OPERATIONAL COSTS & ROI

• The utility costs to operate an L-POD® Gen 5 Unit depend on operating conditions.

• Operated at 100% capacity, the feed pump on each L-POD® Gen 5 Unit will consume 466 kW/day.  The electrostatic transformer will consume another 100-600kW/day, averaging about 150 kW/day.  The current value of one kilowatt/hour of electricity in Texas is  $0.1123, so 466  + 150 kilowatts = 616 kilowatts per day times $0.1123 = $69.18 worth of electricity each day.

• Operated at 100% capacity, the single burner on each L-POD® Unit will fire at full capacity.  Each burner is rated for 1,250,000 BTU/hour.  There are one million BTU's in every 1,000 standard cubic feet of natural gas.  Gas is normally sold in until of 1,000 standard cubic feet , often referred to as 1 MCF (where "M" stands for 1,000 and "CF" stands for cubic feet).  One MCF of natural gas has a current value of $4.61.  So, each burner consumes 1.25 MCF per hour, or 30 MCF/day.  At $4.61/MCF, 30 MCF/D will cost $138.30 each day. However, each burner is only about 50% efficient at transferring the heat it generates into the fluid inside the treater.  So, we must add 50% for the inefficiency of this heat transfer, bringing the actual gas cost to $207.45/day.

• Adding the two maximum utility costs together, we get a total maximum utility operating cost of $69.18 plus $207.45, or $276.63/day.

• At today's oil recently reduced value of $100.68 per barrel, and using the maximum L-POD® throughput of 11,000 BOPD, each day the L-POD® operates it will process $1,107,480 worth of oil at a maximum cost of only $276.63, which equates to a processing cost of only  $0.00024978/barrel.

• Assuming a three year capitalization on the $1.75MM purchase on one L-POD® Unit, the total capital plus operating cost of an L-POD® Unit is $1,874.80/day when processing 11,000 BOPD, for a cost per barrel of only $0.1704.