BEACON EQUITY RESEARCH

Analyst: Victor Sula, Ph.D.

Report Update
June 12th, 2008

UPDV daily 6/11/2008

0.08

0.07

0.06

0.05

0.04

0.03

0.02

Universal Property Development 0.01

and Acquisition Corporation 0.00

volume
14255 US Highway Number 1
80
Suite 209
60
Juno Beach, FL 33408

Millions
Phone: (561)-630-2977 40
Fax: (561) 630-2241 20
Web Site: www.UPDAc.com
0
12 13 14 15 16 19 20 21 22 23 27 28 29 30 Jun 3 4 5 6 9 10 11

Market Data Company Overview

Universal Property Development and Acquisition Corporation (UPDV) is in-
Exchange/Symbol OTC OB: UPDV volved in energy exploration, development, production, storage, distribution
Coverage Initiated 12/20/2007 and fuel blending. UPDV operates as a holding company, owns controlling
Current Price $0.008 interests in six energy businesses, and provides funding to its subsidiaries for
Rating Speculative Buy developing proven energy reserves and cutting-edge technologies. Through
Outstanding Shares 139.9 Million this business model, UPDV is able to expand its asset portfolio and knowl-
Market Cap. $1.12 Million edge base.
Average 3-m Volume 3,847,320
The Company’s Continental Fuel subsidiary imports, purchases, stores and
sells oil and natural gas; its Heartland and Canyon Creek subsidiaries engag-
es in oil and gas exploration and production and its Aztec subsidiary provides
oil and gas field services.

At year-end 2006, UPDV had proven reserves of approximately 16 thousand

barrels of oil (MBD) and 110 million cubic feet (MMCF) of natural gas, located
on 5,700 acres. In equivalence terms, approximately 46 percent of the Compa-
ny’s proven reserves consisted of oil, and approximately 54 percent consisted
of natural gas. Nearly 100 percent of these reserves are classified as proved,
developed or producing. In addition, after purchasing a majority interest in
Heartland Oil and Gas Corp. in April 2007, UPDV gained drilling rights to an
additional one million acres, one-third of which represents developed proper-
ties. The Company also owns an oil and gas gathering system that includes
approximately 85 miles of pipeline.

UPDV was incorporated in 1982 as Tahoe Lake Concession. In June 2005, after
an upstream merger with a wholly-owned subsidiary, the Company changed
its name to Universal Property Development and Acquisition Corporation,
conducting operations in Texas and Kansas.
 Analyst: Victor Sula, Ph.D.
Report Update
June 12th, 2008

Recent Developments

Continental Fuels

Continental Fuels provides petroleum product storage, resale and transportation services for UPDV. Continental
Fuels owns and operates UPDV’s port facilities and blending and distribution businesses. The company’s man-
agement team has reorganized operations with the goals of increasing petroleum products trading and develop-
ing additional supply contacts and customer relationships.

In December 2007, Continental Fuels acquired Geer Tank Trucks Inc., a privately held Texas business that pur-
chases, transports and sells oil. Geer Tank Trucks operates from five locations in Texas. It owns two salt water
disposal wells and four pipeline terminals with yards located in Jacksboro, Mineral Wells, Graham, Cisco and
Bowie, Texas. In addition to oil shipping and trading, Geer Tank Trucks provides oil well services such as salt
and fresh water removal services and frac tank rentals. In April 2008, revenues from Geer increased to $8.8 mil-
lion.

Heartland Oil and Gas Corp.

Heartland Oil and Gas Corp. (HTOG) explores for and develops natural gas resources, primarily consisting of
coal bed methane, in the Cherokee and Forest City basins of northeast Kansas.

HTOG’s production from its Kansas properties has increased consistently since it was acquired by UPDV in 2007.
In April 2008, HTOG reported revenues from natural gas sales exceeding $266,000, including sales exceeding
$100,000 from its CBM fields in Kansas. The Company is close to completing a 4 ½ mile pipeline extension that
will connect 12 additional wells in its Jake coal bed methane field. The pipeline extension significantly expands
HTOG’s Miami County operations and could potentially double revenues.

HTOG has also expanded production from its Catlin Oil & Gas field in Jack County, Texas, which is currently
producing at over 300 MCF/day. In Palo Pinto County, Texas, HTOG plans to drill another salt-water disposal
well. In addition, HTOG is negotiating terms for connecting to a highly efficient low-pressure gas sales line
and expanding production from five wells drilled and completed in the Barnett Shale. All these developments,
coupled with reduced overhead spending and payroll cost reductions implemented last year, position HTOG for
improved profitability in upcoming quarters.

