Overview

USA Superior Energy Holdings, Inc. is an oil and gas enhanced recovery and drilling company focused on shallow well oil and gas fields in Texas. USA Superior is composed of a team of seasoned experts in their field, with over 50 man-years of oil and gas and shallow well field experience of reworking, stimulation, finding, drilling, horizontally drilling and well completion operations and production. USA Superior currently owns all of its projects but will joint venture or have working interest relationships when appropriate. To maximize production, USA Superior Energy's also provides complementary technologies including specialized work over technologies, shallow well cased hole horizontal drilling applications and the utilization of portable Nitrogen applications.

(For definitions and a full explanation of Oil Reserves, scroll lower to the "Oil Reserves" section)

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Investment Highlights

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Technology

Cased Hole Horizontal Drilling (CHHD)

Horizontal drilling has revived many plays and areas once thought uneconomic to develop. Directional drilling (sometimes known as slant drilling outside the oil industry) is the science of drilling non-vertical wells.  There are over 1 million oil wells located in the Permian Basin in Texas, USA. The quantity and quality of horizontal drilling technology has developed to the point where it has become dependable, practical, and reasonably priced. This combination has created a bonanza for horizontal drilling in the Permian Basin with favorable results. The technology requires drilling small holes into a portion of the casing which passes through the production zone. The holes or perforations provide a path for the oil to surge from the surrounding rock into the production tubing and allow for specifically directing the flow of oil exactly to or from where one wants it.

USA Superior aims to begin utilizing its advanced oil well enhancement technologies to increase production on two of its six exploration projects, namely its Bateman and Dale McBride projects in Texas, which currently produces over 1,000 barrels of oil per month. Oil wells owned or leased by the company, as well as those of other companies that are unable to produce under ordinary conditions, may see increased production with the use of the company's state-of-the-art technologies. As such, USA Superior plans to acquire more semi-depleted oil fields and apply new technologies to enhance production, create a higher return on investment, and become a profitable energy stock.

The company eventually plans to offer its CHHD technology to other companies in the energy industry on a project basis for a fee or for a percentage of production.

Nitrogen Stimulation Technology

USSU is successfully using nitrogen to increase the production from marginal wells on its Navarro County prospect. Nitrogen can be used in lieu of, or in addition to, water as a means for increasing well pressure and oil production beyond primary production. Nitrogen can be used to increase oil production either by dispersing it across an entire reservoir, thereby affecting several wells simultaneously, or by dispersing it to individual wells in a “Huff and Puff” process.

USSU has formed a Joint Venture with the Generon Division of Innovative Gas Systems to deploy its proprietary nitrogen-based technology on select prospects using Generon equipment. In exchange for 20% of the cash flow, Generon has agreed to provide nitrogen-generating equipment at no capital cost. Generon’s trucks with skid-mounted, nitrogen-generating units can be placed adjacent to a well that has demonstrated low down-hole pressure.

Field experience over a 6-year period has indicated that USSU may achieve a two-fold to four-fold increase in production with only a slight increase of water production, based on nitrogen usage of 1.000 to 4,000 cubic feet for every barrel of oil produced. At a cost of less than $8.00 per thousand cubic feet for the nitrogen and $85 per barrel oil prices, USSU’s technology provides a very rapid payback and attractive returns.

Management believes the Company’s technology can reduce operating costs and increase well production by as much as 50 - 70%. At present, the nitrogen is vented through the system. Future plans call for separating recovered nitrogen and recompressing it for further lifting. Management believes that lifting as many as four wells from one Generon unit can be accomplished.

Nitrogen Generation

USSU has developed a proprietary process for generating nitrogen at the well site. The Company’s technology allows high-pressured nitrogen to be concentrated directly from the air at 92-99% purity in a non-cryogenic, low-cost process.

Using nitrogen to pressurize the reservoir has many advantages. Nitrogen is both environmentally-friendly and readily available; approximately 78% of the air humans breathe consists of nitrogen. Any escape of nitrogen gas, while inefficient, is uneventful. Nitrogen is inert to most mineral and rock conditions and provides a safe way to push oil through rock to the producing well. In addition, the expenses involved in producing nitrogen are minimal.

XIOM

In addition, USSU has entered into an agreement with XIOM Corporation to distribute XIOM’s patented coatings technology in Texas, Louisiana and Oklahoma for oil field use. XIOM has more than 40 years of coating experience and 48 patents relating to equipment and coating.

The XIOM process offers a cost-effective system for applying polymer coatings. The coating contains no VOCs (volatile organic compounds), is easy to apply, has low flammability, and is 7 to 10 times more durable than paint.

The coating helps protect pumps from corrosive acids and rods inside the drill hole from paraffin accumulation. XIOM coatings will reduce the need to pull drill pipe and repair wells.

