An interview with Sioux Sinnott, President of Aleanna Resources, published in La Nuova Ferrara, June 6th 2011

An interview by a local newspaper in Ferrara, Italy, in English translation. At the bottom of the page, you can find an attachment containing the original version (in Italian), published June 6th, 2011.

1. Who is AleAnna and what is its mission?  

AleAnna Resources, LLC (“AleAnna” or the “Company”) is an international oil and gas exploration and production company headquartered in Texas. AleAnna operates exclusively in Italy, where the company is building a presence with eight exploration permits and three exploration permit applications in the Po Valley and Bradano basins, encompassing a total of 804,000 acres/3300 km².

In the Po Valley, the company holds seven exploration permits and two exploration permit applications that are expected to be awarded by the end of 2011. In the Bradano basin, AleAnna holds one exploration permit and one application that are expected to be awarded in 2011, as well.

AleAnna values its local relationships and intends to establish a long-lasting presence in Italy through exploration and production using the newest, safest and most environmentally friendly technology available.

The Company is owned and managed by three experienced oil and gas exploration and production companies: Kerns / AleAnna, LP, a private independent exploration and production (hereinafter “E&P”) company based in San Antonio, Texas; Saxon Oil Ltd., a Canadian publicly traded independent E&P company based in Dallas, Texas; and AleAnna Energy LLC, which is jointly owned by BRS Resources, a Canadian publicly traded independent E&P company based in Dallas, Texas; and Bluescape Resources Company LLC, a private E&P company based in Dallas, Texas.

AleAnna is dedicated to the safe and efficient discovery and production of oil and gas, with respect always for the environment, the law, and the health and safety of its workers and the surrounding population. The company is committed to grow through science-based and environmentally responsible technologies.

I currently serve as president of AleAnna, and bring over 35 years of international oil and gas experience to the company. Previously, I was Vice-President of Saxon Oil Company; President of Heartland Rig International (HRI) Inc., a global manufacturer of drilling rigs and equipment; and held positions at Arco Oil and Gas, Exxon Neftegaz Limited, Nimir Petroleum and Petrosakh USA. My expertise is in project management and I attended Southern Methodist University in Dallas, Texas.

Pietro Marsili currently serves as Operations Manager for AleAnna’s operations in Italy. Mr. Marsili has more than 20 years of experience in the Italian oil and gas industry. He has extensive experience in organizing and managing exploration activities, including surface production plant construction, onshore/offshore seismic acquisition, site surveys for offshore drilling, and onshore/offshore well drilling. He holds a degree in geology from the University of Rome and a Ph.D. in geology from the University of Bologna.

2. Why did you choose to invest in Italy and the Po Valley?

The Po Valley has been one of Europe’s most significant on-shore oil and gas producing regions since the 1950s. Until EU regulations allowed international E&P companies to come into the country in the 1990s, ENI was the dominant player in a market with little competition, and left behind many undeveloped but significant oil and gas prospects in Italy that AleAnna and other companies are now trying to develop with more advanced and environmentally friendly seismic imaging and drilling technology. Italy is an attractive place for our company to operate for several reasons:

• Italy is an undersupplied market, with approximately 86% of the domestic energy needs being imported from countries like Russia, Algeria, Libya, and others. The political climate in those countries, the public backlash against nuclear energy in the wake of the disaster in Japan, coupled with the high price of oil, make Italy’s dependence on energy imports a matter of serious national interest;

• Italy’s growing electricity demand will be met largely by electricity generated from natural gas. Natural gas is a cleaner-burning, more “green” energy source than oil or coal, and is abundant in Italy. Italy’s undeveloped gas reserves are on par with the largest European countries. Developing these reserves is critical if Italy is to meet its growing energy needs. As is the case in the U.S., increased dependence on foreign energy supply means less political and economic freedom and much higher energy costs for consumers in terms of higher natural gas prices and heating and cooling costs;

• AleAnna is the fourth largest on-shore acreage holder in terms of exploration permits, so the company’s success in producing gas will contribute to Italy’s indigenous energy supply and ultimately to lower costs to end-users;

• AleAnna’s use of the most advanced 3D seismic imaging and drilling technology will greatly reduce the environmental impact of its extraction activities. AleAnna was one of the first companies to use 3D seismic imaging technology in Italy. The benefit of the 3D technology is two-fold: it gives geologists and geophysicists a clear 3D image of what the geological formations look like 2000 meters underground. These precise imaging techniques enable the technical team to more accurately pick the best target in the geological formation which, in turn, means fewer wells are needed to develop the reservoir and while minimizing the risk of an unsuccessful well. AleAnna is employing the latest drilling technology that minimizes noise pollution and emissions and ensures the smallest possible size of our environmental footprint on the land.

