Well Enhancement Process

In January 2007, we formed Well Enhancement and Recovery Systems, LLC, of which we are a 1/3rd owner. We formed this company to develop a new deep water well enhancement tool and process which we believe will increase the efficiency of deep water wells in the Denver metropolitan area. In our fiscal 2008, the well enhancement tool and process was completed and tested on two deep water wells developed by an area water provider with favorable results. According to studies performed by an independent water engineer, preliminary results indicate the well enhancement tool effectively increased the production of the two test wells by approximately 80% and 83%, respectively, over production of nearby wells developed in similar formations at similar depths.

Based on the positive results of the test wells, we continue to refine the process of enhancing deep water wells and anticipate marketing the tool to area water providers.