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Microcap & Penny Stocks : OILEX (OLEX)

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To: Steven Taylor who wrote (3953)9/3/1998 3:58:00 AM
From: Steve  Read Replies (2) of 4276
 
You still don't get it do you? This kind of swabbing is new, new, new!!! You drive up to the well, position the swab tool and drop when fluids are reached you go down through them and pull up lifting typically 5 barrels of fluid. All completed in less than 15 minutes and on to the next well. The swabbing rigs you are thinking about are like workover rigs and take a long time to set up. A 12 well field is probably not worth it unless it was combined with another adjacent lease.

You still didn't answer the question what kind of swabber was it, who was the manufacturer? If you can't answer that then we can assume that you are not interested in this NEW design and application of an existing technology. It is an innovation.

I have waited for you to show some promise in this area but since you have not I offer the following facts:

Until 1993 The Texas RRC had only granted use of production swabbing on a case by case basis severely limiting the market for portable production swabbing. In 1993 the TRRC granted a waiver to Rules 21 and 23 allowing for the first time portable production swabbing at wells throughout Texas without prior TRRC approval.

The following requirements were placed on operators:

1. Wells must be sealed or capped at the ground surface

2. Wells must exhibit low fluid levels that continuous pumping cannot be sustained (interpreted as economically sustained)

3. Gas production must be minimal

4. All oil and salt water must be contained to prevent ground contamination

5. Operators must be in compliance with all TRRC pollution, safety and conservation rules

6. The appropriate District Office must be informed as to all leases on which the mobile pumping equipment will be utilized.

As you see I have been well aware of the market niche that portable production swabbing is appropriate for from a regulatory point of view. From a practical point of view I offer the following practical rules of thumb.

1. Sand formations that have been water flooded are not desirable
2. A water drive formation well will not work unless it will "gun barrel" in the well bore and additionally a 30% water cut is minimum for profitability.
3. A high oil cut well that does not have bottom hole pressure will not work.
4. Carbonate or chalk formations deeper than 1,000 ft. will normally have more bottom hole pressure than shallow sand formation wells.
5. If the formation is tight, you will have to wait on the well bore to fill over a longer period of time. Some wells can only be swabbed once or twice a month, but you can recover much more oil per swabbing interval.
6. It is more economical to make 4 runs on 1 well for 20 barrels vs 1 run on 10 wells for 20 barrels.

Narrowing the target market and being forthright and honest with the customer and carefully analyzing a prospects chances of success with portable production swabbing is what builds trust and profits for the long run. We're here and we plan to stay, for a long, long time.

See ya.
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