Note 4 Acquisition of minority interest in Nautilus Poplar LLC and acquisition of additional working interests

Prior to September 2, 2011, the Company was the parent company and 83.46% owner of NP, a Montana Limited Liability Company. NP in turn was the 68.75% owner of oil and gas working interests in the East Poplar Unit (“EPU”) and Northwest Poplar field (“NWP”) in Roosevelt County, Montana (together, the “Poplar Field”). MPC also owned a direct 28.3% working interest in the Poplar Field.

To simplify the holding structure of the Poplar Field and for reasons relating to accounting, reporting, capital calls, investors and partners, and conflicts of interest, , MPC, effective September 1, 2011, assigned its direct working interest in the Poplar Field to NP. In addition, MPC management thought it desirable to acquire all of the membership interests in Eastern Rider LLC (“ER”) and Nautilus Technical Group LLC (“NT”) (ER and NT, collectively, the “Nautilus Sellers”) (the “Nautilus Restructuring” or the “Transaction”). Prior to the Transaction, Nautilus Tech maintained a 10% membership interest in NP and a 2.9% oil and gas working interest (“WI”) in the Poplar Field while ER maintained a 6.5% membership interest in NP.

The terms of the Nautilus Restructuring are set forth in the September 2, 2011 Purchase and Sale Agreement between the Company and the members of NT and ET (the members of NT and ER, collectively, the “Sellers”) (the “PSA”). The Sellers included John Thomas Wilson (MPC director, and now President and CEO) and a consultant to and an employee of NP (each a “Related Seller”) as well as certain other persons. The effective date for the Nautilus Restructuring was September 1, 2011. The Company negotiated the consideration and terms of the Nautilus Restructuring with the intention of transacting with the Sellers on fair value terms. The approach to valuation was consistent with this goal.

Due to the conflicting interests of Mr. Wilson resulting from his position with and financial interest in the Nautilus Sellers, the Board appointed a Special Transaction Committee (“Committee”) to provide an independent forum for the consideration of the terms of the Nautilus Restructuring as set forth in the PSA and the related Registration Rights Agreement(discussed below). To independently validate the fairness of the consideration underlying the Nautilus Restructuring, the Committee commissioned a fairness opinion from an independent investment bank. At the August 24, 2011 Committee meeting, the Committee approved, and recommended that the Board approve, the transactions. On August 26, 2011, the Board approved the transactions.

The PSA provided for the Company's purchase of all membership interests in NT and ER in return for $4,000,000 in cash (“Cash Consideration”), $2,000,000, less certain debt owed to MPC by NP, NT and ER and certain costs (“Total Share Consideration”), in privately issued shares of MPC's common stock, par value $0.01 ("Common Stock") and the potential for future production payments, payable in cash, to the Sellers, collectively, of up to $5,000,000 under certain conditions. The shares were sold pursuant to Section 4(2) of the Securities Act.

The Cash Consideration was transferred on September 2, 2011. Consistent with the terms of the PSA, 1,182,742 shares of Common Stock were issued on September 23, 2011 (“Issuance Date”), the earlier of (i) the third business day following September 20, 2011, the date on which MPC's Form 10-K for the year ending June 30, 2011 (“Form 10-K”) was filed with the Securities and Exchange Commission (“SEC”) and (ii) September 30, 2011. Consistent with the terms of the PSA, on the Issuance Date, MPC delivered to a Seller shares of Common Stock as determined by dividing the Total Share Consideration allocated to the Seller by, in the case of Related Seller, the greater of (i) the NASDAQ consolidated closing bid price of a share of Common Stock on the business day immediately preceding the execution of the PSA and (ii) the NASDAQ official closing price of a share of Common Stock on September 22, 2011, the earlier of the second business day following September 20, 2011, the date on which the Form 10-K was with the SEC and September 22, 2011 (“NASDAQ Closing Price”). In the case of a Seller that was not a Related Seller, MPC delivered shares of Common Stock as determined by dividing the Total Share Consideration allocated to that Seller by the NASDAQ Closing Price. Mr. Wilson's interest in the Nautilus Transaction approximated 51% of the consideration paid for the Nautilus Tech and ER interests.

The potential for future production payments is contingent upon achieving certain levels of production at Poplar. The first payout of $2.0 million is payable to the Sellers when the sixty (60) day rolling average for production of the Poplar Field has reached 1,000 barrels of oil equivalent per day as set forth in Nautilus' Reports of Production to the Board of Oil and Gas Conservation of the State of Montana (“Reports”). The second payout in the amount of $3.0 million will be paid to the Sellers when the sixty (60) day rolling average for production of the Poplar Field has reached 2,000 barrels of oil equivalent per day as per the Reports. The fair value of these contingent payments was estimated.

The production projections used in valuing its proved reserves as of June 30, 2011 were used as the basis for identifying the timing of the production payouts. The Company utilized a discount rate of 8% which is consistent with the rate used in valuing its asset retirement obligation and reflects the Company's credit adjusted incremental borrowing rate.

At September 30, 2011, the Transaction between MPC and NP was complete. As a result of the Transaction,

• MPC is the 100% owner of NP,
• NP is the 100% owner of the EPU and maintains a 78.65% WI in the NWP; and
• MPC created a new, wholly owned Delaware LLC, MPNA, and assigned its 100% ownership interest in NP to this entity.

The buy-out of the minority interest in NP from NT and ER was accounted for as an equity transaction with the impact reflected directly in equity at estimated fair value.

The acquisition of the 2.95% direct working interest in Poplar Field from NT was treated as a business combination for accounting purposes. The fair value of assets acquired and liabilities assumed were recorded at estimated fair value. This estimate was made based on Level 3 or unobservable inputs. Unobservable inputs are defined in authoritative guidance as inputs that reflect the Company's assumptions of what market participants would use in pricing the asset or liability based on the best information available at the time.

A deminimus amount of revenues and earnings related to the 2.95% WI acquired are included in the accompanying unaudited condensed consolidated statements of operations for the three months ended September 30, 2011. No pro forma financial results are provided for the three months ended September 30, 2011 or 2010, due to the immaterial effect.

The table below summarized the consideration paid to NT and ER under the PSA and the estimated fair value of the assets acquired and liabilities assumed for the WI acquired from NT: