Optimization

A key in managing mature assets is optimizing production facilities for maximum efficiency. This is done by right-sizing equipment, or bringing in third party volumes through our mid-stream facilities. For example, in July of 2014, we replaced a larger Cat compressor with a smaller Arrow unit. This reduced our HP use as well as our operating costs by approximately $4,500/year. In addition, we sold the oversized unit, generating net cash proceeds of $369,000. Finally, through proper documentation and reporting of site horsepower use and idle service equipment, we were able to re-determine the base value for property tax assessment thereby resulting in $313,000/year in actual property tax reductions. We see a number of additional opportunities similar to this example. These are planned to coincide with turnarounds (scheduled maintenance) which allows us to avoid that additional expenditure.

A second key success factor is in record-keeping. Through meticulous review of well and land files, and truing up the government records with reality, we have reduced our corporate liability by $290,000 since we first acquired our assets. This process is connected to our ARO process, ensuring that reclaimed wells and facilities are removed from our well lists as soon as they are eligible.

We use advanced software in this process, tying satellite images to on the ground photographs, giving us a very accurate record system with ready proof to regulators and land owners as to any changes that may be appropriate.