SemGroup Updates

October 6, 2010 - UPDATE #13

Vess Oil Corporation (“VOC”) interest owners should have received payment of the Twenty-Day Claims (the twenty-day period for sales prior to the SemCrude, L.P./Eaglwing, L.P. bankruptcy on July 22, 2008) in April or May 2010. VOC received funds in late September 2010 for the collection of the sale of oil volumes to SemCrude, L.P. / Eaglwing, L.P. for the period prior to such 20-day period (June 2008 and July 1, 2008). These funds are being assessed and allocated among the various leases and corresponding interest owners. VOC currently expects to have these funds distributed to the interest owners in the next 60 days.

This update does not attempt to cover all aspects of the SemCrude bankruptcy cases. If you have any questions concerning the same, you should consult your attorney.

April 7, 2010 - UPDATE #12

Vess Oil Corporation expects that interest owners will receive payment of the Twenty-Day Claims (the twenty-day period for sales prior to the SemCrude, L.P./Eaglwing, L.P. bankruptcy on July 22, 2008) by April 19, 2010. The proceeds from the sale of oil volumes of the interest owners during June 2008 and on July 1, 2008 are still pending the outcome of the bankruptcy proceedings. This update does not attempt to cover all aspects of the SemCrude bankruptcy cases. If you have any questions concerning the same, you should consult your attorney.

December 23, 2009 - UPDATE #11

On December 1, 2009, the SemCrude Debtors (inclusive of Eaglwing, L.P.) filed a verification that the conditions for the Fourth Amended Plan to become effective had been met, and that the producer settlement proposed in the Plan would be funded. The Plan acknowledges that there may be disagreement between Debtors and producers as to the amount to be paid for 503(b)(9) claims (“Twenty-Day Claims”). The Plan requires producers to work with the Producer Representative to resolve any disagreement regarding the amount of the Twenty Day Claim filed by the Producer and the amount which the Debtor listed in its schedules. Vess Oil Corporation(“VOC”) and Debtors disagree as to the amount to be paid to VOC and its interest owners for their Twenty-Day Claims. VOC is working with the Producer Representative to attempt to resolve the disagreement and this process will take some time and effort.

At this point, while VOC will work diligently to timely secure the apropriate settlement payment, it is currently estimated the earliest it will be able to forward a payment to interest owners for the Twenty-Day Claims will be the end of the first quarter or beginning of the second quarter of 2010. In the meantime, we anticipate that some producers whose Twenty-Day Claims are not in dispute will receive payment. Many of you will undoubtedly hear that other operators or interest holders have received payment of some form. This may be due to another Producer having a Twenty-Day Claim amount that was not in dispute. Also, other interest owners may be paid pursuant to a different settlement than the Producers Settlement, although they are likely receiving a smaller settlement percentage. Finally, some creditors may receive payments for gas because SemGas assumed their contracts and had to cure all arrearages on gas revenue only.

This update does not attempt to cover all aspects of the SemCrude bankruptcy cases. If you have any questions concerning the same, you should consult your attorney.

November 9, 2009 - UPDATE #10

Update Concerning Confirmation of the Fourth Amended Plane

On October 28, 2009, the United States Bankruptcy Court for the District of Delaware entered an Order Confirming Debtors’ Fourth Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the Bankruptcy Code (the “Confirmation Order”). The Confirmation Order includes the proposed settlement between the producers and the SemCrude Debtors (inclusive of Eaglwing, L.P.). Pursuant to the settlement, producers (inclusive of their interest owners) are to be paid the full amount of their 503(b)(9) claims (“Producer Twenty Day Claims”) according to the schedules to the Fourth Amended Plan, plus some additional money for those producers (and interest owners) with state law lien or trust claims. To the extent there is disagreement between a producer and the Debtors concerning the amount of the claim, the Confirmation Order sets up a resolution process that includes a settlement phase, mediation phase if necessary, and court involvement if necessary.

The Effective Date of the Fourth Amended Plan is the first business day after all of the following events have occurred: (1) The Confirmation Order is filed and docketed by the Clerk of the Court; (2) the requirements of Section 18.1 of the Plan (which includes the dismissal of certain producer adversaries proceedings, the dismissal of the Debtors’ and Bank’s objections to Twenty-Day Claims; the establishment of the Litigation Trust; the establishment of the Exit Credit Facility; and the authorization of the New Common Stock and Warrants) have been accomplished or waived; and (3) the effectiveness of the Confirmation Order shall not have been stayed. Debtors are to file a notice with the court when these events have occurred.

At least one notice of appeal of the Confirmation Order has been filed. Appeals of the Confirmation Order may or may not stay the effectiveness of the Confirmation Order, depending on further order of the court.

This update does not attempt to cover all aspects of the SemCrude bankruptcy cases or the Confirmation Order. If you have any questions concerning the SemCrude bankruptcy cases or the Confirmation Order, you should consult your attorney.

September 28, 2009 - UPDATE #9

Update Concerning the Fourth Amended Plan

On September 22, 2009, the SemCrude Debtors (inclusive of SemCrude, L.P. and Eaglwing, L.P.) filed a Fourth Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the Bankruptcy Code (the “Fourth Amended Plan”). The SemCrude Debtors also filed a Disclosure Statement for the Forth Amended Plan (the “Fourth Amended Disclosure Statement”). The Fourth Amended Plan embodies the terms of a proposed settlement between the Producers’ Committee, the Unsecured Creditors’ Committee, the SemCrude Debtors and the SemCrude Debtors’ Lender Group. The proposed settlement would make (all dollar amounts are approximate) $172,500,000.00 available to pay the claims of producers. Of this amount, it is estimated that $125,000,000.00 would be used to pay producers’ 503(b)(9) claims (“Producer Twenty Day Claims”), with non-Eaglwing Producer Twenty Day Claims being paid 100% and Eaglwing Producer Twenty Day Claims being paid 65%. To make the Fourth Amended Plan acceptable the Official Producers’ Committee has agreed to apply enough of the remaining money to the Eaglwing Producer Twenty Day Claims so that they are also paid 100%. The 503(b)(9) portion of the claims which Vess Oil Company filed on its behalf and all of its interest owners’ behalf are included in the Producer Twenty Day Claims which the Fourth Amended Plan proposes to pay in full as described above. This would leave some additional money to be paid to those producers with state law lien or trust claims (such as Kansas) on a pro rata basis. For those producers with state law lien or trust claims, it is believed that the proposed settlement would pay approximately 44% of the total claim of producers and their interest owners. Under the proposed settlement, there would be no distribution on any remaining general unsecured claims of the producers or their interest owners. The Producer Twenty Day Claims would be paid in the amount stated in the SemCrude Debtors’ schedules, unless the producer can establish that it is entitled to more than the scheduled amount. Any claims against the prepetition lenders are released by a creditor’s acceptance of the Fourth Amended Plan.

The proposed settlement also contains terms applicable to 503(b)(9) claimants who are not producers (“Other Twenty Day Claimants”). This group consists mostly of midstream buyers and sellers of oil and gas. The proposed settlement is to pay 66% of those 503(b)(9) claims based on the amounts listed in the SemCrude Debtors’ schedules. Other Twenty Day Claimants can elect to accept the settlement or can reject the settlement and litigate their claim.

To make the proposed settlement feasible, the SemCrude Debtors have asked the bankruptcy court to release of the $127,000,000.00 of funds paid into the court by J. Aron, BP, Conoco and Plains and which are in dispute. The bankruptcy court has not yet decided whether these funds will be released. There is a hearing set for October 8, 2009 to address this issue.

On September 24, 2009, the bankruptcy court conducted a hearing on the SemCrude Debtors’ motion to approve the Fourth Amended Disclosure Statement. The bankruptcy court approved the Fourth Amended Disclosure Statement with some modifications. The bankruptcy court also set the confirmation hearing for the Fourth Amended Plan on October 26, 2009 at 10:00 a.m. Eastern Time. The deadline for filing ballots and for filing objections to the Fourth Amended Plan is October 21, 2009.

