Technology | Service & Supply | Quarterly / Earnings Reports | Oilfield Services | Third Quarter (3Q) Update

Raise Production Sees Teething Issues on New System

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Raise Production Inc. has released its financial results for the three and nine months ended September 30, 2014.

President's Update

The Company has provided an update on its Horizontal Wellbore Production System progress and other corporate developments.

The Company has continued its efforts to develop a replacement part for the previously announced third party component that has compromised prior deployments of its System.

We have experienced good progress to date on qualifying a replacement part after testing numerous improvement iterations. Testing has been rigorous and time consuming. We have identified that the malfunction was due to two different mechanisms in the same part. Either one or combination of both would cause a system breakdown. We are confident that we have resolved one of those mechanisms with a new part design and an improved process for manufacturing. Tests are ongoing to prove consistent and competent function for the first mechanism identified. We are now in the process of qualifying a material and production process for the second mechanism.

We are currently working with two qualified suppliers to solve the second mechanism and expect to be able to deploy a complete new System early in 2015. Although we have sourced qualified suppliers in our original timeframe, the delay in deployment is due to supplier delivery times around the holiday season. The additional time taken to ensure that our next installation has a high probability of success is in the best interests of the Company and its shareholders. We are approaching a solution that we anticipate will address the third party issues experienced to date.

Late in the second quarter of 2014 and throughout the third quarter we began to experience success in the application of our proprietary vertical rod pump. Our new rod pump, developed ancillary to the development of the System, has been deployed in several test applications and are proving to be operating as designed. We will continue to deploy a number of additional rod pumps in different reservoirs and monitor their performance. Early in 2015, we will be in a position to determine the best commercial path forward with this product when test results prove to be sustainable.

We remain focused on the development of the System of which the rod pump will be a component. The development of the rod pump further demonstrates the ingenuity and creativity of the people here at Raise.

The Company continues to have a solid balance sheet with a cash balance that will to enable it to continue the development of the System into the latter part of 2015.

We would like to express our thanks to our shareholders and test partners for their patience during this time. We believe that this setback does have a solution and we will be getting back in the ground as soon as possible.