Challenger Project on the Cinnabar Lease

Mosman acquired a 85% working interest in the 348.83 acre Cinnabar Lease which includes the Challenger Project located between Mosman's Stanley and Champion projects in East Texas.

There are four development drilling locations on the Cinnabar Lease identified using nearby wells and 3D seismic methods.  These are the same methods used to identify the targets at Stanley and Falcon.  There are two wells drilled on the Lease which have previously produced significant quantities of oil but are now shut in.  The Operator maintains the Lease as "Held by Production" (HBP) by periodically opening one of the wells to produce a few barrels of oil.

A Reserve Report indicates the project has Reserves (gross) as follows (thousands of barrels of oil equivalent “MBOE”):

Proved
Developed
Producing
Proved
Developed
Behind Pipe
Proved
Undeveloped
Total
Proved
Total
Probable
Total
Proved
Plus Probable
2
49
614
665
184
849

This Reserves Report was prepared by a third party independent petroleum engineering firm for Barry Lasker, a Managing Partner at Baja, in June 2017 and conforms to SPE-PRMS petroleum guidelines. The royalties on the lease are circa 25%.

Mosman will become the Operator of the Cinnabar Lease and contract operator services will be provided by Contour Exploration and Production,  a company owned by, Mr Howard McLaughlin.  In exchange for the providing these services,  Contour may earn 12% in the Lease when a well is drilled to a maximum value of USD96,000.  On completion Mosman's current 97% interest reduces to 85%.

Cinnabar enables Mosman to continue to build the Company's production base in Texas.  Drilling at Cinnabar will be after Falcon-1 is placed on production, the workover at Greater Stanley is completed and the planned drilling of Galaxie well is completed.