Osage Exploration's primary target in Oklahoma is the serendipitously named Osage section of the Mississippian aged carbonate formation that lies between the Pennsylvanian and Devonian aged rocks. The Mississippian is a fractured carbonate that has been historically drilled vertically in many areas of Oklahoma, most notably in the Sooner Trend.

With the highly developed techniques of horizontal drilling with multi-staged massive frac technology, the Mississippian appears to be a prolific producer in many parts of Oklahoma. Osage is focused on an area on the east side of the Nemaha Ridge where there is a significant amount of natural regional fracturing that we believe will enhance recoveries of oil.

The west side of the Nemaha Ridge has been extensively drilled for the Mississippian, as this was the fairway of the Sooner Trend. We believe for this reason that the western flank of the Ridge has been somewhat pressure depleted.

Because the Mississippian section is not as thick on the eastern side of the Nemaha, the drilling tended to be primarily on shallower or deeper horizons. We have targeted the eastern side of the Nemaha Ridge because the rock quality is excellent, and the Mississippian has not been pressure depleted because of far less historical drilling.

The support for our thesis comes from the well logs that we have evaluated to localize our land acquisition efforts. We have evaluated hundreds of Mississippi penetrations in and around our area, as well as compared those logs to the logs in the other parts of Oklahoma where the horizontal Miss is being successfully drilled now.

Given all the above, we believe that the focus going forward will be economics. Those familiar with the Bakken, Marcellus, Haynesville, or Eagle Ford know that land prices can be as high as $5000 to $9000 per acre with drilling costs of $5 million to $10 million per well. Our acquisition price is a fraction of these numbers and we believe that well costs could be below $3 million.