OPERATIONS

Robert L. Bayless, Producer LLC operates approximately 250 wells in the San Juan, Paradox, Piceance and Sand Wash basins of New Mexico, Colorado, and Utah. The majority are natural gas wells in the prolific sandstone and coalbed methane plays of the San Juan Basin. Bayless also owns and operates the Moffat Pipeline system in Northwest Colorado. In addition, the company owns nonoperated working interests in about 300 wells in these basins and in the Uinta, Powder River, Green River, and Permian basins of Utah, Wyoming, and New Mexico.

Growth areas for the future include these core areas and new ventures in the Rocky Mountain region and elsewhere. Bayless will participate in about 200 wells in 2008 and is actively acquiring exploration acreage in several states. This includes a large overriding royalty position near the West Tavaputs discovery in Utah. The company also owns a royalty interest in the highly-prospective Beetaloo Basin in Australia through its affiliate, Territory Oil & Gas.

Other affiliated companies involved in oil and gas production include:

• Animas Energy LLC • Bayless Ranches LLC • Bayless Drilling Company • KM Production Company • Palo Production Corp. • Moffat Pipeline Corp.

HISTORY

The company traces its roots to 1958 when Robert L. Bayless moved to Farmington, New Mexico from Oklahoma to explore for oil and gas in the San Juan Basin. Following the successful 20-year partnership of Merrion and Bayless, Bob continued to explore for and produce natual gas in the Southern Rocky Mountain Region.

In 1997 the Independent Petroleum Association of Mountain States named Bob Wildcatter of the Year. He was inducted into the Rocky Mountain Oil & Gas Hall of Fame in 2004.

In the early 1990's the Bayless Farmington office joined with Robert L. Bayless Jr.'s Denver office to become active all across the southern and central Rockies. Bob passed control of the company to his sons and son-in-law in the late 1990's and died in 2002. Robert L. Bayless, Producer LLC carries on his legacy of long-range thinking, solid oil & gas operations and good citizenship into the future.