September 2010
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Company History

Underground Energy, Inc. was formed as a Delaware corporation on June 4, 2007.  Through April 2010, the company has raised a total of $4.0 million in operating capital.      Since inception the company has built an organization of employees and a well qualified team of consultants.  In compliance with the Company’s business philosophy to maintain fiscal fitness and a lean organization, the Company has few employees and relies heavily on consultants and contractors to provide the in-depth skills, expertise and personnel resources to conduct the Company’s business.      Underground Energy has demonstrated the ability to identify and acquire prime hydrocarbon resources.  The company has focused efforts on California because of the abundance of oil resources, close proximity to infrastructure, multiple markets for the heavy oil, available human resources with oil production experience, local knowledge of the industry, and workable regulatory and permitting conditions for oil operations.  In addition to California, the company has prospects in Nevada, Trinidad and Alberta.      In October 2008, Underground Energy concluded an extensive effort to identify and negotiate a lease of a tar sand deposit (Asphaltea Project) in California with 30 million barrels oil in place (“OIP”) and potential for conventional oil recovery below the tar sand zone in the Monterey formation that is estimated to contain more than 480 million barrels OIP with more than 52 million barrels of oil estimated to be recoverable through conventional means.       In April 2009, Underground Energy consummated a farm in lease on the Casmalia Project diatomite deposit with 300 million barrels OIP and the potential to expand to 600 million barrels OIP.  The project provides the opportunity to utilize the company’s underground technology by drilling horizontal wells from a tunnel to recover this unconventional resource.  The company invested with others to acquire an 18% ownership in 20,000 lease acres from the BLM in Nevada based on historical wells indicating oil resource recovery potential.       Underground Energy has filed technology patents and is currently expanding the company’s technology patent base in the areas of underground oil processing and extraction.      The company is evaluating other resource acquisition opportunities.