Dear Valued Investor Partners,
We hope this update finds you well. Please find below your July 2026 operational update for the Lois #1 saltwater disposal well.
OPERATIONS UPDATE, JULY 2026
Status: Awaiting OCC approval, approval expected imminently
As we have reported previously, the Lois #1 is a key enabler for the wider field, unlocking additional production from the ASE 1, the ASE 4, the Lois Anne #1-1 and the 3-1 completion, and the economics of the Wilcox and also the Hunton formation across the lease. We are pleased to report meaningful progress on every front this month.
Surface use agreement: The surface use agreement with the landowner has been acquired.
Regulatory progress: Following acceptance of the application and the filing of the proposed wellbore schematic reported last month, the application has moved to review. We received correspondence from the underground injection control reviewer at the Oklahoma Corporation Commission and are working through it now. The permit will be approved once the OCC signs off on the adjusted proposed procedure and schematic. Approval is expected imminently.
BASE OF TREATABLE WATER UPDATE
There is one technical matter we would like to explain clearly, because it is the item currently in front of the OCC.
Some years ago the OCC updated its mapping system for the Base of Treatable Water, which is the Commission's estimation of the bottom of the fresh water aquifer sitting beneath the surface. Footages across Seminole County moved from approximately 500 feet to approximately 800 feet. Longer-standing investors may recall that this change affected the amount of surface casing required on the wells ASE has drilled more recently, relative to the earlier ASE wells.
That depth change has now reached the Lois #1. The Base of Treatable Water on record at the OCC for this well has moved from 510 feet to 724 feet. Because surface casing must be set 50 feet below the Base of Treatable Water, the current requirement would be for surface casing to be set and cemented from 774 feet back to surface.
Our position: We have applied for a waiver to the depth restriction, citing the OCC's own Base of Treatable Water tables as they stood in 2021, which is when the well was drilled. We expect to hear back on the waiver request within the next few days.
If the waiver is granted: No additional work is required and the permit proceeds.
If the waiver is not granted: The remedy is straightforward. We simply set a liner and squeeze approximately 300 feet of cement. The work adds approximately 1 day of rig time to set the liner, circulate the cement, and allow 12 hours for the cement to set.
We want investors to understand that both paths lead to the same destination. The waiver simply determines whether we spend an additional day and a modest sum on the way there.
SURFACE AND ACCESS WORK
Road work to lay the right of way is scheduled to commence in the next 5-10 days. Once the road is in, the crew will begin spreading rock around the wellbore to improve the well pad.
COMING UP, AUGUST 2026
We expect a decision on the waiver request within days, and OCC approval of the permit imminently thereafter. Road and right-of-way work proceeds in early August, followed by well pad improvement. Either path on the casing question keeps us on schedule.
Our next scheduled investor portal update will be released on or before September 11th, 2026.
Best regards,
THE ASE TEAM
