SoTex4Overview

South Texas Multi-Well IV Prospect
Bexar County, Texas

Alliance Petroleum Interests specializes in the TABLE OF
exploration, development and the acquisition of CONTENTS
domestic oil and gas reserves. With the use of
technological advances, we can procure more 2 Prospect Summary
oil and gas than previous developers of these 3 Location Map
same proven fields.   Advances in fracking and 4 Geological Summary
other technology has led to the success of 5 Emerald Bay Energy
this strategy. We are not a “wildcat” driller, and 6 Conversion Table
specifically seek out infield acreage to assure 7 Trend Map
best possible production in today’s economic 8 Production Map
climate.  The owners’ relationships in the industry 9 Schematic Diagram
provide the ability to capitalize on our extensive 11 Tax Benefits
network and partnerships or “allies” hence the 13 Example Tax Worksheet
name of the company.  Alliance prides itself on 14 Scout Tickets
securing superior opportunities in oil and gas
prospects and properties that provide significant
return potential with quantified downside risk for
our participating Partners.

1 API SOUTH TEXAS MULTI WELL IV

PROSPECT SUMMARY

Prospect API South Texas Multi Well IV
4 vertical oil wells
Infield development in currently producing field

Prospect Data Bexar County, TX Somerset oilfield - approx. 100 acres

Location 17.3 miles South 34* West of San Antonio, TX

Depth Total vertical depth is approx. 1600 feet in each well

Geophysical Extreme subsurface well control throughout entire
Somerset field

Potential Reservoirs Escondido formation
Olmos/Navarro formations
Anacacho/Pecan Gap formations

Completion Technology Potential triple zone completion, light formation
fracture where necessary

Units Available 10

1 Unit 6% Working Interest and 4.5% Net Revenue Interest
2 stage turnkey investment diversified into 4 wells

Managing Venturer Alliance Petroleum Interests

Operations Emerald Bay Energy, Inc. (TSX-V:EBY)

API SOUTH TEXAS MULTI WELL IV 2

DALLAM SHERMAN LIPSCOMB
HARTLEY HEMPHILL
HANSFORD OCHILTREE

HUTCHINSON

MOORE ROBERTS

OLDHAM POTTER CARSON GRAY WHEELER
DEAF SMITH 40 ARMSTRONG
• 4 New Wells DONLEY
• Total Depth +/-1,600 ft RANDALL COLLINGSWORTH
• Reserve Estimates Per Well
15,000-50,000 BO per well CASTRO SWISHER
(based on surrounding current
and past production) BRISCOE HALL CHILDRESS
• Prospect Reserve Estimates
60,000-200,000 Total Barrels of Oil PARMER

Fair Oaks Ranch FLOYD MOTLEY COTTLE HARDEMAN
FOARD
BAILEY LAMB WICHITA

27 HALE WILBARGER CLAY

LUBBOCK BAYLOR GRAYSON LAMAR RED RIVER
CROSBY
KNOX MONTAGUE

DICKENS KING ARCHER COOKE

COCHRAN HOCKLEY FANNIN

DELTA

YOAKUM TERRY WISE DENTON FRANKLIN TITUS BOWIE
GAINES WISE HOPKINS CASS
STONEWALL
LYNN GARZA KENT HASKELL THROCKMORTON JACK COLLIN 30 MORRIS
CAMP
YOUNG HUNT

SCURRY SHACKLEFORD PARKER DallROaCKsWALL RAINS UPSHUR MARION
FISHER
DALLAS WOOD

DAWSON BORDEN JONES STEPHENS Fort WorthPALO PINTO TARRANT

HOWARD 20 HOOD ZVAANNDT 20 GREGG
20 SOMERVELL RUSK
MARTIN MITCHELL EASTLAND KAUFMAN SMITH

ANDREWS TAYLOR ERATH JOHNSON
ELLIS
NOLAN CALLAHAN 45
35W

NAVARRO HENDERSON

STERLING BROWN COMANCHE

EL PASO ECTOR BOSQUE HILL

El Paso LOVING TMIDLAND RUNNELS SANDERSON CHEROKEE
WINKLER GLASSCOCK E XCOKE AHAMILTON
HUDSPETH CORYELL
10 COLEMAN LAMPASAS 35 NACOGDOCHES SHELBY
MCLENNAN SABINE
FREESTONE