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Financials

Revenues for the quarter ended March 31, 2008 increased to $115,563 from $15,443 in the same period of 2007. This increase reflects a full quarter of operations of the Bateman Project which was acquired at the comparable quarter's end in 2007. Sales volume for the first quarter 2008 was a net 1,322 barrels, which was a substantial increase over third quarter and fourth quarter volume of 727 barrels and 139 barrels, respectively. The Company anticipates a further sales volume increase for the second quarter of 2008 as sales volume has exceeded a net 1,183 barrels in the month of May 2008. The Company realized an average price of $91.63 per barrel during the quarter ended March 31, 2008.

For the quarter ended March 31, 2008, the Company's net loss decreased to $516,740, compared to the same quarter 2007 net loss of $3,379,474.

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Projects

Navarro Shallow in Texas

USSU has begun re-developing a shallow (350 ft) reservoir that is part of the Benton Project discovered 20 years ago in Navarro County, Texas. Eight wells were drilled, completed and put on pump to produce from oil sands. Due to low pressure in the reservoir, oil was produced at a very slow rate. The project proved uneconomic at the time and was plugged and abandoned after producing only 200 barrels of oil over a two-year period.

The Company is re-developing this play as an enhanced recovery project; nitrogen will be used to pressurize the reservoir and push oil into the well bore. USSU expects oil recovery of 40-60% from this prospect using Nitrogen Stimulation techniques.

During the third quarter of 2005, USSU drilled four wells in the reservoir. All four wells penetrated the oil sand at a depth of 350 feet. Three of the wells were oil-producing wells and one was the nitrogen injector well. By July 2006, these three wells were producing 5.5 barrels per day.

USSU believes this 400-acre prospect contains potential reserves of 2-3.5 million barrels of recoverable oil. Over the next 12 months, the Company plans to develop 40 wells. Each is expected to produce at least 10 barrels of oil per day. Moreover, the Company has the potential to expand the prospect’s acreage to 1,000 acres.

Zavalla Serpentine in Texas

The Zavalla Serpentine in Texas consists of a series of oil fields ranging in size from 800 to 1,000 acres, formed over volcanic serpentine plugs at depths of 3,500 – 4,000 feet. Oil trapped between the sand and gas is found underneath the Ancocha Lime and is expected to produce 40,000 - 50,000 barrels of oil in a 40-acre space.

These fields were discovered in the 1960s but there has been little development since then. The fields are caused by the intrusion of large masses of volcanic rock, which have large amounts of iron. The high iron content results in tighter permeability than the surrounding sedimentary rocks. Airborne magnetic surveys have identified more than 14 anomalous “high iron masses” that have not been drilled.

Due to the tighter permeability of the formation, this project can benefit from nitrogen injection and certain horizontal drilling techniques. There are currently over 333 acres leased with additional leasing in progress. The Company plans to drill four targets and, if successful, lease and drill the remaining 10 prospects.

Bateman and Benton Fields

The Company announced on June 6, 08 the completion of the probable reserve studies for their Bateman and Benton Fields. Mr. Rowland Carey, Chairman and CEO, announced, "We have now completed our lengthy analysis of our probable and proven recoverable reserves. The total net present value of our holdings in the Bateman project, when fully developed, is approximately $87 million (standard industry discount rate of 10% with an $100 average price of oil)."

The Bateman project will be the focus of the company's activity in 2008 and 2009. This field's production will be accelerated during 2008. The net production (after payment of royalties) during the ten year life is approximately 1.5 million barrels of oil in the Bateman field. This would total approximately $146 million of net revenue (after royalties).

Thirty-six infill-drilling locations have been identified after the Company's analysis of the Bateman Field. The Company is currently in review with their third party reservoir engineer, Cathedral Resources.

Cathedral's end of year 2007 reserve report has identified proven reserves of 445,000 net BO with an undiscounted value of $18.9 million and a NPV10% of $3.8 million. A breakdown of the reserves shows PDP reserves of 194,300 net BO with a NPV 10% of $1.9 million from existing wells, and twenty PUD locations with 250,650 net BO with a non-discounted NPV of $11 million and a discounted NPV10% of $1.93 million.

The Company believes that upon continuing execution of their plan of development (wellbore and reservoir enhancement), oil reserves that normally would have been produced far in the future will now be produced within the next 10 to 20 years. In the Company's probable and proven reserve model, they utilize the SEC required guidelines, historic production rates and existing production conditions to determine the NPV. The average PUD has a total operating expense of $311,000 per well over the 75-year expected well life. Reducing the production life of these wells from 75+ years to 10 or 20 years will reduce total operating expenses from $311,000 per well to $61,000 per well over the wells' life.

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Oil Reserves

(Source: Wikipedia)

Oil reserves are the estimated quantities of crude oil that are claimed to be recoverable under existing economic and operating conditions.

