EXECUTIVE BRIEF: JOINT VENTURE DEVELOPMENT PROPOSAL

PROJECT: Advanced Geothermal Repurposing Pilot (AGR-1)
LOCATION: Andrews County, Texas | Fullerton Field (San Andres/Clearfork Formations)
TRACT SPECIFICATION: O.G. Bitler Tract | Block A-47, Public School Lands (Sections 3 & 8) [📑]

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I. EXECUTIVE SUMMARY

This proposal outlines a strategic Joint Venture (JV) designed to execute a regulatory arbitrage and capital preservation pilot on legacy Texas Public School Lands (PSL) [📑]. By converting non-producing, idle wellbores currently carrying severe Asset Retirement Obligations (AROs) into closed-loop Energy Conservation Wells, the JV will harvest low-temperature (~100°F) subterranean thermal energy [📑, 📑]. This pilot achieves two core corporate mandates: immediate regulatory deferral of multi-thousand-dollar well-plugging liabilities and localized operational cost reduction (OPEX) via zero-emission thermal optimization [📑, 📑].

II. THE JOINT VENTURE MATRIX & PARTICIPATION

The JV structure aligns three critical stakeholders, optimizing legal standing, operational footprint, and cutting-edge engineering:

1. The Operating Partners (Hilcorp Energy Company / Crescent Energy):
   • Role: Working Interest (WI) Owners and Lease Operators [📑].
   • Contribution: Provides physical site access, structural wellbore infrastructure (casing/surface facilities), and handles local field operations on Sections 3 & 8 [📑].
   • Benefit: Immediate balance-sheet relief through the legal deferral of immediate Rule 14 plugging liabilities (valued at $50k–$250k per wellbore) [📑, 📑].
2. The Technology & Service Partner (Halliburton Low-Carbon Solutions / Labs):
   • Role: Advanced Geothermal Systems (AGS) Lead and Subsurface Engineering Partner.
   • Contribution: Supplies turnkey downhole completions packages, including retrievable isolation packers, vacuum-insulated tubing (VIT), ThermaLock cement formulations, and automated SmartWell telemetry arrays [📑].
   • Benefit: Real-world commercial deployment of proprietary AGS systems on highly scrutinized Texas State School Lands, creating a scalable blueprint for the wider Permian Basin.
3. The Vested Originator (The Bitler Legacy Estate / Legal Counsel):
   • Role: Project Originator and Regulatory Facilitator.
   • Contribution: Leverages its historical, dominant mineral estate footprint dating back to the 1940s/50s on Block A-47 to secure rapid, frictionless state-level regulatory clearances [📑, 📑].
   • Vested Interest: Holds a 1.5% Overriding Royalty Interest (ORRI) carved out of the gross financial value generated by the project (calculated via direct grid-power offsets or BTUs of utility gas replaced by geothermal line-heating loops) [📑].

III. REGULATORY SCHEMATIC (THE ARBITRAGE HACK)

The legal foundation of this JV relies entirely on capturing statutory advantages embedded within the Texas Natural Resources Code:

• Texas Senate Bill 1210 / House Bill 2632 Alignment: The JV will petition the Texas Railroad Commission (RRC) to formally reclassify target idle wellbores on Sections 3 and 8 from "Inactive Status" to active "Energy Conservation Wells" [📑].
• Statewide Rule 14 Mitigation: Under active RRC guidance, this reclassification legally Halts the mandatory 12-month plugging countdown [📑]. The operating partners preserve corporate capital by converting an active ARO liability into an asset, while maintaining compliance via Halliburton-engineered Mechanical Integrity Testing (MIT) [📑].
• General Land Office (GLO) Compliance: Because the physical surface rests on Public School Lands, the project acts as a high-profile ESG shield for the operators [📑]. It demonstrates proactive asset stewardship directly to the state, eliminating potential administrative friction regarding lease maintenance or environmental degradation.

IV. TECHNICAL CONVERSION OVERVIEW

• Subsurface Loop: Rather than extracting volatile or corrosive reservoir brine, Halliburton will install a low-cost, 100% closed-loop U-tube or coaxial fluid circulation system inside the existing 5.5" or 7" vertical casing [📑].
• Surface Utility Capture: The fluid will loop down to ~5,000 feet, absorbing the ambient ~100°F reservoir heat, and return to the surface via insulated tubing [📑]. The energy will be routed directly through a micro-scale scroll expander Organic Rankine Cycle (ORC) running a butane working fluid to generate off-grid site electricity, or utilized via direct heat-exchangers to melt paraffin wax clogs in the production line, cutting line-heater fuel costs to zero [📑, 📑].

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