OSE Mission Statement:
OSE was created to serve Oklahoma by assisting and promoting the development of sustainable energy. This project will focus on increasing the return to members while enabling Oklahoma producers to add value to agricultural products and enter biofuel markets.

Company Background:

During the Spring session of 2002, the Oklahoma State Legislature commissioned a statewide ethanol feasibility study that was completed and unveiled in an energy conference in January 2003.

On July 30, 2002, an agricultural group formed Oklahoma Farmers Union Sustainable Energy LLC (“OKFUSE”), an Oklahoma limited liability company, and began the initiative of developing an ethanol project. Oklahoma Farmers Union provided staffing and support to assist OKFUSE in its efforts. The purpose of OKFUSE was to create rural economic growth and to identify a crop that could sustain or provide the opportunity for diversity for some producers. OKFUSE formed a steering committee, identified technical advisors, utilized the statewide ethanol feasibility study and began work to identify a specific site to build and operate an ethanol plant. OKFUSE also partnered with the Oklahoma Department of Agriculture and Oklahoma State University to study and conduct test plots of various varieties of hull-less barley in an attempt to identify the potential for a new feed stock for an ethanol plant.

OKFUSE applied for a USDA Value Added Market Development Grant which was funded for $231,000. The goal of the project was: “To determine the feasibility and financial sustainability of a major cooperative business development; focused on increasing the return on investment to cooperative members as a value-added producer owned, new generation cooperative that will enable Oklahoma grain producers to utilize new and expanding agricultural biotechnology to enter new energy markets utilizing grain products for the production of bioenergy products.”

OKFUSE formed various working sub-committees which contracted with BBI International, headquarterd in Salida, Colorado, for the completion of a feasibility study and the creation of a business plan, met with technical advisors and with potential community representatives, visited several ethanol production facilities, and gathered information relative to types of ethanol facilities and construction and technology methods. It also received a completed feasibility study, which after substantial due diligence review, was approved and submitted to the USDA for approval.

OKFUSE/OSE applied to the Oklahoma Department of Agriculture-Agricultural Enhancement Diversification Board (“AEDB”)and was approved for two loans totaling $129,5000 to continue project activities. Thereafter, OKFUSE and its technical advisors and independent contractors continued to work on the feasibility study data and continued to plant hull-less barley plots and coordinate their efforts with Oklahoma State University. It also gathered specific information from communities and individuals and met with various sources for the contracting of services, rail, utilities, marketing and distribution of ethanol and distillers grain.

In furtherance of the ethanol project, OKFUSE distributed requests for proposals and disbursed them to various communities and entities that OKFUSE believed might be interested in locating the Plant in their community, or on their site, or entering into other arrangements. It also began meeting with ethanol plant designers, equipment providers, contractors, marketers, buyers and sellers to begin the formation of initial relationships with these entities.

In March 2005, OKFUSE and Chaparral Energy, L.L.C., an Oklahoma limited liability company, learned that they had been separately taking similar actions to finance, design, develop, construct, own and operate an ethanol plant to be located in the State of Oklahoma, their initiatives and discussions with third parties including, but not limited to, producers and suppliers of corn and grain sorghum, certain municipalities, designers, builders and operators of ethanol plants, suppliers of feedstock, potential end users, and marketers of ethanol, distillers grains and carbon dioxide and concluded that they would be competitors if both were to own and operate an ethanol plant. As a result, on April 29, 2005, OKFUSE and Chaparral signed a joint venture agreement whereby they agreed to form Oklahoma Ethanol LLC in order to finance, design, develop, construct, own and operate an ethanol plant in the State of Oklahoma. OKFUSE and Chaparral were the initial Members of Oklahoma Ethanol, with the expectation that another entity would replace OKFUSE as a Member of Oklahoma Ethanol.

On May 10, 2005, Oklahoma Ethanol was formed. Since that time it has continued the efforts of Chaparral and OKFUSE with respect to all aspects of the development of the Plant. Oklahoma Ethanol is a limited liability company formed for the sole purpose of constructing, owning and operating the Plant. Oklahoma Ethanol does not expect to generate any revenues, let alone operate at a profit, before the Plant is completely constructed and operational.

On October 17, 2005, OSE was formed with the same management team as OKFUSE. It replaced OKFUSE as a Member of Oklahoma Ethanol and has worked with Chaparral in all aspects of the development of the Plant for the benefit of Oklahoma Ethanol.

During October 2006 OSE closed the offering period with 293 members with $8,138,000 invested, the average investment was @27,775. The place where the larger number of single investors came from was Enid with 26 separate investments. The place where the most investment dollars came from was Edmond with $660,000, then Oklahoma City with $650,000 followed by Wellston with $630,000. Investments were received from a total of 112 different towns.