HTOG has initiated discussions with institutional investors and private equity funds specializing in oil field
projects regarding funding for a 300 well drilling program. Drilling locations in southeast Kansas have been
identified and drilling is planned over the next 12 to 24 months. Reserve forecasts by consulting petroleum en-
gineers involved in this project estimate a 10 year production life and 100,000 MCF of production for each well.
At recent natural gas prices, this suggests each well could produce $1.2 million in revenues over its useful life.
Total drilling costs for the 300 well project are estimated at $39 million.

Aztec Wells Services

Aztec Wells Services Inc. is UPDV’s oilfield services and well drilling subsidiary. Aztec is drilling Heartland’s
wells in Kansas and Texas, extending Heartland’s pipelines and maintaining and expanding Heartland’s produc-
tion in northern Texas.

Universal Property Development and Acquisition Corporation (UPDV) 2

 Analyst: Victor Sula, Ph.D.
Report Update
June 12th, 2008

Financial Record

Income statement

Following a series of acquisitions and joint ventures, UPDV began reporting meaningful revenues in 2007 from
its energy trading business. The Company reported 2007 revenue of $31 million, up from $0.6 million in 2006.
Revenue growth reflects the Continental Fuels, Caitlin Oil & Gas, Heartland Oil & Gas and Geer Tank Trucks
acquisitions.

Revenue, $ million

18
15.2
16
14 12.3
12 10.2
10 7.0
8
6
4 1.3
2 0.1 0.2
0
Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008

Source: SEC Filings

Revenue rose 11-fold year-over-year in the first quarter of 2008 to $15.2 million from $1.3 million mainly due to
strong petroleum sales from the Company’s Continental Fuels subsidiary, which contributed nearly $14.6 mil-
lion to first quarter revenues. Natural gas sales reported by Heartland Oil & Gas climbed to $0.6 million in the
2008 first quarter.
Income statement, $ thousands

Q1 2007 Q1 2008 % Chg

Revenue 1,308 15,189 1061%

Cost of goods sold 1,375 14,786 975%
Gross profit (67) 403 n/m

Operating expenses 1,727 3,237 87%

Operating profit (1,794) (2,834) n/m

Other income (expenses) 938 (1,562) n/m

Minority interest (130) (212) n/m
Net income (727) (4,184) n/m

Diluted EPS -0.002 -0.005 n/m

Source: SEC Filings

Universal Property Development and Acquisition Corporation (UPDV) 3

 Analyst: Victor Sula, Ph.D.
Report Update
June 12th, 2008

Net losses after minority interest increased by $3.5 million to $4.2 million in the first quarter of 2008 as a result of
costs associated with increasing production, higher payroll and related benefit costs and increased general and
administrative expenses.

The Company is integrating its recently acquired Geer Tank Trucks business into Continental Fuels’ operations,
a move expected to improve margins and boost revenues in the second half of 2008.

Segments

During 2008, the Company has restructured its operations into the following two segments:

Petroleum products storage, resale and transportation segment

The Company’s petroleum products storage, resale and transportation operations are carried out by Continen-
tal Fuels, which owns and operates port facilities, and the storage, distribution and transportation businesses.
Continental Fuels is focused on increasing petroleum products, trading and securing new supply contracts, and
customer relationships.

Oil and gas property acquisition, development and production segment

The five remaining subsidiaries comprise the oil and gas properties acquisition, development and production
segment. Heartland owns and operates oil and gas properties in north Texas, southeast Kansas (the Cherokee
Basin) and northwest Kansas (the Forest City Basin).

Aztec Well Service Inc. carries out Heartland’s drilling and workover programs and also provides drilling ser-
vices to other exploration and production companies.

Canyon Creek and Catlin Oil & Gas identify and acquire promising oil and gas properties, low-risk drilling
prospects and prospects in need of state-of-the-art technology to make them viable.

Segment financial data, $ thousands

Q1 2008
Petroleum products storage, Oil & Gas acquisition,
resale and transportation development and production
TOTAL

Revenue 14,664 525 15,189

Operating loss (519) (2,313) (2,834)
Interest expense (453) (104) (556)
Interest income 29 (0) 29
Net loss before minority interest (1,246) (3,150) (4,395)

Source: SEC Filings

Universal Property Development and Acquisition Corporation (UPDV) 4

 Analyst: Victor Sula, Ph.D.
Report Update
June 12th, 2008

Liquidity and capital resources

The Company has incurred operating losses since its inception, has an accumulated deficit of approximately
$343 million and lacks sufficient capital to fund all of its obligations. To complete its 300 well drilling program,
UPDV must secure $39 million in additional financing. During 2008, the Company must also raise approxi-
mately $3 million in debt or equity financing to fund ongoing business operations.

