1. Gas Well Deliquification Workshop Sheraton Hotel, Denver, Colorado February 19 – 22, 2012 Selection & Validation of Hydraulic Dewatering Pumps in the Natural Gas Industry: An Update Brendan Furrow, Business Development Manager Ken Newman, P.E. & President David Bolt, Vice President Travis Bolt, Operations Manager

2. Feb. 19 – 22, 2012 2012 Gas Well Deliquification Workshop Denver, Colorado 2 Outline … Background Technology Field Studies Conclusions Alone with a Cormorant

3. Feb. 19 – 22, 2012 2012 Gas Well Deliquification Workshop Denver, Colorado 3 Hydraulic Dewatering System Three major components Surface Hydraulic Power Unit (HPU) with Power Optimized Hydraulics (POH) Hydraulic Fluid and Water Conduits Hydraulic Down-hole Pump (HDP) Hydraulic Fluid Casing HDP Produced Water HPU

4. Feb. 19 – 22, 2012 2012 Gas Well Deliquification Workshop Denver, Colorado 4 Hydraulic Dewatering Systems Dual Acting –Hydraulic fluid is used to move the pump in both directions –Increased longevity & reliability compared to Single Acting –Production rates (maximum of 100 BPD; depends on depths, well configuration, etc…) –Depths (maximum of 10,000 ft TVD) Single Acting –Hydraulic fluid is used to move the pump up or down (depending on configuration) and water backpressure provides the force to restore the pump up or down –Reduced installation costs compared to Dual Acting –Production rates (maximum of 70 BPD; depends on depths, well configuration, etc…) –Depths (maximum of 10,000 ft TVD) Dual Acting System

5. Feb. 19 – 22, 2012 2012 Gas Well Deliquification Workshop Denver, Colorado 5 Hydraulic Dewatering Systems Deployed via Dual FLATpak or Concentric Coil 2 hydraulic fluid conduits to operate pump Produced water flows up tubing Deployed via Triple FLATpak 2 hydraulic fluid conduits to operate pump 1 Produced water conduit Tubing removed from well Deployed via Coiled Tubing 1 hydraulic fluid conduit Produced water flows up tubing Deployed via Dual FLATpak 1 hydraulic fluid conduit 1 Produced water conduit Tubing removed from well Deployed via Wire-line 1 hydraulic fluid conduit on the outside of the tubing Produced water flows up tubing Casing Tubing DATT DATC SATT SATCSATT WL CT Casing Tubing Casing

6. Feb. 19 – 22, 2012 2012 Gas Well Deliquification Workshop Denver, Colorado 6 Cormorant Engineering Test Facility The Test Facility was funded by a major oil & gas company to validate the performance of our pumps and modeling capability. Intensification Cylinders Coiled Tubing Reel; 15,000 linear ft HPU & HDP Data Acquisition System

7. Feb. 19 – 22, 2012 2012 Gas Well Deliquification Workshop Denver, Colorado 7 Cormorant Engineering Design Tool Cormorant developed a dynamic simulation model for hydraulic dewatering pumps Model uses Finite Element Methods Also uses Finite Difference in time Method

8. Feb. 19 – 22, 2012 2012 Gas Well Deliquification Workshop Denver, Colorado 8 Cormorant Engineering Design Tool

9. Feb. 19 – 22, 2012 2012 Gas Well Deliquification Workshop Denver, Colorado 9 Since the 2011 Gas Well Conference Built and endurance tested 4 different pump designs Installed pumps in 4 different wells with 3 different pump designs; DATC, SATC and SATT Tested pumps at elevated temperatures (215 degrees F) Built and tested 5 hydraulic skids, each one advancing reliability and performance Deployed 2 screens for solid exclusion

10. Feb. 19 – 22, 2012 2012 Gas Well Deliquification Workshop Denver, Colorado 10 Since the 2011 Gas Well Conference Developments and Learning's: –Redundancy, Redundancy, Redundancy! –Eliminate external plumbing on down-hole pump via a “Snorkel Concept” on our Dual Acting Systems –Endurance Testing: using abrasives of sand and coal fines in Test Facility –Water / Oil interface seals: HNBR proprietary blend; temperatures to +300 degrees F with very high abrasion resistance & redundancy –Water Plunger Seals (Hi Temp Nylon Ring to 220 degrees F, Fiber HNBR / Teflon to +300 degrees F) –Hydraulic System Development; controls, pump, and Natural Gas Engine + Electric –Reliability….good and continuing to improve

11. Feb. 19 – 22, 2012 2012 Gas Well Deliquification Workshop Denver, Colorado 11 Since the 2011 Gas Well Conference Field Monitoring Data acquisition systems & remote access to data via a 3G access point Alarm alert capabilities sent via SMS (texts)…etc.. Hydraulic Power Unit: Power Optimized Hydraulics (POH) Proprietary Hydraulic Management Controls Increased HPU efficiency yields higher production Lower energy consumption & smaller footprint Reduction in costs due to increased longevity of components Pump cycles on Pressure or Time based parameters

12. Feb. 19 – 22, 2012 2012 Gas Well Deliquification Workshop Denver, Colorado 12 Field Study Massard Field (near Fort Smith, Arkansas) Depth: ~6,800 ft MD Deviated Well: S shaped well that with small deviation, nearly vertical CBM environment Deployed Technology –Single Acting System conveyed on Dual FLATpak –Electric driven HPU Average Production: 13.5 BWPD

