Is Oil and Gas Explorer AGYP Going Electric?
No, Allied Energy Corp. (OTCMKTS:AGYP) is not going to join Tesla (Nasdaq:TSLA) in the EV market. AGYP is an oil & gas exploration company that is switching from gas generators to a 3- phase/200 amp electric service to power production at the company’s Annie Gilmer Lease. This move will certainly be better for the environment, and maybe more importantly to oil investors, better for AGYP’s profit margins.
Cause and Effect
- AGYP’s gas motors were inefficient both cost and performance-wise.
- To achieve optimal performance AGYP needs an electric submersible pump ‘ESP’
- ESP’s require electric power
- The gas motors powered production yielding a 2.5-5% oil cut on fluids pumped.
- AGYP’s new electric submersible pump will increase daily fluid production by over ~500%
What This Means For Investors
Capital Gains Report estimated the new ESP could yield between $1.09 and $2.09 million annually in oil revenue based on the reported oil cut, the increase in fluid production, and a cautious $80 crude spot price.
These projections, while pure speculation, still may not fully illustrate the revenue and margin impact the new ESP will bring.
Higher volume pumping could create greater oil cuts
Higher oil cut=higher revenue
Lower energy cost, fewer expenses
Fewer expenses, greater profit margin
ESP Advantages
Electric submersible pump (ESP) systems are:
- Low-maintenance
- Cost-effective
Especially compared to alternatives such as vertical turbine, split case, and positive displacement pumps in various fluid-movement surface applications in the petroleum industry.
The new ESP is ideal for AGYP’s ‘rework’ strategy because they are said to be ‘especially effective in wells with low bottomhole pressure, low gas/oil ratio, low bubblepoint, high water cut, or low API gravity fluids.’
AGYP’s Other Producer
At its Prometheus lease Well 1H, AGYP is pumping 2,000 to 2,400 barrels of fluid daily. While the company has yet to report the oil cut on this site, it has sold approximately 500 barrels already.
If the Prometheus site reports a 2.5% cut, it would be pumping 50 barrels of oil daily. Using an $80 oil price, AGYP’s Prometheus is capable of $4,000 daily. Annually, it would translate into $1,460,000.
These two sites alone are only one/third of the companies current operations. There are several more projects in their portfolio.
KEY TAKEAWAY
AGYP will be installing the electric grid and immediately conducting a 60-day test with the ESP. The results of these tests could be a major catalyst in the near term. Make sure AGYP is on your watchlist if it isn’t already.
This report is part of a sponsored investor education program
