Archer Petroleum

Matagorda Bay Prospect

Key points:

Located approx 2 miles offshore in Matagorda Bay, Texas
Approx 1280 gross acres covering Blocks 127, 151 S/2, and 150 N/2
Included in acquisition are 3 existing shut-in well bores, an existing 7 mile pipeline to shore and an onshore and offshore oil/gas handling facilities
23% Working Interest to Archer

Under the terms of the Participation Agreement, Archer will pay 23% of lease acquisition, geological and geophysical costs ($650,000 gross, or $150,000 net) and 23% of any costs associated with re-completion of the existing well bores.

A key component of this acquisition is the existence of a fully drilled, cored, logged, cased and shut-in well bore (the 127-1 well) in Block 127. The 127-1 well has multiple pay zones indicated on logs and cores and is expected to be initially completed in the Bol Mex (8560 - 8710' depth) section of the Lower Frio.

Internal analysis of the logs and cores of the Bol Mex zone indicate approximately 115 feet of expected oil pay. The reservoir is estimated to cover a minimum of 350 acres with potential up to 750 acres.

Completion planning has already begun with Operating Partner South Bay Resources, and on-site operations are expected to commence in the second Quarter of 2011.

Internal analysis indicates an additional 200 plus feet of apparent net pay are evident in the logs and cores, and upon successful completion of the Bol Mex interval the company will target these additional zones for future completions.

Detailed information coming soon