A typical Welder Exploration & Production, Inc. oil and gas exploration and production project consists of seven critical steps:

• Finding a sound geological idea, which hints of a potential discovery of an economic accumulation of hydrocarbons. Typically Welder generates a majority of its drilling prospects "in-house." However, Welder does, on occasion, purchase prospects from independent prospect generating geo-scientists and also employs the use of joint ventures with other exploration companies in the search for exploration opportunities.

• A detailed analysis of all available geological, geophysical, and engineering data to provide scientific and technical support of the idea. To help facilitate this process, Welder has on staff two geologists and one geophysicist and utilizes the skills of other geologists and geophysicists on a consulting basis. Welder uses three-dimensional seismic data with the latest computer hardware and software to help establish the location of trapped pockets of hydrocarbons. These advanced interpretive techniques have greatly reduced both dry hole percentages as well as the cycle time form the idea stage of a prospect to initial sales.

• The acquisition of oil and gas mineral lease covering the prospective area. Welder has on staff one professional landman, one attorney-at-law, and two land and lease analysts, as well as other consulting landmen "in the field." It is the objective of the Welder Land & Legal Department to secure oil and gas mineral leases in an expeditious and efficient manner, as well as, to assist the Welder Drilling & Production Department with various land surface issues which are a part of the exploration and production process. Welder strongly believes in fostering good relations with land surface owners and intends to treat properties as would a well-mannered guest.

• The drilling of an exploratory well to test the idea of discovering economic quantities of hydrocarbons. Welder has drilled wells to a total depth of a few thousand feet to as deep as 18,000 feet. The experience of the Drilling & Production Department allows Welder to execute and administer the drilling and completion of wells in deep, high pressure, high temperature, hostile environments, where significant amounts of oil and natural gas can be discovered and recovered.

• The installation of production facilities and pipelines necessary to deliver the product to markets. Once a well is determined to be productive, Welder moves quickly in order to place the well "to sales." While oil is usually delivered to market via tanker truck, in the case of a natural gas discovery, pipelines must be laid to the nearest or most economical natural gas transmission pipeline. Fortunately, Welder drills a majority of its exploratory wells in mature areas where there exist at least one pipeline option. However, given the enormous size and bureaucratic nature of most modern natural gas transmission companies, Welder also works as quickly as possible to secure transportation contracts in order to reduce the cycle time from discover to initial sales.

• The drilling of development wells to produce the discovered reserves. Welder strives to improve the economics of an oil and gas discovery by the efficient drilling of the discovered reserves. Utilizing newly acquired well-bore data and production information, Welder attempts to drain the maximum amount of oil and gas from a minimum number of additional drilled wells.

• The daily, weekly, and monthly monitoring of the engineering and marketing data to ensure a maximum economy of the producing reserves. With the aid of its field personnel, Welder's Drilling & Production Department monitors the producing wells on a daily basis in order to determine the need for engineering or marketing adjustments.