CULBERSON 20 WARD UPTON REAGAN MILLS
JEFF DAVIS
PRESIDIO CRANE CONCHO LIMESTONE LEON HOUSTON
MCCULLOCH
IRION GTROEMEN
FALLS
REEVES

SAN SABA ROBERTSON ANGELINA

SCHLEICHER MADISON NEWTON

BELL

PECOS MENARD BURNET WALKER POLK
KIMBLE
CROCKETT WILLIAMSON MILAM BRAZOS GRIMES
10
MASON LLANO TYLER

SUTTON BLANCO TRAVIS BURLESON 45 JASCAINNTO
LEE WASHINGTON
TERRELL GILLESPIE MONTGOMERY LIBERTY HARDIN

10 HAYS Austin ORANGE
KERR 10
VAL VERDE 35

BASTROP HARRIS

EDWARDS KENDALL AUSTIN WALLER
KINNEY
REAL COMAL CALDWELL FAYETTE Houston

BREWSTER BANDERA 10 FORT BEND JEFFERSON
BRAZORIA CHAMBERS
GUADALUPE GONZALES
45
UVALDE COLORADO GALVESTON

San Antonio WILSON LAVACA
BEXAR
MEDINA WHARTON

37 DE WITT

MAVERICK FRIO VICTORIA

ZAVALA KARNES JACKSON

MATAGORDA

ATASCOSA GOLIAD

CALHOUN

DIMMIT MCMULLEN

LA SALLE LIVE OAK BEE REFUGIO
35 WJEILMLS SAN PATRICIO ARANSAS

WEBB 37

DUVAL NUECES Corpus Christi

KLEBERG

ZAPATA BROOKS

KENEDY

JIM HOGG

STARR

HIDALGO

WILLACY
CAMERON

BEXAR

COUNTY

16

PROSPECT Helotes Hollywood Park Universal City
ACREAGE
16 1535 Converse

Hill Country 10
Village

Castle Hills

Leon Valley Windcrest
Alamo Heights Kirby
Terrell Hills

35

151 San Antonio

410 10 China Grove

LOOP SPUR LOOP
13 536 13

35 SPUR
422

Lytle

16 Elmendorf

Somerset 37

28

South Texas Multi-Well IV Prospect
Bexar County, Texas

LOCATION MAP

3 API SOUTH TEXAS MULTI WELL IV

GEOLOGICAL The Escondido Formation is comprised of
SUMMARY Shale, siltstone, and sandstone; shale, gray to
bluish gray; siltstone, brownish yellow, thin-
bedded; sandstone, fine-grained, calcareous, in

The Emerald Bay leases are within the Somerset part asphaltic, argillaceous, gray, flaggy-bedded;
Field in Bexar and Atascosa Counties, Texas. some pyroclastic material; marine megafossils
Production was first established in 1911 when C. common. It Overlies Olmos Formation.

Kurz found oil at 900’ in the shallower Escondido The stratigraphic position of the Olmos Sand

sand while drilling a water well. Development is within the Cretaceous-Taylor Group. The Olmos

proceeded rapidly into the 1920s until about 1200 conformably overlies the San Niguel Formation

Escondido and Olmos wells were drilled. In 1931, and underlies the Escondido Formation un­

a northern extension of the Somerset field was conformably. The upper limit of the Olmos is

discovered and called the Von Ormy Oil Field. marked by the “Lit” zone. This zone is a regional

Approximately 12 million barrels were marker that is referred to while drilling

produced to 1950. In the 50s and 60s, and is easily recognized on well logs.

portions of the field were redrilled This horizon is also the unconformity.

due to the development of hydraulic Formations below the “Lit”, including

sand fracturing. In 1954, a southern the Olmos, dip at a slightly steeper

extension of the Somerset field was angle than the formations above. The

discovered. This new field was called Olmos sand is primarily a regressive

Shaw. In 1985 all three fields were sand bar sequence de­posited in a

consolidated and are now reported northeast-southwest direction. Sands

under the Somerset Field. Andrew Alff vary in thick­ness, from a few feet to
Geologist
The Somerset Field is located on as much as 5O feet. The formation
the southeastern side of the Balcones consists of a greenish gray, medium soft

