Chris, I can answer some of your questions because I have asked the CFO Britt Brooks the same ones in the past.
Is Nutek required to use swabbing trucks before implementation of the Bailer Pump? Yes, the swabbing actually cleans out the well and seems to increase the yield of the pumps upon installation. (but it is only required once)
"What is the cost of swabbing?" The cost of the swabbing equipment is relatively expensive, I believe about $40,000-60,000. This is an upfront cost, and the daily costs of using the swabbing trucks are maintenance and manpower - this is basically a manual operation. One swabbing truck can routinely service a fixed number of wells - for arguements sake, lets say they can swab 10 wells/day, and a well can be swabbed 1 time every 3 weeks. This means that one swabber can regularly service 150 wells. (Nutek views this as a fixed cost, since they have the equip, and keep their operator on full time.) 150 wells is approximately the number of wells that Nutek has that are not equiped with the Bailer pumps. So they do not feel a sense of urgency to crank up production. If anyone has ever been involved in new product development, you will know that there is a great potential to tweak, and improve the product in a small trial run enviroment. For example, since the pumps were first produced, the control system has been upgraded from a std. analog to a programmable digital. This allows Nutek to program into each pump certain parameters for individual wells such as drilling depth and daily expected yield etc. Since there is a small # of Bailer pumps installed, they do not have to worry about retrofitting or improving generation1, g2, g3... pumps and so forth during the R&D phase which they are still in. Hopefully, the next announcement that we hear will be that all of the "bugs" have been resolved, production of the pumps is 50/week, and that with sagging oil prices Nutek has found many more buying opportunities from higher cost producers.
I have also heard that Penquin Refrigeration may not be the primary manufacturer of the Bailer Pump. The main production may go to a different source.
I hope this info was valuable. Hopefully we can get answers for the rest of your questions soon.
Rick |
