AGUA NEWSLETTER DECEMBER 2018

Primexx Energy Partners Limited
(https://www.primexx.com/)

Primexx Operating Corporation was founded in 1960. The company is located in Dallas, Texas. Primexx Energy Partners Limited produces oil and natural gas. Primexx Energy Partners Limited specializes in exploration and in crude petroleum production. The Company acquires and develops fields which facilitate the production of oil and gas  reserves. Primexx Energy Partners Limited serves clients throughout the United States.

Agua Recycling Solutions (ARS) has completed agreements with five significant oil companies as of December of 2018. Primexx Energy Partners Limited adds to our existing MSAs. The following are current Master Service Agreements (MSAs) all with operators that have active drilling schedules in the Permian’s Delaware Basin:

Admiral Permian Resources, LLC
(https://www.admiralpermian.com/)
BlueStone Natural Resources, LLC
(htp://bluestone-nr.com/)
LUXE Energy LLC
(https://www.luxeenergy.com/)
Admiral Permian Resources, LLC
(https://www.admiralpermian.com/)

ABOUT OUR CEO

(Figure 1) Smithsonian Museum of American History - display "America's Huey 091" - exhibit "Americans at War - The Price of Freedom". Pictured: Robert Frost, one of several who had the honor to fly this Vietnam warbird.

Chief Executive Officer, Principal, Frost Rains Holdings, LLC – 3:16 Disposal Systems dba Agua Recycling

Solutions – Great Southwest Regional Center, LLC

Mr. Robert Frost has held key sales and management positions with several nationally known corporations in the financial services, computer, market research, and pharmaceutical industries, such as International Data Corporation and Merck-Medco. He initially developed the original concept of the ERISA medical bill audit review process and has extensive knowledge about ERISA regulations. Robert is often called upon by attorneys involved in ERISA litigation to provide expert testimony about hospital overcharges and inaccuracies in billing. Robert has been recognized as an expert witness in medical bill reviews by multiple courts, both state and federal.

Mr. Frost’s ERISA background and expertise has enabled him to provide consultation  as  an  Investment  Advisor  within  the  401k,  403b  and  Defined Benefit Plan marketplace. Robert formerly worked with Shearson, Lehman, American Express  and  Merrill,  Lynch,  Fenner,  and  Smith  and  held series 7 and 63 securities licenses in addition to commodity and Group 1 insurance licenses.

For nine years Mr. Frost has served on the Board of Directors of the West Texas A&M University Foundation and is its past president.

Mr. Frost served one tour of duty as a combat helicopter pilot in the Republic of South Viet Nam where he was decorated with the Bronze Star. Robert currently serves as Chairman Emeritus of the Board of Directors for The Conservatory of the Plains Foundation.

Mr. Frost was awarded an MBA in Business Management from The University of Dallas.

Featured Freedom Fighters News Artcle: “Robert Frost”. Click below for interview with: Joan Hallmark, Reporter at KLTV Dallas.

http://www.kltv.com/story/33420048/freedom-fighters-robert-frost/?fbclid=IwAR1ROIhANE_0FtHA2Y0vwNAcx1U-OZUvZ1w7hzB82m6nXzG5DBNgDT-grLU#.WAt6ej_1peo.facebook

AGUA RECYCLING SOLUTIONS ENTERS NEW JOINT VENTURE

In December of 2018 Agua Recycling Solutons entered an agreement with one of the largest

freshwater-well drilling companies in The Permian Oil Basin. The joint venture includes the following terms:

  • The drilling of 5 freshwater wells and one freshwater holding pit at our Orla, Texas Agua 2 Facility (total daily freshwater capacity of 25,000-30,000 bbls per day)
  • The capex for constructon of the Agua 2 improvements will be borne by the drilling company. There will be a sharing arrangement of profits
  • Drilling company to provide established New Mexico customer agreeing to purchase 15,000- 20,000 barrels of freshwater per day at a price of $.50 per barrel.
  • Customer is a midstream water transfer company that will provide the 8 miles of lay flat pipeline required to transport the water to the New Mexico state line located 8 miles north of Agua 2 (see demand for freshwater article link in this newsleter).
  • Drilling company partner has Right of Way agreement in place for the 8- mile piping route
  • The drilling of 2 freshwater wells at Agua 3 including freshwater holding tanks, this will establish a freshwater station for trucks at Agua 3.
  • The capex for construction of the Agua 3 improvements will be borne by the drilling company.

