$FNRC - 1st NRG Corp. due diligence

FNRC - 1st NRG Corp.





FNRC Company Description
1st NRG Corp. (OTCBB: FNRC.PK) is an exploration and production company headquartered in Denver, Colorado whose activity to date has been centered on development of the Clabaugh Ranch Field, a project developing and producing coal bed methane reserves (CBM) located in the Powder River Basin of Wyoming.

The targeted coal seams in the Powder River Basin are part of the Tongue River Member of the Fort Union formation and have been extensively mapped as natural resource developments and exploration have occurred throughout the region. Industry data from many wellbores drilled by others, allow the Company to estimate the extent, thickness, gas saturation, formation pressure and relative permeability of the coal seams. This reduces (but does not entirely eliminate) the risk of drilling unproductive wells.

The Company has experienced a 100% success rate at Clabaugh Ranch where the 42 drilled wells have encountered developed coal seams in the Werner, Upper and Lower Smith, Wyodak/Anderson Lower, Gates and Wall formations. Well log analysis of the drilled wells demonstrates gross pay zones of approximately 150-200 feet, the most significant of these being the Werner, Wyodak/Andersen, and Gates coals.

Clabaugh Ranch is about 20% developed; currently the 42 drilled wells are commingling gas produced from three coals - the upper and lower Smith, and the Wyodak/Anderson. In total the Company has identified 515 separate coals seams for development of which only 126 (42 wells X 3 seams) have been completed. There are 8 permitted locations for future development and acreage for 28 additional locations which will be permitted in the future.

FNRC Products and Services

Clabaugh Ranch
1st NRG Corp. (OTCBB: FNRC) is an exploration and production company headquartered in Denver, Colorado. The Company is currently pursuing prospective acquisitions in coal bed methane (CBM) fields in the Powder River Basin of Wyoming. We own working interests in producing and prospective CBM wells in the Clabaugh Ranch Field a development of 6,025 gross acres in the Powder River Basin in northeast Wyoming. The Powder River Basin is a major source of coal bed methane - clean natural gas.

There are 8 permitted locations on the acreage for future development which we believe will provide significant upside to 1st NRG. All of the wells drilled there have encountered developed coal seams in the Warner, Upper and Lower Smith, Wyodak/Anderson Lower, Gates and Wall formations. Wire line logging shows gross pay zones of approximately 150-200 feet. The most significant of these are the Warner, Wyodak/Andersen, and Gates coals.

We believe these multiple coal zones will be valuable. Pursuant to approval from the Wyoming Oil and Gas Commission (the “WOGC”), natural gas production is commingled from three coals in the producing wells: the Schwartz, Upper and Lower Smith, and the Wyodak/Anderson Lower. When water levels from these coal seams subside, we intend to perforate other behind pipe coal seams and begin producing from those coals as well. Using the same well bores and capital equipment (pumps, electricity, water and natural gas gathering systems) will result in lower total development costs per Mcf for the properties. We also expect cumulative recovery by simultaneous multiple seam production to be greater than single seam production and result in lower per Mcf operating costs and longer well lives.

The coal seams in the Powder River Basin that are targeted have been extensively mapped as a result of a variety of natural resource developments that have occurred in the region. Industry data from many wellbores drilled by others allows us to determine the extent, thickness, gas saturation, formation pressure and relative permeability of the coal seams. This reduces (but does not entirely eliminate) the risk of drilling unproductive wells.



Eastern Ohio - Utica Shale
Utica Shale – The New Oil Frontier?

Overview
With the recent technological advances in drilling techniques, numerous operators have started looking at the Utica as the next oil frontier with several operators comparing its potential to the Eagle Ford Shale in Texas and the Bakken Shale in Williston Basin of North Dakota and Montana. While it is still very early in the play operators like Chesapeake Energy, Gulfport Energy, Anadarko, Petroleum Development Corp and Devon (to name a few) have been acquiring acreage in Ohio.

As information becomes available the size and extent of the Utica Shale resource will become more evident. The Ordovician-aged Utica Shale is distributed across several US states as well as Quebec, Canada and is found approximately 2,000+ ft below the Marcellus Shale. The shale is generally shallower to the West and deepens to the East. Recently the Ohio Department of Natural Resources released estimates of the possible Utica-Point Pleasant recoverable reserve potential in Ohio to be between 3.75 to 15.7 trillion cubic feet and 1.3 to 5.5 billion barrels of oil. In addition to the Utica Shale, other formations such as the Devonian shale, Marcellus shale, Clinton sandstone, Medina Sandstone, Trenton Limestone, Black River, Beekmantown dolomite and Rose Run all are potential targets below the Second Berea.