Balance sheet, $ thousands

30-Sep-07 31-Dec-07 31-Mar-08

Current assets, including 4,573 8,160 10,476

Cash and equivalents 730 2,117 2,617
Oil and gas properties 10,836 2,118 1,276
Oilfield equipment and pipeline 7,203 8,956 9,574
Other assets 153 3,368 3,368
Total Assets 22,765 22,602 24,694

Liabilities, including 15,260 21,855 28,341

Debt 11,067 11,974 13,604
Minority Interest 839 449 238
Equity 6,666 299 (3,885)
Accumulated deficit (321,592) (339,228) (343,411)

Source: SEC Filings

UPDV used the proceeds from the notes payable to fund its acquisition program. At the first quarter’s end, Con-
tinental Fuels was not in compliance with Sheridan loan covenants requiring minimum quarterly EBITDA of
$500,000. On May 19, 2008, Sheridan granted a waiver for this covenant in the first quarter based on assurances
that Continental Fuels would achieve minimum EBITDA targets in the 2008 second quarter.

In addition, other UPDV subsidiaries are not in compliance with Sheridan loan covenants, which require aver-
age daily gas sales from the Palo Pinto assets no less than 2,000 MCF/day and a 1:1 cash flow coverage ratio. On
May 19, 2008, the Company requested and received a waiver regarding average daily gas sales requirement.
However, Sheridan did not waive the 1:1 cash flow coverage ratio requirement. As a result, Sheridan’s loans to
UPDV subsidiaries (other than Continental Fuels) have been reclassified as current liabilities.

1-for-10 reverse stock split

On April 28, 2008, UPDV declared a one-for-10 reverse stock split effective May 12, 2008. As a result, the total
authorized share count was reduced from 2.5 billion (2 billion shares of common stock, and 500 million shares
of preferred stock) to 250 million (200 million shares of common stock and 50,000,000 shares of preferred stock).
Based upon recent filings with the SEC, the total number of outstanding common shares was reduced to ap-
proximately 100,000,000 as a result of this reverse.

Universal Property Development and Acquisition Corporation (UPDV) 5

 Analyst: Victor Sula, Ph.D.
Report Update
June 12th, 2008

Industry Outlook

After surging nearly 58 percent in 2007 (the largest annual gain in a decade), crude oil prices rose to $100 per
barrel on the NYMEX in early January and have set new records on nearly a daily basis in March, April and May.
Oil prices exceeded $130 a barrel in late May and some analysts are predicting $200/barrel oil this year.

A variety of factors have resulted in the recent price surge, including geopolitical tensions:

 OPEC, the source of more than 40 percent of the world’s oil, began to reduce oil output in late 2006 to stem
price declines. More recently, OPEC has refused to call an early meeting to discuss high oil prices, insisting sup-
ply and demand fundamentals are balanced.

 Oil demand was boosted by the need for diesel-fueled power generation in earthquake-affected areas of
China where hydroelectric plants were damaged.

 Crude supply from Nigeria, the world’s eighth largest oil exporter, has declined since February 2006 because
of militant attacks on the country’s oil industry. In May 2008, production fell again due to attacks on pipelines
by anti-government militants. Oil companies and trading sources indicate nearly one million barrels per day of
production has been lost due to militant attacks and sabotage.

 Iraqi oil exports through the northern part of the country have been negatively impacted by renewed cross-
border raids by Turkish forces against Kurdish rebel positions. Turkey has launched several cross-border aerial
attacks this year to stamp out Kurdish bases in northern Iraq.

The main reason for increasing oil consumption is strong demand from China, India and the Middle East. At the
same time, concerns about the U.S. economy and a weakened U.S. dollar are prompting investors to hold oil and
other commodities as hedges against inflation and a weak dollar. A weak dollar also makes oil less expensive to
buyers purchasing with other currencies.

