M&M Offshore

PRINCE EDWARD ISLAND PROPERTY
The Company has recently acquired a 25% interest in a property consisting of over 500,000 acres under permit for both coalbed methane and conventional gas. The property is located within central Prince Edward Island, Canada and is underlain by Carboniferous and Permian sedimentary strata of the Maritimes Basin. Detailed stratigraphic correlation of drill well data has confirmed the presence of 20 coal seams of 2-3 meters in thickness and total accumulations of up to 40 meters underlie the property. Studies have shown that the coal rank is sufficient to produce high gas values. Source rock studies indicate that the early Carboniferous rocks are oil prone and the upper Carboniferous rocks are gas prone. In addition excess coal gas expelled during coalification may have charged nearby reservoirs.

The conventional hydrocarbon potential of the Maritimes Masin is exemplified by the Stoney Creek oil and gas field and the East Point E-49 gas discovery and the recent discoveries onshore New Brunswick. The Stoney Creek field produced over its lifetime 800,000 barrels of oil and 28 MMcf of natural gas. The East Point E-49 well, located just off-shore the north east point of Prince Edward Island, produced 5.3 MMcf/day from a 12 meter sandstone interval during drill stem tests with an estimated 77.3 Bcf in place. The onshore New Brunswick discoveries have indicated a potential of 300 Bcf of natural gas. These examples demonstrate that the Carboniferous rocks of eastern Canada are capable of generating and retaining hydrocarbons.

EPS believes that the Prince Edward Island property offers excellent potential for both coalbed methane and conventional gas resources and plans an exploration program consisting of a detailed assessment of existing seismic data and available drill well logs as well as acquiring new data in prospective areas to indicate drill targets.

ONTARIO PROPERTIES
EPS holds interests ranging from 22.5%-6.25% in the Dover, Gosfield and Aldborough Townships of Ontario. These properties encompass approximately 2,250 acres of which 326 acres are held by the production two oil wells and one gas well. EPS plans a summer seismic program to delineate further drill targets and plans to participate in drilling a horizontal well in the summer.

BIGSTONE AREA, ALBERTA EPS holds an average 20% working interest in three sections of land with three producing gas wells in the Bigstone Area (Twp 61-W5) of Alberta. Two of the gas wells are operated by BP Amoco and one gas well is operated by Talisman Energy.
CHERHILL, ALBERTA EPS holds a 30% interest in the Cherhill property. The Cherhill prospect indicates a 2.5 metre (approximately 8 feet) natural gas pay zone in the lower Belly River formation.
FARROW, ALBERTA EPS holds a 31.5% interest in a quarter section of land in the Farrow area of Alberta. The Farrow property is prospective for Glauconite oil. The Company earned into the Farrow prospect by purchasing 4 square miles of 3-D seismic data covering the Farrow prospect and intends to drill into a feature that could warrant a multiple oil well program.
SIBBALD PROPERTY ALBERTA The Sibbald property is located in Townships 28 and 29, Range 02 W4M, approximately 160 miles east of Calgary, Alberta. EPS holds an average 50% working interests in approximately 5,760 gross acres of land. Three wells are currently producing gas from the Bakken Formation of the Mississippian Period. EPS and its joint venture partners are currently reviewing data for a work over and tie in of an additional well in this area and assessing opportunities for further exploration and production recovery.
OLDS PROPERTY ALBERTA The Olds area encompasses approximately 5760 acres. The initial program will drill 3 prospective plays of 2 sections each (1280 acres) (a Test Well and an Earned Section). One well is a multi-zone natural gas prospect and the other two Test Wells are expected to be Viking gas by-pass pay zones. Drilling of the first Test Well is scheduled imminent and the other 2 Test Wells are anticipated to spud by the end of October. The Company has a 25% interest before payout and a 12.5% interest after payout in each of the Test Wells in the Olds Prospect and earns a 12.5% working interest (Earned Interest) in an additional land section by drilling each Test Well. If successful the program operator anticipates further drilling of the 3 Earned Sections in the new year.	*Olds-Innisfail Prospect*

MARKET GROWTH

According to a report by Banc Boston Robertson Stephens presently 10% of electricity production in North America is fueled by natural gas. Natural gas consumption by the utility industry is expected to grow significantly, increasing 142% by 2010. Utilities will then represent 25% of natural gas consumption in the U.S., versus about 14% today. The Department of Energy forecasts a quadrupling of gas-fired generating capacity during this period. By the year 2010 it is anticipated that 40% of electricity production in North America will be generated by natural gas. The demand/supply effect of increasingly more power plants consuming natural gas could bode well for natural gas producers with long term supply contracts and price increases.

A recent announcement by OPEC to reduce supply of oil exports in an attempt to hold oil prices at US 25.00 per barrel suggests continuing high yields for oil and also gas producers.

PEI has one of the highest costs of energy in Canada and island electricity and heating requirements represent a ready market for lower cost natural gas and coal-bed methane. However the most promising market of all, the northeastern United States, is as close as the Sable Pipe line. The proposed pipeline is within 41 miles of the PEI coastline and the existing Confederation bridge is designed to hang a gas pipeline.