Fault Zone and on the north, updip perimeter of sandstone. The sands are very bentonitic

Rio Grande Embayment. Due to the continuous and alternate with shale.

deposition of sediments into the Rio Grande The Upper Cretaceous Anacacho Limestone

Embayment and the fact that the Llano region to is exposed in outcrops between the cities of San

the north is geologically more stable, the Balcones Antonio and Del Rio, Texas. A detailed study of

Fault Zone acted as a “hinge” and thus the faulting. four outcrops (Blanco Creek section, Sabinal

Therefore in this area, faulting is extensive; River section, Seco Creek section, Hondo Creek

characterized by northeasts­outhwest normal section) shows that the Anacacho Limestone rests

(tensional) faults. There are 3 primary zones and on the Upson Clay (which contains fauna of early

targets for development in the Somerset field. Campanian age) and is overlain by the Corsicana

They are the Escondido Sandstone, the Olmos Marl (which contains fauna of early Maastrichtian

Sandstone, and the Anacacho Limestone. age).

API SOUTH TEXAS MULTI WELL IV 4

Shelby Beattie, President and CEO Gibson C. Scott, COO

Mr. Shelby D. Beattie has over 35 years industry Mr. Gibson C. Scott has over 37 years of global
experience specializing in exploration, production, industry experience. He is Director since
and project management. He has been involved April 2003 and Chief Operating Officer of the
in the oil and gas business as a director or Corporation since February 2005. Mr. Scott
member of executive management since 1980. has a 29-year history as a senior management
Working as a landman from 1980 to 1982, he was professional with Sperry-Sun Drilling Services. He
Vice President of mineral leasing for Newport Oil was Country Manager (Canada) with Sperry from
& Gas, Inc., a private oil and gas company. From 2000 to 2003. He is currently the President of
1982 to 1992, he was Director and Vice President TrueBore Consulting Inc. Mr. Scott is experienced
of Phoenix Oil and Gas, and project-managed the in foreign business relations and negotiations,
development of over 200 oil and gas wells and strategic business planning, and mergers and
associated mineral leases. He has served as a acquisitions.
Director of the Corporation since 1997, as Chief
Financial Officer of the Corporation from 1997 to Andrew Alff, Geologist
2005, as President since September 2001 and
CEO since February 2005. Andrew Alff has been a geologist working in Texas
since he graduated cum laude from the University
Mike Rice, CFO, VP and Secretary of Wisconsin – Eau Claire with a bachelor’s
degree in May of 1979. Out of college he provided
Mr. Michael L. Rice has over 16 years of industry geology for a number of small oil companies in
experience specializing in energy financing and the Luling-Branyon field area of Caldwell County,
production operations. Mr. Rice started working Texas. His consulting work resulted in the
for the Corporation at the Company’s inception discovery of several new oil fields and wells under
and has held a variety of positions such as 2500’ that began production in excess of 100
Secretary and Treasurer during this time. Mr. Rice barrels per day. He went from working the shallow
has specialized in compliance and operations fields in Caldwell County to working in Houston,
management for over 13 years. Mr. Rice graduated Texas for a geophysical and geological consulting
from the University of Utah with a B.Sc. in company mapping offshore Louisiana for major oil
Economics and Consumer Studies, and has companies such as Exxon and British Petroleum.
managed the Company’s day-to-day operations When oil prices plummeted in the late 1980’s he
for more than 13 years. went back to being a consulting geologist. Most
recently, his work in the Salt Flat Edwards field
in Caldwell County, Texas has resulted in over 4
million barrels of oil being produced since 2007.

Hugh Scott, Landman

Hugh Scott has over 30 years industry experience
specializing in mineral rights acquisition and
management.

