Patented Completion Technology Geoslicing© Enhanced Oil and Gas Recovery Technology

Advanced Geoslicing© Enhanced Oil and Gas Recovery Technology

“An Industry Disruptive Technology,” according to the National Research Council of Canada “…a technology capable of recovering an additional 1 BCF of Gas in New York State,” NYSERTA

What is Geoslicing? “Industry disruptive solution” for the recovery of oil & gas Patented technology, environmentally-friendly technology for Eco-Safe, Enhanced Oil Recovery, 3rd Generation Tool Uses an eco-friendly high-pressure abrasive water-sand mixture to slice the earth Patented tool slices 1m to 6m+ feet through the casing into oil/gas formation, 2nd Generation Tool Shown in Photo Creates an effective well-bore of 2m-12m versus 125mm Provides a radically expanded surface area of up to 1000% greater for Oil and Gas to Flow thereby improving flows

Geoslicing© 5,000 psi/345 bar Gen-1 tool in action After a one minute pre-treatment pressure test of Gen-1 Geoslicing© Technology a 15-foot hole has been sliced into the ground.

What is Geoslicing? Benefits? An Advanced Oil and Gas Recovery Technology Improves Oil Recovery Rates 300% - 500% Improves Gas Recovery Rates 800% - 1600% Recovers Oil/Gas Faster and more Completely from formation Benefits? Enhances flows from suitable existing, new and capped wells Improves Internal Rate of Returns, Net Present Value and Well Value Improves IRR by increasing flow rates Improves NPV by accessing more oil/gas from the formation Improves Well Value - extended life & expanded reserves accessed

How does a reservoir become damaged?

Estimating Borehole Damage Drilling wells rocks undergo high stresses induced by the weight of the overburden A well is an excavation into rock that follows the laws of hydrodynamics Rocks at a depth of 3 to 5000 feet undergo stresses as high as 3500 – 5000 psi at the well-bore wall Tectonic stresses can induce additional and usually greater stresses Permeability of rocks under the above stresses can be significantly decreased and become near zero which decreases flows Traditional completion methods neglect these forces/factors and therefore the well never reaches its full potential s

Normal Stress Regime Formations sustain two types of mechanical stress: vertical stress horizontal stress These stresses act on the formation in the vectors as indicated. The diagram shown in this slide illustrates the mechanical stress regime within the producing formation (the rock) prior to being penetrated by a well bore.

Damage Caused By Drilling The act of drilling a bore-hole re-distributes mechanical stress. Radial and tangent stresses arise. Pay zone permeability can decrease by 5 to 10 times due to the effect of these stresses alone. This slide shows how the mechanical stress in the near well-bore region is re-distributed of as a result of opening the well-bore. Opening well bore increases the radial and tangent stress’ surrounding the well bore and effectively reduces the ability of the formation fluids to flow to into the well.

Damage from Completion Following conventional perforation, the zone of pressure re-distribution is expanded. Gun debris is deposited on the inner surface of the entry “carrot” and can further damage the formation. During a conventional perforation, pay zone is subjected to high temperature and pressure shock. The standard gun perforator is lowered into the hole. The following slides illustrates how conventional jet perforating completion technology further reduces the near well-bore permeability. When the guns fire an extremely high temperature stream of plasma gas is projected into the casing, cement sheath and formation. This “jet” of plasma deposits a portion of the shaped charge into the opening created by the jet and forms a “carrot” at the end of the perforation that reduces permeability. In addition the guns further stress the formation rocks which creates reduced permeability in the near well-bore region.

Summary of Wellbore Damage mechanical stress disrupted invasion of drilling fluid accumulated formation fines invasion of cement, and gun debris. The hatched area denotes the damaged zone created by conventional jet perforating technology.

Pressure Forms Around the Wellbore Drilling and conventional completion technologies cause a high pressure area to form around the wellbore.

Result of Perforation Lowest Permeability Highest Permeability Permeability Damage at Bore Zone of Repair Above 1 away from Bore This slide shows the reduction in permeability immediately adjacent to the well-bore. Within the pressurized area around the wellbore (in blue), formation permeability is reduced by 500 to 1000 percent.

Result of Fracturing Lowest Permeability Highest Permeability Zone of Repair away from Bore Permeability Damage Remains at Bore This slide shows the reduction in permeability immediately adjacent to the well-bore. Fracturing technologies impact deeper into the formation, but cannot repair the damaged near-wellbore zone (blue).

