During the second quarter of 2009, Particle Drilling has focused all of its efforts on meeting the needs of its customer’s development plans that called for the particle impact drilling (PID) technology to be on site and drilling in April 2009. The company’s customer had been shooting seismic in the region that the next trial was to take place. Just before the company started mobilizing the PID system from Houston, it identified a potential weak zone in the interval in which Particle Drilling planned using the PID system. The customer deemed that the risk linked with utilizing the PID system while drilling through this weak zone was unacceptable and Particle Drilling was told to postpone the mobilization.
Following that event, Particle Drilling has been working with this customer and others in assessing alternative field trial opportunities for the 6 1/2 inch PID bits. Drilling 6 1/2 inch hole in very hard formations is fairly uncommon, which is one of the reasons this customer paid for the development of this size bit.
Particle Drilling continue to work with this customer in assessing opportunities in both 9 7/8 inch and 6 inch hole sizes. As a result of developing the 6 1/2 inch PID bit, Particle Drilling now understands the viability of removing 100% of the rock with steel particles. The company believes that this breakthrough is scalable to other PID bit sizes and will raise bit life well beyond its earlier expectations. Bit life had always been a concern and now that Particle Drilling has confirmed this ability, the company can do away with the rock ring and the need to remove any rock with mechanical force.
The full scale drilling laboratory Particle Drilling built for developing the 6 1/2 inch bit is totally compatible with developing both smaller and larger size PID bits and will mainly decrease the cycle time for new sizes and the reliability of the performance for new size bits.
As a result of an unfavorable decision in the company’s request to NASDAQ, the company’s stock will be delisted on May 12, 2009 and will trade over-the-counter for time being as deficiencies are corrected.
We are obviously disappointed about the cancellation of our 6 1/2 inch trial but we are at the same time pleased with the significant technical progress we have made in improving the PID bit durability as demonstrated with 100% rock removal by particles alone, stated Jim B. Terry, the company’s president and chief executive officer. Our new ability to rapidly prototype as a result of having an in-house full scale drilling lab will improve drilling performance while reducing cost and the time required scaling and modifying bit sizes. We are all very optimistic and look forward to our next field trial.