5 API SOUTH TEXAS MULTI WELL IV

API South Texas Multi Well IV Conversion Table
Table Assumes 5% severance Tax
25% Royalty and $1,000 Monthly Operating Expense

PHASE 1 Drilling and Testing 1/2 Unit (3%WI) 1 Unit (6%WI) 2 Units (12%WI)
Effective Hard
(Turnkey) Dollar Risk $24,500 $49,000 $98,000

PHASE 2 ***assumes 35% tax bracket $15,925 $31,850 $63,700

(Turnkey)

Completion $19,500 $39,000 $78,000

TOTAL $44,000 $88,000 $176,000
INVESTMENT

MONTHLY PRODUCTION

Monthly Revenue Scenarios - 1 Unit Example
* For 1/2 unit example assume half the revenue dollar amount

Daily Rate $50.00 $60.00 $70.00 $80.00 $90.00

Barrels of Oil $8,917.50 $10,713.00 $12,508.50 $14,304.00 $16,099.50
Equivalent $7,635.00 $9,174.00 $10,713.00 $12,252.00 $13,791.00
$6,352.50 $7,635.00 $8,917.50 $10,200.00 $11,482.50
140 $5,070.00 $6,096.00 $7,122.00 $8,148.00 $9,174.00
120 $3,787.50 $4,557.00 $5,326.50 $6,096.00 $6,865.50
100 $2,505.00 $3,018.00 $3,531.00 $4,044.00 $4,557.00
80 $1,222.50 $1,479.00 $1,735.50 $1,992.00 $2,248.50
60
40 0 0 0 0 0
20
0

CUMULATIVE PRODUCTION

Total Return Potential - 1 Unit Example
* For 1/2 unit example assume half the revenue dollar amount

Cumulative $50.00 $60.00 $70.00 $80.00 $90.00
Barrels of Oil
Equivalent $342,000.00 $410,400.00 $478,800.00 $547,200.00 $615,600.00
160,000 $299,250.00 $359,100.00 $418,950.00 $478,800.00 $538,650.00
140,000 $256,500.00 $307,800.00 $359,100.00 $410,400.00 $461,700.00
120,000 $213,750.00 $256,500.00 $299,250.00 $342,000.00 $384,750.00
100,000 $171,000.00 $205,200.00 $239,400.00 $273,600.00 $307,800.00
80,000 $128,250.00 $153,900.00 $179,550.00 $205,200.00 $230,850.00
60,000 $85,500.00 $102,600.00 $119,700.00 $136,800.00 $153,900.00
40,000
0 0 0 00 0

The values shown are hypothetical and used to assist in the calculation relating to possible production levels. Furthermore, all Working Interest (relative to the Joint
Venture) is owned solely by the Joint Venture and not by the individual participants thereof: however each unit in the Joint Venture is comprised of an economic equivalent

of 6% Working interest and 4.5% Net Revenue Interest. Additionally as an if/then scenario, the table highlights an arbitrary price of $60 per barrel of oil to reflect current
price trends. Over the last 3 years oil prices have averaged near $90 per barrel.

API SOUTH TEXAS MULTI WELL IV 6

A-899

C. BUSTILLO
A-82

SOMERSET

ALL 4 WELLS
CURRENTLY PRODUCING

PHASE I

PHASE I PHASE I CURRENTLY COMPLETING

A-271 TREND PHASE II PHASE II PH-A5S0E 0II (4 WELLS)

PRODUCTIVE W.R. MULKY CURRENTLY DRILLING
A-518 PHASE III (4 WELLS)

PHASE III

PHASE III

AtaBsecxoasraCCoouunnttyy PHASE IV

J.T. WHITE PROPOSED LOCATIONS A-438 A-147
A-885 PHASE IV (4 WELLAS-7)4

A-625

LEGEND 28

Proposed Location South Texas Multi-Well IVA-P16r2ospect
Oil Well Bexar County, Texas
Permitted Location
Gas Well HERNANDEZ TREND MAP
Oil and Gas Well A-372
Plugged Oil Well
Plugged Gas Well
Plugged Oil & Gas Well
Dry Hole
Salt Water Disposal Well
NDE Not Deep Enough

7 API SOUTH TEXAS MULTI WELL IV

1604 H GERHARDT-OPER IP 16 BOPD
IP 16 BOPD
253,596 BO-11 WELLS

STILL PRODUCING

SCHIMMEL-OPER KEY WELL “C”
278,721 BO-15 WELLS SCHIMMEL-OPER
233,224 BO - 6 WELLS
STILL PRODUCING
STILL PRODUCING
IP 22 BOPD
DISCORBIS-OPER
GA CLARK-OPER 82,140 BO-3 WELLS
148,227 BO-11 WELLS
STILL PRODUCING