• Just like any industry, we have challenges, and have tried to address these challenges by educating the public with information about our company and what we are doing by increasing content on our website, being available to the press, and contacting local stakeholders.

3. How many investments did you plan for 2011 and the coming years? 

In 2011 alone, AleAnna has planned capital expenditures of more than €14,000,000. For all of our blocks, the Company has committed in its work programs capital expenditures totaling more than €110,000,000. How quickly we are able to deploy capital depends largely on the speed of the permitting process at the Ministry, Regional, and local levels. As with regulatory agencies all over the world, these processes in Italy need to constantly be streamlined where efficiencies can safely save time and money. We hope Ministry, Region, Mayors, and citizens realize that, in our business, time is money, and our ability to get the required permits in a timely and predictable manner is critical to our effectiveness.

4. Can you give more details about your projects in Ferrara Province in the areas of Corte dei Signori and Ponte del Diavolo?

The Corte Dei Signori exploration permit was awarded in March 31, 2008, and was our first block awarded. As part of our application to the Ministry we pledged to do a 3D seismic study followed by the drilling of a well in this area. In accordance with our work program we completed the acquisition of 3D seismic data in 2009 and, based on this data, have plans to drill a development well in the area in September 2011.

The Ponte Del Diavolo block exploration permit was the second awarded to AleAnna, in February 2009. Similar to Corte Dei Signori, the Company pledged as part of its work program submitted to the Ministry, to conduct a 3D seismic survey on the block to identify potential targets and to subsequently drill a well. We have hired an Italian company to do the seismic acquisition survey which should begin any day now. After our team of geologists and geophysists anazlyze this data, we will start planning our well for this block, which can hopefully be permitted to drill sometime next year.

AleAnna is also planning a 3D acquisition in the Ponte Dei Grilli permit area in 2011. This has been in progress for several months with hopes of coordinating a joint shoot with other operators in the area. AleAnna continues to pursue a combined shoot but is prepared to acquire our own 3D seismic data beginning in 2011 if an agreement is not made with other operators.

5. What projects do you have to support local communities in the areas most affected by your activities, such as Ostellato or Masi Torello?

AleAnna participated in a public meeting in Masi Torello, May 2, 2011, to inform citizens about its upcoming seismic acquisition survey in the area and to answer questions. Pietro Marsili attended on behalf of the company. Geotec SPA, contracted by AleAnna to conduct the upcoming seismic survey, gave a presentation (available on AleAnna’s website www.aleannaresources.com) about the 3D seismic acquisition process and what residents can expect. Also, the royalties paid to local communities could have a huge benefit. For example, in the Bascilicata Region during 2008-2009 alone there was approximately €210,000,000 in royalties from hydrocarbon production paid to the local communities. This is money that can be reinvested in local communities by improving schools, building new roads, etc.

6. How do you plan to handle possible subsidence in the areas of your activities?

It’s unfortunate that there is such widespread misunderstanding by the general public about what causes subsidence in relation to E&P activities. Subsidence is a natural phenomenon. It is being speculated that oil and gas drilling and production activities are perhaps one of fifty factors—some man-made, some natural—that contribute to subsidence, but there is no evidence that drilling and production activities at depths of thousands of meters below the surface in air-tight geological formations—where AleAnna is drilling—has any effect on subsidence. A more notable man-made cause of subsidence, for example, is subsurface water extraction such as is used in Italy for water wells. In any case, AleAnna has pledged to monitor subsidence with the best technology available in all of its projects in Italy to ensure the projects have minimal environmental impact.

7. What is your commitment to the environmental sustainability of your projects?

 AleAnna is committed to proven conservative E&P techniques to ensure minimal environmental impact of its projects. As stated, the company’s use of the 3D seismic technology allows us to precisely pinpoint the target part of the geological formation so that we minimize the number of wells needed to develop the reservoir and avoid drilling an unsuccessful well. The well-site is no bigger than a normal sized barn and will be restored fully to its natural state after AleAnna’s operations are complete. Most companies have not previously used 3D seismic technology in Italy because of its high cost. For example, the Ponte Del Diavolo seismic survey is costing AleAnna close to €4,000,000 alone. AleAnna feels this is money well-spent given the environmental benefits of fewer wells and the resulting smaller ecological footprint.

8. What are your relationships with local institutions?

AleAnna has made efforts to continue to foster its relationships with institutions by making itself available to local journalists, attending public meetings to explain its activities, hiring local contractors and businesses when possible, updating its website with information about its activities and about the E&P business to inform people, and by meeting Ministry, Regional, and local politicians and encouraging open dialogue. AleAnna values its relationship with local institutions and wants to help form a mutually beneficial partnership with local parties and welcomes these groups to contact AleAnna directly.