How does Geoslicing© Repair Wellbore Damage? Geoslicing © cuts through the compacted and low permeable near-wellbore zone Does not burn, scar, or “cook” the formation In carbonates, dislodges clay particles and fines In sandstones, reduces sand mobility problems In deep gas sands, relieves overpressure damage from mud weight systems

The Geoslicing© Process Slotting treatment pressure is < or = to formation pressure Slotting transfers the zone of stress to the tips of the slots This enhances productivity Porosity & permeability are increased in the slotted area of the near well-bore zone Slotting equalizes pressure differential between pay zone and well-bore (pressure drop is reduced within interval) The tool is raised when the slot is complete to begin a new slotting procedure. In this manner, the entire target interval is treated. The abrasive slurry is aimed into the target formation at the correct pre-calculated vector. The GeoSlicing tool is lowered down to the target formation. AHPT technology cuts through the near well-bore damage and re-distributes the the mechanical stress due to drilling the bore hole. Natural formation permeability is restored and pressure drop is distributed across the entire area of the slot.

How Geoslicing© Repairs Slotting frees near well-bore zone from disruptive effects of mechanical stress. The highly stressed area is moved and concentrated at the tips of the slots. The screening effect of these stresses around well-bore is eliminated. Formation fluids can now flow more readily from pay zone to the well-bore. Following the slotting procedure, the mechanical stressed area is limited to the end of the slots which is located from 3 to 10 feet from the well-bore. The area within the dashed line is the area of the pay zone within the unloaded stress regime.

Geoslicing© Re-Distributes Stress 1.15 1.25 2.50 3.75 5.00 Mechanical stress is concentrated at the tips of the slots. An area of greater permeability forms around the slotted wellbore. 0.1 0.3 0.5 0.7 Unlike conventional jet perforating, the mechanical stress within AHPT slots is concentrated at end of the slots resulting in a very large increase in near well-bore permeability. 0.1 0.3 0.6 0.8 1.0

Result of Geoslicing© Geoslicing Lowest Permeability Highest Permeability Highest Permeability at Well Bore This slide shows the reduction in permeability immediately adjacent to the well-bore. Formation permeability at the well bore is increased by several orders of magnitude.

Geoslicing Comparison of Results High Permeability at Well Bore is the Objective to Enhance Oil Recovery

Geoslicing© vs. Perforation Gen 3 Tool 6.5 yd 6.5 Geoslicing© vs. Perforation Gen 2 Tool Gen 1 Tool

Benefits of Geoslicing© 1. Re-distributes stresses away from near-wellbore zone 2. Porosity increases >> 4-5x; Permeability >> 15x 3. Drainage volume increases up to 24.2x greater than borehole 4. Very deep penetration (compared to perforation)> 3-6x 5. Eliminates screenouts, lamination, skin effects (all barriers to oil flow) Creates vertical permeability that does not normally exist in nature (reaches full thickness through interbedding / layers) Has a longer lasting effect than any other technology due to larger surface areas and structures which stay open

Benefits of Geoslicing© (continued) “Managed balanced” drilling – not overbalanced So powerful it can cut multiple casings & deep rock Does not crack casing cement / keeps hydraulic integrity The only technology that actually excavates rock Accurate & controllable connection / communication with production zones and with surface Helps direct a hydraulic fracture (even near water) Ecologically safe / environmentally friendly Follow-up intensification methods also show increased results due to huge drainage surface (i.e. acidization, hydro-fracturing, acoustics, etc.)

The Effect of Geoslicing© Benefits (Continued) 16. Softening of problems with developing heavy oil layers by providing greater openings for flows 17. Easing of problems with opening wells with two or more strings of the casing 18. Allows for recompletion of zones with sub-adequate production in comparison to adjacent zones 19. Reliable completion of thin-laminated production zones

Geoslicing© Standard perforation (M is permeability) M2>>M1 After boring a well, tangential compressive stresses arise in the near-wellbore zone thereby decreasing the rock permeability M2 Permeability M1 Well M1<<M2 Near-Well Zone

Geoslicing© Combined with Chemical Treatment Along the well Axis in opposing directions a slice is cut the entire depth of the production layer (or for such depths as desired) A minimum depth of penetration into the zone on either side of the well-bore of 7 to 10 well diameters is required Wellbore Geoslice GeoSlice

The Effect of Geoslicing© The GeoSlice© transforms the compressive tangential stresses into extended linear ones M2 Permeability GeoSlice© M1 Well Near-Well M2>>M1 Zone Geoslice©

