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I could only park the rig there for so long. It really didn't matter anyway as I could have just gotten another rig there within 15 to 30 days of being given the green light, and money. I didn't feel it was my place at the time to out XNRG by mentioning that I didn't start working on the next well because I wasn't paid yet by Vencedor who wasn't paid yet by XNRG.
MaxDaniel, I appreciate you're frustration more than you know, however I made NO false claims or statements in the videos. And it was I who requested to have all videos with me in them taken down. As for the one you referenced, all 5 locations were and are ready for drilling with pipelines and electrical lines. I was waiting on the go-ahead from management and most of all the money, which never came. The rig was ready, on location and everyone was on standby so there was no "false claim" on my part We were ready willing and able to perform the task. Despite promise after promise from XNRG to Vencedor and myself, the money never came. So the rig was moved and everyone went on to do other things. Now with the permits expiring and no apparent interest in renewing them, I believe those roads, locations and pipelines will likely have to be undone within 30 days of the permit expiration per Pennsylvania DEP regulations. Potentially an expensive reclamation job if the tank battery also has to be moved. Who's going to pay for that? The Rice 15 is a decent, typical little well for the area, and I'm proud of the work we did. But it's hardly the flagship of a public company. It's more like a drop of water in a hot frying pan in the grand scheme of things. In my opinion, these types of small wells need to be drilled in groups of 3 at the minimum in order to have a chance to be financially viable due to the cost of common infrastructure such as the tank battery and electrical service. In the case of the Rice 15, the entire cost of infrastructure is supported by one well. I know the plan was to do 5, but XNRG should have made sure they had the money for it before committing and diving head first.
I'm still owed a small balance from XNRG for the completion of the well and have been getting paid "on time" from its production. Not the way I like to do things but I wasn't given much of a choice as I was on the hook to plug the well and reclaim the roads and sites if it wasn't completed. Also it was anticipated at the time that the rest of the money would likely come in for the other four wells any day and the fuel deal was assumed to be closed within months of the 15 being completed. It was anticipated that I would likely be paid off from the proceeds of one of those events anyway. None of it happened and the full weight of the liabilities related to the completion of the Rice 15 fell on the Rice 15 itself. Since XNRG is a public company, isn't this stuff made "public" to the shareholders?
I miss stated the permit expiration date. It is 04/27/15. I'm sure you all figured that out but just incase.
Yes and Yes
That is correct. What once was looked at as an asset, (roads/locations/pipelines/electrical lines) will now become a huge liability when the permits expire as they will all need to be undone.
I don't know for sure that they won't be renewed, but at this point I don't see how they can be. And I don't know what 3A10 settlement shares are. Sorry I haven't been following that stuff. I'm just the sub, sub contractor. The permits expire 04/27/14. I believe the deadline to renew is around 15 days before expiration. Essentially too late at this point to renew. In order to renew, you need to first re-notify everyone with a water well within 1,000 feet of the proposed wells of intent to renew. You also need to re-notify all the surround municipalities. You have to re-run a PNDI report with the Pennsylvania DCNR to look for environmental impacts since ours expired. In our case we know there is one for the massasauga rattlesnake. So then we have to call a snake expert out of New jersey to come visit the site to look for snakes. Some of this can be done during the review process of the renewal, however it takes a bit of time plus the cost of the renewed permits. I was not given any order to start the process, for which it is pretty much too late and I was not given funds to pay for the applications. So call it a hunch. I don't think they are being renewed.
You mean to tell me that the only thing XNRG, a public company, is actually producing is the Rice 15? I was under the impression that XNRG had a lot more going on than that. Way more. I guess I am a little gullible. So the Rice 15 is it? Hillbillies in Kentucky drill wells like these in their back yard. Not to diminish the Rice 15 or hillbillies in general. I'm basically just a white collar redneck myself and I drilled about 40 wells and operate close to 100. And I'm considered a small-time operator. I think the Rice 15 is a decent little well, but hardly one to support the running of a business. Maybe if you drill about 15 of them. Hopefully Jerry gets one of his other deals done.
