Growing demand, declining production, and all-time high prices have created an extremely positive environment for oil and gas. This backdrop is ideal for Blugrass Energy's strategy of building shareholder value through exploration and production projects.

Energy drives the engine of today's global world, and modern society's thirst for this vital commodity is virtually unquenchable. Total global energy use in 2006 was equivalent to 81 billion barrels of oil. It is projected to grow to 121 billion by 2030.

The continued progress of mankind - and especially of the United States - depends upon the availability of sufficient, reliable sources of energy. The following facts tell the story of where the global energy market is heading:

• The United States uses 4.5 times as much energy per capita as the global average, making energy supply supremely important to the world's sole remaining super power
• Two out of every three barrels of oil used in the United States are imported
• Rapid development in countries with huge populations e.g. Brazil, Russia, India, and China - is creating energy demand and usage far beyond historical levels
• The developing world's rapidly growing thirst for energy is cutting into the share of global energy production available for US needs and driving up prices

The Bottom Line: global energy demand is projected to grow 2.2% annually through 2020, compared to the 1.7% annual rate that has been in place since 1986. This equates to 33% more energy by 2020, extracted from depleting reserves. The energy must come from somewhere.

88% of energy consumed globally comes from the three most easily accessible sources: Oil (36%), Coal (28%), and Natural Gas (24%). But these hydrocarbons are not renewable, and their accessible supply is limited. Increased energy demand has thus caused prices to rise and scarcity fears to grow.

These concerns have begun to stimulate more serious efforts at developing reliable, abundant alternative energy sources. Unfortunately the development process is slow, and global reliance on oil, coal, and natural gas is expected to continue for several decades to come. The reality is, while policies are beginning to change, growth in demand for oil and gas will persist for years.

The limited supply is a critical issue to businesses, governments, and individuals alike. Particularly in the United States, there is great need for additional secure supply, creating opportunity for companies like Blugrass Energy, which focus on accessing and producing reserves contained within North America.

Sources: U.S. Department of Energy, IEA Energy Outlook 2007, BP Statistical Review 2007

The increased demand for energy from all corners of a growing world will ensure that oil and gas are likely to remain critical energy sources for the next several decades, if not longer. The importance of energy, and the energy industry, has reached an all-time high from which it is not likely to retreat.

As the world's largest consumer of energy, the United States has oil and gas requirements that exceed those of any other country. At the same time, the U.S. depends on foreign sources for two out of every three barrels of oil it uses, with a significant percentage of the foreign oil being derived from countries that are either politically unstable or downright hostile to the US. Clearly there is a major conflict when the world’s sole remaining super power relies so critically on other countries to keep its economy and society alive.

Solving the problem of dependence on foreign oil is quite possibly the most important challenge facing the United States today. There is no question that maximizing domestic oil and gas production can play a major role in solving the problem. Blugrass Energy is well-positioned to become a major player in this dynamic industry. The company's mission of delivering energy for a secure future combines perfectly with Blugrass's overriding responsibility to maximize shareholder value.