West Ranch Prospect Overview

On December 2, 2013, Gray Fox Petroleum Corp. acquired a 100% Working Interest (WI) and an 82% Net Revenue Interest (3% overriding royalty to Seller; 15% to Federal) in the West Ranch Prospect, Nevada.

The prospect is based in a prolific oil-generating basin in the Butte Valley Oil Play Region of north-central Nevada. The leased land comprises 32,723 acres in the Butte Valley Oil Play Region in North Central Nevada and expiration dates of the leases range from March 31, 2016 to July 31, 2017.

It is located ~100 miles north of Railroad Valley's oilfields and ~60 miles east of Pine Valley's oilfields, which have produced a combined 50+ million barrels of oil (MMboe) from structures and reservoir horizons similar to those under the West Ranch Prospect.

The area is accessed via all-weather county roads and Bureau of Land Management (BLM) access roads that cross both prospective structures. The assets are also located in close proximity to established industry infrastructure, allowing for rapid transition from discovery to production to nearby Foreland Refinery in Railroad Valley, Ely NV.

According to the Purchase Agreement, Gray Fox is required to drill a test well of at least 6,000 feet on the West Ranch prospect within two years of the closing of the Purchase Agreement.

Two key reservoirs

In April 2014, Gray Fox announced the completion of Phase II of an a assessment of the oil and gas exploration potential of the Company's West Ranch Prospect.

The "Assessment of the West Ranch Acreage (WRA) Elko and White Pine Counties Nevada" concluded that the Guilmette carbonate is the most prolific reservoir in the Railroad and Pine Valleys fields and is considered the main target objective in the West Ranch Prospect. It highlighted that although it was not penetrated in the Federal 1-4 and 1-5 wells, it is present in outcrops to the north, east and south of the Prospect.

It also noted the sandstones in the Chainman formation are the secondary objective, however, they may require fracture stimulation. The Chainman shale source rock data in the West Ranch Prospect wells and offsetting outcrops indicate the Chainman formation is in the dry gas - wet gas window and that there is a higher geological chance to find gas rather than oil in both reservoirs.

These two prospective horizons are accompanied by five intervening secondary horizons: the Rib Hill Sandstone, Pakoon Dolomite, Ely Limestone, Chainman Shale and Joanna Limestone.

GCA adds that three structural highs (Lead A, Lead B, Lead C) have been identified by the most recent residual gravity data within the WRA, the data also shows a large residual gravity high outside the WRA (Upside Lead) - this anomaly is mapped and linked to Lead B, in the residual gravity map, although in GCA opinion it could be fault separated - Gray Fox has expressed its interest in this area for lease.

The leases are located in a high-potential region currently being explored by a number of renowned operators within the oil and gas industry. Noble Energy is currently undertaking a $130 million exploration program on the Wilson Prospect, located north-west of West Ranch. According to a Q1 2013 presentation, it estimates Gross Unrisked Resource Potential at 190 –“ 1,400 million barrels of oil (MMboe). The company hopes to reach full production of 50,000 barrels of oil per day (BOD) by 2020.

Other notable companies active in the area include Plains Exploration and Production Company; EOG Resources Inc; Cabot Oil & Gas Corporation; SM Energy Co. and Newfield Exploration Co.

Based on an analysis of the potential reservoir rocks, source rocks, structural traps and reservoir sealant horizons, it is recommended to refine the prospect's structural parameters. Gray Fox has developed an initial exploration program designed to assess the West Ranch Prospect's resource and production potential. Activities being considered include geological mapping, gravity surveying and additional seismic coverage to inform the location of drill targets focused on the peak of the structural closures.

The West Ranch Prospect overlies structures and reservoir horizons similar to those that have produced a combined 50+ million barrels of oil in Nevada to date.