PacWest FracDB Capabilities Overview, Nov 2011

FracDB: The First US Frac DatabaseA Powerful Tool for Understanding the MarketHouston, TexasNovember 14, 2011TERMS & CONDITIONSInformation furnished in all reports produced by PacWest may be used by Client for internal purposes, as Client deems beneficial, aslong as due care is taken to hold the information confidential within Client’s organization and PacWest is not liable for the information PacWest Consulting Partnersprovided. 920 Memorial City Dr, Suite 160 Houston, TX 77024All rights to the information remain with PacWest. PacWest represents that it will not breach any obligation of confidentiality withrespect to information contained in the study. PacWest will maintain in confidence and not disclose any information related to Client,without prior written consent of the Client. PacWest will not disclose to any person, including, without limitation, any of the Client’scompetitors or suppliers, the fact that Client has engaged PacWest in this project scope, the scope of the assignment or any otherinformation relating to Client.

FRACDB CAPABILITIES OVERVIEW Contents 1. PacWest Snapshot 2. FracDB Capabilities  FracDB Overview  Pressure Pumper & Customer Relationships Case Study  Completions Chemical Market Case Study 3. PacWest Market Intelligence Offerings Client Confidential © PacWest 2011 | All rights reserved | 2

FRACDB CAPABILITIES OVERVIEW PacWest is a boutique strategy consultancy and market intelligence firm that specializes in unconventional oil & gas Firm Overview & Capabilities Consulting & Advisory Market Intelligence Products  Provide strategy consulting and  Offer industry-leading analysis of advisory services to Oil & Gas unconventional market  Strength in Oil & Gas supply market  Deep knowledge and strength in the - Often work with operator supply pressure pumping / frac market chain groups analyzing supply/demand, developing  Employ combination of primary sourcing strategies, building intelligence + secondary research capabilities, etc.  Unique in market: apply strategy  With oilfield suppliers, often work at consulting capabilities to turn C-Level or business lead research into actionable intelligence All key staff come from top-tier strategy firms; consulting and market intelligence capabilities reinforce/inform each other Client Confidential © PacWest 2011 | All rights reserved | 3

FRACDB CAPABILITIES OVERVIEW A sampling of some of PacWest’s recent projects demonstrate our depth of experience in North American and international shale Sample of Recent PacWest Consulting Projects PacWest Project Client Outcome Analyzed Bakken & Eagle Ford supply/demand; conducted Operator avoided completion demand planning exercise to develop new pressure pumping delays, avoided significant sourcing/contract strategy additional costs Developed Poland unconventional market entry, PE firm focused on high-growth product/service, and JV strategy for a potential shale service segments only, with the right company for a private equity client strategic partners Developed an innovative economic and strategic analysis of Operator understood cost operator all-in water management costs over 20-year implications, made optimal timeframe, for Bakken & Eagle Ford assets economic decisions Conducted a study of frac pump market focused on supplier Equipment manufacturer strategic plans, manufacturing capabilities, and supply chain developed optimal strategic capabilities investment plans Conducted study of evolving service company landscape in Operator made better informed Poland, including equipment, resources, and expansion plans contract award decision We have resources in nearly every major unconventional country/region to support international shale needs Client Confidential © PacWest 2011 | All rights reserved | 4

FRACDB CAPABILITIES OVERVIEW FracDB is the definitive database of fracs and frac chemicals that can be used to conduct sophisticated market analyses Product Overview Data Elements  Database of US fracs and frac chemicals, built  Frac date into a rich structured data set  Well number, API number - The data set already contains nearly 7,000  Operator fracs conducted in 2011  TVD  A sophisticated tool that can be used to run a  Water volume variety of analyses:  Pressure Pumper - Pressure pumping/frac market share  Play - Completion chemicals market share  Chemical type - Regional frac design practices  Chemical ingredient - And dozens of other analyses…  Chemical supplier  Updated quarterly Contact us for more detail FracDB is a powerful tool for the sophisticated market analyst – available late 2011 Client Confidential © PacWest 2011 | All rights reserved | 6

FRACDB CAPABILITIES OVERVIEW PacWest’s FracDB provides unprecedented insights into the completion chemicals market Analysis of Pressure Pumper Customer Relationships ■ The PacWest FracDB is a database of US fracs and frac chemicals, built into a rich, structured data set - The dataset currently contains detailed data from over nearly 7,000 US fracs conducted in 2011 - The FracDB provides a granular view of pressure pumper customer relationships across US plays/basins ■ As an example of the analysis possible with the PacWest FracDB, we have provided a detailed view of pressure pumper customer relationships for one key shale play and one of Baker Hughes’ key customers Client Confidential © PacWest 2011 | All rights reserved | 8

