Attached files

Brian K. Miller, P.E.
500 W. Texas Ave., Suite 815
Midland, TX 79701
432/682-0610


February 10, 2010


Texas Vanguard Oil Company
P.O. Box 202650
Austin, TX 78720

Subject: Evaluation of Oil and Gas Reserves to the Interests of
         Texas Vanguard Oil Company in Certain Properties Located
         New Mexico, Oklahoma, Texas and Wyoming. Effective January 1,
         2010, Pursuant to SEC Guidelines. Project 9.1286.

Ladies and Gentlemen:

Brian K. Miller, P.E. (Miller) has completed an evaluation of proved
Developed producing oil and gas reserves to the interests of Texas
Vanguard Oil Company (TVOC). This evaluation was requested by Mr.
William G. Watson.  This evaluation was based on available information
provided by TVOC and obtained from public record sources. Projections
of reserves and future net revenue to the subject interests were
based on operating conditions, economic parameters and market
conditions considered applicable as of January 1, 2010.

TOTAL RESERVES

The following table presents a summary of the net reserves and cash
flow, effective January 1, 2010.

                                           Proved
                                         Developed
     Reserve Category                    Producing

    Net Oil Reserves, BBL                  431,638
    Net Gas Reserves, MCF                2,108,346
    Net Equivalent Barrels (6:1)           783,029

    Future Sales Revenue, $             33,172,680

    Taxes:
      Severance & Production, $          1,835,774
      Ad Valorem, $                        903,668

    Operating Expenses, $               15,843,850

    Capital Investment, $                        0

    Future Net Cash Flow, $             14,589,380

    Future Cash Flow Disc. @ 10%, $      9,042,188


Texas Vanguard Oil Company
February 10, 2010
Page 2

Detailed projections of oil and gas reserves and associated future net
revenue are included in the tables following this report letter.  These
tables include various data that describe the oil and gas reserve
forecasts, economic parameters, and associated evaluation parameters
such as interests, taxes, product prices, operating cost, and
investments, as applicable.  Following these tables are graphs of
production histories with associated reserve projections for each
individual property.

Future net revenue is income to the evaluated interests after
consideration of royalty payable to others, production (severance)
and property taxes, operating expenses and investments, as applicable.
Future net revenue is presented in this evaluation on a before
federal income tax basis and does not consider any encumbrances
against the properties if such exist. It was assumed there would be
no significant delay between the date of oil and gas production and
the receipt of the revenue.

This report includes only those costs and revenues considered to be
directly attributable to the subject properties. There could exist
other revenues, overhead costs, or other costs associated with TVOC.
Such additional costs and revenues are outside the scope of this
report. This report is not a financial statement for TVOC and
should not be used as the sole basis for any transaction considering
TVOC. In this report, Miller expresses no opinion as to the fair
market value of the evaluated interests.

Miller is an independent consulting petroleum engineer and does
not own an interest in the evaluated properties or any interest
in TVOC. Millers compensation for the preparation of this report
is not contingent upon or subject to the results of this
evaluation.

Reserves were evaluated and classified according to the attached
Definitions of Oil and Gas Reserves for evaluations prepared for
disclosure to the Securities and Exchange Commission (SEC).

Miller utilized industry-accepted methods of engineering in
preparing the projections of oil and gas reserves estimates
included in this evaluation. However, it should be noted that the
estimates of oil and gas reserves carry any inherently high
degree of risk due to the uncertainties in the interpretation
and quality of the available historical data.

Miller reserves the right to revise the estimates and associated
economics contained herein without notice based on any revisions
to the data utilized or any subsequent event that would in the
opinion of Miller, cause a material change in those estimates.
These estimates are being furnished with the understanding that
revisions may be required in the future as a result of future
performance, operational changes, and changes in product prices
and taxes.

