic" stance to its supposedly communist system of governing. India has become a "land of opportunity" different from even its own recent past. Both of these countries are just now giving birth to a massive middle class, a class that will demand goods and services unprecedented in the history of the world. Russia is also flexing its muscles as an economic power and is eager to compete on the world stage after many, many years of being a closed society. 34
WORLD ENERGY MARKETS WHY INVEST IN DOMESTIC ENERGY? Profitability: Evaluation, location & information technology can greatly limit downside risk & maintain huge upside potential. Consistency: Long term necessity & ongoing world demand for product (oil & natural gas). Peace of Mind: Long term revenue stream helps eliminate portfolio volatility. Tax Benefits: Unique & significant as compared to most ALL other investments. (See more details in the box to the right of this page). Job Creation: Domestic drilling & operating Tax Benefits of Investing in Energy DIRECTLY create ongoing, good paying, long term • Intangible Drilling Cost Tax Deduction employment for U.S workers. • Tangible Drilling Cost Tax Deduction Direct Participation: Total transparency as to how • Active vs. Passive Income your money gets put to work for you. - Lease Costs Communication with experienced & accessible - Alternative Minimum Tax: 100% of the principles & management. intangible drilling costs can be written off in the first year (depending on tax status) 35
WORLD ENERGY MARKETS WHY INVEST IN DOMESTIC ENERGY? Without question, we need to develop our oil and natural gas resources here at home. Not only is this crucial in moving us towards energy independence, domestic production of oil and natural gas creates Americans jobs! The oil and gas industry contributes to OUR economy, from producing to refining, from processing to transportation, and from storage all the way to distribution and retailing. It also has indirect economic benefits to other industries. The oil and natural gas industry has a widespread economic impact thought-out all sectors of the economy an across all 50 states. Not to mention Job Creation: Domestic drilling & operating DIRECTLY creates increasing revenues for local state governments. ongoing, good paying, long term employment for U.S. Workers. 36
LELAND ENERGY, INC. Domestic Oil & Gas Development Experience
DOMESTIC OIL & GAS DEVELOPMENT EXPERIENCE LELAND ENERGY, INC. Leland has been committed to Domestic Energy Resource Development for over 35 years Leland Energy, Inc. is an independent energy resource company primarily involved in the drilling, operating, and development of oil and natural gas. The company has been around since 1975, when it was originally incorporated as a Texas corporation under the name "Leland Petroleum, Inc.” In the years since then, it has continued to be solely owned by the Thompson family, and has been subsequently renamed and re-incorporated as a Nevada corporation; the current name of Leland Energy Inc., more clearly reflecting the focus of the business. Kentucky Well Tour, 2009 38
DOMESTIC OIL & GAS DEVELOPMENT EXPERIENCE LELAND ENERGY, INC. By putting together small and intermediate size blocks within a County, we can still benefit by the economy of scale that allows us to keep expenses within industry acceptable parameters, and at the same time, begin to accumulate an ever expanding portfolio of producing properties with excellent long range profits along with substantial in the ground reserves to be developed over the coming years. (90% Oil Cut Well #2, Codell) 85% Treatment Weld County, CO Engineers on a Drill Rig platform Weld County, CO 2011 39
DOMESTIC OIL & GAS DEVELOPMENT EXPERIENCE LELAND ENERGY, INC. Most of the drillers and operators in this area have no "exit strategy" and, like all businesses, need the infusion of capital to continue to grow and expand. Most independents would not dream of looking at a lease with 4 producing wells and only 1000 acres remaining for development. We will! ?? Partner Visit to Block Battery Tanks Green County, KY, 2009 Rig with Drill Pipe, Weld County, CO, 2011 40
Newly Painted Tank Battery, Well #12L - Pickett County, Tennessee The energy resource business will continue to be a vital component in the growth and security of our nation. Even in this very erratic economic climate, energy commodity prices have maintained a strong market price. While we here at Leland Energy, Inc. are not "experts" in world economics, we believe that energy commodity prices will continue to climb.

