PRESIDENT'S MESSAGE It's been my great pleasure to meet with many of you personally over the nearly two years I've served at the helm of Granite Energy. My optimism about oil and gas, and our unique niche in this dynamic industry, could not be stronger. Since my last formal message to our strategic partners, Granite has made several significant strides. We recently increased our global exposure by achieving a listing on the German Frankfurt Stock Exchange. As the world demand for oil remains high, I believe the move into the European markets will play a pivotal role in the overall success of our company by enabling us to forge new partnerships and attract foreign capital. Record extremes in wet weather dominated the first six months of the year and hampered our drilling efforts. However, I can report that we are back on track in Oklahoma and Texas and are making impressive gains. While rainfall and standing water delayed our drilling and well completions in Oklahoma and Texas, we anticipate three completions within the coming few months. Preliminary results are encouraging. Our Texas projects appear promising as we forge ahead in drilling shallow offset wells on our leases in the Lone Star State. The record rainfall affected many points along the chain and placed a heavy demand on drilling and completion equipment. This has put most companies in the region behind schedule. I would like to thank H-Petro-R for their ability to coordinate the many services required to complete our well operations - and for placing us front of the line for the necessary equipment. These are benefits few others in our industry enjoy. On a greener note, we announced a dividend to shareholders of GreenStart Inc. stock. While I accept as a given that we must, as a planet, continue to seek clean alternative energy sources for future generations, I realize that oil and natural gas are today's solution and will continue to play a very important role in our everyday lives for years to come. This move will allow GreenStart to expand its scope, while enabling Granite Energy to focus on its core business of oil and gas production. The success of GreenStart will not only add value for existing shareholders, but should make all involved feel good about playing a part in a revolutionary, environmentally-friendly solution in alternative energy. We have assembled a top team at Granite Energy, of which you, as a strategic partner, play a vital role. We are all investing a great deal of time, energy and expertise in assuring the success of our company. Until my next letter, have a wonderful fall and a rewarding holiday season. Sincerely, S. Matthew Schultz |