GARP®Presentation ALRDC Seminar May 14 th, 2014 Daryl Mazzanti – Garp Services, LLC Wholly owned subsidiary of Evolution Petroleum Corp (EPM- NYSEMKT )

GARP®Presentation

ALRDC SeminarMay 14th, 2014

Daryl Mazzanti – Garp Services, LLCWholly owned subsidiary of Evolution Petroleum Corp

(EPM- NYSEMKT)

Outline• Intro • What is GARP®?• What problem does it solve?• Why is this a problem?• Why choose rod pump and gas lift?• How does it work?• Results to date• Pros / Cons• Help from Industry

What is GARP® ?

• Gas Assisted Rod Pump• Combination of two of the oil

industry’s most reliable, understood, and popular forms of artificial lift (Rod Pumps and Gas Lift)

What problem does it solve ?

• Reduces back pressure over conventional forms of lift currently placed above deviated sections in horizontal wells and in vertical wells that are too deep to pump or have extended perforated intervals. This practice leads to production rate reduction, pre-mature abandonment, and a loss of reserves and leases

Why do operators do this?

• Operators are hesitant to place lift equipment in deviated sections and into perforated intervals due to inefficiencies and high operating costs associated with gas interference, solids issues, and wear and tear on tubulars

Flowing Well

Pumped Off ConditionPump is gas locked

Standing LiquidLevel Operators don't place the pump

with-in the perforations due to :1) Potential for gas locking the pump2) Potential to stick the pump (high debris area)

Long Perforated Long Perforated IntervalInterval

Rod Pumped Well

Why choose rod pump and gas lift?

Rod pump -Well known/understood -Readily available parts -Workovers can be less expensive than other forms of lift -Lowers reservoir pressure better than other forms of lift

Gas Lift -Well known/understood. Low maintenance costs (downhole) -Not affected by deviated section, solids, or gas locking -For short lift distances, provides a very efficient form of lift without exerting high back pressure on the reservoir -More effective in lifting deep reservoirs than other methods

GARP® First Generation Design

• Designed for 7” csg or larger• Applicable to mainly older horizontal wells • Dual wellhead w/ two adjacent tubing strings one for gas injection and one for the rod pump • Requires a small two stage compressor• Gas lift raises liquids a short distance from the deviated

section to above the pump. Gas breaks out and rises to the surface, liquids fall and are trapped by a packer. Once they rise above the pump, they enter the pump chamber and are transported to the surface.

GARP®for Big Bore Wells (7” csg or larger)

GARP® Slim Hole Design

• Second Generation designed for wells with 4-1/2” casing or larger • Applicable to nearly all vertical wells and

modern horizontal wells• Utilizes concentric tubing arrangement with a

single wellhead• Works with same principals as the larger bore

design

G

When should GARP® be installed?

• GARP is most effective when other forms of artificial lift become inefficient or stop working due to liquid loading below the artificial lift equipment

GARP in the life of a well

Flowing Artificial Lift -High Volume- Gas lift/ESP/Jet/PCP -Med- Low Volume – Rod Pump / Plunger/ Stop Cock/ Soap GARP® - not tested yet for rate acceleration in non-marginal wells Abandonment

Results to Date

• Has only been installed on company owned marginal wells

• Morgan Kovar #1 – Austin Chalk Horizontal well in Fayette County, Texas

• Selected Lands #2 – Georgetown/Buda Horizontal well in Grimes County, Texas

• Philips #1 – Austin Chalk Horizontal well in Grimes County, Texas

• Currently installing GARP® on a 10 well horizontal pilot program with an operator in the Giddings Field

Morgan Kovar #1 Rate vs Time

Morgan Kovar #1 Rate vs Cum

Selected Lands #2 Rate vs Time

Selected Lands #2 Rate vs Cum

Philips #1 Rate vs Time

Philips #1 Rate vs Cum

Advantages of GARP®• Economically recovers reserves currently being left behind • Significantly extends the life of leases • A very efficient gas separation design allows rod pumps to be

used in gassy wells • The injection string in both designs can be utilized for a much

more efficient placement of chemicals (corrosion, scale, salt)• Combines two of the most well established forms of artificial

lift capitalizing on specific strengths and minimizing weaknesses

• In the Slim hole version, a standing valve prevents load water from chemical/paraffin treatments from over-whelming low pressured reservoirs. This same design also allows the pump to be flushed using load water from casing injection to free stuck pumps.

Disadvantages of GARP®

• Does not overcome inherent limitations of rod pumps, i.e. solids production, wear and tear on moving parts, paraffin, etc.

• More costly to install than rod pumps alone since another tubing string is needed; however, most of these costs are tangible. Typical costs are ~ $100-$125K (not incl pumping unit, rods, pump)

• A pressured gas source is necessary. A small compressor can be built for ~$35,000 or it can be rented for ~$1700/mo.

Help from Industry

Need opportunities to expand the technologyWells outside of the Giddings Austin Chalk AreaVertical oil or gas wells with extended perforated intervalsVertical oil/gas wells too deep to rod pumpRate acceleration test in non-marginal wellsWilling to do pilot programs for no fee