Shareholder update from Archer President:
*from an e-mail I traded with Colin today:
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Hello ________,
In terms of the Sandklene 950 – we did indeed purchase the rights to use the product – not the exclusivity. We would like to have been able to do so but unfortunately those rights were unavailable, and by securing the “use rights” we do have the ability to pursue our business model of becoming a heavy oil/bitumen producer.
I believe that one of the things that we will need to avoid (in due time….) is to rely too heavily on the technology angle – once this process is establish as an effective oil extraction method, the focus should shift from “does it work?” to “how much quality land do they have, and do they have a management team that has the ability to fund their operations and run the business efficiently.” This is the same paradigm shift that occurred in the Bakken Shale in the early days of horizontal frakking – once people saw it worked it wasn’t about who had access to the frakking tech, it was who had the best land and who had the cash.
In terms of numbers -- I can tell you the following, which is theoretical, and will only be proved correct or incorrect based on months of continuous field production which is the only way to be truly sure of your data:
The extraction unit are rated to be able to process up to approx. 100tons of crushed ore per hour, though we anticipate running the machine at somewhere less than that.
Depending on oil saturation levels we are seeing in the field of anywhere from 6% to 14% by weight, this could theoretically produce anywhere from 500+ barrels per day of bitumen.
If these numbers are correct, and we are able to sell the finished product to the market at levels approaching WTI less a reasonable discount for heavy oil, then we should be able to produce a very solid operating netback per barrel.
The expected Capex per single unit site is relatively low (approx. $3m), and the payback based on the above figures being correct is very fast (anticipated to be less than a year).
I know I am being somewhat vague in the details (as is my habit) – but you can see that the numbers become very compelling very quickly. We have a lot more work to do but as you know these things take time, and in the case of this project we feel the time is very well spent!
Regards/Colin
