Overview

Arête Industries, Inc. was incorporated in the state of Colorado in 1987. Our corporate office is located at 7260 Osceola Street, Westminster, Colorado 80030, and our telephone number is 303-427-8688. Our Website can be found at www.areteindustries.com.

We are a publicly traded company trading on the OTC Markets OTC-QB under the symbol: ARET. The Company has been publicly traded since 1987, and has over 4,000 shareholders.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934 will be available through our Internet website as soon as reasonably practical after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.

Currently Mr. Donald W. Prosser continues his responsibilities as Chairman and Chief Executive Officer. Mr. Charles Gamber is the Corporate Secretary, John R. Herzog is the acting CFO, and Mr. Charles B. Davis serves as Chief Operating Officer who joined the Company because of his oil & gas background and great experience in the business. We are in the process of expanding the number of board members to at least seven and Board has several consultants who are providing shareholder communications, marketing, business development and investment banking service.

About the Company

In September 2006, the Company acquired a gas gathering system (pipeline and compressor station related assets) located in Campbell County, Wyoming. This system was constructed in late 2001 and began operations early in 2002. The system consists of 4.5 miles of 8-inch coated steel pipeline. During the first half of 2011, this pipeline was currently transporting approximately 900,000 Mcf (thousand cubic feet) of coal bed methane per day and had been cash flowing from its operations until the June 2011 when we did not sell natural gas due to the low prices being paid. This system has a current throughput capacity of approximately 4 million cubic feet (“MMcf”) of gas per day. Gathering fees are subject to contracts which are life of lease or 10-year contracts expiring in 2012.

In May 2011 we entered into a Purchase and Sale Agreement for the purchase of certain oil and gas operating properties in Colorado, Kansas, Wyoming, and Montana. The purchase price for the acquisition was $11,000,000. The purchase is part of our strategy to enter the oil and natural gas exploration and production business. Potential 3 additional purchase price payments are due under the following circumstances. If the Company increases is proven producing net oil reserves or net gas reserves by drilling or recompletion on certain of the acquired properties in Colorado and Kansas, then the Company will pay $250,000 for every 20,000 bbl or 150,000 mcf increase respectively, which amount will be increased by a defined percentage if the Nymex prices for oil or gas stay above a specified price floor for more than 60 days. Cumulative payments under the additional purchase price factor for the Colorado and Kansas properties are limited to $5 million. The Company will also make similar payments to sellers if the Company increases reserves in the Wyoming properties, and the Company will make additional payments under a formula by which Sellers and the Company will share proceeds of sales or production from untapped formations on the properties acquired in Wyoming. Cumulative payments under the additional purchase price factor for the Wyoming properties are limited to $20 million. The aggregate of all additional purchase price payments from all factors is capped at $25 million. Part of our strategy is to monitor the current production, seek to develop the property with infield drilling, explore sales and purchases of additional leases and operating wells with upside potential. We are currently evaluating several opportunities for drilling in Kansas and Colorado. We have had preliminary discussions on three properties for sale, joint venture, or farm-out in Wyoming. However, we need to augment our current financial potential to establish a plan for the development in Wyoming. As part of the purchase we had an agreement to receive a portion of the proceeds from sale of certain of the properties that could be sold before payment in full of the base purchase price and assignment of the properties to us. In fact, some of these properties were sold and we recognized a gain on the sale of these assets of $2,479,934 in the year ended December 31, 2011.

The Company’s focuses on acquiring interests in traditional oil and gas ventures, and seeking properties that offer profit potential from overlooked and by-passed reserves of oil and natural gas, which may include shut-in wells, in-field development, stripper wells, re-completion and re-working projects. In addition, the Company’s strategy includes purchase and sale of acreage prospective for oil and natural gas and seeking to obtain cash flow from sale, drilling opportunities, and royalty income from such prospects. As the projects are developed, Arete, or entities created by Arete, will have ownership interests in the revenue streams, which can be securitized and collateralized either through equity or private debt holders.  This strategy will enable the company to continue to grow, fulfill its ongoing financing requirements, and create value for its shareholders.