July 14, 1996 Board of Directors Midland Resources, Inc. 16701 Greenspoint Park Drive, Suite 200 Houston, TX 77060 Gentlemen: You have asked Southwest Merchant Group to express an opinion from a financial point of view of the fairness of the price paid to purchase of all of the common stock of Summit Petroleum, Inc. by Midland Resources, Inc. Southwest Merchant Group is an investment banking and management consulting firm located in Dallas, Texas. As an element of our business activities, we value the shares and assets of both publicly held businesses for a number of reasons, including mergers, acquisitions, public offerings, employee stock ownership plans, valuation for estate tax purposes, etc. Information pertaining to the experience of the principals of Southwest Merchant Group is attached. In arriving at our opinion, we reviewed such documents (including various Summit Petroleum, Inc. filings with the Securities and Exchange Commission), considered such questions, and conducted such analysis as we deemed appropriate. Also, we visited the common headquarters facilities of Summmit Petroleum, Inc. and Midland Resources, Inc. and discussed the operations of the business, including future prospects and potential problem areas with various management personnel. In addition to reviewing documents and visiting the management offices, in reaching our opinion we considered the nature and history of the business of Summit Petroleum, Inc., the economic outlook for the economy in general, and for the oil and gas exploration industry in particular. We also considered the financial condition of Summit Petroleum, Inc., its oil and gas reserves, cash flows derived from operation of wells, tax loss carryforward, as well as the earnings and cash flow history and our estimate of the company's potential. No limitations were placed on our investigation, and we were given full access to all material requested on a timely basis. However, we have relied upon and assumed the accuracy and completeness of the financial and other data provided to us, particularly the audited and unaudited financial statements, and estimates of oil and gas reserves of Summit Petroleum, Inc. prepared by the company. We have not attempted independent verification of such data. Based on our analysis of the factors deemed relevant, it is our opinion that the proposed purchase of all of the common shares of a Summit Petroleum, Inc. by Midland Resources, Inc., at a cash price of $0.70 per share, and the purchase of option shares at a price of $0.70 per share, less the exercise price thereof, is fair from a financial point of view to the shareholders of Midland Resources, Inc. Sincerely, Southwest Merchant Group 5735 Pineland Drive, Suite 215 Dallas, Texas 75231 /s/Michael D. Riggs Michael D. Riggs Managing Director