1. ALRDC Seminar New and Novel Artificial Lift Technologies ConocoPhillips, Houston, Texas May 14, 2014 Downhole Counterbalance Effect Tool Patent Pending Joe Ippolito, CEO LOTRAM LLC

2. May 14, 2014 2014 ALRDC Seminar for New or Novel Artificial Lift Technologies, Houston, Texas 2 General Background Description of DH-CBE Downhole Counterbalance Effect Tool (DH-CBE) The DH-CBE utilizes the pressure difference between inside the tubing and outside the tubing (casing pressure) to generate an upward force. This force reduces stress on the –Pumping unit structure –Pumping unit gear box –Rod string

3. May 14, 2014 2014 ALRDC Seminar for New or Novel Artificial Lift Technologies, Houston, Texas 3 General Background Description of DH - CBE The DH-CBE would typically be deployed below 1,200’ (see Fig. 1). Tubing pressure at this depth would be approximately 500 PSI. Casing pressure at the same depth could be as little as 2 PSI. The 498 PSI difference would be used to power the DH-CBE.

4. General Background Description of DH - CBE May 14, 2014 2014 ALRDC Seminar for New or Novel Artificial Lift Technologies, Houston, Texas 4

5. May 14, 2014 2014 ALRDC Seminar for New or Novel Artificial Lift Technologies, Houston, Texas 5 General Background Description of DH - CBE Tool Concept is illustrated in Fig. 2. The DH-CBE has an internal sliding element. There are plungers of different diameters at each end. High pressure fluid is internal to this element. Low pressure gas is external. The pressure difference pushes the sliding element upward. The rods are landed on the sliding element. The sliding element moves with the rod string.

6. General Background Description of DH - CBE May 14, 2014 2014 ALRDC Seminar for New or Novel Artificial Lift Technologies, Houston, Texas 6 Patent Pending

7. May 14, 2014 2014 ALRDC Seminar for New or Novel Artificial Lift Technologies, Houston, Texas 7 General Background Description of DH-CBE Force calculation is shown in Fig. 3. –Pressure difference between casing and tubing is applied to the difference in plunger areas.

8. General Background Description of DH - CBE May 14, 2014 2014 ALRDC Seminar for New or Novel Artificial Lift Technologies, Houston, Texas 8

9. May 14, 2014 2014 ALRDC Seminar for New or Novel Artificial Lift Technologies, Houston, Texas 9 General Background Description of DH-CBE Zero net energy from the fluid –The fluid works on the rod string during the up stroke. –The rod string works on the fluid during the down stroke. Therefore the DH-CBE supplies a counter balance effect directly to the rod string. The force is simply pressure times area. Therefore, unlike walking beam pumping units, the CBE is relatively constant throughout the stroke.

10. May 14, 2014 2014 ALRDC Seminar for New or Novel Artificial Lift Technologies, Houston, Texas 10 Objectives Wells with a fully loaded PU structure. Wells with a fully loaded PU gearbox. –Crank mounted weights apply a force that varies with crank angle. Improved counterbalance reduces peak torque. Wells with a fully loaded rod string. –Directly reduces loads above the DH-CBE. –Indirectly reduces rod stress below the DH-CBE by allowing for heavier rods without over loading the rods above or PU. Hydraulically driven sucker rod pumping units that do not use a counterbalance method. –Energy is burned off during down stroke.

11. May 14, 2014 2014 ALRDC Seminar for New or Novel Artificial Lift Technologies, Houston, Texas 11 Development Status Design status –Produced first prototype. Tested in a well. –Produced second prototype. Tested in same well. –Incorporated results in a third generation tool. Not yet tested. Completed 3D modeling and stress analysis. Testing has demonstrated proof of concept. Currently trying to demonstrate proof of applicability.

12. May 14, 2014 2014 ALRDC Seminar for New or Novel Artificial Lift Technologies, Houston, Texas 12 Testing Results of Prototype 2 The DH-CBE prototype was installed on April 22, 2013. DH-CBE sized to reduce rod loads 5,000 LBS. Static Testing –Reduced traveling valve load 4,976 LBS –Reduced standing valve load 5,227 LBS Dynamic Testing –Reduce PPRL load 4,999 LBS –Reduce MPRL load 6,060 LBS –Reduced Peak Torque 9% –Reduced peaks in dyno card Well went down in Dec 2013 with a hole in tubing.

13. May 14, 2014 2014 ALRDC Seminar for New or Novel Artificial Lift Technologies, Houston, Texas 13 What Support is Needed from Industry? We need access to additional wells in order to conduct further testing. We need to show that the DH-CBE will out last the rod pump. Target wells are in excess of 6,000’ We will need assistance in developing an application database in order to appropriately develop variations of the tool. Assistance can come in the form of collaboration, funding, or other kinds of support.

14. May 14, 2014 2014 ALRDC Seminar for New or Novel Artificial Lift Technologies, Houston, Texas 14 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 ALRDC Seminar for New or Novel Artificial Lift Technologies, they grant to the Artificial Lift Research and Development Council (ALRDC) rights to: –Display the presentation at the Seminar. –Place it on the www.alrdc.com web site. 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 ALRDC Seminar where it was first presented.

15. May 14, 2014 2014 ALRDC Seminar for New or Novel Artificial Lift Technologies, Houston, Texas 15 Disclaimer The Artificial Lift Research and Development Council and its officers and trustees, and the ALRDC Seminar 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 and their company(ies), provide this presentation at the ALRDC Seminar "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 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.