Don't understand all the focus on Rice 15
What is going on with XNRG's other wells/projects? How are they performing? The Rice 15 is a small shallow oil well in Pennsylvania that is typically only one of at least five in a SMALL project. As a stand alone well it's hardly even worth talking about. And with the cost of all the infrastructure being carried by one well it's difficult for it to be profitable without the other four. Especially since the permits are expiring and apparently not being renewed. Unless there's something Venceor, the land owner and myself don't know about. Yet everyone is so focused on how it's doing. XNRG has to have other producing projects. The Rice 15 can't be the sum total of XNRG's accomplishments over the last three years.
Don't care. That's not the standard in Western PA. Almost everyone uses the same separator setup. Either that or simply bypass the separator and feed oil and water directly into the oil tank. Pennsylvania oil separates from the water in a bout 1 to 2 seconds. Whatever water may end up in the tank is drained off the lower valve in the back of the tank. And industry standard is not a one size fits all. I don't know where you're getting you information, but it's not related to Pennsylvania production.
pepeoil The "rinky dink separator" as you put it can handle about 250 bbls per day or 10 shallow wells. It's actually overkill for a field of this size. A load of water is 100 bbls not 130. A standard water truck can only haul 110 bbls and is only permitted 100 so your source of information is incorrect in this matter. The oil tank is a brand new 210 bbl tank. I was told not to paint it until someone agreed on a color and signage. I have the standard green, but other colors were being considered. The pump jack is new and factory painted. All plumbing and parts were purchased new. I can tell you posses better than average knowledge of oilfield practices, but just because you may be upset with XNRG doesn't mean you should take it out on the sub contractors. Or in my case, sub, sub contractor.
That sounds like a great deal. It's actually below my cost. I should fire everyone, sell my rig and just pay them to do the work. Who is offering such a great deal? I'm assuming 1,000 ft wells with at least 80 NRI and that the lease acquisition costs, roads and location costs are included in that price (Total Turn-key)? I'm not defending whatever XNRG charged for the wells, but the prices your suggesting sound a bit too good to be true. And based on the information you gave us, small casing size, 5 & 1/2" and the larger 2&3/8" tubing and the coarse 10/20 resin coated sand and 1,000 gals of acid that you're talking about a shallow well in Texas. Apples and oranges. And if that's the case you're also looking at about a 65% NRI not 80%+. Wherever it is, it's not western Pennsylvania. Tell me I'm wrong.
I don't know of any promoted project where the wells are $100K each with a working interest anywhere near 80%. Maybe if the driller is drilling for himself and using some used materials. Or if they are giving the investor 65% or less working interest. And how many zones are being fracked? With what kind of sand? A quality frac on a 1,000 ft well can cost $8,000 more per well vs a cheep frac. What kind of casing is being used? Chinese at $6.50/ft or American at $10.00/ft X 400 ft per well? These and other things added together make a big difference in the final cost of a well. You also have to look at the total life cycle of the project not just the hard wholesale cost of drilling & completing a single well.
1. Lease acquisition cost
2. Attorney/Accounting fees (SEC Registrations/filings)
3. Cost of running a company in general
4. Promoter/Broker fees
5. Project management fees
6. Surveys and permitting
7. Building a tank battery
8. Finally the cost of building roads, pipelines, electrical lines, locations, drilling an finally completing the wells.
In addition, Vencedor at XNRG's request, required NCEP to only use new high quality materials such as 7" 17 lb/ft threaded durable American steel for the casing. The frac was to maximize all available zones within the well and only API certified Otawa 20/40 sand was to be used. The separator and oil and brine tanks were also new. I don't know what money was spent or is still owed by XNRG to Vencedor for the project, but what I can tell you is that only high quality materials and workmanship went into the project and no corners were cut. XNRG and its shareholders got a top quality product.