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Drilling & Acquisition Fund, LLC

  • 1. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC
  • 2. EXECUTIVE OPPORTUNITY DRILLING & ACQUISITION FUND, LLC SUMMARY The “Opportunity Drilling & Acquisition Fund, LLC” (the “FUND”) is an SEC Registered Investment Vehicle designed to provide security through the acquisition of currently existing early stage production, with the upside long term profit potential of new wells being drilled in primarily developmental properties. ACQUISITIONS The “Fund” has, under contract, through its Supervisory Operator, the rights to purchase a 50% Working Interest in 4 producing wells in Weld County, Colorado. These wells, located just outside of Greeley, Colorado, are drilled & completed in the prolific Wattenberg Field of the D & J Basin. The wells are producing from the Niobrara, and the Codell formations at a depth of 8600 feet. Wells producing from these formations have a historic production rate of between 25 and 30 years. The Interest to be purchased is less than 2 years old, they all produce both oil & natural gas, and have contracts for the sale of same for both. Plains Marketing, Inc. is the buyer for the oil and the natural gas is sold to DCP Midstream, a division of Duke Energy, Inc. The purchase of these interests will allow for a secure asset stream and early startup to the Fund. DRILLING ACTIVITY There will be a total of 12 new wells for the Fund. All are in direct off-set developmental locations. Two of the wells will be drilled in the Colorado D&J Basin, Adams County, Colorado, and the remaining ten wells will be drilled in Pickett County, Tennessee. These locations are direct off-sets to numerous commercial wells. The Colorado D&J Basin wells will be drilled to a total depth of approximately 8700 feet and will target the Dakota Sands (deepest), the J-1 and the J-2 Sands respectively, and the Codell. All of these formations are active, producing formations in this area, making the probability of success (*90% plus) extremely high. These wells are expected to produce BOTH oil & natural gas. These sands are typically stimulated with hydraulic fracturing with great success. Purchasers for both are competitive and readily available for both in this market. The 10 Pickett County, Tennessee wells are “shallow” wells, 2000 feet. These wells will target the Knox (deepest) the Stones River, the Sunny Brook and the Murfreesboro formations. These wells also are to be drilled on leases that are currently producing and will be direct off-sets to commercial wells. Current commercial success rate in the immediate area is over 75% and is typically completed with nitrogen, foam stimulation treatment for enhanced recovery. Barrett Oil Transport and Coomer Oil are the current active purchasers and transporters in this area. Our Supervisory Contractor, Leland Energy, Inc. has a 100% success rate in Colorado and a 75% commercial success rate on its drilling activity in Tennessee. Additionally, based on its high success rate and long standing (35 years) experience in the oil & gas industry the Supervisory Contractor will provide, as part of its contracted services, an Energy Production Deficiency Protection Plan. Through a financial pledge agreement, the “Plan” will secure up to 100% of all monies invested in the Fund. For more information, see the Pledge Agreement Section of this booklet. 2
