That Gasfrac employee has provided a couple of updates again. Some people seem to think it is Doug McMillan (Vice President Sales & Engineering at Gasfrac).

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1st Update:-

I was planning to write back sooner but after Pittsburgh I spent some time in
Texas then back to Canuckville...

If it is ok I will touch on two things 1) your question and then 2) my opinion of
the Conference I will try to get to that tomorrow night as it was extremely
interesting....

1). With respect to the pricing reduction, that really becomes a benefit of
efficiencies and product input cost reduction. As a Corporation introducing a
new technology to a very competitive industry our challenge becomes 'how do we
remain profitable and yet competitive'...and all in the same swoop make
believers in a technology that is far outside of the box...

Now total credit to BlackBrush, they had a formation that was not delivering
what they were hoping, even with new horizontal and completion techniques, and
they decided to give our technology a try. It looked very positive on paper,
but until you execute you never really know. As you look at page 21 (I believe
that is the page), you will notice the cum performance of the LPG (indicated as
NGL) is lower than the water Fracs. What that really was, was actually they
were not able to handle the Propane flow back on surface; thus, they had to
choke back production. You can see after about 20 to 30 days it was a different
story. So that was really the proving part...we are on to something!

So back to cost reduction...how do we keep improving the process? Sorry, to
bore the heck out of everyone, but I'll kinda go through a bit of the evolution.
As we started working with them to improve flow back challenges and potential
recovery we stumbled on some tremendous positives (ok...it wasn't stumbling
because the BlackBrush Team and our FlowBack group were all over this!).
Without getting to 'nerdy' what we do to handle higher temperatures in a
formation (down hole) is we start to cut Propane with Butane which shifts the
phase curve keeping it as a liquid; therefore, able to pump and place Proppant
in the fracture down hole. Same idea here, but at the different end of the
spectrum (on surface), it is a little warm in Texas in the middle of summer.
Because of the high ambient temperature(s) we actually started to see cavitation
of our pumps during high percentage Propane treatments; therefore, we started
cutting more and more with Butane. The upside...much easier recovery for BlackBrush as the fluid stays in solution in the Oil; thus, a tremendous cost
savings! As everyone started to recognize the upside it was BlackBrush again
that asked us to take it to another level. They wanted us to pump a C4+ which
is a vey common and available product. We had to make some adjustments etc. but
in the end tremendous production results with even better recovery for BlackBrush driving down the costs.

Now where can it go? Efficiency and input cost optimization. We and BlackBrush can improve our efficiencies as we are doing, and more importantly as we
better understand the reservoir and fluid reaction we can work on customizing
the input fluids further reducing cost. I know I shouldn't get into
this...BUT...remember I am biased too...why not work closely with a client that
lives and breaths Hydrocarbon expertise...and use their product to stimulate
their well...to produce more product...to stimulate their well...etc. etc.??
This truly becomes a full cycle...without ever touching the ecology of the Water
cycle!

Anyway have a great evening and I plan to get back on tomorrow night to discuss
more about the Conference tomorrow as it was excellent and very thought
provoking.

Cheers,
Doug

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2nd Update:-

Good Evening,

This is strictly my opinion...

As I noted yesterday I wanted to stop by and address the Water Conference. In a word it was excellent! The venue and organizing group did a first class job. If you were an opponent or proponent it was extremely informative.

With respect to Water, the industry has made tremendous gains and has done an excellent job of improving and learning from past mistakes to address a change in culture. A very interesting aspect of the society which we live in is to witness the entrepreneurial spirit advancing technology, whether you are for or against, it was profound to see the many talented minds and facets at work with tremendous collaboration to attempt to solve the Water issues of the past, present and future. Now with saying this you must realize the audience consisted of many Operators, Government Agencies, and Service Providers all focused on Water. Many questions surround this medium but the overlying tone in my opinion was how do we economically make this resource sustainable? Many technologies were presented and discussed. The pure reality is it is NOT sustainable as many understand, but is technology the paradigm that will change this? Possibly? Or will it just prolong the inevitable? I have no idea...

But food for thought; a tremendous push in technology and execution presented was the science of recycling. Absolutley groundbreaking technology! BUT...let's reduce this to the simplest form. Can the industry sustain itself by recycling Frac fluid? How much Water will one recover in the fracturing process after each individual Frac? Now this will vary, but for argument sake an industry average is in the 30% range. Whether that number is larger or smaller is not the point...it is simply there is a deficit. Yes you will have to find a Water source from somewhere to replenish the volume for the next Frac no matter how cost effective or efficient your recycling is. Is technology just prolonging the inevitable?

Now I am very biased, yet the most profound statement made in the Conference was made by BlackBrush as the presenter opened the presentation with our solution to the Water challenges is not to use Water... Yes you could pretty much hear a pin drop! Remember the venue was filled with people from all walks associated with Frac Water. We didn't get stoned or anything like that, but our technology was absolutely out of left field and many had no idea such a concept exists. It left people with a different solution to the norm and much head scratching to follow...

The inertia of the industry is on a different plane, our objective has to be one success at a time and just keep plugging away. BBOG's proven success was simply one step at a time and this eventually catches momentum. As some have noticed an announcement was made on April 1st by Terrace Energy as they have joined BBOG to drill and complete a new well in the Olmos formation (large play in the Eagleford area) using our technology. This is in addition to the regular work being performed by us for BBOG on the San Miguel...momentum yes! For interest sake, the financial backer for Terrace, LG Industries (Korean Conglomerate). With respect to our opportunities in the North East US...tremendous but again it will be one step at a time as we are truly the contrarian.

Someone had asked that with better production and cost reductions GFS should be an easy sell? Yes, it is getting better but it is very tough slugging as the headwinds are doing everything to counter our facts, but more successes on a daily basis is the key to change the tide. We will getter!

Cheers,
Doug