According to the Energy Information Administration (EIA), world oil consumption is expected to rise by 1.2 mil-
lion barrels per day in 2008 following an estimated 1.0 million barrels per day increase last year. OPEC supplied
approximately 32.2 million barrels per day during the first quarter of 2008. Although Saudi Arabia is expected
to boost its pumping capacity by about 11 percent next year to 12.5 million barrels per day, OPEC supply is ex-
pected to remain relatively flat through 2008.

U.S. petroleum consumption increased 0.2 percent to an estimated 20.7 million barrels per day in 2007. Domestic
crude oil output was estimated at 5.1 million barrels per day. The most recent EIA short-term energy outlook
report concluded that U.S. oil demand will likely decline by about 190,000 barrels per day in 2008 due to a weak
economy and record gas prices. In 2009, U.S. petroleum consumption is forecast to rise by 210,000 barrels per
day. West Texas Intermediate (WTI) crude oil prices, which averaged $72.30 per barrel in 2007, are forecast to
average around $110 per barrel in 2008 and $103 per barrel in 2009.

Universal Property Development and Acquisition Corporation (UPDV) 6

 Analyst: Victor Sula, Ph.D.
Report Update
June 12th, 2008

NYMEX Crude Oil Futures

Close (Front Month)

$140

$127.76
$120
$ / Barrel

$100

$80

$60
05/01/2007 06/29/2007 08/29/2007 10/29/2007 12/28/2007 02/29/2008 04/30/2008
05/31/2007 07/31/2007 09/28/2007 11/28/2007 01/30/2008 04/01/2008 05/30/2008
May 1st, 2007 - June 2, 2008 WTRG Economics ©2008
www.wtrg.com
Close (479) 293-4081

Source: www.wtrg.com/daily/crudeoilprice.html

Natural gas market

According to EIA, U.S. natural gas consumption rose 6 percent in 2007, driven mainly by increases in the resi-
dential, commercial, and electric power sectors. U.S. natural gas production is forecast to increase by 1.4 percent
in 2008 and by 0.5 percent in 2009.

As of April 25, 2008, working natural gas in storage was 1,371 billion cubic feet (Bcf). Natural gas inventories are
3 Bcf below their five-year average and 255 Bcf below prior year levels. Crude oil inventories are at a three-year
low and many U.S. utilities are switching from crude oil to natural gas as a fuel source for their power plants.

The Henry Hub spot price, which averaged $7.17 per Mcf in 2007, rose to $10.49 per Mcf in April 2008 and was 74
cents per Mcf above the March spot price. According to EIA, uncertainty over natural gas demand by the electric
power sector during the summer and the possibility of hurricane-related supply disruptions later this year could
impact spot prices in upcoming months. Natural gas spot prices are expected to average around $9.70 per Mcf
in 2008 and $9.40 per Mcf in 2009.

Universal Property Development and Acquisition Corporation (UPDV) 7

 Analyst: Victor Sula, Ph.D.
Report Update
June 12th, 2008

Natural Gas Spot

Henry Hub

$12.00
$11.480

$11.00

$10.00
$ / MMBTU

$9.00

$8.00

$7.00

$6.00

$5.00
05/01/2007 06/29/2007 08/29/2007 10/29/2007 12/28/2007 02/29/2008 04/30/2008
05/31/2007 07/31/2007 09/28/2007 11/28/2007 01/30/2008 04/01/2008 05/30/2008
May 1st, 2007 - May 30, 2008 WTRG Economics ©2008
www.wtrg.com
Close (479) 293-4081

Source: www.wtrg.com/daily/ngspot.gif

Valuation and Analyst Summary

For valuation purposes, we consider the Company’s operating segments separately:

Petroleum products storage, resale and transportation segment

The Company’s petroleum products storage, resale and transportation operations are carried out by Continental
Fuels. In our initial UPDV report earlier this year, we projected proforma 2008 revenues approaching $120 mil-
lion, mainly due to the Geer Tank Trucks acquisition which was expected to add $50 million to annual revenues.
However, first quarter 2008 results fell below our expectations; Continental Fuels reported $15 million in rev-
enues. As a result, we are adjusting our full-year 2008 revenue forecast for this segment down to $70 million.

We multiply our $70 million 2008 revenue estimate by the petroleum transportation peer group average 1.0 time
Price/Sales multiple to derive a $70 million value target for this UPDV segment.

Oil and gas property acquisition, development and production segment

The remaining five subsidiaries comprise the oil and gas properties acquisition, development and production
segment. Heartland owns and operates oil and gas properties in north Texas, and Eastern Kansas (the Forest
City Basin).