This update does not attempt to cover all aspects of the SemCrude bankruptcy cases, the Forth Amended Disclosure Statement, the Forth Amended Plan or the proposed settlement. If you have any questions concerning the SemCrude bankruptcy cases, the Forth Amended Disclosure Statement, the Forth Amended Plan or the proposed settlement, you should consult your attorney.

August 28, 2009 - UPDATE #8

Update Concerning Third Amended Plan

On August 26, 2009, the SemCrude Debtors (inclusive of SemCrude, L.P. and Eaglwing, L.P.) filed a Third Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the Bankruptcy Code (the “Third Amended Plan”). As a result, the deadlines previously set by the Court to submit ballots and to object to the confirmation of Debtors’ plan are no longer operative. Also, the confirmation hearing scheduled for September 16, 2009 is cancelled.

The Debtors will mail a new disclosure statement (the “Disclosure Statement”) to creditors in the near future. The deadline for filing objections to whether the Disclosure Statement contains adequate information is September 21, 2009. The hearing on approval of the Disclosure Statement will be September 24, 2009. If the Disclosure Statement is approved, the court will set a date for a new confirmation hearing relating to the Third Amended Plan and deadline for filing ballots and objections to confirmation of the Third Amended Plan.

Vess Oil Company and its counsel will review the Disclosure Statement to determine whether an objection to the Disclosure Statement is appropriate and will file an objection if it is appropriate.

This update does not attempt to cover all aspects of the SemCrude bankruptcy cases, or the Disclosure Statement or the Third Amended Plan. If you have any questions concerning the SemCrude bankruptcy cases, the Disclosure Statement, or the Third Amended Plan, you should consult your attorney.

July 9, 2009 - UPDATE #7

Update Concerning First Purchaser Lien Claims

As previously reported, a Court order entered in the SemCrude bankruptcy cases permitted a group of Texas producers, Kansas producers (inclusive of Vess Oil Corporation), and Oklahoma producers to commence adversary proceedings in order to determine the priority of the producers’ First Purchaser Lien Claims vis-à-vis a lender bank group’s pre-petition liens. After conducting discovery and exchanging expert reports, the producers and the bank group filed competing summary judgment motions in the adversary proceedings. The bankruptcy judge recently released his opinions on the summary judgment motions, ruling in favor of the bank group and against the producers.

The effect of the ruling on the First Purchaser Lien Claims is that the amounts included in the proof of claim Vess Oil Corporation filed that are in excess of the 503(b)(9) (the “Twenty-day Claim”) claim amount are considered general unsecured claims, as opposed to secured claims.

The ruling on the First Purchaser Lien Claims does not affect the Twenty-day Claims that Vess Oil Corporation filed on behalf of itself and its interest owners. SemCrude’s proposed plan provides that allowed Twenty-day Claims be paid in full, although the plan has not been confirmed and the plan preserves SemCrude’s right to object to Twenty-day Claims. If SemCrude files an objection to the Twenty-day Claims claim filed by Vess Oil Corporation, Vess Oil Corporation will receive notice of the objection and will respond to any objection which may be filed.

Vess Oil Corporation has also joined with the other producers to pursue an appeal of the ruling on the First Purchaser Lien Claims.

This update does not attempt to cover all aspects of the SemCrude bankruptcy cases, or the First Purchaser Lien Claim adversary proceedings. If you have any questions concerning the SemCrude bankruptcy cases or the First Purchaser Lien Claim adversary proceedings, you should consult your attorney.

May 19, 2009 - UPDATE #6

On Disclosure Statement and Chapter 11 Plan of Reorganization

You may have heard that the debtors in the SemCrude bankruptcy cases recently filed a Disclosure Statement and a Chapter 11 Plan of Reorganization. As of the date of this update, a deadline had not been set to object to the Disclosure Statement and/or the Plan. If you have been receiving notices in the SemCrude bankruptcy cases, you will likely receive a notice when the deadlines to object to the Disclosure Statement and/or Plan are set.

