Please refrain from sharing any of the information contained in this report on any public internet

forums, as it will only compromise our stock positions by attracting those who are only interested in
short-term profits. This influx of short-term money will cause unnecessary volatility in our positions
and will only lengthen the amount of time it takes for all of us to reach our goals.

RESEARCH REPORT – March 7, 2011

Symbol: PSTR Company Name: Postrock Energy Corp.

Date Position Initiated: March 7, 2011 Price Initiated: 6 – 6.15 – 3/3 - 3/7
Allocation: Medium Addition: 3/10 – Price: 5.05-5.15
Current Opinion: Buy

We have been accumulating shares of PSTR since March 3rd for both our own accounts and managed
accounts for the following reasons:

We are actively seeking energy companies that have undergone a restructuring of assets or debt. It is
important that the parties participating in the restructuring are experienced operators within their
respective field and have a success rate that gives the investment an edge over a long-term time frame.

The energy sector over the next 5-10 years will be an inevitable magnet for capital. There are multiple
reasons for this, the primary being:

1. Massive user demand as Brazil, China, India, North Africa and the Middle Eastern countries
participate in an active routine of infrastructure building, significant expansion of population,
and demand for transportation.
2. Continued political tensions and upheaval in the Middle East. As oil prices increase, they will
create a vicious and self-reinforcing cycle of violence between the citizens of oil producing
countries and their respective governments. The citizens will demand more, as they see their
governments reaping the rewards of rising oil prices. The government will be more desperate
than ever to maintain a grip on control as they remain in the midst of licking clean the worlds
largest honey pot.
3. A recalibration of what has been thought of as the “normal” trading range for energy prices.
This process can take sometime to complete and often times ends up with prices that overshoot
any reasonable target.

As oil/gas prices continue to rise, companies that deal in this sector will also see their share price rise to
extraordinary levels. The smaller the market-cap the more potential for gains in companies that have
competent management teams and an established exploration/production/transportation platform.

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There will also be the effect of rising crude oil prices positively influencing other energy commodities
such as natural gas. A portfolio that contains companies that deal with different aspects of the energy
sector may be a prudent means of managing risk.

PSTR is a company that deals primarily in the production of natural gas. They also have a significant
amount of interstate pipeline that is used for the transportation of gas to different markets. Natural gas
prices will have an impact on the share price of PSTR over the long-term. Given the continued
potential for crude oil to experience further gains, natural gas will be a first-tier beneficiary of the
gravitational pull of crude oil over the rest of the energy sector. This will be a long-term positive for
PSTR.

PSTR has seen their share price decline significantly since it started trading on the Nasdaq in 2010. The
decline came as a result of an excess of debt that needed to be serviced, as well as the uncertainty of a
class action lawsuit that came about when the company traded under the symbol QRCP (Quest
Resource Corp.).

In September of 2010 – White Deer Energy, an energy investment firm headed up by Thomas J.
Edelman, made a $60 million investment into PSTR. The investment allowed PSTR to reduce and
restructure their debt load. White Deer Energy retains the right to invest $30 million more into the
company.

It should be noted, at the time this investment was made into PSTR, the market cap of the company
was somewhere in the vicinity of $30 million. The investment was facilitated through the issuance of
warrants. While dilution has taken place as a result of the warrants, the larger focus should be on the
dynamics behind the decision to invest such a large amount into PSTR. This becomes especially
relevant when considering the career and accomplishments of Thomas J. Edelman, White Deer's
founding partner.

(continued on page 3)

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A picture of Thomas J Edelman's influence and involvement in the oil/gas industry:

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Thomas J Edelman's background:

– 1981: Founded Snyder Oil Corp. Later sold the company to Devon Energy
– 1988-2003: Chairman/CEO of Range Resources
– 1996-2005: Founded and later sold Patina Oil & Gas to Noble Energy
– 2010: Launches White Deer Energy with $800 million in capital commitments. White Deer is
an activist energy investment fund.

Being that PSTR is one of the first investments that White Deer Energy has made as an activist
investor, one should take confidence in the fact that it will be treated with the utmost care and diligence
in an effort to see the company succeed to the greatest extent possible.

Given the history of Mr. Edelman, as well as his enormous network of contacts within the oil/gas
industry, odds favor an eventual buyout of PSTR. It is, in fact, stated on White Deer's website that
investments are exited “through public offering, merger or sale”.

Mr. Edelman & co. managed to raise $800 million, of which $100 million is Mr. Edelman and Mr.
Guill's (co-founding partner) personal funds. The rest, you can be sure, are individuals and corporations
for which White Deer will be pressed to exceed initial expectations as growth of assets is always a
focus amongst newly formed funds.

