1. Pump Stroke Optimizer A patent-pending device for improving SRP performance, cutting lifting costs and reducing rod wear in horizontal oil wells enclinelift.com

2. Introduction Bill Elmer, P.E. – BSChE TAMU 1978 David Elmer – BSPE TAMU 1991, Rice MBA John Elmer – BA UT 1980, UH MBA Three brothers formed Encline Artificial Lift Technologies LLC to commercialize certain of Bill’s innovations. Team includes 2 production engineers, 1 CFO, 1 CEO/CMO, 2 patentholders, and 2 executives who have managed prior successful startups.

3. Pump Stroke Optimizer What the PSO is The problem: Today’s RPCs not designed for horizontal wellbores How the PSO works Why it works Proven results Compelling economics

4. The Pump Stroke Optimizer An embedded PLC Fits inside most rod pump controller enclosures One hour installation time Self-adjusting Can be monitored on a smart phone

5. The problem: Today’s rod pump controllers were designed for vertical wellbores In vertical wells, small pump speed changes can quickly match pump capacity to well production. Horizontal wellbores have fluctuating flow regimes. Short-term events (waves, slugs) can “mislead” a rod pump controller into making unwanted speed changes and to cycle frequently between maximum and minimum pump speeds. The result: Poor pump fillage

6. How do operators handle poor pump fillage today? By manually setting pumping speed – Limiting maximum pumping speed – Reducing the minimum pumping speed The current approach requires – Regular monitoring by personnel – Resetting pumping speeds as wells continue to deplete.

7. How it works The PSO allows the pumping unit to run at an optimum speed, requires no monitoring and will automatically reset pumping speeds as wells deplete – Infers RPC setpoints on Minimum and Maximum Working Speeds. – Infers when the pumping unit is on the upstroke or downstroke. – Calculates average pumping speeds – Counts frequency of “pumpoff” events. – Delivers an alternate speed signal to the VFD that keeps the maximum speed more in line with the recent average pumping speed.

8. The PSO decreases slippage and increases pump fillage Sucker rod pumps only allow slippage on the upstroke For RPCs that permit a downstroke speed that is slower than the upstroke speed, the PSO preferentially reduces the downstroke speed.

9. Example: Conventional pumping unit setup to run 8 SPM but only needs to run at 3 SPM Without a PSO, the pump would be set to 3 SPM – Total stroke duration is 20 seconds – Upstroke duration is 10 seconds (50% of a cycle) With a PSO, pump speed is changed so that 25% of each total stroke duration is spent on upstroke – 6 SPM on upstroke, a 5 second duration – 2 SPM on downstroke, a 15 second duration – Total stroke duration is still 20 seconds with 3 SPM but the upstroke duration is now only 25% of each cycle (5/20)

10. Example: Pumping at 3 SPM with a PSO

11. By modifying the industry slippage formula to account for smaller stroke duration, pump slippage is greatly reduced, especially when pumping below 3 SPM.

12. Why does a longer duration downstroke increase pump fillage? In our opinion, the longer duration downstroke yields: – Additional quiet time for gas bubbles to rise and exit the gas anchor, bringing less gas in the pump – Additional time for gas bubbles to rise from the bottom of the pump, leaving a gas-free almost incompressible fluid between the standing and travelling valves at the end of the downstroke. This fluid, having degassed during the upstroke at low pressure, will not evolve gas bubbles and expand when the upstroke begins. This allows the standing valve to open sooner, as evidenced by the straighter upper left hand portion of the example dyno card This results in more liquid entering the pump, for an effective longer net stroke length, and better pump fillage

13. Another explanation for the below card is less pump slippage.

14. Field Trial Results Methodology: Capture XSPOC data on two test wells prior to PSO installation, install PSO, set initial parameters, monitor performance. The test wells: – Horizontal oil wells, about 3 years old Producing laterals 10,700 - 11,000 feet deep TVD, Perforated intervals between 4,500 – 5,000 feet long. Well #1 – Toe up, Well #2 – Toe down – 30 to 110 BPD total fluid [95% oil cut] – GOR range of 1000 – 2000 scf/bbl – Pumps set above the kickoff point, 9,700’-10,200’ – API RP11L pumping system

15. Well #1: 35% reduction in strokes per day, oil production not significantly affected Well #1 averaged 5155 strokes/day for the two weeks prior to PSO installation. The average after PSO installation was 3345 strokes/day, a 35.11% reduction. Oil production rate is not significantly affected. Pump fillage increased from 76% up to 90%, an 18% increase.

16. Well #1: Minimum load increased by 1000 pounds, maximum load mostly unchanged This is better for rod loading, and should result in less rod buckling and compression, hence less wear. Slower downstrokes have mitigated many of the outlier instances of very low minimum rod loads.

17. Well #2: 25% reduction in strokes per day, oil production not significantly affected Well #2 averaged 5557 strokes/day before PSO installation. After PSO installation, the well averaged 1361 fewer strokes/day. Average pump fillage increased from 79% to 84.5%. Minimum pump fillage increased to around 75%, from 55% - 65%.

18. Well #2: Minimum load increased 1000 pounds as did the maximum load This is because there was less gas in the pump, due to increased pump fillage. The maximum load increase is tolerable, and benefits from reduced buckling should outweigh any issues related to higher sideloading.

19. Why it works The PSO creates maximum working speed setpoints that are better aligned with the daily production rate. This prevents over-reacting to high pump fillages often seen at the beginning of a slug event. Keeping the maximum pumping speed slightly higher than average pumping speed helps avoid low pump fillage events.

20. Compelling economics Although there are clear paths for rod failure deferral, the PSO can be justified by energy cost savings alone.

21. Conclusions The PSO reduces pumping system losses – Saving energy that would otherwise be lost to pump slippage. – Minimizing mechanical and hydraulic losses associated with wasted (poorly filled) strokes. – Power savings should pay for the device in <1 year The PSO improves the operating behavior of rods. – Slower downstrokes help keep rods in tension Less inertia and friction resisting the downstroke Time for gas in the pump barrel to separate, – Greater average pump fillage reduces pound events enclinelift.com