STW Resources Holding Corp (OTC QB: STWS) announced the signing of a partnership agreement with a Texas ranching family to lease brackish water rights and build, own and operate a Proprietary state of the art "Hybrid Reverse Osmosis Water Processing System" capable of processing approximately 30,000 barrels of brackish water per day on the family's ranch located in Upton and other surrounding Texas County(s) forty miles southwest of Midland. In the agreement, STW will pay a 23% royalty to have access rights to the brackish water on several sections of land. Additionally, STW will own and operate the water systems designed by STW to process and deliver water to oil & gas producers for use in drilling and completing wells on and around the family ranch and for use on other oil & gas field in the area. There are in excess of 40 drillings rigs working in and around the ranch.
Signing this agreement is the next step in our plan is to build multiple STW Proprietary Hybrid Reverse Osmosis Facilies to sell processed brackish water to oil & gas producers. These projects will include access to a disposal well for any waste from the operation, ample supply of brackish water for processing, operation of the water reclamation facilities and a loading/unloading depot or extended water pipeline systems for water delivery. STW will process brackish water and sell it to producers at a prevailing rate similar to the current rate they are paying for fresh water currently per barrel ($.80-$1.10 per barrel). STW has received commitments from a major producer to purchase the water. Drilling activity is expected to continue for the next ten-fifteen years.
The first facility will initially process approximately 30,000 barrels or 1,260,000 gallons of brackish water per day and deliver approximately 27,000 barrels or 1,134,000 gallons of fresh water per day to producers. The STW Proprietary Hybrid RO System can recover approximately 90% of the fresh water from the Brackish water. The capacity can be increased at any time to process up to 50,000+ barrels per day as demand for water increases. The first phase of the project has several brackish water wells completed with additional wells to be drilled and a disposal well is planned for the near future. Estimated costs to build the first 30,000-barrel per day STW Hybrid RO System and drill 7 new brackish water wells is approximately $2.9 million. The landowners contracted recently to have a hydrogeological study performed on the brackish water reservoir and it validated the ample supply of brackish water for this project. The facility is expected to be operable in the fourth quarter of 2014.
STW CEO Stanley Weiner stated, "This is a great partnership, we're working with a local family and extending the company's model to conserve fresh water while the development of an oil rich area continues to happen. This is a win-win deal. Still increasing the US oil production while conserving our fresh water resources."
Alan Murphy President of STW Water added, "This project is a model for STW as our plan is to continue signing agreements and working with landowners to process and sell the currently unusable brackish water. It's good for everyone, the landowners conserve their fresh water and STW creates revenues further increasing shareholder value."