The Effect of Geoslicing© Enhances Reservoir Properties The GeoSlice releases the near-wellbore zone stress and provides increasing rock permeability - dramatically enhances the reservoir properties and flows 1.0 1.05 1.0 1.05 1.25 2.5 3.75 5.0 0.1 0.3 0.5 0.7 0.7 0.5 0.3 0.1 5.0 3.75 2.5 1.25 .o.2 ,3 .6 .8 1.0 1.05 1.0 1.05 1.0

The Effect of Geoslicing© Comparison of Geoslicing© to other completion methodologies GeoSlicing when compared to other completion methods dramatically enhances the depth of the production layer opening and the drainage surface area

The Effect of Geoslicing© Application The product layer consists of carbonate, terrigen or crystalline rocks The productive layer interval is fastened with the casing column for 5” to 12” (120 to 320 mm) by the diameter, independent of the well depth Geoslicing has been tested on production layers up to depths of 20,000 ft (6 km) with low and high formation pressures and with the bottom hole temperatures up to 140o C GeoSlicing can be applied after drilling, during production, or after workover repairs

The Effect of Geoslicing© Benefits The efficiencies of the technology cutting processes does not change the hydrodynamics of the structure nor leave excess water in the formation The method is effective in complex conditions and can be applied when there are various drilling complications: with enormous drilling idle times/closed wells, multi-string casings, abnormal high pressures, etc. The method can dramatically increase oil or gas recovery involving neighboring layers with various permeability The effects of Geoslicing persist for dramatically long times – years, while other methods produce only short term effects

The Effect of Geoslicing© Benefits Geoslicing increase the near-wellbore zone rock permeability by changing the tangential stress values and the direction of their variation Disappearance of the ‘skin’ effect Increases the production layer utilization by producing a continuous ‘window’ rather than a punched hole perforation Drastically increases the production layer opening area and duration of flows Makes low-quality reservoir rock profitable by increasing production compared to standard well casing flows

The Effect of Geoslicing© Benefits Softening of problems with developing heavy oil layers by providing greater openings for flows Easing of problems with opening wells with two or more strings of the casing Allows for recompletion of zones with sub-adequate production in comparison to adjacent zones Reliable completion of thin-laminated production zones

Field Results of Geoslicing© Advanced Oil and Gas Retrieval Technology

Example A – Gas Zone Rejuvenation Background Name: Kinnert 1. Drilled in 1976; dead in 2000 API #15-095-10063-0001 S14-T30S-R7W Kansas Problem Statement Operator researched how to boost output, but could not find an economical well stimulation method Solution Gen-1 tool to stimulate depleted gas zone in March 2003 Implementation Time 1 Day, excluding planning Costs $35,000, because GeoSlicing© technology was in early stage of development, only 3rd party costs are included Win/Win for operator as no cash outlay, just rewards

Example A – Gas Zone Rejuvenation Initial Production after GeoSlicing© 81 mcf/d compared to 101 mcf/d in 1976 Payout 5.1 months (100% working interest) 10,500 mcf @ $3.85 (inc. royalties & expenses) Total Gas Production 98,623 mcf (March 2003 to June 2008 – still producing December 2010) Daily Production today = 31 mcf/d Total Revenue $592,000 (98,623 mcf X ~$6/mcf) (inc. royalties & expenses) to June 2008 last data available

Example A - Historical Production The decline rate is shallower than during original production. Approximately 50% decline over 9 years.

Typical Production Curve after Geoslicing© This example from Kansas, 2003

Example B – Oil Zone Rejuvenation Background Name: Moran 1. Drilled in 1969; dead in 2000 API #15-165-20227 S30-T19S-R20W Kansas Problem Statement Operator researched how to boost output, but could not find an economical well stimulation method Solution Gen-1 tool to stimulate depleted oil zone in April 2003 Implementation Time 1 Day, excluding planning Costs $35,000, because GeoSlicing© technology was in early stage of development, only 3rd party costs are included Win/Win for operator as no cash outlay, just rewards

Example B – Oil Zone Rejuvenation Initial Production After GeoSlicing© 8 bopd Payout 7.1 months (100% working interest) 1,200 bbls @ $43.57 (inc. royalties & expenses) Total Oil Production 7,392 bbls (March 2003 to June 2010) Daily Production today = 8 bopd Total Revenue $571,560 (10,392 bbls X ~$55.00/bbl) (inc. royalties & expenses)

Example B - Historical Production The zone was very depleted when GeoSliced© in 2003. The decline rate is relatively flat.