13. Feb. 19 – 22, 2012 2012 Gas Well Deliquification Workshop Denver, Colorado 13 Field Study Fayetteville Shale Depth: ~3,000 ft MD Horizontal Well: ~87.5° Deployed Technology –Dual Acting System conveyed on Triple 1.0 inch FLATpak –Natural Gas driven HPU with POH –Integrated filter on hydraulic fluid conduits –Down-hole screen for solid exclusion (300 micron) So at ~25 BWPD, the minimum settling diameter is 1,117 microns or 0.044 inches –Harbison-Fischer water section attached to Cormorant Engineering hydraulic dewatering pump –Remote monitoring High solids environment (0.25 tsp. to 0.5 tsp. per stroke cycle) Average Production: 21 BWPD Uptime since install: 90%+ (includes PM)

14. Feb. 19 – 22, 20122012 Gas Well Deliquification Workshop Denver, Colorado 14 Field Study – Performance Monitoring Model comparison: Predicted vs. Actual

15. Feb. 19 – 22, 2012 2012 Gas Well Deliquification Workshop Denver, Colorado 15 Field Study North Slope Alaska Project Depth: ~2,000 ft TVD Vertical Well Deployed Technology –3.25 inch Single Acting System Wire Line Conveyed –Water Measurement and Backpressure Device –Harbison-Fischer water section attached to Cormorant Engineering hydraulic dewatering pump –Electric HPU with Power Optimized Hydraulics Estimated Production: 55-75 BWPD

16. Feb. 19 – 22, 2012 2012 Gas Well Deliquification Workshop Denver, Colorado 16 Field Study Fruitland Coal, San Juan County Depth: ~2,200 ft TVD Vertical Well Pump Endurance Testing: 90 day cycle testing using intensification (simulating down-hole pressures) along with grit + coal fines Deployed Technology –2.375 inch Single Acting System –Water Measurement and Backpressure Device –Harbison-Fischer water section attached to Cormorant Engineering hydraulic dewatering pump –Electric HPU with Power Optimized Hydraulics –Remote Monitoring Estimated Production: 5-10 BWPD

17. Feb. 19 – 22, 20122012 Gas Well Deliquification Workshop Denver, Colorado 17 Conclusions Cormorant Engineering has designed & validated 5 different pump configurations Each application can be modeled for optimum pump selection Power Optimized Hydraulics improves HPU performance by: –Increasing HPU efficiency to yield higher production –Lowering energy consumption & providing a smaller footprint –Reducing costs due to increased longevity of components Technology & field maturity have continued to improve confidence & reliability in hydraulically driven systems

18. Questions??? Feb. 27 - Mar. 2, 2011 2011 Gas Well Deliquification Workshop Denver, Colorado 18 Brendan Furrow Business Development Manager Office: (936) 337-4427 brendan@cormorant.us.com

19. Feb. 19 – 22, 20122012 Gas Well Deliquification Workshop Denver, Colorado 19 Copyright Rights to this presentation are owned by the company(ies) and/or author(s) listed on the title page. By submitting this presentation to the Gas Well Deliquification Workshop, they grant to the Workshop, the Artificial Lift Research and Development Council (ALRDC), and the Southwestern Petroleum Short Course (SWPSC), rights to: –Display the presentation at the Workshop. –Place it on the www.alrdc.com web site, with access to the site to be as directed by the Workshop Steering Committee. –Place it on a CD for distribution and/or sale as directed by the Workshop Steering Committee. Other use of this presentation is prohibited without the expressed written permission of the author(s). The owner company(ies) and/or author(s) may publish this material in other journals or magazines if they refer to the Gas Well Deliquification Workshop where it was first presented.

20. Feb. 19 – 22, 2012 2012 Gas Well Deliquification Workshop Denver, Colorado 20 Disclaimer The following disclaimer shall be included as the last page of a Technical Presentation or Continuing Education Course. A similar disclaimer is included on the front page of the Gas Well Deliquification Web Site. The Artificial Lift Research and Development Council and its officers and trustees, and the Gas Well Deliquification Workshop Steering Committee members, and their supporting organizations and companies (here-in-after referred to as the Sponsoring Organizations), and the author(s) of this Technical Presentation or Continuing Education Training Course and their company(ies), provide this presentation and/or training material at the Gas Well Deliquification Workshop "as is" without any warranty of any kind, express or implied, as to the accuracy of the information or the products or services referred to by any presenter (in so far as such warranties may be excluded under any relevant law) and these members and their companies will not be liable for unlawful actions and any losses or damage that may result from use of any presentation as a consequence of any inaccuracies in, or any omission from, the information which therein may be contained. The views, opinions, and conclusions expressed in these presentations and/or training materials are those of the author and not necessarily those of the Sponsoring Organizations. The author is solely responsible for the content of the materials. The Sponsoring Organizations cannot and do not warrant the accuracy of these documents beyond the source documents, although we do make every attempt to work from authoritative sources. The Sponsoring Organizations provide these presentations and/or training materials as a service. The Sponsoring Organizations make no representations or warranties, express or implied, with respect to the presentations and/or training materials, or any part thereof, including any warrantees of title, non-infringement of copyright or patent rights of others, merchantability, or fitness or suitability for any purpose.