In most cases, oil refers to conventional oil and excludes oil from coal and oil shale. Depending on the source, bitumen and extra-heavy oil (tar sands) may also be excluded.[2] The exact definition varies from country to country and national statistics are not always comparable.

The total amount of oil in an oil reservoir is known as oil in place. However, because of reservoir characteristics and limitations in petroleum production technology, only a fraction of this oil can be brought to the surface, and it is only this producible fraction that is considered to be reserves. The ratio of reserves to oil in place for a given field is often referred to as the recovery factor. The recovery factor of a field may change over time based on operating history and in response to changes in technology and economics. The recovery factor may also rise over time if additional investment is made in enhanced oil recovery techniques such as gas injection or water-flooding

All reserve estimates involve some degree of uncertainty depending on the amount of reliable geologic and engineering data available and the interpretation of those data. The relative degree of uncertainty can be expressed by dividing reserves into two principle classifications - proved and unproved. Unproved reserves can further be divided into two subcategories - probable and possible to indicate the relative degree of uncertainty about their existence.

Proved reserves are claimed with reasonable certainty (80% to 90% confidence) to be recoverable in future years by specified techniques. To meet this definition, the development scenario must have been defined and use known technology, and the scenario must be commercial under current economic conditions (prices and costs prevailing at the time of the evaluation)

Proved reserves are further subdivided into Proved Developed (PD) and Proved Undeveloped (PUD). PD reserves are reserves that can be produced with existing wells and perforations, or from additional reservoirs where minimal additional investment (operating expense) is required. PUD reserves require additional capital investment (drilling new wells, installing gas compression, etc.) to bring the oil and gas to the surface.

Proved reserves are the only type the U.S. Securities and Exchange Commission allows oil companies to report to investors.

Probable reserves are either unsubstantiated claims or based on median estimates of the accumulation that are more likely to be recovered than not (50% confidence). This can result from either better reservoir behaviour than expected under the proved category or additional investments to be decided over the medium to long term (three to ten years) using conventional techniques.

Possible reserves ideally have a chance of being developed under favourable circumstances. [7] Industry specialists refer to this as P10 (i.e. having a 10% certainty of being produced).

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Energy Industry Outlook

World energy demand is projected to remain strong over the long-term mainly due to population and economic growth as well as technology improvement. With the United Nations predicting world population growth from 6.4 billion in 2004 to 8.1 billion by 2030, and the US Energy Information Administration projecting 4.1% growth in world GDP, energy demand will increase substantially over the long-term.

The EIA projects demand will continue to exceed supply, resulting in declining commercial oil inventories that are already approaching historic lows at year-end 2007.

Oil supplies are impacted by geopolitical and weather-related risks. One particular concern relates to Iran’s nuclear ambitions, and the global response. Other supply-related risks include continued attacks on Iraqi pipelines, civil war in Nigeria and global geopolitical instability.

In 2007, global oil demand is expected to increase by 1.3 million barrels per day (bbl/d), mainly due to acceleration of China’s needs and strong US demand. According to the EIA, US consumption increased by 0.2 million bbl/d in the second quarter of 2007 compared to year- earlier levels, while China’s oil demand rose by an estimated 0.5 million bbl/d over the same period. In 2008, the EIA estimates world oil consumption will grow by 1.5 million bbl/d.

Continued world oil demand growth, combined with only modest increases in world production and the continuing risks of geopolitical instability, is expected to keep crude oil prices high through 2008. Depleted inventories makes oil prices very sensitive to external risks factors. With OPEC 2007 production nearly one million b/d lower than 2006, inventories have fallen.

Recent News and Press Releases

USA Superior Announces $87 Million Net Present Value of Probable and Proven Reserves in Bateman Field
Marketwire (Fri, Jun 6)

USA Superior Reports "E" Modifier Removed From Stock Symbol
Marketwire (Thu, Jun 5)

USA Superior Reports First Quarter 2008 Results
Marketwire (Mon, Jun 2)

USA SUPERIOR ENERGY HOLDINGS, INC. Files SEC form 10-Q/A, Quarterly Report
EDGAR Online (Fri, May 30)

USA Superior Anticipates Completion of First Quarter Certifications and Reviews by May 30, 2008
Marketwire (Tue, May 27)

USA SUPERIOR ENERGY HOLDINGS, INC. Files SEC form 10-Q, Quarterly Report
EDGAR Online (Tue, May 20)

USA Superior Reports 2007 Results
Marketwire (Tue, May 20)

USA SUPERIOR ENERGY HOLDINGS, INC. Files SEC form 10-K, Annual Report
EDGAR Online (Fri, May 16)

USA Superior Announces $122 Million Net Present Value of Probable Reserves
Marketwire(Wed, Apr 23)

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Management

G. Rowland Carey
Position: President and Director

G. Rowland Carey, is the President and a Director of the Company. Mr. Carey is graduated from University of North Carolina. Prior to becoming President of the Company he was the Managing Member of The Company, LLC. From May 1990 to present he has been the President and CEO of Coast Capital, LLC. Coast provided equipment financing to oil and gas companies. From June 1983 to August 1985 he was the Co-founder and President of Gardner-Carey, Inc. specializing in the development of rural land into subdivisions.