Construction at both facilities will begin in early February and should be completed by mid-March.

(Figure 2) Water Well Drilling

AGUA RECYCLING SOLUTIONS OUTLOOK FOR 2019

As the 2019 year begins, the stage is set for Agua Recycling Solutions to have a banner year. This is made possible by finally reaching the strategic position required for Agua Recycling to execute and deliver on its unique business model, a model that has been in pre-development for over three years. Here are some of Agua’s significant accomplishments that have recently taken place:

  • Approval by the Texas Railroad Commission of SWD Injection Disposal Permit for Agua 2. Additional SWD permit approvals on schedule for Agua 3 and Agua 4 for February, 2019.
  • Signing of a new Master Service Agreement (MSA) with Primexx Energy in December, 2018.
  • Expansion of mobile unit program from one technological process to three different processes. These mobile units will provide services off-site from our four fixed locations (services to include freshwater disinfection and recycle-reuse of produced water for fracking locations). Mobile units will be primarily based at Agua 1 during the 2019 ramp-up stages.
  • Joint venture agreement with a major water well drilling company to develop and construct new infrastructure at Agua 2 and Agua 3 enabling robust freshwater sales to begin in March, 2019 (see separate newsleter article).
  • Completion on a large commercial freshwater well at Agua 4 (30,000 bbls per day capacity) with freshwater sales to Centennial Resources beginning in February, 2019.

NOTE: CLICK ON LINK AND THEN CLICK ON “DOWNLOAD” AT THE TOP OF PAGE

1/ AGUA 1 Update

Agua 1 (Barstow) became permited as a recycling facility in mid-2018. Up until that time the facility was in a research and development "pilot" mode. Over 1000 truckloads of produced water were received, processed, recycled and lab tested during the last half of 2018. In the fall of 2018, a freshwater well at Agua 1 was developed and installed  with  a capacity  to produce up  to 12,000 barrels per  day  of freshwater.  In Ward County, the market for freshwater is $ .25- $ .50 per barrel. During the 4th quarter of 2018, several mobile units were deployed enabling us to begin off-site freshwater disinfection and produced water  recycling services. Over 5 Master Service Agreements were established with major oil companies and a small amount of revenue from the mobile jobs was generated. The mobile unit revenue is expected to grow rapidly throughout 2019. Agua 1 is currently in the process of applying for a "Salt Water Injection Permit" with The Texas Railroad Commission, that upon approval will allow a saltwater injection hole to be drilled on the property. This application process is a lengthy one that may take an additional 6-9 months for approval. The process was recently revised by the Texas Railroad Commission and now requires an extensive Seismological Review. The current drilling activity for oil and gas within a 10-mile radius of Agua 1, has dramatically increased and the demand outlook for recycling of produced water and for freshwater sales is strengthening (see Figure 3 map of drilling activity). The model going forward for Agua 1 is to: 1. sell freshwater by truck and piping, 2. to recycle piped-in produced water and return the clean water (suitable for fracking) to the drillers and oil operators (also via pipeline) and 3. eventually drill an injection well to enable disposal of the produced water that is not sold for reuse. Notice in the video below that the new freshwater well is depicted at the beginning of the video.

Video (1): https://netorgft3606560-my.sharepoint.com/:v:/g/personal/dallas_aguarecycling_com/EULPqV48aqdIhZ6GqVto-wIBn0kJVQbQEUjZLv2Qu6GQTg?e=6TC5o4


(Figure 3) Red pin dots indicate active drilling locations

2/ AGUA 2 Update

Agua 2 is extremely pleased to announce that we have received our first Salt Water Injection Permit and are now authorized to drill a saltwater injection hole! Agua 2 has also entered into a joint venture with a major water well and injection well drilling company to drill five freshwater wells and build a freshwater pit on our property. Drilling and construction will begin in early February.