NCEP is Vencedor's subcontractor only. Not a partner. I am also the owner of NCEP, Jon Malis. Yes the same person in the videos. I subcontract for other companies as well. I only work for other oil and/or publicly traded companies.
To get VEP's PA permit info, and anyone's for that matter, you only have to go the PA DEP website. I'm not sure if a link is allowed on the posts but here is the direct link for VEP's PA Wells:
http://www.ahs.dep.pa.gov/eFACTSWeb/searchResults_singleClient.aspx?ClientID=287090
It just shows the wells currently permitted in Vencedor's name in PA. I believe his operator ID is 287090. As for the bonding, in order to have a permit you must have a bond and to get a bond you must first be a registered oil and gas operator. The bond ID may be included in the permits. It's all public information. As for their Texas stuff, they used a different subcontractor for that so I can't comment. Once the Rice project is complete, I will be transferring the permit and bond from NCEP to VEP for operations of the Rice project.
If you're interested. Here are NCEP's registered wells/permits:
http://www.ahs.dep.pa.gov/eFACTSWeb/searchResults_singleClient.aspx?ClientID=259632
Regarding the Brian/Randy split. Brian and Randy just had differences of opinion on how to run their company. Brian seems to have a more aggressive forward thinking philosophy and Randy seems more analytical and conservative. I think the stalled Rice project helped to widen that void and cause the split a lot sooner than it would have if the project had been completed on time. I continue to work with both of them and they will both do fine individually.
As for Randy's experience in the oil field, he has been there since day 1 back in 2010 when I started working for VEP. He likes to be hands on and takes personal ownership in each project. I know for a fact he personally invested in the first two projects I did for VEP to show his investors that he was willing to take the risk along with them. I know he also invested in Xun Energy purchasing open market stock to the tune of around $20,000 of his own money.
Yes Randy is now a one man operation and no longer has a brick an mortar location. He shut down the Newport address after the breakup with intentions to move to north Texas, closer to his projects there. What Randy does is develop relationships, find and vett opportunities, design projects to meet the needs of the purchaser and obtain funding for projects. Although I'm his boots on the ground in PA, he takes a serious personal interest in everything that goes on in the field. I've even met him out at his Texas oil field to consult on future projects down there.
Requiring payment up front is standard practice for a well that is drilled on behalf of an investor of any type. I know that in order for an individual investor to take advantage of certain tangible/intangible tax benefits the SEC says they must be "at-risk" (Pay for drilling and related activities prior to drilling taking place). Also if you just think about it on a common sense level, if a well is drilled and is either dry or not otherwise productive, where's the incentive to pay the driller for services rendered?
As for price, it depends on depth of well, type of formation being fracked and of course how many hands are in the cookie jar. When dealing with a public company like XNRG there are lost of hands but your risk is greatly reduced because of the due diligence on the project and the disclosure requirements of the company Vs dealing with Bob's drilling in Podunk PA where you will pay less but could loose your entire investment and have little to no recourse. It's basic risk/reward philosophy.
I’ve worked with Vencedor over the last four years. I think it’s unfair to diminish their reputation by making the statement “just one guy who uses a PO box as an address”. They are a registered, bonded oil and gas operator in Pennsylvania. I’ve been involved in two other successful projects with them in Pennsylvania. They also have successful operations in Texas. As far as poor performance of the #15. That’s a matter of opinion. If you compare it to the many wells drilled in the US that are either dry holes or produce so little that the cost of production exceeds revenue, the 15 looks quite successful. Vencedor and XNRG also learned a lot from the fracking of the first well to perhaps improve on the completion of the next 4. And with Roads, locations, pipelines, electrical and tanks already in place, it should be a no brainer to finish the project. But Vencedor can’t finish the project until pre-paid by XNRG. I don’t know the details of the application of the pre-payment of $900K to the Rice project, but typically, wells are paid for first before drilling begins in order to be "at-risk". I believe XNRG made best efforts to make this happen, but apparent problems with funding and affects of low oil prices has delayed that. A common problem throughout the industry today. And hopefully short lived as prices continue to rise.