Petroleum Equities also provided technical assistance in the preparation of testimony for the subsequent litigation and testified in court. At trial, the jury awarded a $5.5 million judgment to the partnerships.

The investors acquired direct working interests in the program’s wells, allowing full, immediate deduction of intangible drilling costs as well as depletion-allowance credits on all future producing revenue. Initially, eight wells were drilled and completed by the operator. Subsequently, two additional wells were drilled offsetting the most successful of the original wells.

Twelve months after the program was launched, Petroleum Equities was directed by the operator to re-evaluate the program’s economics and found it to be generating cash flow to investors at or above initial expectations.

The conclusion from this due diligence was that the production projections of the general partner were not justified by actual production from existing, analogous wells. And Petroleum Equities’ opinion — which was conveyed to the potential investor — was that it was highly unlikely that the revenues to the limited partners would be sufficient to provide a satisfactory return on investment, even after accounting for the high gas prices being realized at the time.

In addition, a comprehensive proposal regarding commercialization of the technology covered by the patents was prepared. Based on the proposal, an independent petroleum company entered into an agreement with the research company to develop a commercialization structure.

For general information about the in situ conversion and recovery of heavy hydrocarbons, see our reports “Underground Refining Converts Heavy Hydrocarbons to Synthetic Crude Oil,” “Experimental Verification of In Situ Upgrading of Heavy Oil,” and “Commercial Application of In Situ Upgrading of Heavy Oil” as well as the presentation “In Situ Hydrovisbreaking” (Adobe Acrobat file – 1.4MB).

An anticipated shift in Ecuador from the production of light crude oils to heavier crude oils requires significant modifications to the country’s existing facilities for oil transportation and refining as well as the installation of additional new facilities.

USTDA subsequently awarded a grant to the Hydrocarbon Directorate, and a master plan was developed by a major U.S. consulting firm.

In conducting the study, Petroleum Equities first interviewed U.S. oil and gas operators regarding their attitudes toward working in India. The U.S. interviews were followed by interviews with government officials and corporate executives throughout India to compile an overview of the Indian petroleum sector. See the report “Petroleum Sector in India: Executive Summary.”

A major recommendation from the study was that the Oil & Natural Gas Corporation Ltd. (ONGC), India’s flagship petroleum company, should hold technical seminars in the U.S. to recruit U.S. partners for developing six prime offshore exploration blocks assigned to ONGC by the Indian government. This recommendation evolved into an international “road show,” which ONGC staged in major cities that are centers for worldwide oil and gas development.

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