IP 22 BOPD SOMERSET DORRIS PET-OPER
IP 25 BOPD 11,106 BO-1 WELLS
IP 72 BOPD
STILL PRODUCING
GA CLARK-OPER 1604
16,843 BO-1 WELLS SEAGULL -OPER
IP 44 BOPD IP 172 BOPD 39,433 BO BO-14 WELLS
KEY WELL “B”
JE HILLIER-OPER IP 38 BOPD STILL PRODUCING
82,140 BO - 3 WELLS
ALL 4 WELLS
STILL PRODUCING CURRENTLY PRODUCING

KEY WELL “A” PHASE I PHASE I (4 WELLS)
PHASE II
CARIB DRG-OPER CURRENTLY COMPLETING
PHASE II (4 WELLS)
26,232 BO-1 WELL
DODSON INC -OPER
STILL PRODUCING 114,654 BO BO-13 WELLS

IP 15 BOPD IP 19 BOPD IP 20 BOPD STILL PRODUCING

IP 25 BOPD PHASE III ANACACHO-OPER
PHASE IV 11,692 BO-2 WELLS

TX AMERICAN-OPER CURRENTLY DRILLING
PHASE III (4 WELLS)
266,998 BO -17 WELLS

STILL PRODUCING

SEEKER OIL -OPER PROPOSED LOCATIONS AMERICAN ENG-OPER IP 16 BOPD
PHASE IV (4 WELLS) 88,435 BO
43,256 BO BO-8 WELLS

STILL PRODUCING

CHARO ENG-OPER

37,338 BO-4 WELLS

STILL PRODUCING

IP 20 BOPD

AtaBsecxoasraCCoouunntyty IP 30 BOPD

LEGEND INITIAL PRODUCTION
1-29 Barrels of Oil Per Day
Proposed Location 30+ Barrels of Oil Per Day
Oil Well
Permitted Location *Wells shallower than 1,000’ not shown
Gas Well
Oil and Gas Well South Texas Multi-Well IVA-P16r2ospect
Plugged Oil Well Bexar County, Texas
Plugged Gas Well
Plugged Oil & Gas Well PRODUCTION MAP
Dry Hole
Salt Water Disposal Well
NDE Not Deep Enough

API SOUTH TEXAS MULTI WELL IV 8

KEY WELL “A” CURRENTLY DRILLING CURRENTLY COMPLETING CURR
CARIB DRG-OPER PHASE III (4 WELLS) PHASE II (4 WELLS) P
26,232 BO-1 WELL
PROPOSED LOCATIONS 12
STILL PRODUCING PHASE IV (4 WELLS) 12 3
1 2 3 4P
IP 19 BOPD

1 234

PHASE IV

POTENTIAL RESERVES PER WELL 5,000- ESCONDIDO
10,000 BO NAVARO
OLMOS
5,000-
10,000 BO

10,000- ANACACHO TD 1,600’
15,000 BO

*NOT TO SCALE-FOR ILLUSTRATION PURPOSES ONLY
9 API SOUTH TEXAS MULTI WELL IV

ALL 4 WELLS KEY WELL “C” KEY WELL “B”
RENTLY PRODUCING
PHASE I (4 WELLS) SCHIMMEL-OPER JE HILLIER-OPER

3 4 PHASE I 233,224 BO - 6 WELLS 82,140 BO - 3 WELLS
3 4 PHASE II
STILL PRODUCING STILL PRODUCING
PHASE III
IP 16 BOPD IP 44 BOPD