Example C – Halting the Grim Reaper Background Drilled in 1986; completed lower (high porosity) zone 7595’ – 7644’ 1986 - 1990 Total production = 379,790 mcf from lower zone Dead in 1990; well to be P&A’ed API 04-011-20373 S18-T14N-R1E MDB&M Colusa County, CA Problem Statement Well was to be P&A’ed and our challenge was to show our technology would work on low porosity zone, when other technologies could not Solution Used Generation 2 GeoSlicing© tool in June 2005 GeoSliced© new zone 7148’ – 7163’ Implementation Time 1 day, not including planning Costs $70,000 (Workover costs only – PG&E tie-in costs not included)

Example C – Halting the Grim Reaper Initial Production After GeoSlicing© 650 mcf/d Payout 15 days 7,000 mcf x $9.66 (inc. royalties & expenses) Total Gas Production 176,165 mcf (Sept 2005 to June 2008 – Still Producing) Daily Production today = ~110 mcf/d Total Revenue $1,233,150 (176,165 mcf x $7.00/mcf) (inc. royalties & expenses)

Grizzlies 1 – Comparative Production Again, the decline rate due to GeoSlicing© is much shallower.

Example D – Raising the Dead Background Name: Curry 1, Drilled: 1989 API 31-013-212211 Panama Quad, Chautauqua County, Blockville, NY Problem Statement Revive a heavily depleted barely-/non-producing Medina well utilizing GeoSlicing© and fracturing Solution Used Generation 3 GeoSlicing© tool to stimulate depleted gas zone in Dec 2003, 4030’ – 4105’ Implementation Time 2 Days; 1 GeoSlicing©, 1 day Fracturing excluding planning Costs $115,000 SDF cost only – location and R & D costs NIC, only 3rd party costs are included

Example D – Raising the Dead Initial Production After GeoSlicing© 130 mcf/d compared to 2 mcf/d for 15 years and 0 mcf/d in 2008 Payout 287 days (100% interest) 28,000 mcf x $4.00 (inc. royalties & expenses) Total Gas Production 20,150 mcf (1989 to 2010) Daily Production today = ~100 mcf/d Total Revenue Revenues during first 7 months exceeded those of preceding 18 years ($319,375 in revenues in 18 months now)

Curry 1 – Raising the Dead Production Rates The increase after GeoSlicing© is over 12000%!

Example E – Creating Star Economic Performers Whirlpool rock (blue wells) generally surpasses Medina rock (red wells) in both gas production and gas resources, gas production results for Curry 1 (completed by GeoSlicing© in the Medina) are high, even in comparison to Whirlpool completions, considering Curry 1 draws from average gas resources.

What Equipment is used in Geoslicing© ?

Surface Equipment 1. Wellhead 2. Pulp-cleaning filter 3. Manifold unit 4. Pump set 5. Sand-mixing set  6. Tank.

Surface Equipment Provided by Schlumberger Sand Mixing Set (Blender) Tank Wellhead

Surface Equipment Provided by Schlumberger Pump Set Water Truck Shaker Half Tank BOP Wellhead

Geoslicing© Oil Platform Support Equipment Abu Dhabi

Advanced Geoslicing© Tool Gen-1 Ball trapper Upper Seal Compensator Pusher Perforator Lower Seal Nozzles Circulation Ball Bolts Engine

Scientific Method of Geoslicing©

rP As Nozzle Diameter Increases 6 Red = 3mm Green = 4.5mm Blue = 6mm 5 4 Rate (bbls/min) 3 2 1 100 200 300 400 Pressure (atm)

Calculating Working Pressure rPR = [(D12 x rPN) – rFS] / (D22 – D12) Where: D1 is the ID of the pusher (mms); D2 is the OD of the tubing (mms); rPN is the pressure of the slurry through the nozzles (MPa)(variable); and  rFS is the compressive force of the engine (Newtons)(variable).

Optimizing Working Pressure II III 6 5 4 3 2 1 9 8 7 25 20 15 10 rPN, MPa rPR, MPa

Economic Impact of Geoslicing©

Curry 1 – Economic Impact Before GeoSlicing© $0 - 8/day for 15 years after $400 per day!

Thank you for your interest! Please feel free to contact us: William Azzalino, Managing Director T: (949) 903-4033 E: GeoSlicing@Gmail.com Thank you for your interest!