Valued Partners,
We hope this update finds you well. We are writing to address the ongoing situation with the Seminole County operator and provide you with an update on our efforts to remove them. As you are aware, we have been pursuing damages, retaining title of all assets under the working interest participation agreement and removing the current operator, MXP Operating LLC. To achieve this, we respectfully requested each Limited Partner to contribute towards the Seminole legal fund, and we would like to thank those who have already contributed.
The current legal bill to date is $114,000 USD, and our legal team estimates that we will require $300,000 in total to service the current invoices, complete discovery and conduct multiple depositions. Our legal team believes that once this is completed, we should be in a position to file a motion for summary judgment on our change-of-operator claim. Currently, our legal team has served discovery on MXP and is awaiting their responses. Once received, they will book and conduct the depositions.
Over the past 4-5 months ASE has been gathering substantial information for our legal team and conducting our own due diligence on the Seminole County project. We have discovered that the operator has been illegally selling the oil to local gatherers/purchasers, which we have contacted to stop MXP from receiving oil revenue. There are lis pendens in place that legally prevent the purchasers from paying out any revenue.
The wells have also continued to produce gas, which Enerfin (a gas purchaser) is holding said funds in suspense. Chris, our CEO, has spoken to a representative from the oil purchasers to stop them purchasing any more oil, and during that conversation was told (verbally) that their company has been picking up between 1-2 truckloads of oil per day, and that the ASE 3 well has been producing between 150-200 Bopd, free-flowing without a pumpjack. At the current rate of 150 Bopd and selling oil at $75 per barrel that would generate $11,250 in gross revenue per day. Please note that over time, declining rates in production and oil prices will impact the revenue generated from each well.
During our in-depth investigation, we have sourced a video (see below) of the ASE 3 well, and after showing a local expert in the Oklahoma area, he stated that this well has vast amounts of energy and up to 1,400 PSI (pounds per square inch), and he also strongly believes that the operator has perforated either more of the Misener/Hunton or potentially a new payzone. This information supports what is visible on the well logs and that Seminole County is worth fighting for, and the legal case is an essential and worthwhile investment to regain what is rightfully yours. Please note, that based on the logs and cross-sections, most zones are blanket formations, meaning that based on what has been verbally reported, the increases in the ASE 3 production rates bodes very well for all of the other ASE wells.
We feel it is extremely important to provide the most detailed information to all investors, so as to make a fully informed decision about whether you support the legal fund and fight for what is rightfully yours or lose the asset and let MXP illegally take your asset and all current and future income. Previously we requested that each Limited Partner contribute $2,000 towards the legal fund (as per the email dated 20th of April 2023). However, based on the time-sensitivity of the legal case and the estimated $300,000 required, we formally request each Limited Partner to contribute their share of the legal fund with the intention of winning the case and regaining back the asset which is rightfully yours.
In the next 24 hours an invoice will be emailed to each Limited Partner showing the exact contribution amount, which is in ratio to your investment. Unfortunately, if we do not receive the required funds by the 22nd of May, ASE is not in a position to continue fighting the case on your behalf and that of the other Limited Partners. We appreciate that this is a challenging situation and that you may have some questions and concerns. We want to make sure all investors are well informed, so please feel free to contact us or email your questions to info@alphasevenenergy.com