Jerry D. Witte
Position: Secretary and Director

Over 27 years experience with an oil and gas exploration and production. Mr. Witte is graduated from Univ. of So. Florida. Prior to becoming Secretary of the Company, Mr. Witte was President and technical scientist of TriLucent Technologies, a public company that utilized remote sensing and radar based hydrocarbon identification for resource development. From 1985 to 1998 Mr. Witte was a senior project manager for SONAT Exploration where he was involved in numerous projects. Prior to 1985 Mr. Witte worked for Gulf Oil and Reservoirs Inc. From 1979 to present Mr. Witte has worked in areas including but not limited to geophysics, geochemistry, petrophysics and the development of enhancement technologies in the oil and gas industry.

Paul T. Eads
Position: Director

Over 30 years experience with an oil tool manufacturer with emphasis on technical sales support, application engineering and training. Mr. Eads is graduated from the Univ. of Houston. Prior to joining the Company from 1994 to 1999 Mr. Eads was President of XL Lift Systems, Inc. which specialized in providing gas lift consulting services to major oil and gas companies throughout the world. From 1993 to present Mr. Eads was an independent consultant providing gas lift equipment and services to companies including, Exxon, Amoco and Camlow S.A.I.C. (Argentina). Mr. Eads has chaired sessions for the Society of Petroleum Engineers as has written and presented numerous papers and computer programs on gas lift designs and technology.

Ben Terral
Position: Field Operations Specialist

Over 50 years oil field equipment, Mr. Terral holds a total of twenty-seven patents pertaining to down hole tools, mandrels and wire line tools. Expertise in solving operational problems as well as engineering equipment to solve problems. Mr. Terral has worked for the companies including CAMCO Inc. (Dept Chief), Wireline Equipment Manufacturing Co. (VP Engineering), MACCO/Schlumberger (Product Mgr), McMurry/Brown/Hughes (Snr. V.P. Engineering).

Randy Holifield
Position: Field Operations

Over 29 years oil field operations in Texas and Gulf Coast States, Oklahoma, Kentucky and Tennessee for NORAM (Texas Operation Mgr) PAMCO, Crystal Services, and SHWJ Oil. Experience includes operations and completions for several thousand wells, several hundred well drilled, water flood and heavy oil production.
 

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Contact

USA Superior Energy Holdings Inc.
Suite #105
1726 Augusta Drive
Houston, Texas
USA 77057

Telephone: (832) 251-3000
Fax: (832) 251-9300

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FORWARD LOOKING STATEMENTS

This report includes forward-looking statements that reflect USA Superior Energy Holdings, Inc. current expectations about its future results, performance, prospects and opportunities. USA Superior Energy Holdings, Inc. has tried to identify these forward-looking statements by using words and phrases such as "may," "will," "expects," "anticipates," "believes," "intends," "estimates," "plan," "should," "typical," "preliminary," "we are confident" or similar expressions. These forward-looking statements are based on information currently available and are subject to a number of risks, uncertainties and other factors that could cause USA Superior Energy Holdings, Inc.'s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, without limitation, the Company's growth expectations and ongoing funding requirements, and specifically, the Company's growth prospects with scalable customers, and those outlined above. Other risks include the Company's limited operating history, the Company's history of operating losses, consumers' acceptance, the Company's use of licensed technologies, risk of increased competition, the potential need for additional financing, the terms and conditions of any financing that is consummated, the limited trading market for the Company's securities, the possible volatility of the Company's stock price, the concentration of ownership, and the potential fluctuation in the Company's operating results.

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Disclaimer

AllPennyStocks.com feature stock reports are intended to be stock ideas, NOT recommendations. Please do your own research before investing. It is crucial that you at least look at current SEC filings and read the latest press releases. Information contained in this report was extracted from current documents filed with the SEC, the company web site and other publicly available sources deemed reliable. For more information see our disclaimer section, a link of which can be found on our web site. This document contains forward-looking statements, particularly as related to the business plans of the Company, within the meaning of Section 27A of the Securities Act of 1933 and Sections 21E of the Securities Exchange Act of 1934, and are subject to the safe harbor created by these sections. Actual results may differ materially from the Company's expectations and estimates. This is an advertisement for USA Superior Energy Holdings, Inc. The purpose of this advertisement, like any advertising, is to provide coverage and awareness for the company. The information provided in this advertisement is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject us to any registration requirement within such jurisdiction or country.

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