South Texas Multi-Well IVA-P16r2ospect
Bexar County, Texas

SCHEMATIC DIAGRAM

API SOUTH TEXAS MULTI WELL IV 10

TAX BENEFITS ACTIVE VS. PASSIVE INCOME: The Tax Reform Act of 1986
introduced into the Tax Code the concepts of “Passive” income
POTENTIAL RETURNS: Projected returns of five times the and “Active” income. The Act prohibits the offsetting of losses
initial investment are common in the industry. Elements of risk from Passive activities against income from Active businesses.
vary greatly in all investments, and based on the strategy used, The Tax Code specifically states that a Working Interest in an
can be extremely decreased within the oil and gas industry. oil and gas well is not a “Passive” Activity (Limited Partners
excluded), therefore, deductions can be offset against income
TECHNOLOGICAL ADVANCEMENT: The oil and gas industry from active stock trades, business income, salaries, etc.
is one of the largest users of advanced technology. Billions
of dollars are spent each year to reduce the investment risk DEPLETION ALLOWANCE: If you are an investor in an
associated with establishing productive wells. With modern independent oil and gas project, the current depletion
day advancements, it is easier to find oil and gas than ever. allowance is 15% of your share of the gross income from the
Technology rather than luck is what has allowed the industry to property based on average daily production and can be taken
continue to meet the rapidly increasing demand for oil and gas every single year until the well produces all of the oil and gas
from China, India and other developing nations. in its reservoirs. This makes fifteen cents of every gross income
dollar non-taxable, thereby producing tax-sheltered income.
STRATEGIC ADVANTAGES: By concentrating on infield
development plays, meaning oil production has been proven SMALL PRODUCERS TAX EXEMPTION: The 1990 Tax Act
in the area, Alliance Petroleum Interests has been able to provided some special tax advantages for small companies
put together risk diverse programs with high probabilities and individuals. This tax incentive, known as the “Percentage
of success. Using our connections in the industry, including Depletion Allowance”, is specifically intended to encourage
operators that are familiar with the area, technological participation in oil and gas drilling. This tax benefit is not
strategies that allot more production out of each well, we available to large oil companies, retail petroleum marketers,
believe our programs to be some of the most risk averse in the or refiners that process more than 50,000 barrels per day. It is
entire industry. also not available for entities owning more than 1,000 barrels
of oil (or 6,000,000 cubic feet of gas) average daily production.
*TAX ADVANTAGES: Investing in oil and gas can be one of the The “Small Producers Exemption” allows 15% of the Gross
most tax-advantageous investments available. Congressional Income (not Net Income) from an oil and gas producing
incentives encourage domestic petroleum development. property to be tax-free.
Oil and Natural Gas from domestic reserves helps to make
our country more energy self-sufficient by reducing our INTANGIBLE DRILLING COSTS (IDCS): IDCs include labor
dependence on foreign sources. In light of this, Congress has intensive costs such as the drilling contractor and professional
provided tax incentives to stimulate domestic Oil and Natural services, and are reported to the investor at the end of the
Gas production financed by private sources. Drilling projects year. For a producing well, up to 85% of the investment
offer many tax advantages and these benefits greatly enhance constitutes what are known as IDCs and are written off an
the economics. These incentives are not “Loop Holes” - they investor’s ordinary income in the first year.
were placed in the Tax Code by Congress to make participation
in oil and gas ventures one of the best tax advantaged Typically most of the investment is deductible in the same
investments. At the end of the year Alliance Petroleum tax year and can be offset against active or ordinary income
Interests sends out a K1 to each partner that can be given to his (salaries, business income, stock trades, etc.). For every dollar
accountant to receive full benefits of this active tax deduction. of IDC invested, the investor receives one dollar of deduction.
These IDC deductions reduce an investor’s dollars at risk.

IDCs can make up roughly 85% of the total investment.