Current oil and gas production was obtained from the Railroad
Commission of Texas (TRRC).  Furthermore, Miller utilized
historical production data obtained from the TRRC and a standard
information source considered reliable by the Oil and Gas
Industry. All of the data was accepted as correct and utilized
by Miller in the preparation of this report. Miller expresses no
opinion as to the validity of the above information used for the
basis of this evaluation.

Miller did not perform on-site operational and environmental
reviews of the individual properties in this evaluation. These
investigations were considered outside the scope of services
requested.

PRICES AND COSTS

An oil price of $61.18 per barrel based on a New York Mercantile
Exchange price (NYMEX) was utilized as the base oil price as of
the effective date.  This base price represents the average of the
closing price for light sweet crude oil traded on NYMEX on the
first day of the month for each month in 2009. If the first day

Texas Vanguard Oil Company
February 10, 2010
Page 3

of the month fell on a weekend or holiday, then the prior trading
day closing price was used in the average.  The base oil price
was adjusted for evaluated property, and the adjustments came
from average historical differentials between the actual prices
received by each property and the average NYMEX prices for the
month for months from December 2008 through November 2009. Oil
price data was provided by TVOC on the properties from December
2008 through November 2009.  The base oil price plus or minus
the applicable price differential for each individual property
was held constant through the economic life of the property.

A gas price of $4.19 per MMBTU of natural gas based on a
New York Mercantile Exchange price (NYMEX) was utilized as
the base gas price. This base price represents the average
of the closing price of natural gas traded on NYMEX on the
first day of the month for each month in 2009. If the first
day of the month fell on a weekend or a holiday, then the prior
trading day closing price was used in the average. The base
gas price was adjusted for each evaluated property for BTU
content, compression and treating, and contract terms, and
the adjustments came from historical ratios between the
actual prices received by each property and the average NYMEX
prices for the month for months from November 2008 and
October 2009. The base gas price multiplied by this ratio
for each individual property was held constant through the
economic life of the property.

TVOC provided Lease operating expenses (LOEs) for all of
2009 on the operated properties and the non-operated
properties. The lease operating expenses (LOEs) were
adjusted for nonrecurring items and averaged for the
months included. LOEs include normal repairs and maintenance
such as pulling jobs and chemicals.  LOEs were held
constant for the economic live of the properties.

The evaluated interests also include royalty and overriding
royalty interests.  These royalty interests are not
subject to operating expenses. However, economic lifetimes
were calculated for each property by estimating abandonment
rates for the evaluated properties. Based on experience,
the abandonment rates are representative of the wells in
the field.

State production and ad valorem taxes were deducted at
published rates as applicable.

PROPERTY REVIEW

This evaluation includes engineering projections of proved
developed producing oil and gas reserves for 313 wells on
254 leases. The estimated reserves are 55.1% oil based
on barrels of oil equivalent and the estimated future net
revenue is 73.4% oil based on future net sales. The most
valuable property, the Richter, Gertrude lease accounts for
2.9% of the future net revenue discounted at 10%. The
Richter, Gertrude lease is located in the Serbin (Taylor)
field in Lee County, Texas and is operated by TVOC.
TVOC owns a 0.6440625 Working Interest (WI) and a
0.5198281 Net Revenue Interest (NRI) in the well. The
lease has 4 wells and began production in July 1997 and
has a cumulative production of 59,243 Bbl. of oil and
296,786 Mcf of gas through November 2009. The lease has
a mature and established decline trend. In addition, the
remaining evaluated leases exhibit mature and stable
decline trends and projections of oil and gas reserves
were based on extrapolation of historical decline trends.

Of the 313 wells evaluated, 228 are operated by TVOC and
represent 84.6% ($7,645.9M) of the future net revenue
discounted at 10%.

Texas Vanguard Oil Company
February 10, 2010
Page 4

It has been a pleasure in preparing this evaluation. All
information utilized in the preparation of this evaluation
will be retained and is available for your review.

Yours very truly,



s/Brian K. Miller

Brian K. Miller, P.E.

Attachments