The production potential of the and Forest City basin is enormous. In 1999, the Petroleum Technology Transfer

Universal Property Development and Acquisition Corporation (UPDV) 8

 Analyst: Victor Sula, Ph.D.
Report Update
June 12th, 2008

Council estimated nearly 10 trillion cubic feet of natural gas in eastern Kansas alone. The Forest City Basin is
thought to contain approximately 1 trillion cubic feet of natural gas.

The Company is currently producing 300 MCF/day from its Heartland properties and plans to expand produc-
tion to 500 MCF/day with the completion of a pipeline connection in Palo Pinto County to a low-pressure sales
line. Assuming the 500 MCF/day production level is achieved, this segment could be producing $2.5 million in
annual revenues. We value these operations at $10 million based on our $2.5 million estimate and a peer group
average 4.0 times Price/Sales multiple.

HTOG has initiated discussions with institutional investors and private equity funds potentially interested in
funding its 300 well drilling program. Drilling costs are estimated at $39 million. With the completion of drilling
operations over a two-year period, HTOG could boost production and gas sales to $36 million annually.

Assuming a 30 percent EBIT margin, and a 10-year time horizon, this project could generate a Net Present Value
in a $15 million range.

UPDV valuation

Our $95 million value target for UPDV is the sum of the $70 million value estimate of its Continental Fuels seg-
ment and the $25 million value of HTOG current and potential future production. We assume an increase in the
fully diluted share count to 450 million by year-end 2008; we think the Company may sell 300 million shares to
fund its drilling program.

Since our initial report, UPDV’s share price has declined to $0.008 mainly because of slow progress from HTOG
and lower-than-anticipated revenues from Continental Fuels. Despite the Company’s need to secure additional
financing, we continue to think UPDV has attractive energy assets and significant growth potential. Accordingly,
we are reiterating our Speculative Buy rating for Universal Property Development and Acquisition Corporation.
The rating reflects the risks associated with securing outside financing and satisfying the loan covenants of the
Sheridan agreement. The Company also faces additional challenges in attaining its production targets.

Universal Property Development and Acquisition Corporation (UPDV) 9

 Analyst: Victor Sula, Ph.D.
Report Update
June 12th, 2008

Disclaimer
Beacon Equity Research (otherwise known as BER) is an independent research firm specializing in small and micro capitalization companies.
BER has no investment banking or consultation conflicts thereby minimizing the inherent conflicts of interest between the research analysts and
the companies they cover. BER is not a registered investment advisor or broker dealer. No information in this report should be construed as an
endorsement to either buy or sell any securities mentioned in this report. The analyst(s) who prepared this report rely on publicly avail¬able
information which neither the analyst, nor BER, can guarantee to be error-free or factually accurate. All conclusions in this report are deemed
reasonable and appropriate by the author. The Private Securities Litigation Reform Act of 1995 provides investors a “safe harbor” in regard to
forward-looking statements. To fully comply with the requirements of this law, BER cautions all investors that such forward-looking statements
in this report are not guarantees of future performance. Unknown risk, uncertainties, as well as other uncontrollable or unknown factors may
cause actual results to materially differ from the results, performance or expectations expressed or implied by such forward-look¬ing state-
ments. Investors should exercise good judgment and perform adequate due-diligence prior to making any investment. BER and its affiliates
have been compensated a total of ten thousand twho hundred fifty dollars from OTCstockZone for enrollment of UPDV in its research program
and other services. Ratings and price targets in this report should not be construed as recommendations or stock price predictors. Readers of
this report are urged to use due-diligence in any purchase of security listed herein. Readers should consult the Company’s SEC filings as well
as our initial report on the firm to better understand the inherent risks associated with this security. There may be many uncontrollable or un-
known factors which may cause actual results to materially differ from the results, performance or expectations expressed or implied by such
forward-looking statements. Investors should exercise good judgment and perform adequate due-diligence prior to making any investment.

All decisions are made solely by the analyst and independent of outside parties or influence.

I, Victor Sula, Ph.D, the author of this report, certify that the material and views presented herein represent my personal opinion regarding the
content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my compensation been
either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will own and shares or se-
curities in any of the companies featured in this report.

Victor Sula, Ph.D. - Senior Analyst

Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004, Mr. Sula
held Senior Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistance and TACIS
sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization and liquidation. He is
also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D. degree in 2001 and bachelor’s
degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level III candidate in the CFA program.

Universal Property Development and Acquisition Corporation (UPDV) 10