  • 3. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC PROFORMA PROJECTION Adams Cty @20bbls/well Adams Cty @35bbls/well and 1450 mcf Adams Cty @50bbls/well and 3000 mcf *Pro-Forma Production Revenue Pickett Cty @5bbls/well Pickett Cty @8bbls/well Pickett Cty @10bbls/well 1 Num ber of Wells to be Drilled in Adam s Cty 2 2 2 2 2 2 2 2 2 Assumed Cumulative Total Daily Production (bbl) 2 40 40 40 70 70 70 100 100 100 (Post Completion) Assumed Cumulative Total Daily Production (mcf) 3 1600 1600 1600 2900 2900 2900 6000 6000 6000 (Post Completion) 4 Num ber of Wells to be Drilled in Pickett Cty 10 10 10 10 10 10 10 10 10 Assumed Cumulative Total Daily Production (bbl) 5 50 50 50 80 80 80 100 100 100 (Post Completion) 6 Assum ed Total Production All Wells (bbl) 90 90 90 150 150 150 200 200 200 7 $/bbl $75.00 $85.00 $105.00 $75.00 $85.00 $105.00 $75.00 $85.00 $105.00 8 Assum ed Total Production All Wells (m cf) 1600 1600 1600 2900 2900 2900 6000 6000 6000 9 $/m cf $2.00 $4.00 $6.00 $2.00 $4.00 $6.00 $2.00 $4.00 $6.00 10 Gross (Net Revenue Interest) Per Day $9,950.00 $14,050.00 $19,050.00 $17,050.00 $24,350.00 $33,150.00 $27,000.00 $41,000.00 $57,000.00 11 75% NRI (100% WI) Per Day $7,462.50 $10,537.50 $14,287.50 $12,787.50 $18,262.50 $24,862.50 $20,250.00 $30,750.00 $42,750.00 12 Days Per Month 26 26 26 26 26 26 26 26 26 13 Monthly Working Interest $194,025.00 $273,975.00 $371,475.00 $332,475.00 $474,825.00 $646,425.00 $526,500.00 $799,500.00 $1,111,500.00 Less Monthly State Tax and Op. Exp. 14 (approx. 10% of WI) $19,402.50 $27,397.50 $37,147.50 $33,247.50 $47,482.50 $64,642.50 $52,650.00 $79,950.00 $111,150.00 15 Net Monthly Revenue $174,622.50 $246,577.50 $334,327.50 $299,227.50 $427,342.50 $581,782.50 $473,850.00 $719,550.00 $1,000,350.00 16 Net Yearly Revenue $2,095,470.00 $2,958,930.00 $4,011,930.00 $3,590,730.00 $5,128,110.00 $6,981,390.00 $5,686,200.00 $8,634,600.00 $12,004,200.00 17 Net Yearly Disbursement to Fund (80% WI) $1,676,376.00 $2,367,144.00 $3,209,544.00 $2,872,584.00 $4,102,488.00 $5,585,112.00 $4,548,960.00 $6,907,680.00 $9,603,360.00 18 Per Unit Participation $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 19 Number of Units in Fund 50 50 50 50 50 50 50 50 50 20 Total Fund Raise $12,000,000.00 $12,000,000.00 $12,000,000.00 $12,000,000.00 $12,000,000.00 $12,000,000.00 $12,000,000.00 $12,000,000.00 $12,000,000.00 21 Existing Prod. 50% 4 Wells Per/year/unit $5,129.80 $5,129.80 $5,129.80 $5,129.80 $5,129.80 $5,129.80 $5,129.80 $5,129.80 $5,129.80 22 Net Per Unit Yearly Disbursem ent (New + Exist) $38,657.32 $52,472.68 $69,320.68 $62,581.48 $87,179.56 $116,832.04 $96,109.00 $143,283.40 $197,197.00 23 Net Per Unit Monthly Disbursem ent $3,221.44 $4,372.72 $5,776.72 $5,215.12 $7,264.96 $9,736.00 $8,009.08 $11,940.28 $16,433.08 24 Annual Rate of Return on Investm ent 16.11% 21.86% 28.88% 26.08% 36.32% 48.68% 40.05% 59.70% 82.17% 25 Tax Considerations** 26 Capital Contribution (1 unit) $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 $240,000.00 27 Amount to Write Off (Assuming 70% Eligible) $168,000.00 $168,000.00 $168,000.00 $168,000.00 $168,000.00 $168,000.00 $168,000.00 $168,000.00 $168,000.00 28 Tax Bracket 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 29 Dollar Amount Deduction $58,800.00 $58,800.00 $58,800.00 $58,800.00 $58,800.00 $58,800.00 $58,800.00 $58,800.00 $58,800.00 29 Actual Dollar Amount of Investment $181,200.00 $181,200.00 $181,200.00 $181,200.00 $181,200.00 $181,200.00 $181,200.00 $181,200.00 $181,200.00 30 Percent annual ROI based on tax-adjustm ent 21.33% 28.96% 38.26% 34.54% 48.11% 64.48% 53.04% 79.07% 108.83% *The Pro- Forma c alc ulator is a tool designed solely to assist in valuing the possibilities of this program, and is in no way a guarantee of produc tion. Furthermore, no tax advic e is being given, and applic able tax regulations vary from individual to individual. Individuals should seek independent tax advic e regarding the tax benefits of this program. 3 **Ac tual perc entage may c hange based on the total of intangible benefits made available through drilling, c ompletion, and status of already existing wells.