If any objections are to the Disclosure Statement and/or Plan are filed, the objections will either be resolved by agreement or decided by the Court. This process will likely take several months. In the meantime, you may or may not hear anything from Vess Oil Corporation about the process.

It is the intent of Vess Oil Corporation to act on its own behalf and on behalf of its working interest owners, royalty interest owners, and overriding royalty interest owners with respect to any objections it has to the Disclosure Statement and/or the Plan.

If you have any questions about the Disclosure Statement, the Plan or the procedural aspects of dealing with them, you should consult with an attorney concerning the same.

Proofs of Claim

Vess Oil Corporation timely filed proofs of claim in one or more of the SemCrude bankruptcy cases (inclusive of Eaglwing, LP) on its behalf and on behalf of its working interest owners, royalty owners, and overriding royalty interest owners to assert statutory first purchaser lien claims, reclamation claims and 503(b)(9) claims. As previously stated, the proofs of claim filed by Vess Oil Corporation reflect amounts for oil sold to SemCrude, or a related entity (inclusive of Eaglwing, LP), during June and July 2008.

Administrative Claims

You may or may not have recently received a notice or re-notice of Debtors’ Motion for Relief From Order Establishing Procedures For The Resolution Of Administrative Claims Asserted Pursuant to Section 503(b)(9) Of The Bankruptcy Code And Regarding Payments For Post-Petition Purchases Nunc Pro Tunc To April 16, 2009. This is Debtors’ motion asking the Bankruptcy Court for additional time, until June 15, 2009, to analyze and possibly object to creditors 503(b)(9) claims, also referred to sometimes as “twenty day claims.” Any creditor that objects to Debtors’ motion for additional time must file an objection to the motion with the Bankruptcy Court before May 26, 2009 at 4:00 p.m. Court time. Vess Oil Corporation does not plan to object to this motion.

First Purchaser Lien Claims

Pursuant to a Court order that was entered a few months into the SemCrude bankruptcy cases, a group of Texas producers, Kansas producers (inclusive of Vess Oil Corporation), and Oklahoma producers each commenced adversary proceedings in order to determine the priority of the producer liens vis-a-vis Bank of America’s pre-petition liens. A list of “threshold issues of law” was determined, and each group of producers filed a motion for summary judgment regarding the threshold issues of law in each of their respective adversary proceedings. Expert reports were filed, and opposing briefs and reply briefs were all filed. In addition, Bank of America filed its own summary judgment motion regarding the threshold issues of law, as did J. Aron, who was granted permission to intervene in the adversaries (J. Aron, along with some other entities, set off amounts they owed the Debtors with amounts they were owed just before the bankruptcy filing, and the producers have more or less been pitted against this group for some time now). All briefing was recently completed on all motions regarding the threshold issues of law, and on May 13, 2009, the Court heard oral argument on the Texas and Kansas issues of law, and on May 14, 2009 was scheduled for oral argument on the Oklahoma issues of law. The Court will likely take the summary judgment motions under consideration and eventually issue a ruling.
This update does not attempt to cover all aspects of the SemCrude bankruptcy cases. Pleadings from the SemCrude bankruptcy cases can be reviewed on the internet at http://www.kccllc.net/SemGroup

January 23, 2009 - UPDATE #5

On January 8, 2009, the Court in the consolidated SemCrude bankruptcy cases (inclusive of Eaglwing, LP) entered a certain Order Pursuant to Bankruptcy Rule 3003(c)(3) and Section 502(b)(9) of the Bankruptcy Code Establishing Deadlines for Filing Proofs of Claim and Approving the Form and Manner of Notice Thereof (the “Claims Bar Date Order”). The Claims Bar Date Order provides, among other things, that the deadline for filing proofs of claims is March 3, 2009 at 5:00 p.m. prevailing Pacific Time. The Claims Bar Date Order further sets forth the rules and requirements relating to the form of proofs of claim and the manner of filing proofs of claim.

