March 31, 2010

In the following description of Diaz’s principal oil and natural gas properties, reserve and production amounts stated are gross reserves based on forecast costs and prices, as evaluated by AJM Petroleum Consultants. The estimates of reserves and future net revenue for the individual properties may not reflect the same confidence level as estimates and reserves in future net revenue for all properties due to the effects of aggregation.

Canadian Drilling Program

In Canada, during the year ended December 31, 2009, 4 wells were drilled (net 1.60) resulting in 4 oil wells (net 1.6).

Alberta, Canada - Lloydminster - WI 50%

Diaz has a 50% working interest in 4 producing heavy oil wells (2.0 net wells). The Lloydminster field is the primary development focus of the Company. Three additional wells were drilled during Q1 2010 and are
expected to be on production early in Q2 1010.

Diaz believes the Lloydminster heavy oil play may support up to 35 wells on one section, with initial production rates of approximately 60 Bopd per well. The AJM Report outlined in the “Oil and Gas Reserves” section, later in
this report, assigns 60,000 barrels of proved plus probable reserves to 24 undrilled wells on this field. On the next page, is a gross pay map of the Lloydminster pool, showing Diaz’s four producing wells and three horizontal wells drilled during Q1 2010 which are anticipated to be on production during Q2 2010. Diaz believes the project has very attractive economics with oil prices in the range of $80 per barrel, the drilling royalty credit and a 5% royalty for the first year of production.

Diaz currently plans to continue development drilling at the Lloydminster field starting in the summer of 2010.

Lloydminster field development economic assumptions include:

- Average gross well cost $750,000 drilled plus $200,000 for completion and production facilities.
- New well initial production - 60 bopd with a 20% annual decline.
- Revenue based on $65 per barrel.
- Operating costs - $15 per barrel.
- Alberta royalty rate of 5% for the first year of production.
- Alberta drilling credits - $200 per meter drilled prior to March 31, 2011.

Retlaw, Alberta

Diaz has interests in 43 producing gas wells (15.1 net wells), 1 shut-in gas well (0.5 net wells) and 1 oil well (0.5 net) in the Retlaw area located 90 miles southeast of Calgary, Alberta.

The Company’s production at Retlaw, throughout 2009, averaged 741 Mcfd compared with 1,021 Mcfd for 2008. Q4 2009 production decreased to 519 Mcfd compared with 1,424 Mcfd in Q4 2008.

Enchant South - Hays, Alberta

In the Enchant South – Hays area, located 110 miles southeast of Calgary, Diaz has an interest in 39 producing gas wells (22.5 net wells) and 3 producing oil wells (2.1 net wells).

Provost, including Leahurts - Alberta

Diaz holds an 80% working interest in the Leahurst field located in the Provost area. The well was drilled during October 2007 and began first production during June 2008 at over 600 Mcfd (net 480 Mcfd). The well has
produced continuously since then with a natural gas production rate for the well in December 2009, of 193 Mcfd (net 155 Mcfd).

Big Bend - North-Central Alberta

Diaz has an 80% working interest in the Big Bend field, located in north-central Alberta. The well was shut-in during the second half of the year awaiting workover operations which were completed in February 2010. March 2010 production rates have been in excess of 500 Mcfd.(400 Mcfd net).

United States Drilling Program

 

Diaz’s United States drilling program has been in the Wilcox deep gas trend concentrated in an area 100 miles South West of Houston, Texas. During the year ended December 31, 2009, 1 well was drilled (net 0.05) resulting
in 1 gas well (0.05).

Provident City, Lavaca County, Texas – Working Interest 13%

The Company owns a 13% working interest in two natural gas wells producing from zones in the Wilcox formation in the Provident City field, Lavaca County.

The Provident City #1 well was producing at an average rate of approximately 1.6 MMcfd (207 Mcfd net) during the month of December 2009. Also, during the month of December, the Provident City #2 well averaged a production rate of 714 Mcfd (91 Mcfd net).

Hound Dog, Lavaca County, Texas – Working Interest 28.1% and 25.3%

Diaz has a 28.1% working interest in the R. Dickson #1 well, a 25.3% working interest in the R. Dickson #2 well and a 25.3% working interest in the balance of the 1,635 acres of land.

The R. Dickson #1 well was producing 70 Mcfd (net 19 Mcfd) at the end of December 2009. The R. Dickson #2 well was producing 330 MMcfd (net 83 Mcfd) at year end.

N.W. Speaks Robertson #1 Well, Lavaca County, Texas – Working Interest 21.6 %

The N.W. Speaks Robertson #1 well was producing at 256 Mcfd (net 54 Mcfd) during December 2009.