  • 5. ENERGY PRODUCTION DEFICIENCY PROTECTION PLAN ABOUT PETROLEUM MUTUAL RESERVE, LLC 5
  • 6. ENERGY PRODUCTION DEFICIENCY PROTECTION PLAN ILLUSTRATION: THE PETROLEUM MUTUAL RESERVE PROGRAM 6
  • 7. ENERGY PRODUCTION DEFICIENCY PROTECTION PLAN OIL APPROVAL LETTER 7
  • 8. ENERGY PRODUCTION DEFICIENCY PROTECTION PLAN PLEDGE AGREEMENT (PART I) 8
  • 9. PRODUCTION DEFICIENCY PROTECTION PLAN PLEDGE AGREEMENT (PART II) 9
  • 10. OVERVIEW OF THE LEASES
  • 11. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC OVERVIEW OF THE LEASES The Opportunity Drilling & Acquisition Fund, LLC (The “Fund”), is a financial investment designed specifically for today’s economic environment. It combines current “in place” producing reserves with the upside of millions of dollars in developmental production. WELD COUNTY, COLORADO The Fund has under contract through its Supervisory Operator, the rights to purchase a 50% Working Interest in 4 producing wells in Weld County, Colorado where the ever expanding DJ Basin is the leading productive field and the 7th largest oil & natural gas field in the U.S. There is currently an average of 19,000 active wells in the field. The formations, Niobrara, Codell, and J Sands 1 &2 are tight sands and shales that collectively produce both oil and gas and typically stimulated with hydraulic fracturing, and have a success rated of over *90.0% (plus). The Codell wells have a history of producing 25 – 30 years and more. With new technology in fracturing these wells, they can be re-fractured after several years of production which can increase production, in some cases, higher than the original flush production. The purchase of these interests will allow for a secure asset stream and early startup to the Fund. ADAMS COUNTY, COLORADO The Fund has also attained the rights, through its Supervisory Operator, to two new wells in Adams County, Colorado. Also located within the prolific Wattenberg Field, the Adams County location has potential for successful drilling & completion. What makes these locations so exciting is that they are a direct off-set to some very good wells. More detailed information on these wells is located in the Adams County section of this booklet. In addition, we will get a premium price for our gas because of its rich content. Even more great news is that, in the well logs reviewed of off- sets to the new locations, there are 2 additional pay zones that show future commercial options, and possible behind the pipe assets and revenue. PICKETT COUNTY, TENNESSEE The Fund through its Supervisory Operator, has the rights for the drilling & completion of 10 “new” wells in Pickett County, Tennessee, all to be drilled at a minimum to the Knox Formation. The developmental projects, the Larry Storie Lease & the H. Johnson Lease, are 800+ acres in the Parker Etter Field which is located in the very prolific Moodyville Quadrangle. These are all “infill” locations, which places them at direct off-set to our current proven producing wells. These wells will be drilled & completed using today’s sophisticated engineering techniques & completion treatments to insure maximum recovery and production. Given the “off-set” and “infill” locations, the probability for hitting a commercially successful well is better than 90%. 11
  • 12. OPPORTUNITY DRILLING COUNTY, WELD & ACQUISITION FUND, LLC COLORADO The Fund has, under contract through its Supervisory Operator, the rights to purchase a 50% Working Interest in 4 producing wells in Weld County Colorado, in the New Winsor area that adjoins the northern portion of the Wattenberg field which is in the ever expanding DJ basin (See Figure 1). There are currently over 19,000 active wells in the area. The Formations are Cretaceous aged deposits covering large portions of the Eastern Plains of Colorado. The Formations are tight sands and shales that collectively produce both oil and gas, which are typically stimulated with hydraulic fracturing. Figure 2 – DJ Basin formations graphic depicting field in various depths and stimulation(s). The majority of wells in the Wattenberg field are re-fractured or re-stimulated using an elliptical model, for greater recovery of reserves (See Figure 2). Re-fracturing and the use of low cost "slick-water fracs" (as opposed to a conventional "gel- Figure 1 - Regional Well Map of the Wattenberg Field based fracs") further the economic feasibility of these wells. *See Larger Map of Existing Well(s) Drill Site on Following Page 12