The following is a press release regarding White Deer's initial launch and capital raising efforts:

White Deer Energy will exceed the equity goal for its debut fund.
The firm plans to hold the oil-and-gas focused buyout vehicle's final close on June 29, and already has
enough commitments lined up for a $780 million haul. With additional investors looking at the
offering, it could bring in more than $800 million.
White Deer was aiming for $750 million. The Houston firm set that goal in August 2008, and stuck
with it even through the worst of the global financial crisis.
The timeline for the fund's final close, meanwhile, has been more of a moving target. White Deer and
placement agent Credit Suisse had been aiming to wrap up marketing efforts during the first three
months of this year after closing on an estimated $630 million by the end of 2009, but opted to
campaign for more capital instead. A first close came in July 2009 with $302 million.
White Deer's capital-raising abilities largely reflect the strong track records of founders Tom Edelman
and Ben Guill. Guill was president of First Reserve until 2007, while Edelman managed a series of
energy companies, including Patina Oil & Gas.
Backers were also encouraged to see Edelman and Guill chip in $100 million of the new fund's capital,
placing them among the vehicle's largest investors. TIAA-CREF is contributing another $100 million.
The targeted holdings for White Deer's fund include stakes in companies engaged in the exploration or
production of oil and natural gas. Page 4
http://www.peinsider.com/headlines.php?hid=146287

I am a firm believer in looking into the investors that participate in an activist investment just as
fervently as you would the companies fundamental or technical picture. This is especially true the more
implanted the activist investor or investment firm become in the company. Inserting one or two
members of the firm on the board of directors, while restructuring debt and recapitalizing a company –
as has been the case with PSTR – is an immediate cause for deep study into who the activists are, their
past success and future expectations. In the case of PSTR and White Deer – everything is lining up in
perfect accordance.

On March 2nd, PSTR announced year end results for 2010. Amongst the highlights from the earnings
report:

- White Deer Energy L.P., a private equity fund, invested $60 million in the Company.

- The Company's credit agreements were restructured.

- Certain Appalachian assets were sold for $28 million, another $11.7 million were sold in early 2011.

- Debt was reduced by $109.1 million, another $9.3 million was paid down in early 2011.

- 163 wells were completed and 292 returned to production in the Cherokee Basin.

- Proved reserves rose 80.3%, reaching 134.9 Bcfe at year-end.

- Operating costs were reduced to $2.39 a Mcfe.

Perhaps the most compelling yet easily overlooked part of the earnings report is as follows:

For 2011, the Company has budgeted $52 million of capital spending. Of this amount, $43.6 million
will pay for the drilling and completion of 290 new wells, the completion of 8 wells drilled in 2010 and
the recompletion of 40 wells, all in the Cherokee Basin. In addition, $7.3 million has been budgeted for
leasehold acquisition land and equipment purchases and approximately $1.0 million for the KPC
Pipeline. These capital expenditures are expected to be entirely funded with internal cash flow.

Internal cash flow funding $52 million of capital spending in 2011. The market cap of the company is
currently sitting at roughly $50 million. Indicating a price to cash flow of below 1 based on the most
recent close. This is for a company that is firmly implanted in the middle of a sector that will attract
massive amounts of capital over the next 5-10 years as a result of the geopolitical/macro-economic
forces that are currently at work.

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 In addition to this, there is a possible alternative energy play here. As crude oil prices continue moving
up to levels that few think are possible, alternative sources of fuel will come into the spotlight. One
such alternative is natural gas. T. Boone Pickens is one of the many who have been active proponents
of natural gas vehicles becoming more commonplace in the United States. There are already over 10
million natural gas vehicles in use worldwide. As the price per gallon of gasoline continues to rise,
more attention will be paid to the viability of natural gas as a legitimate alternative. Natural gas
producers/facilitators will profit handsomely as a result.

Let's examine the technical picture for PSTR:

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PSTR exhibits all the attributes of the type of company that we seek for investment:

– A strong sector, with potentially explosive future expectations

– A once troubled past that caused the company to languish below fair value
– An activist investor angle from a seasoned veteran in the industry
– A value angle, with price to cash flow being the most important consideration
– A technical picture that suggests renewed interest and higher prices

We have taken long-term positions for both our own accounts and managed accounts. The target upside
is difficult to predict given the current dynamics of the energy environment. The plan is to stay put for
sometime, allowing all of the aforementioned attributes to come together in forming considerable gains
over the long-term.

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