Coalbed Methane

CBM is natural gas that is trapped within buried coal and is stored, or adsorbed, onto the internal surfaces of the coals. Geologists have long known that coal was the source for natural gas found in many conventional accumulations, but coalbeds were not targeted for production due to high water content and minimal natural gas production. Following a West Virginia mine explosion in 1968, the U.S. Bureau of Mines began to examine ways of removing methane from coal prior to mining. The Bureau of Mines demonstrated that CBM can be produced when large volumes of water are pumped from a coal seam. In a process known as dewatering or depressuring, a submersible pump is set below the coal seam, and the water column is pumped down, reducing the pressure in the coals.

As pressure in the coalbed formation is reduced, CBM is released through a process called desorption. CBM then moves into naturally occurring cracks, or cleats, in the coal, and then to the well bore. Cleats are natural fractures which have formed in the coals, usually as a result of the coalification process and geological stresses. The cleats are generally filled with water, and pumping the water off then lowers the reservoir pressure allowing desorption to occur. Thus, unlike producing from a conventional natural gas reservoir, reservoir pressure in a coalbed formation must generally be reduced to allow for production of CBM because of the necessity to remove water and reduce the pressure within the coal seam, CBM, unlike conventional hydrocarbons, often will not flow immediately with initial production. Coalbed formations typically require extensive dewatering and depressuring before desorption can occur and the methane begins to flow at commercial rates.

In the past 20 years, CBM in the United States has evolved into a major component of the United States natural gas production. According to the National Energy Technology Laboratory, CBM provides approximately 8% of daily natural gas production in the United States. The Rocky Mountain region, due to its immense coal reserve base, is a significant source of United States CBM production, and there are more than 18,000 producing CBM wells in the Powder River Basin, according to the U.S. Department of Energy. The primary CBM basins include the San Juan, Green River, Raton, Powder River and Uinta Basins in the western United States.

CBM production is expected to increase substantially due to the tremendous reserve potential of the numerous, virtually undeveloped U.S. coal basins. Within the Rocky Mountain region, the Powder River Basin has become a major CBM producing basin. According to the U.S. Department of Energy 2002 Powder Basin Coalbed Methane Development and Produced Water Management Study[1], the Powder River Basin is estimated to have substantial recoverable natural gas reserves. Approximately 1.01 Bcf of CBM is produced from the Powder River Basin per day.

The Powder River Basin is an asymmetrical structure and sedimentary basin bounded by the Bighorn and Black Hills uplift and the Casper Arch. The Paleocene Fort Union formation crops out along the basin margin and is overlain by the Eocene Wasatch formation in the central and western part of the basin. The Wasatch and Fort Union formations contain numerous coalbeds, some of which approach 250 feet in total thickness. The Fort Union formation is divided, in ascending stratigraphic order, into the Tullock, Lebo, and Tongue River members, with the majority of coal and CBM production being produced from the Tongue River member.

The majority of Powder River Basin CBM reserves are found in the Fort Union formation. Extensive drilling in the Fort Union formation (over 25,000 drilled well bores) has provided supporting data indicating that this formation contains numerous coalbeds which are generally continuous, extremely permeable and are relatively shallow (less than 1,000 feet deep) and low in rank (geologic maturity) compared to other coals in the Rocky Mountains.

(1) http://fossil.energy.gov/programs/oi...iverBasin2.pdf

FNRC Key Company Management

Mr. Kevin P. Norris has been Chief Executive Officer of 1st NRG Corp. since December 1, 2009. Mr. Norris is the Founder of e2 Business Services, Inc. and serves as its Chief Executive Officer and Controlling Shareholder. He has 33 years of industry experience with various energy companies including Apache Corporation, Universal Fuels Company, TOP Gas Gathering and BlueCreek Energy. Through his career, Mr. Norris has been involved in the drilling, operating, transportation and marketing of both oil and gas wells and specifically CBM (Coal bed Methane) wells for over 11 years. He has over 28 years of industry experience. He has been a Director of Eco-Trade Corporation since April 22, 2013. Mr. Norris serves as Director of 1st NRG Corp. Mr. Norris serves as Member of Board of Directors at BlueCreek Energy, Inc. and e2 Business Services, Inc. He was the Chairman of the IPAMS Natural Gas Committee. Mr. Norris received a Bachelor of Science degree in Business Administration from Colorado State University in 1979.

FNRC Contact Info

1st NRG Corp
10184 Park Meadows Drive
Lone Tree, CO 80124
Website: http://1stnrg-corp.com
Phone: 720-484-5706
Email: investorrelations@1stnrg-com

FNRC SEC Filings
http://www.otcmarkets.com/stock/FNRC/filings

FNRC Headlines
http://finance.yahoo.com/q/h?s=FNRC+Headlines
http://1stnrg-corp.com/Press_Releases

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