Video (1): https://netorgft3606560-my.sharepoint.com/:v:/g/personal/dallas_aguarecycling_com/EZ7_0U7TTjFJu7unKjG2jX4BmYUCSo- bdxg0ddMoUw9ygw?e=EcugXd

Video (2): https://netorgft3606560-my.sharepoint.com/:v:/g/personal/dallas_aguarecycling_com/ER- C0RXOpGdKjhbyXsF5j7ABdeaLxqMQvr6hjFpcWXtP9g?e=Fo8OZT

3/ AGUA 3 Update

Agua 3 has entered into the Joint Venture for a new freshwater station to be constructed in February – March 2019. Agua 3 is on schedule for receiving a permit (sometime during the first quarter 2019) from The Texas Railroad Commission to drill a saltwater injection hole.

4/ AGUA 4 Update

Agua 4 completed drilling and construction of a large commercial freshwater well that has a capacity of 30,000 barrels per day. Freshwater sales will begin in February, selling water to Centennial Oil for drilling of oil wells on one of our partner's property that borders Agua 4 on the south end of our property. Agua 4 is on schedule to receive an approval for a saltwater injection hole permit during the 1st quarter, 2019.

Video (1): https://netorgft3606560- my.sharepoint.com/:v:/g/personal/dallas_aguarecycling_com/EfJAHNlZxdFGjvQW_jViYfsBngXSX66EExmSCSJgJn_erQ?e=5anq4A

Video (2): https://netorgft3606560- my.sharepoint.com/:v:/g/personal/dallas_aguarecycling_com/EWTcx7XuXC5CqN5sf1woPkABNtq8ty2ptH8fRfJ1GY9i-g?e=Ppg8g7

Video (3): https://netorgft3606560- my.sharepoint.com/:v:/g/personal/dallas_aguarecycling_com/ERiuWHNPs_VNmxx2VpX9POEBxZmybdONIESdwz0Wm_-K- Q?e=1eR0Fo

Video (4): https://netorgft3606560-my.sharepoint.com/:v:/g/personal/dallas_aguarecycling_com/EW_ZsZHjoNROvmM-qpxKI9ABPHoNmve5UXoYEXAegbxpHQ?e=fzMDXT

Pilot Program

Agua Recycling just completed (December 2018) a 450,000 barrel recycling pilot with Primexx Energy. The purpose of the pilot was to test a new mobile unit technology that uses an electro-oxidation process (See A72 Unit in the video below).

Video (1): https://netorgft3606560-my.sharepoint.com/personal/dallas_aguarecycling_com/_layouts/15/onedrive.aspx?id=%2Fpersonal%2Fdallas_aguarecycling_com%2FDocuments%2FShared%20with%20Everyone%2FGO%20PRO%20VIDEOS%2FPRIMEXX%20NEPTUNE%20SWD%20DRONE%20VIDEOS%2FGH010067%2EMP4&parent=%2Fpersonal%2Fdallas_aguarecycling_com%2FDocuments%2FShared%20with%20Everyone%2FGO%20PRO%20VIDEOS%2FPRIMEXX%20NEPTUNE%20SWD%20DRONE%20VIDEOS&slrid=54f7ba9e-70b6-8000-0729-87270661ee90

(Figure 4) Mobile Unit at Primexx Energy Jobsite

LINKS TO RECENT ARTICLES OF INTEREST:

1) Oil boom in Southern New Mexico ignites groundwater feud with Texas.

https://www.newsdeeply.com/water/articles/2018/07/16/oil-boom-in-southern-new-mexico-ignites-groundwater-feud-with-texas

2) Why the Permian Basin my become the World’s Most Productive oil field.

https://www.forbes.com/sites/rrapier/2018/12/27/why-the-permian-basin-may-become-the-worlds-most-productive-oil-field/#ce536b55ccb3

3) New Mexico official says Texas landowners are “stealing” millions of gallons of water.

https://www.texastribune.org/2018/06/07/texas-landowners-new-mexico-stealing-water-fracking/

4) New Mexico officials consider options to reuse oilfield water.

http://www.artesianews.com/1595899/n-m-officials-consider-options-to-reuse-oilfield-water.html

5) There is still room to run for oil prices.

https://oilprice.com/Energy/Oil-Prices/There-Is-Still-Room-To-Run-For-Oil-Prices.html

6) Crude Oil Prices – 70 Year History Chart.

https://www.macrotrends.net/1369/crude-oil-price-history-chart

7) IHS: Anadarko Basin emerging as top onshore play outside of Permian.

https://www.houstonchronicle.com/business/energy/article/IHS-Anadarko-Basin-emerges-as-top- onshore-play-13526129.php

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