  • 13. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC DRILL SITE: WELD COUNTY, COLORADO 13
  • 14. DECEMBER 2012 REVENUE - WELD COUNTY, OPPORTUNITY DRILLING & ACQUISITION FUND, LLC COLORADO Please notice the revenue check on this page. This check is from Plains Marketing (the Oil Purchaser) and represents production in the month of November, 2012, by the 4 wells the fund is acquiring interest in. The bottom left hand corner of the check shows the year to date gross totals for 2012. This figure was used to calculate what 50% interest will potentially contribute to the fund as a minimum giving a bottom line to an investment in the project. The checks are issued to Leland around the 25th of each month, and upon receipt Leland immediately issues payment to the Fund who in turn distributes to the LLC Members. *Past Performance is no guarantee of future success. 14
  • 15. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC ADAMS COUNTY, COLORADO The Adams County lease is just outside the city of Brighton, about 30 miles north of Denver. The primary off-set is the North – York #3, permit # 901120 which was spud in on October of 1990. It was completed in the J-Sand at 8352’ to 8430’ Its Initial flow rates were as follows over a 24 hour period: 43 Bbls of Oil and 2392MCF of gas. (See attached copy of the “Completion Report” filed with the state of Colorado in December of 1990 on following pages). Currently, our average price paid on the Weld County wells are $4.25 per MCF and $80 per Bbl. Due to the proximity of the fields and similarity of the formations, it is likely that we will get the same quality gas from the new wells and receive the higher gas payment amount. That would be equal to revenues of $13,606 per day at today’s prices; 43 Bbls. of oil times an $80 net per Bbl = $3,440 on oil, and 2392MCF times $4.25 = $10,166 on gas. That’s a total in excess of $353,000 per MONTH in today’s pricing! The additional great news is that in the well logs reviewed on this and other off-sets, there are 2 additional pay zones that show commercial options and possible behind the pipe assets and revenue: the Codell (above the J-Sand) at around 7900’, and the Dakota (below the J-Sand) at approximately 8560” to 8580’, both being oil & gas bearing formations. Another off-set, the Barlow, was re-completed in 1978 in the Dakota formation. Keep in mind the treatment (fracing) techniques were not nearly as sophisticated as they are today. That well generated 26 Bbls of oil and 500MCF over its 24 hour test. Again, at today’s pricing that’s 26 times $80 = $2,080, and the 500MCF times $4.25 = $2,125 per day in gas revenue. That times 26 production days a month = over $109K in monthly revenue! (Completion Report on following pages). Our 2 new locations need to have 1 currently expired permit sent in for renewal. We can expect a 60 day (or more) period for the re-issuing of the permits, after which we will commence drilling. *See Map of Surrounding Area on the Following Page 15
  • 16. OPPORTUNITY DRILLING & ADAMS COUNTY, LOCATION AREA: ACQUISITION FUND, LLC COLORADO 16
  • 17. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC FORMATION CROSS-SECTION: ADAMS COUNTY, COLORADO As referenced in the detailed description of Adams County, please see above a diagram of the additional pay zones pertaining to the 2 wells to be drilled. 17
  • 18. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC COMPLETION REPORT 1: ADAMS COUNTY, COLORADO 18
  • 19. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC COMPLETION REPORT 2: ADAMS COUNTY, COLORADO 19
