Dear Valued Investor Partners,
We hope this message finds you well.
Development Update: Lois #1 Well
Continuing with our long-term strategy, we are providing investors in this limited partnership with an update on the Lois #1 well in the context of the broader development of the ASE Lois LP's six new wells.
As we have touched on in previous updates, the information we are gathering from drilling the new wells has been invaluable. The mud logs, wireline logs, and cuttings from the physical formations are giving us an excellent understanding of the oil and gas formations beneath our oilfield, their characteristics, and most importantly, how they are best optimised.
As we have always stated, the data from these wells enables us to make the best possible decision for the Lois #1 well.
Lois #1 Well Logs
In full transparency, the Lois #1 well log does not compare as favourably to the other logs across the field. For that reason, we are being very deliberate about how we complete this well to best maximise the return on investment for our investor partners.
A Strategic Opportunity: Saltwater Disposal
We are currently evaluating the conversion of the Lois #1 into a saltwater disposal well (SWD), which we could monetise through the disposal of water from producing wells across our oilfield.
As you may be aware, we have been in the process of permitting an SWD at the ASE 4 well. We are now exploring transferring that permit to the Lois #1 as an alternative.
Why an SWD Matters to This Oilfield
The wells we have drilled across the field contain substantial water-bearing formations. For example, the Lois Anne 3-1 contains a very substantial, high quality Wilcox formation which, with a submersible pump installed, we believe will produce between 800 and 1,000 barrels of fluid per day at a 10 to 15% oil cut. Other wells, such as the Lois Anne 1-1, also contain the Wilcox. In addition, we are looking at reopening the ASE 1 well, which will also require access to an SWD.
An SWD is therefore a critical piece of infrastructure for the development of this oilfield. The benefit to investors of holding ownership in an SWD is that, unlike a producing well, it is not subject to production decline. In fact, as the oilfield is developed further, disposal volumes can grow. The well will have the capacity to inject up to 5,000 barrels of water per day, and each of our limited partnerships utilising the SWD would pay a per-barrel fee to dispose of their water, creating a recurring revenue stream for this partnership.
Next Steps
We understand you may have questions at this stage. This is all the information we can share to date, however we are confident that by the next portal release, expected within the next 30 days, we will be able to provide additional details.
We appreciate your patience and look forward to updating you further in our next portal release on or before the 11th of July.
THE ASE TEAM