It is likely that working interest owners, royalty owners, and overriding royalty interest owners will receive certain documents (“Bar Date Package Documents”) from SemCrude, or a related entity (inclusive of Eaglwing, LP), in the near future. It is also likely that the Bar Date Package Documents will include a proof of claim form. While working interest owners, royalty owners, and overriding royalty interest owners may be permitted to file proofs of claim, they may or may not have to do so. The Claims Bar Date Order provides, in part, that “the following persons or entities are not required to file a Proof of Claim on or before the General Bar Date . . . non-operating interest owners in oil or gas wells and/or properties, including, but not limited to, working interest owners, royalty owners, and/or overriding royalty interest owners, to the extent that, consistent with the Operators’ Claims Procedures previously approved, the operator of their oil or gas wells and/or properties has filed a proof of claim on their behalf . . .” It is the intent of Vess Oil Corporation to file proofs of claim on a lease by lease basis on behalf of the working interest owners, royalty owners, and overriding royalty interest owners for the leases it operates for the oil sold to SemCrude, or a related entity (inclusive of Eaglwing, LP), during June and July 2008. Vess Oil Corporation will not file a proof of claim for working interest owners, royalty owners, and overriding royalty interest owners for claims relating to transactions before June 2008. If working interest owners, royalty owners, and/or overriding royalty interest owners believe they have a claim against SemCrude, or a related entity (inclusive of Eaglwing, LP), relating to transactions before June 2008, they should consult with an attorney.

October 2, 2008 – UPDATE #4

COURT ORDER ALLOWS VESS OIL CORPORATION TO FILE PROOFS OF CLAIMS FOR STATUTORY LIEN CLAIMS ON BEHALF OF WORKING INTEREST OWNERS, OVERRIDING ROYALTY OWNERS AND ROYALTY OWNERS. CLAIM DEADLINE DATE NOT YET ESTABLISHED IN SEMCRUDE/EAGLWING BANKRUPTCY CASES

On September 17, 2008 the Court in the consolidated SemCrude bankruptcy entered an Order Establishing Procedures for the Resolution of Liens Asserted Pursuant to Producers’ Statutory Lien or Similar Statues (the “Order”). The Order provides among other things that producers who are the operators of oil or gas wells, such as Vess Oil Corporation, may file proofs of claims for statutory lien claims on their own behalf and on behalf of all non-operating interest owners in any such well. The Order further defines non-operating interest owners to include working interest owners, overriding royalty owners and royalty owners. To date, a proof of claim deadline has not been set in the SemCrude bankruptcy cases. It is currently the intent of Vess Oil Corporation to file proofs of claims on a lease by lease basis on behalf of the working interest owners, overriding royalty owners and royalty owners, for the leases it operates.

The Order further provides, in part, that certain producers can file adversary proceedings in which they seek a decision from the bankruptcy Court on certain threshold legal issues, such as the issue of whether producers and interest owners who claim statutory liens on product sold to a SemCrude entity have priority over the pre and post bankruptcy liens claimed by SemCrude’s lending group. The Order provides that there will be only one adversary proceeding per state and that the decision rendered by the Court in the adversary proceeding will be binding on all claimants in the applicable state whether or not they participate in the adversary proceeding. Vess Oil Corporation is a participant in the adversary proceeding in Kansas. The timing of a decision in the adversary proceeding is unknown at this point, but it could take several months or more.

There are other aspects to the Order, including, but not limited to, certain rights and remedies affecting producers and interest owners. You should review the Order carefully and consult with an attorney if you have any questions concerning the Order.

Click here to view the Court Order.

September 12, 2008 – UPDATE #3

Relevant Questions

1) What actions are being taken by Vess Oil Corporation in order to protect its claim to unpaid proceeds from its sale of oil to Eaglwing?

