Divergent Energy Services Corp V.DVG.H

RE:Anyone

[Chincy1]

ok here goes...essentially they have developed a downhole linear magnetic electric motor to work in conjunction with a conventional rod pump. The primary goal of the linear motor is to replace a pump jack and rods in deviated and/or horizontal wells. By eliminating the rod string and pump jack, the goal is to reduce all tubing and rod related failures. The motor is attached directly to the rod pump downhole, and similar to an Electrical Submersible Pump (ESP), will be powered through a banded electrical cable from the service. The cool part is this motor does not spin like an ESP; rather it is a permanent magnet motor and will have a similar up and down motion, and stroke the rod pump from the bottom, versus a pump jack and rods which activate the pump from the top. Effectively they are targeting wells with high work over frequencies due to rod and tubing problems.
From my research, there are approx. 5000-10000 wells drilled in Canada a year (well maybe not this year with the decline in oil, which by the way is kinda good for DVG as their technology is all about saving oil companies $) of which approx 75%+ of them are deviated or horizontal in nature and require artificial lifts. So that is one year...there are roughly 750,000 pump jacks 'out there'. Traditionally a pump jack is used with the down hole rod strings. These rod strings require a lot of ongoing maintenance. Essentially the new motor that DVG has would replace the pump jack on surface and all the down hole rod strings as it would be a motor that would lie down hole attached below the pump. Their partner in the pilot (who everyone is speculating is Crescent Point) has approx 4200 current wells that could use this new motor (depending on bpd size as right now DVG is targeting 100-250 bpd producing wells)... that is ONE company...lets take 500 motors a year x $175,000 (i have heard anywhere btwn 150-225k) and that is what 2-3 years out could be on revenue, again that is one customer! The opportunity as star-buck stated is BIG. Hope this helps and those that are close to the deal, feel free to comment on my numbers, but I think I am not out of line at all. C1