  • 20. OPPORTUNITYPICKETT& ACQUISITION FUND, LLC DRILLING COUNTY, TENNESSEE The proposed new wells are locations offsetting and between known producers. All the wells drilled on this acreage were drilled on ten acre spacing, in compliance with spacing laws in Tennessee. The State of Kentucky determined several years ago the Knox formation was very dense and not porous enough to effectively drain ten acres. Tennessee followed suit and changed the spacing law for three counties in Tennessee, Pickett County being one of them because most of the production was from the Knox formation. They concluded that Knox wells should be drilled on five acre spacing, due to their fractured porosity within the producing zones. This lease offers new locations between producing wells that have retained most of its virgin pressures. All IP’s for current existing wells are between 27 – 50 Bpd. In comparing this lease with Leland’s known Knox lease located 1 mile south of The H. Johnson / Storie Prospect Lease (see following pages for Proven Production & Proven Reserves for more information), you can see some of the production history. Two (2) existing wells we treated produced in excess of 1200 bbls of oil within a 30 day period. We have also included in the following pages a structure map on the Knox formation, note the same structural features. There is every reason to believe, through the reserve report and by the comparison with a known Knox lease, we have the potential to reach the same production numbers or exceed them. 20
  • 21. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC DRILL SITE(S): PICKETT COUNTY, TENNESSEE 21
  • 22. STORIE LEASE: ADJACENT TO H. FUND, LLC OPPORTUNITY DRILLING & ACQUISITION JOHNSON LEASE 22
  • 23. 23 OPPORTUNITY DRILLING & ACQUISITION FUND, LLC PICKETT COUNTY, TENNESSEE Stratigraphic Section for the Moodyville Prospect & Surrounding Vicinity
  • 24. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC PICKETT COUNTY, TENNESSEE 24
  • 25. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC ACTUAL CHECK RECEIVED FROM OIL PURCHASER: PICKETT COUNTY, TENNESSEE 25 *Past Performance is no guarantee of future success.
  • 26. OPPORTUNITY DRILLING & ACQUISITION FUND, LLC ACTUAL CHECK RECEIVED FROM OIL PURCHASER: PICKETT COUNTY, TENNESSEE 26 *Past Performance is no guarantee of future success.
  • 28. PROVEN PRODUCTION & RESERVES WELD COUNTY, COLORADO Above: Well Fracing & Completion work, Weld County, CO 2011 Left Top & Bottom: Completion Process: Pumps, Tanks, and Fracing Equipment, Weld County, CO 2011 28
  • 29. PROVEN PRODUCTION & RESERVES WELD COUNTY, COLORADO Bottom Left & Right: Well Caps in place awaiting treatment, Weld County, CO 2011 Top Right: Natural gas line for tap in, Weld County, CO 2011 29
  • 30. THE H. JOHNSON LEASE: & RESERVES PROVEN PRODUCTION PICKETT COUNTY, TENNESSEE Top & Right: Nitrogen Foam Frac Treatment set up for H. Johnson Wells #3 and #11
  • 31. THE H. JOHNSON LEASE: & RESERVES PROVEN PRODUCTION PICKETT COUNTY, TENNESSEE Left: Oil into the pits from Well #6L Top Right: Inside one of the Logging Truck on the H. Johnson Lease 31
  • 32. THE H. JOHNSON LEASE: & RESERVES PROVEN PRODUCTION PICKETT COUNTY, TENNESSEE #6L Tank Battery & 1st Pick up by Barrett Oil Purchasing Pickett County, TN 2012 32
  • 34. WORLD ENERGY MARKETS WORLD GROWTH WORLD GROWTH In most past "dips" (recession, depression), there has been one primary in world economic growth. Whether it was the prevailing world power such as the United States or a combination of nation states, there has NEVER been the pending demand for essential commodities as there are today. China has clearly accommodated a "capitalistic" stance to its supposedly communist system of governing. India has become a "land of opportunity" different from even its own recent past. Both of these countries are just now giving birth to a massive middle class, a class that will demand goods and services unprecedented in the history of the world. Russia is also flexing its muscles as an economic power and is eager to compete on the world stage after many, many years of being a closed society. 34
