Xtreme Oil & Gas Inc.
As the fourth generation in his family to work in the oil and gas business, Will McAndrew knows how to identify a worthwhile opportunity, even when there are obstacles in the way. A former Exxon employee, McAndrew was a strategic consultant specializing in the structure, formation and marketing of partnerships and joint-venture energy financings before launching Xtreme Oil & Gas – a business that was born out of a worthwhile opportunity that had a few obstacles in the way.
“Will started the company in 2007 after acquiring a property in West Texas –1,600 acres – from 12 doctors and an attorney who were fighting over what to do next,” COO Nick DeVito explains. “ Will came in as the “white knight” and over the course of a year was able to settle with everyone by exchanging their ownership interests in the property for stock in Xtreme Oil & Gas. That’s how it began.” Today, Xtreme is an independent oil and natural gas exploration, development and production business with projects and properties located in the southern United States. The first property it purchased in Brown County, Texas – West Thrifty – is 90 percent owned by the company. It housed a flourishing operation in the 1930s, producing 30,000 barrels per day at peak. When the oil stopped gushing, the site was shuttered, but its wells and much of the oil remained. The strategy now is to create pressure to extract the balance, something that was impossible during the site’s heyday. With today’s technology, many historical sites are being revisited.
Xtreme determined which of West Thrifty’s 63 wells were prime for secondary recovery methods using a device that creates a pressure wave when dropped to the bottom of a wellbore. Xtreme tracked the waves to find the fault line.
The company discerned that a water-injection method could recover an estimated 4.5 million barrels of oil. The water is injected along with surfactant, “which is really the fancy name for soap,” DeVito explains. “Just like dish soap that takes the oil off your dishes, surfactant takes the oil off of sand. This combination of oil and water then comes out of the wellbore and we keep recycling the water back in. It’s a closed-loop system so there are no environmental problems.”
The entirety of Xtreme’s portfolio has been built in the same way as this West Thrifty property example. McAndrew has a long-standing reputation in the industry, and learns about many low-risk/high-reward opportunities. “When the oil industry started, it was quite a high risk to go out and try to produce, but now we have the benefit and knowledge of all the past logs,” DeVito says.
Xtreme isn’t the only one aware of this trend. Geology reports from the company’s Kansas joint venture with four other companies show exactly at what points oil was produced and from what depth. Twenty million barrels of oil are left to be recovered on the 8,500-acre parcel using horizontal drilling and hydraulic fracturing techniques, which uses a sand and water mixture to create pressure to hold the rock fractures open and allow the oil to flow.
Xtreme used this same type method in Oklahoma. Geology reports showed that 400,000 barrels could be recovered from the site. Once it began production, Xtreme found that the land actually appears to hold double that amount. DeVito believes that this is a promising sign for its Kansas operation since both properties lie on the same formation trend.
Like Oil and Water
Oil isn’t Xtreme’s only business in Oklahoma. The company recently opened a 15,000-barrel-per-day saltwater disposal well that disposed of 1,000-barrels-per-day in its first 10 days of operations.
Every oil and gas well produces a fair amount of saltwater that must be recycled underground. The water also has a small amount of oil left in it, about 1 to 3 percent that can be skimmed off the top. On a five-acre site in Oklahoma, Xtreme developed a closed-loop saltwater disposal system where it is able to retrieve excess oil from the saltwater before recycling it back into the ground. For every 15,000 barrels of saltwater, DeVito says it can extract 150 barrels of oil.
The company wanted to ensure that its site was easy and accessible. The trucks enter the site and release the water into a large water capture pit where Xtreme skims off the excess oil. The trucks circle back out and the transaction is completed. Xtreme is considering opening a new well closer to the Arkansas border, which doesn’t allow saltwater disposal in the state.
“It’s [an] environmentally friendly facility,” DeVito says. “We use a chemical like dish soap to break up the oil which we then sell. And the water is treated and disposed back into the ground. We also produce a by-product that we can sell as road salt and road sand so all production creates value for us. We plan on growing this side of the business, as rapidly as possible to further enhance all revenue sources for Xtreme.”
In summary, Xtreme represents a unique opportunity with a strong and experienced management team. The company is well-positioned for long-term growth in the oil, gas and saltwater disposal sectors. EMI