Applied Fluid Jetting Services

Patents and Licenses
In February 2009, we filed a provisional patent (application number 61/152,885) relating to the process and unique equipment related to our applied fluid jetting process. In February 2010, the final patent application was submitted. This filing, if granted, preserves Blast’s and John Adam’s, the inventor’s, exclusive use of this proprietary process.

We believe the applied fluid technology and related trade secrets may be instrumental to our competitive edge in the oil and gas service industry. We are highly committed to protecting the technology. We cannot assure our investors that the scope of any protection we are able to secure for our technology will be adequate to protect such technology, or that we will have the financial resources to engage in litigation against parties who may infringe upon us or seek to rescind their agreements with us. We also cannot provide our investors with any degree of assurance regarding the possible independent development by others of technology similar to that which we have acquired, thereby possibly diminishing our competitive edge.

Research Efforts
Over the past several years, Blast has been developing a down-hole stimulation service that management believes has the potential to dramatically increase production volumes and reserves from existing or newly drilled wells at an attractive price to the customer. Blast has filed for a patent to protect this proprietary AFJ process.

The theory behind AFJ is both simple and extremely bold to maximize the reservoir area contacted by the well bore, both vertically and horizontally--in order to increase production rates and improve reservoir recovery rates. Recent experience has moved the theory closer to commercial realization. Blast provides a production stimulation service by entering existing or new well bores to access the productive formations containing oil and natural gas. By jetting laterally into the formations, more of the reservoir is exposed to the wellbore and additional hydrocarbons are flowed to the surface.

It is believed that this AFJ process can be successful in many types of sandstone and limestone/carbonate formations. In addition, management believes that the AFJ service may be successfully applied down to 9,000 feet of vertical well depth by simply adding a longer coiled tubing string. Since the process is at an early stage, management believes that laterals longer than 90 feet may be jetted with the existing equipment.

One of the major features that make the AFJ process attractive is the low barriers of entry required in securing the production stimulation business. Independent operators face a natural decline from their oil and gas wells and are willing to pay a modest amount to stimulate that production and increase their revenues. Their investment is demonstrated almost right away and can be returned very quickly, assuming the process is successful. The major service companies have focused their marketing away from Blast’s niche.

AFJ Testing Results
In 2008, Blast successfully jetted up to 90 feet horizontally into targeted oil zones from the 2,750 feet deep vertical well bore and we jetted 20 laterals into multiple zones. At a well depth of approximately 300 feet, the Blast rig completed two separate 50 foot laterals in each of two gas wells located near Abilene, Texas. Each lateral extension was positioned at 180 degrees from each other into the targeted producing sand. As a result, the initial production of the first well increased five-fold and increased twelve-fold on the second well.

During 2009, Blast further tested the AFJ process on wells in the Austin Chalk play in Central Texas operated by Reliance Oil & Gas, Inc. (“Reliance”) with some initial production success. Later Blast attempted to apply the process to third-party wells in West Texas and in Kentucky. Unfortunately due to mechanical failures of the surface equipment we were not able to achieve any lateral jetting in the down-hole environment. Currently the AFJ rig and other support vehicles have been moved back to a storage yard in Texas. Once sufficient funds are available we intend to resolve the mechanical issues and we will once again take steps to try to commercialize this technology.

Market
We believe it has become clear in recent years that while the demand for oil and gas in the U.S. continues to grow, the planet’s ability to meet this demand from existing and new sources worldwide is rapidly declining. This accelerated decline will require producers to seek new extraction methods or technologies to develop oil and gas production from existing fields and we anticipate that our AFJ process will help satisfy the need for these new technologies. According to the US Energy Information Administration, approximately, 2.5 million wells have been drilled in the U.S. since 1949. “Historically, only some 30% of the total oil in a reservoir – the “original oil-in-place” – was recoverable. As pressure declines in the reservoir, the oil becomes costlier and costlier to produce until further production becomes uneconomic…recent advances now allow greater recovery from old reservoirs.”

A key issue facing most independent oil and gas producers is how to economically increase their production volumes. Conventional approaches can involve some fairly expensive undertakings such as in-fill drilling programs, horizontal drilling, well stimulation and massive “frac” jobs. While these programs may apply to large fields with thick contiguous pay sands, there are many fields with geological conditions or production characteristics where the potential improvement may not support such high dollar solutions.

The use of the AFJ process in the existing energy business is very small but has the potential for explosive growth. The vast majority of the approximate 2.5 million wells drilled in the U.S. since 1949 are either shut-in or are producing far below their productive capacity. Traditional energy stimulation techniques are not cost effective for these wells due to high costs. Producers universally agree that more revenue from each well makes good economic sense for them at almost any price level of crude oil and natural gas in excess of marginal operating costs.

AFJ Process PowerPoint