Answer: Among other things, we have made a reclamation demand. We have coordinated with Delaware counsel to file a notice of the reclamation demand in the SemCrude/Eaglwing bankruptcy case. We have filed objections to SemCrude’s Debtor in Possession Financing Motions. We have filed an objection to the Motion of Debtor’s for Authorization to Establish Procedures for the Resolution of Reclamation Claims, Administrative Claims Asserted Pursuant to Section 503(b)(9) of the Bankruptcy Code and Liens Asserted pursuant to First Purchase Lien or Similar Statutes (the “Claims Procedure Motion”). We intend to take the action(s) necessary to comply with any order on the Claims Procedure Motion.

2) Does Vess Oil Corporation (VOC) intend to file a proof of claim on behalf of itself and as agent for all interest owners with an interest in or to the leases from which it sold oil to Eaglwing?

Answer: VOC intends to seek permission from the bankruptcy court to file a proof of claim on behalf of itself and all interest owners with an interest in the wells VOC operates and that sold production to Eaglwing. VOC will rely on Bankruptcy Rule 3001, among other things, to support the motion.

3) Can you confirm what parties are considered an “interest owner” pursuant to the actions being taken by VOC to protect its claim to unpaid proceeds from its sale of oil to Eaglwing?

Answer: VOC and other producers are asking the court to establish procedures addressing the resolution of producer liens and administrative claims that provide Operating Producers the option, but not the obligation, to file proofs of claim on their own behalf and on the behalf of all working interest owners, royalty owners and overriding royalty owners.

4)What is the likelihood of recovery in this proceeding?

Answer: VOC cannot give an opinion as to the likelihood of recovery in this proceeding inasmuch as it is impossible to know at this time. It is currently anticipated that the bankruptcy proceedings involving Eaglwing may be ongoing for 12-24 months.

General: On September 10, 2008 the Judge granted the debtors motion to approve procedures for asserting reclamation claims and 503(b)(9) administrative claims. The court continued the hearing on the motion to approve procedures for asserting claims under state lien laws, trust laws and the UCC to September 17, 2008. Everyone generally believes that the final orders, when approved and entered by the court will provide operators such as VOC the option to file claims for all working interest owners, royalty owners and overriding royalty owners. Exactly how these claims are to be filed is still under discussion and yet to be determined.

August 20, 2008 – UPDATE #2

New Purchasers
Coffeyville Resources Refining and Marketing
MV Purchasing
National Cooperative Refinery Association (NCRA)

Oil Sales – Month of August 2008

Vess Oil Corporation resumed sales generally from all leases for the month of August. Accordingly, working interest owners and royalty owners will be put in line for payment by the new purchasers upon receipt of executed Division Orders. It is important to watch for your Division Order such that you sign and return promptly to receive payment from the new purchaser.

Division Orders are an industry document between the purchasers and interest owner. These documents provide the terms and conditions upon which the purchaser is making payment including verifying the owner address, social security number and decimal interest.

Your check and Division Order could be coming from any one purchaser or more than one purchaser depending on the location of your mineral interest in the state.

Payment to the owners will be made by the purchaser generally around the 20-25th day of the month following the month of oil sales. Accordingly, August sales would be paid on or about the 20-25th of September.

Oil Sales – Month of July 2008

Prior to finalizing arrangements with the new purchasers some oil for July was purchased by Eaglwing, LP after July 22, 2008. Payment for these sales volumes should be made to the working interest owners and royalty owners on or before August 27, 2008. These payments would be made by Eaglwing, LP under the Division Order previously in place. Accordingly, this payment should not require any action on the part of the owner.

Bankruptcy Proceeding

Vess Oil Corporation is continuing to monitor the bankruptcy process to ascertain what will be required to file the appropriate proof of claim for the recovery of funds owed to working interest owners and royalty owners from Eaglwing, LP.

At this date it has still not been established as to whether the Debtor (Eaglwing) will name Vess Oil as claimant and the court will allow for filing proof of claim at the lease level for all owners by Vess Oil or if it will require each owner to file their own proof of claim. Vess Oil will provide further update on this issue as soon as available.

