LEA CO., NM SWD PROJECT

Energy Advisors Group is representing a private seller in the sale of their Northern Lea County, New Mexico Salt Water Disposal business. The operation includes three (3x) SWD wells in two (2x) facilities. All injection wells function via vacuum for water disposal and are in regulatory compliance with current MITs (Mechanical Integrity Tests) and no environmental issues.

Operational Comments---

These assets are in northern Lea County where there are little to no alternatives for area operators to dispose of their water. The closest truck accessible commercial SWD facility is more 15 miles away from each of these facilities. Several operators are connected to the facilities via operator owned water pipelines. The facilities receive water via truck (40 to 50 loads per day) and pipe. The operations have been fully automated for ticketing in addition to a 24/7 camera surveillance system. The owner has excellent relationships with its field and office personnel as well as its client base. For example, during the rapid Covid downturn, the owner voluntarily reduced its water rates to assist area operators lower their LOEs and continue to keep wells online. Currently, price rates for both trucked and piped water is the same.

In general, the SWDs dispose into the Penn Pool and due to the vacuum nature of the receiving reservoir the operations of these SWDs is much simplified. The facilities are all in good to excellent shape.

Revenues---

In 2023, these assets generated $1,500,000 in revenue and $1,050,000 in adjusted well level cash flow. DKD had a great start to 2024 and has shown revenue of $860,000 thru July, with $710,000 in well level cash flow. 2023 showed record numbers for these assets (2023 water volumes also set a record) despite the fact that the highest producing facility was down during April, May, June 2023 for a well workover and facility upgrade. Additionally, a disposal price increase was put in place in November 2023 from $0.70/bbl to $0.90/bbl (Price for truck and pipe volumes are the same) with no material effect on volumes received through July 2024.

As of February 25, 2025 the asset is now under purchase and sale agreement w/ closing scheduled for March 2025. Late potential purchasers with asset interest can email Wes Adams to get on back up, stand by list.

Energy Advisors Group

Mr. Wesley Adams

Vice President

Phone: 432-553-2413

---Email: wadams@energyadvisors.com

Mr. Brian Lidsky

Director

Phone: 713-600-0138

---Email: blidsky@energyadvisors.com