We thank you for your continued support and we look forward to keeping you updated on our progress.
Phase 8 (ASE 8A & 8B)
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. Our legal team believes that once discovery and multiple depositions have been 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 response. 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 from 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 have currently contacted all Limited Partners in Phases 1-4 to request a capital contribution to cover their share of the legal funds required.
We would also like to provide you with an update on the Cherokee Phase 1 project. As you may be aware, there have been some delays in commencing the drilling of the well. Our drilling partner, who will be drilling the Phase 1 well and all future wells, has been drilling other wells in and around the project location. They have experienced delays that have caused a knock-on effect to spudding the Cherokee #1 well. However, we would like to assure you that the additional time has allowed the drilling team to gather invaluable data that will greatly assist in maximizing oil and gas production from the Cherokee #1 well and future ASE wells. Our drilling partner has also been conducting tests on other surrounding wells and perfecting the completion process, which will streamline the drilling and completion of all future wells. We are pleased to inform you that the Cherokee #1 well is next in the queue to be drilled.
We thank you for your continued support and we look forward to keeping you updated on our progress.