August 1, 2008 – UPDATE #1

As publicly reported on July 22, 2008, SemCrude, L.P. (“SemCrude”) and certain of its affiliates, including Eaglwing, L.P. (“Eaglwing”), filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. Eaglwing purchased a large portion of the crude oil production operated by Vess Oil Corporation for the month of June 2008 and for the first 18 days of July 2008, after which date further sales to such entities were terminated. As of the date of this Report, Eaglwing has not yet paid the purchase price for such sales. Set forth below is an update regarding this matter:

As part of its Chapter 11 filing, Eaglwing and certain of its debtor affiliates created a special supplier protection program for their critical providers of goods and services including oil sales. Under the program, certain oil operators who contractually commit to continue selling oil to Eaglwing, on the same terms and reasonably equivalent volume as before the Chapter 11 filing, for a period of approximately six (6) months may be eligible to receive full payment, as due, for oil volumes that were provided before the filing, but for which the supplier has not yet been paid.

Based on a stated deadline, Vess Oil Corporation (“Vess Oil”), individually and as contract operator submitted a filing on July 27, 2008 to be eligible to be considered such a critical provider; however, it conditioned its commitments to permit Vess Oil to commence selling oil to other purchasers pending notification of acceptance and full payment by Eaglwing for crude oil production sold to Eaglwing in June and July. Vess Oil has not received notice that they have been designated a critical provider, and they are not aware that other entities have yet been designated a critical provider. There can be no assurance that Vess Oil will be designated as such a critical provider. A primary concern with the special supplier protection program is assurance that all amounts owing for continuing oil sales will be paid, particularly in light of having to commit sales to Eaglwing instead of other purchasers.

Since July 18, 2008 production from the leases sold to Eaglwing has been going into on-location storage tanks and a portion of the oil production was shut-in pending resolution of the marketing process for the production. As of July 31, 2008, Vess Oil has resumed sales of production from the leases, to purchasers other than Eaglwing, under short-term arrangements using current market pricing. Use of such short-term arrangements are expected to allow Vess Oil enhanced flexibility if Vess Oil is designated as critical provider of Eaglwing, as discussed above. Vess Oil has arrangements for the sale of oil from the leases to several different purchasers, with the production ultimately going to, or for the benefit of, oil refineries located in Kansas, including Coffeyville Resources Refining and Marketing (www.cvrenergy.com), National Cooperative Refinery Association (www.ncra.coop) and Frontier Oil Corporation (www.frontieroil.com). Consistent with past practice, each purchaser will handle the administrative aspects of the revenue distribution process associated with such crude oil sales, based on required royalty payments and related division orders.

Vess Oil is currently pursuing with its legal counsel an overview of the claim process required in the bankruptcy proceeding for the recovery of amounts owed to working interest owners and royalty owners from Ealgwing, LP. Upon obtaining more information Vess Oil will provide another update concerning how to proceed with the claim process. At the time of this update it has not been established as to whether the Debtor (Eaglwing) will name Vess Oil as claimant requiring one proof of claim for all interest owners which would be filed by Vess Oil covering all ownership or list each owner separately requiring each owner to respond with their individual proof of claim. This process will develop over the next several weeks and Vess Oil will update further as more information is available

July 23, 2008

SemGroup, L.P. announced on July 22, 2008 that the company and certain North American subsidiaries inclusive of SemCrude, L.P. and Eaglwing, L.P. have filed voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The revenue for June sales from these companies has not been received at this time and there is significant uncertainty regarding the collectability of June sales and the first 18 days of July. The collectability of these proceeds may not be known for some time pending the outcome of the bankruptcy process. You may access court documents and news releases involving this case at www.semgrouplp.com. The information can be obtained on an updated basis by clicking on News & Media and Reorganization.

Vess Oil Corporation (VOC) is currently pursuing new market options to restore production and resume sales as soon as possible. VOC ceased sales to SemCrude and Eaglwing on or about July 18, 2008 and continued to produce wells until on site storage was full. VOC intends to have procured new marketing outlets and resume sales by the end of July.

THIS NOTICE ONLY AFFECTS OWNERS WHO RECEIVE REVENUE FROM EAGLWING, LP / SEMCRUDE, LP.