  • 35. WORLD ENERGY MARKETS WHY INVEST IN DOMESTIC ENERGY? Profitability: Evaluation, location & information technology can greatly limit downside risk & maintain huge upside potential. Consistency: Long term necessity & ongoing world demand for product (oil & natural gas). Peace of Mind: Long term revenue stream helps eliminate portfolio volatility. Tax Benefits: Unique & significant as compared to most ALL other investments. (See more details in the box to the right of this page). Job Creation: Domestic drilling & operating Tax Benefits of Investing in Energy DIRECTLY create ongoing, good paying, long term • Intangible Drilling Cost Tax Deduction employment for U.S workers. • Tangible Drilling Cost Tax Deduction Direct Participation: Total transparency as to how • Active vs. Passive Income your money gets put to work for you. - Lease Costs Communication with experienced & accessible - Alternative Minimum Tax: 100% of the principles & management. intangible drilling costs can be written off in the first year (depending on tax status) 35
  • 36. WORLD ENERGY MARKETS WHY INVEST IN DOMESTIC ENERGY? Without question, we need to develop our oil and natural gas resources here at home. Not only is this crucial in moving us towards energy independence, domestic production of oil and natural gas creates Americans jobs! The oil and gas industry contributes to OUR economy, from producing to refining, from processing to transportation, and from storage all the way to distribution and retailing. It also has indirect economic benefits to other industries. The oil and natural gas industry has a widespread economic impact thought-out all sectors of the economy an across all 50 states. Not to mention Job Creation: Domestic drilling & operating DIRECTLY creates increasing revenues for local state governments. ongoing, good paying, long term employment for U.S. Workers. 36
  • 37. LELAND ENERGY, INC. Domestic Oil & Gas Development Experience
  • 38. DOMESTIC OIL & GAS DEVELOPMENT EXPERIENCE LELAND ENERGY, INC. Leland has been committed to Domestic Energy Resource Development for over 35 years Leland Energy, Inc. is an independent energy resource company primarily involved in the drilling, operating, and development of oil and natural gas. The company has been around since 1975, when it was originally incorporated as a Texas corporation under the name "Leland Petroleum, Inc.” In the years since then, it has continued to be solely owned by the Thompson family, and has been subsequently renamed and re-incorporated as a Nevada corporation; the current name of Leland Energy Inc., more clearly reflecting the focus of the business. Kentucky Well Tour, 2009 38
  • 39. DOMESTIC OIL & GAS DEVELOPMENT EXPERIENCE LELAND ENERGY, INC. By putting together small and intermediate size blocks within a County, we can still benefit by the economy of scale that allows us to keep expenses within industry acceptable parameters, and at the same time, begin to accumulate an ever expanding portfolio of producing properties with excellent long range profits along with substantial in the ground reserves to be developed over the coming years. (90% Oil Cut Well #2, Codell) 85% Treatment Weld County, CO Engineers on a Drill Rig platform Weld County, CO 2011 39
  • 40. DOMESTIC OIL & GAS DEVELOPMENT EXPERIENCE LELAND ENERGY, INC. Most of the drillers and operators in this area have no "exit strategy" and, like all businesses, need the infusion of capital to continue to grow and expand. Most independents would not dream of looking at a lease with 4 producing wells and only 1000 acres remaining for development. We will! ?? Partner Visit to Block Battery Tanks Green County, KY, 2009 Rig with Drill Pipe, Weld County, CO, 2011 40
  • 41. Newly Painted Tank Battery, Well #12L - Pickett County, Tennessee The energy resource business will continue to be a vital component in the growth and security of our nation. Even in this very erratic economic climate, energy commodity prices have maintained a strong market price. While we here at Leland Energy, Inc. are not "experts" in world economics, we believe that energy commodity prices will continue to climb.