Scotia Waterous (USA) Inc. (“Scotia Waterous”) has been retained as exclusive financial advisor by Alamo-Palace MP 59 LLC (“Alamo” or the “Company”) to advise and assist in the sale of its interest in the Main Pass 59 block located in the Gulf of Mexico Offshore Continental Shelf (the “Transaction”). The proposed Transaction will be structured as an asset sale.

BACKGROUND TO SALE

Alamo-Palace MP 59 LLC is a privately held, sole purpose entity managed by Alamo Resources LLC. The Company's entire asset base is composed of a 60% controlling (non-operated) working interest in the Main Pass 59 block. Alamo is seeking cash offers for its entire interest in the asset.

ASSET OVERVIEW

The MP 59 Block is located in the shallow water depths of 60 to 70 feet within the Eastern Gulf of Mexico shelf. The lease is a part of the prolific MP 41 Field operated by Chevron. This field includes 13 unitized blocks and has produced over 500 MMboe of oil and gas since its initial development in the late 1950's. The MP 59 Block is located on the southeastern portion of the field and currently contributes approximately 35-40% of the total field gross oil production. Cumulative production from this block totals over 12 MMboe since its initial development in 1979.

Alamo maintains a non-operated, controlling interest in two leases in the MP 59 Block, OCSG-3194 and OSCG- 8461. The current ownership of both leases consists of Alamo (60%), Chevron (30%) operator, and Ridgelake (10%). Because of a prior non-consent elections, the Alamo 's working interest in the wells averages approximately 65% (average net revenue interest = 54%). The asset contains 17 producing wells and two platforms, the “MP 59-A” and “MP 59-AA”. Chevron also operates the surrounding field infrastructure and is recognized for its quality operating capabilities. An excellent Platform Use and Production Handling Agreement guarantee an extremely attractive netback to the new partner.

The prolific MP 59 Block contains productive hydrocarbons in 13 normally pressured reservoirs ranging in age from Lower Pliocene to Upper Miocene and range in depth from 4,900 ft to 6,500 ft subsea. The block is currently producing a gross 3,000+ bo/day (net 1,600+ bo/day) of oil with associated gas. Ryder Scott is currently conducting a full reserve report, which will be available in mid May, 2008. The partnership's recent operations in the block have added significant value and include a major facility upgrade project to the “A” platform which has resulted in increased production of ~1,300 boe/day (gross) and a successful drilling campaign in 2006. Significant remaining drilling and operational upside potential exists in the block for the new partner to capture. Identified upside includes several proven, identified undeveloped locations, additional low risk exploration drilling proved up by the 2006 campaign, low resistivity- bypassed pay potential, and additional production response possible from gas lift optimization and improved downtime

 

INVESTMENT HIGHLIGHTS

• Alamo is offering a controlling, majority working interest in its MP 59 leases
  • Block is on southeast flank of prolific unitized, Main Pass 41 field
  • Alamo has controlling vote on leases ( Avg WI = 65%)
  • Located in the shallow water depths of 60 to 70 feet within the Eastern Gulf of Mexico shelf
• December 2007 production of 3,058 gross (1,635 net) Boe/day from 17 wells
  • Production from multiple stacked Miocene age reservoirs located 4,900 to 6,500 feet in depth
  • Long life oil production , with average R/P = 8-10+ years
• Updated Ryder Scott reserve report available in Mid-May 2008
• Current cash flow is ~$4.0 MM/month
• Chevron currently serves as operator of record in the block
  • Agreements with Chevron produce one of the lowest operating cost blocks in the GOM
  • 2007 Avg LOE = $4.50 per BOE
• JOA allows all parties to propose and/or operate the drilling & completion of new wells
• Recent field debottlenecking project designed to enhance production from facilities constrained field
  • Completed facilities upgrades to “A” Platform allows for additional production from existing wells
  • Key upgrade component was installation of the Multi-Phase Pump (MPP)
  • Reduced back-pressure improves both current production and EUR
  • Installation of heli-heck and platform crane
  • Electric generator and SCADA equipment
  • Remote monitoring, and well control will greatly reduce downtime
• Modern platform facilities provides enhanced production performance
  • Opens field for further development
  • Reduced downtime
  • Potential for additional production response possible from gas lift optimization
• Numerous upside opportunities included in the offering
  • Numerous PUD drilling locations identified by Ryder Scott
  • Behind pipe recompletions
  • Additional low risk exploration/exploitation potential resulting from recent successful exploration well (A-17)
  • Further expansion of recent facilities upgrade (Phase 1 upgrade completed)
  • Low resistivity- bypassed pay potential
  • Additional response from facility expansion
    • Increased production from existing wells
    • Opens field for further development with increased capacity
    • Additional production response possible from gas lift optimization and improved downtime

 

TRANSACTION PROCESS

The expected timetable for the Transaction is as follows:

Milestone	Date
Confidential Information Memorandum/ VDR	Week of May 19, 2008
Data Room opend in Scotia Watersous' Houstong Office	May 27, 2008
Bids due:	June 24, 2008

Upon signing the attached Alamo Confidentiality Agreement, Scotia Waterous will distribute to interested parties a copy of the Confidential Information Memorandum. The completed Confidentiality Agreement can be faxed to the attention of Thomas McDermott at Scotia Waterous at 713-437-5040 or by email to Thomas McDermott at Thomas_McDermott@scotiawaterous.com. After executing the Confidentiality Agreement and providing sufficient evidence of financing capability, interested parties may then be provided access to the on-line Virtual Data Room, and the physical Data Room. The physical Data Room will be located in Scotia Waterous’ office in Houston, Texas.

At no time should you contact anyone at Alamo regarding the Transaction, unless otherwise directed by Scotia Waterous. Should you have any questions regarding the Transaction, please feel free to contact a Scotia Waterous representative listed below:

CONTACTS

Scotia Waterous
Adrian Goodisman Managing Director adrian_goodisman@scotiawaterous.com (713) 437-5050	Ron Gajdica Managing Director Ron_gajdica@scotiawaterous.com (832) 476-6401
David Hartz Associate Director david_hartz@scotiawaterous.com (832) 437-5066	Rene McHale Associate Director rene_mchale@scotiawaterous.com (832) 476-6403
Tim Pish Director tim_pish@scotiawaterous.com (713) 437-5048	Thomas McDermott Associate Thomas_mcdermott@scotiawaterous.com (713) 437-5067

Neither this letter nor any additional information delivered to you by Alamo or Scotia Waterous with respect to the Transaction, including the Confidential Information Memorandum, shall constitute an offer to sell any securities to any person.

Scotia Waterous ( USA) Inc.
Pennzoil Place - South Tower
711 Louisiana, Suite 1400
Houston, Texas
USA 77002-2716
Tel: (713) 222-0546 Fax: (713) 222-0572
Email: houston@scotiawaterous.com