Ledbetter, President, Nyvatex, lead-in comment to Steve Whitaker’s letter:
This brief note is to help provide understanding and put into context the indicated possible future money-making power of the exclusive Nyvatex NDT™ system. The average industry-wide success rate of new wildcat commercial discovery drilling is approximately 2-3%. The Nyvatex NDT ™ successful prediction rate this past 12 months of “any-oil-under-this-location-and-if-so-what’s-the-commercial-value?” is approximately 95%.

Even if that rate drops to 30%, down from 95%, the return on investment is still remarkable.  To wit, the risked money in the average stock market year might return 10%, but the successful wildcat well has historically returned 100% in the first year alone (12 month payout, sometimes 6 months), with a “1/2 LIFE”(1/2 life = 3-4 years to produce ½ the discovered oil) return of from 400%-1000%. Nothing beats the consistently successful oil wildcatting business for making excellent returns on money and having interesting experiences, while providing an essential product for consumers.

Steve Whitaker, Nyvatex’s NDT chronicler for this past year, is a highly regarded, experienced  oil-field professional. Steve has always sought out new “earth surface-indicator” oil-finding methods to increase wildcat success odds. Nyvatex was extremely gratified that Steve found this NDT theory sufficiently attractive to referee this past 12 months NDT work. Steve’s abbreviated resume is appended to the end of this encouraging letter. Judge the referee for yourself. 

 As all investment profile histories proclaim, history is no guarantee of future results, so Nyvatex herewith says the same. However, it is worth noting that technology that has worked in the past, has an excellent chance of working in the future.

Ledbetter, President, Nyvatex                                            Nyvatex stock market symbol: NYVA

IBEX  Geological  Consultants,  Inc.

ILLINOIS BASIN EXPLORATION   Geology    Geophysics    Petroleum Engineering

February 23,2004

NDT ANALYSES FOR HYDROCARBON EXPLORATION

Temperature variations at the earth’s surface caused by subsurface accumulations of oil and gas have been noted in several publications over the past few decades. Recent studies in Illinois conducted by The Nyvatex Oil Corporation strongly indicate that this method has, at last, reached the point where it can be used effectively in exploration.

Attempts at using soil temperature readings as an indicator of buried hydrocarbon traps have met with only sporadic success in the past due to several factors, including: depth of target, variations in soil type, moisture content of the soil, variations in the rock strata immediately beneath the soil, time of year, accuracy of the measuring device, and depth at which the readings were taken. From the research I had done on the topic, it appears that there had been very few, if any, studies done that attempted to quantify the effects of these problems and whether or not any of them could be eliminated.

Illinois is somewhat unique in that it offers an excellent laboratory for conducting experiments on alternate geophysical exploration methods due to several characteristics. First of all, thanks to recent glaciations, the soil types are relatively homogeneous over large areas. Secondly, there is little topography and much of the area is farmed, meaning there are large, treeless expanses that offer relatively uniform surface conditions. Thirdly, after crops have been harvested in the fall, agricultural activity ceases for 4 months or more, leaving bare, un-vegetated ground on which good, repeatable temperature readings can be taken.  Fourthly, the oil accumulations are relatively shallow (500’ – 5,000’). Additionally, most of the basin is relatively void of any tectonic or igneous variations that might significantly impact shallow subsurface temperature readings.

After much research, Nyvatex has developed a methodology (NDT analysis) for taking shallow, subsurface temperature readings that appear to take advantage of the characteristics in Illinois.  To test the methodology, shallow subsurface temperature surveys were taken over areas where recent oil and gas drilling permits had been taken.  These surveys were conducted prior to any drilling and the results mapped.  Subsequent drilling results were then compared to the previously mapped interpretations based on the temperature surveys.

In all, 32 surveys were conducted in this manner. Of these 32 surveys, 22 have been drilled to date, with 13 predicted to be dry holes (all correctly predicted), 5 predicted to be non-commercial or very poor oil wells (all correctly predicted), 3 predicted to be fair to poor wells (2 correctly predicted, 1 turned out to be a dry hole with oil shows), and 1 predicted to be a good well (correctly predicted). These surveys predicted results with an astounding 95% success rate.

Due to the results noted above, I have elected to form a partnership between Nyvatex Oil Corporation and IBEX Geological Consultants, Inc. for the purposes of exploring for oil in Illinois. By combining an in-depth understanding of the geologic plays in the basin with what appears to be an exceptionally accurate method for determining the existence of hydrocarbons, I believe that we can provide outstanding opportunities for those wishing to be involved in oil exploration.

GENERALIZED ECONOMICS AND RISK

No exploration method is 100% effective. The promising results obtained thus far with the NDT analyses may or may not continue at the rate indicated. Even so, with even a success rate of only 33% (1 out of 3 projects will find economical oil as predicted), the rates of return would be outstanding.

As noted here, the anticipated return on investment is outstanding. Neither Nyvatex nor IBEX Geological Consultants can guarantee such rates of return, but the statistics warrant serious consideration. The oil industry is a high-risk business, and what we are trying to do is to cut that risk to an attractive level. We think that after much research we have succeeded in doing so.

Sincerely,

s/Stephen T. Whitaker
President, IBEX Geological Consultants, Inc.
201 West Springfield Avenue, Suite 1001
Champaign, IL 61820-4834     
Tel.  217-355-1768      
Fax.  217-355-9474

Abbreviated Resume for Stephen T. Whitaker

• Has worked as an oil & gas exploration geologist since 1978

• Has been trained by both major and independent oil companies and has worked for the Illinois State Geological Survey

• Experience includes the use and interpretation of surface and subsurface geological and geophysical mapping methods

• Has generated numerous drillable prospects and has a proven track record of successful exploration in the Williston (North Dakota, eastern Montana), Powder River (northeastern Wyoming), and Illinois basins

• Has worked in the Illinois Basin since 1986

• Is an independent oil operator in Illinois, presently operating 25 oil wells

• Has over 40 geological publications, mostly pertaining to oil and gas exploration in Illinois

• Is a Certified Professional Geologist

• Is a member of American Association of Petroleum Geologists and the Illinois Oil & Gas Association

Has BS and MS degrees in geology (University of Southern California and the University of Colorado, respectively)