11 A P I S O U T H T E X A S M U L T I W E L L I V

By way of illustration, an investment of $100,000 made DRY HOLE: In the event that you invest in a nonproducing
in an oil and gas partnership could yield up to $85,000 in well, 100% of all dollars invested are written off as a loss
tax deductions for the year the investment is made. For an against your ordinary income in the first year.
investor in a 35% tax bracket, that could mean actual tax
savings of up to $29,750 in the first year. LEASE COSTS: Leasehold costs (purchase of leases, minerals,
etc.), legal expenses for title opinions, etc., administrative,
The IDC deduction, a non-preference item, reduces the accounting and Lease/Well Operating Costs (LOC) are also
investors Adjusted Gross Income and lowers the Alternative 100% tax deductible through cost depletion.
Minimum Tax. ***See worksheet for specific examples***
ALTERNATIVE MINIMUM TAX: Prior to the 1992 Tax Act,
TANGIBLE DRILLING COSTS (TDCS): TDCs include pipe, working interest participants in oil and gas ventures were
storage tanks, and wellhead equipment which are capitalized subject to the normal Alternative Minimum Tax to the
and depreciated. For a producing well, approximately extent that this tax exceeded their regular tax. This Tax
15% - 30% of your investment constitutes TDCs, which are Act specifically exempted Intangible Drilling Cost as a Tax
depreciated over a seven-year period using the Accelerated Preference Item. “Alternative Minimum Taxable Income”
Cost Recovery System (ACRS). generally consists of adjusted gross income, minus allowable
Alternative Minimum Tax itemized deduction, plus the sum of
tax preference items and adjustments. “Tax preference items”
are preferences existing in the Code to greatly reduce or
eliminate regular income taxation. Included within this group
are deductions for excess Intangible Drilling and Development
Costs and the deduction for depletion allowable for a taxable
year over the adjusted basis in the Drilling Acreage and the
wells thereon.

2016 Tax Rates

Income Marginal Federal Medicare Taxes State Taxes Marginal Tax Rate
$388,351 Income Taxes 1.5% (Where Applicable)
$217,451 35% 1.5%
$142,701 1.5% 0% to 12% 36.5% to 48.5%
$70,701 33% 1.5%
0% to 12% 34.5% to 46.5%
28%
0% to 12% 29.5% to 41.5%
25%
0% to 12% 26.5% to 38.5%

The above chart is based on the investor filing jointly with his or her spouse, and is to be used for general tax information only.
This should not be considered as individual tax advice. Please consult your personal tax advisor.

API SOUTH TEXAS MULTI WELL IV 12

EXAMPLE TAX WORKSHEET

Amount of Alliance Investment $88,000 Line 1
Multiply Line 1 by 75%
$66,000 Line 2
Approximate amount of intangible drilling cost
Multiply Line 1 by 5% $4,400 Line 3

Approximate amount of leasehold $17,600 Line 4
Multiply Line 1 by 20%
$88,000 Line 5
Tangible Equipment Deduction Pursuant to IRS Sec. 179
Add Lines 2, 3 & 4 43% Line 6

Total Tax Deductions $37,840 Line 7
Enter your overall Tax Bracket
$50,160 Line 8
Include Federal, Medicare, & State (if applicable)
Multiply Lines 5 & 6

**First Year Tax Savings
Subtract Line 7 from Line 1

Net Out of Pocket Investment

(The example above assumes an investor is in a 35% Tax Bracket + 1.5% Medicare Tax + a State Income Tax of 6%.)

INVESTOR TAX WORKSHEET

Amount of Alliance Investment Line 1
Line 2
Multiply Line 1 by 75% Line 3
Approximate amount of intangible drilling cost Line 4
Line 5
Multiply Line 1 by 5% Line 6
Approximate amount of leasehold Line 7
Line 8
Multiply Line 1 by 20%
Tangible Equipment Deduction Pursuant to IRS Sec. 179

Add Lines 2, 3 & 4
Total Tax Deductions

Enter your overall Tax Bracket
Include Federal, Medicare, & State (if applicable)

Multiply Lines 5 & 6
**First Year Tax Savings

Subtract Line 7 from Line 1
Net Out of Pocket Investment

13 A P I S O U T H T E X A S M U L T I W E L L I V

South Texas Multi-Well IVA-P16r2ospect
Bexar County, Texas

SCOUT TICKET
KEY WELL “A”

API SOUTH TEXAS MULTI WELL IV 14

South Texas Multi-Well IVA-P16r2ospect
Bexar County, Texas

SCOUT TICKET
KEY WELL “B”

15 A P I S O U T H T E X A S M U L T I W E L L I V

South Texas Multi-Well IVA-P16r2ospect
Bexar County, Texas

SCOUT TICKET
KEY WELL “C”

API SOUTH TEXAS MULTI WELL IV 16

NOTES

17 A P I S O U T H T E X A S M U L T I W E L L I V

NOTES

API SOUTH TEXAS MULTI WELL IV 18

8330 LBJ Fwy Suite #950
Dallas, TX 75243
469-249-8985.

www.alliancepetro.com