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Well LifeWell LifePlugging InsurancePlugging Insurance
™™
Well LifeWell Life ™ ™ is…is…
a proven ideaa proven ideaused in a new wayused in a new way
Burial insurance for humans Burial insurance for humans is a time tested proven ideais a time tested proven idea
Burial insurance covers the Burial insurance covers the costs of burying costs of burying a persona person
Well LifeWell Life ™ ™ is…is…
““burial” insuranceburial” insurance
for for allall oil & gas wells oil & gas wells
Well LifeWell Life ™ ™ covers the costs covers the costs of plugging new or existing...of plugging new or existing...
land, bay or offshore wellsland, bay or offshore wells
Bonding Protection pays out Bonding Protection pays out onlyonly under certain conditions under certain conditions
Well LifeWell Life ™ ™ is…is…an an alternativealternative to bonding to bonding
Well LifeWell Life ™™ Insurance•Well specific Well specific •paid-up paid-up •non-cancelable non-cancelable •non-surrenderablenon-surrenderable
Plugging InsurancePlugging Insurance remains with remains with the well bore for life the well bore for life
regardless of ownership transferregardless of ownership transfer
Well Life Well Life ™™ Eliminates all future plugging Eliminates all future plugging
liabilities liabilities
for Operators, Land ownersfor Operators, Land ownersWorking Interest Owners Working Interest Owners
and Statesand States
Well LifeWell Life ™ ™
Consists of Consists of • an insurance policy an insurance policy andand • a well service contract a well service contract
together these guarantee every together these guarantee every covered well will be pluggedcovered well will be plugged
Well LifeWell Life ™ ™ covers covers 100% of the expense100% of the expense
100% of the time100% of the time
Well Life Well Life ™™ Plugging InsurancePlugging InsuranceHow it WorksHow it Works
Well OperatorWell Operator
(Policy “Purchaser”)
““Single Single Pay” Pay”
PremiumPremium
Policy Benefits Policy Benefits (Paid AFTER (Paid AFTER plugging is plugging is
completed)completed)SState Approved tate Approved
Plugging CompaniesPlugging Companies (Policy “Primary
Beneficiary”)
Insurance Company Insurance Company (Policy “Insurer”)
Backup system for Backup system for perpetual perpetual assuranceassurance
Fee for ServiceFee for ServiceStateState (Policy
“Owner” & “Contingent Beneficiary”)
*Note*Note: Policy benefits are : Policy benefits are paid to the state in the event paid to the state in the event of non-performance by of non-performance by primary beneficiaryprimary beneficiary
Well LifeWell Life ™ ™ AdvantagesAdvantages
……for Industryfor Industry
• Liability into assetLiability into asset• Tax savingsTax savings• Deal makerDeal maker• Locked in priceLocked in price• Reputation builderReputation builder
Well LifeWell Life ™ ™ AdvantagesAdvantages
……for Regulator’sfor Regulator’s
• Orphaned wells Orphaned wells gonegone• Less work / Lower costsLess work / Lower costs• Stops fund raidersStops fund raiders• Protect state landsProtect state lands
Well LifeWell LifePlugging InsurancePlugging Insurance
™™
Texas (Individual Well & Blanket Bonding vs Insurance)
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Number of Wells/Operator
Cost to P&A Well Bore IW Ins Benefits Bonding Benefits
Surface Remediation @ $600/ w ell
Insurance Benefits
Statutory Bonding Requirements
Assumptions:+ Avg well depth = 5,494feet+ Avg cost to plug well bore = $2.75ft+ Avg surface remediation cost = $600/well+ Texas Bond Requirements: $2.00/ft … or $25,000 for up to 10 wells$50,000 for up to 99 wells$250,000 for 100 wells or more
Texas (Individual Well & Blanket Bonding vs Insurance)
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Number of Wells/Operator
Cost to P&A Well Bore IW Ins Benefits Bonding Benefits
Surface Remediation @ $600/ w ell
Insurance Benefits
Statutory Bonding Requirements
Assumptions:+ Avg well depth = 5,494feet+ Avg cost to plug well bore = $2.75ft+ Avg surface remediation cost = $600/well+ Texas Bond Requirements: $2.00/ft … or $25,000 for up to 10 wells$50,000 for up to 99 wells$250,000 for 100 wells or more
10 Well Example:
Bond = $25,000
Insurance = $150,000
Surface = $6,000
Texas (Individual Well & Blanket Bonding vs Insurance)
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150
Number of Wells/Operator
Cost to P&A Well Bore IW Ins Benefits Bonding Benefits
Surface Remediation @ $600/ w ell
Insurance Benefits
Statutory Bonding Requirements
Assumptions:+ Avg well depth = 5,494feet+ Avg cost to plug well bore = $2.75ft+ Avg surface remediation cost = $600/well+ Texas Bond Requirements: $2.00/ft … or $25,000 for up to 10 wells$50,000 for up to 99 wells$250,000 for 100 wells or more
Well LifeWell Life ™ ™
Legislative Action?•State Policy Ownership status
•State Contingent Beneficiary status
•Insurance equivalence to Bonding
