ECONOMICS OF INSTALLATION

The Omega Technologies Inc. TSR is economical to install on pumping oil wells with run times between failures of 2 years or less and even marginal wells. A chart is given below to demonstrate the Investment Rate of Return on a Tubing Saver Rotator installation. This chart does not credit the revenue lost when a well is shut-in awaiting repair, which should improve the RORs. The curves on the chart reflect potential investment returns if the time between repairs is improved by 100% to 500%. Case Histories suggest possible use of the 300% Gain Curve when all failure types are used and then the 500% Gain Curve if only wear failures are considered (see HISTORICAL PERFORMANCE section).

To use the chart, one needs to know the average run time between failures based on proper documentation of their failure types and mechanisms. The 500% Gain Curve could be used for wells utilizing wear only failure rates. The Tripling Life curve may be used if only the Life for All Failure types is known (Case Histories suggest the Quadrupling Curve). It is highly recommended that failure causes be documented and recorded for each well to help in proper well analysis. An operator should rely on his or her own experience in determining applicability of TSR installation.

The chart assumes that the cost of the TSR is the same as one repair job. If the repair cost is different than the TSR cost, then one needs to use a normalized:

“Adjusted Run Time” = (Actual Run Time) * (TSR Cost) / (Repair Cost per job).

Example 1: A well is failing every 2 yrs (with undiagnosed failures). The operator can buy a TSR for 75% of the cost of one repair job. Using the Life Triples Curve and an “Adjusted Run Time” of 1.5 years, a 49% ROR is anticipated.

The “Adjusted Run Time” = 1.5 years = 2 yrs * (1 Repair Cost * 75%) / (1 Repair Cost).

Example 2: A well has wear related failures occurring about once every 12 months. The TSR will cost about the same as one repair job. The Chart implies a possible 99% ROR (For 500% Gain) with a TSR investment and installation.