FRACDB CAPABILITIES OVERVIEW BHI has a well-established presence in the Barnett but works primarily with Devon, while HAL and WFT have a broader customer base Pumper / Customer Relationships in the Barnett (major E&Ps only) Univer- Frac Operator Pumpco BHI HAL SLB WFT Superior Trican sal Pioneer Tech C&J Chesapeake EOG Devon XTO Pioneer Williams ConocoPhillips Enervest Titan Vantage Range Major customer Minor customer Note: Analysis includes data from 637 fracs in the Barnett executed between January 2011 and September 2011 from the PacWest FracDB Client Confidential © PacWest 2011 | All rights reserved | 9

FRACDB CAPABILITIES OVERVIEW Baker is Devon’s frac provider of choice, but Devon still uses other pumpers in its other assets Frac Provider’s Used by Devon in 2011 (Jan-Sep) Devon’s Frac Providers Comments ■ Although Baker Hughes has provided Play BHI HAL WFT the vast majority of Devon’s fracs in 2011 (92%), Devon has also worked Arkoma Woodford with Halliburton and Weatherford Barnett ■ Baker Hughes is creating an Eagle Ford opportunity for its competitors to Green River gain a foothold with one of its major Haynesville customers Permian Major customer Minor customer Is Baker Hughes leaving value on the table by opening the door for other pumpers to work with Devon? Note: Analysis includes data from 274 fracs executed for Devon between January 2011 and September 2011from the PacWest FracDB Client Confidential © PacWest 2011 | All rights reserved | 10

FRACDB CAPABILITIES OVERVIEW PacWest’s FracDB provides unprecedented insights into the completion chemicals market Completion Chemicals Market Analysis ■ The PacWest FracDB is a database of US fracs and frac chemicals, built into a rich structured data set - The dataset currently contains detailed data from over nearly 7,000 US fracs conducted in 2011 - The FracDB provides extremely detailed data on types and volumes of chemicals used in the hydraulic fracturing process ■ As an example of the granular detail provided by the PacWest FracDB, we have conducted an initial analysis of the market for biocides used during stimulation in the DJ Basin Client Confidential © PacWest 2011 | All rights reserved | 12

FRACDB CAPABILITIES OVERVIEW BHI is the dominant supplier (75%) of biocide in the DJ basin, although it only runs 27% of frac jobs Frac and Biocide Market Share in the DJ Basin Fracs vs. Biocide in the DJ Basin (Jan-Sep 2011) Comments 80% ■ HAL is the largest frac provider in the 75% Share of Frac Jobs (total = 612) DJ Basin, with 28% of the market by 70% Share of Fluid Pumped (total = 6.9M barrels) number of frac jobs, and 36% of the Share of Biocide (total = 336K pounds) market by total fluid pumped 60% ■ However, BHI is the dominant supplier of biocide in the DJ Basin, 50% Market Share with 75% of the market by weight 40% 36% ■ Baker supplied 56% of biocide used in it’s competitors’ frac jobs (i.e. frac 30% 28% 27% jobs not executed by Baker) 23%22% 22% 19% 20% 20% 13% 10% 10% 0% 1% 1% 1% 1% 0% 0% 0% Baker Hughes Halliburton Superior Calfrac Unknown Maverick Note: Analysis includes data from 612 fracs in the DJ Basin executed between January 2011 and September 2011 from the PacWest FracDB Client Confidential © PacWest 2011 | All rights reserved | 13

FRACDB CAPABILITIES OVERVIEW Although there are eight different biocides used in the DJ Basin, Baker’s DBNPA product is by far the most common Biocide Market Share in the DJ Basin Biocide Consumption in the DJ Basin (Jan-Sep 2011) Comments 300,000 ■ Baker is the dominant biocide supplier in the DJ Basin, with 75% of 253,532 market share 250,000 Total = MBNPA 336,342 pounds Propietary ■ Baker sells two biocide products in Bronopol the DJ: DBNPA (94%) and THPS (6%) 200,000 ■ Calfrac is the 2nd largest supplier, withPounds Biocide NaOH THPS 13% share (44,182 pounds), followed 150,000 NaClO by Halliburton with 10% share (44,182 pounds) PEG 100,000 DBNPA Short-Hand Biocide Full Name Bronopol 2-Bromo-2-Nitro-1,3-Propanediol DBNPA 2,2-Dibromo-3-Nitrilopropionamide 50,000 44,182 34,768 MBNPA 2-Monobromo-3-itrilopropionamide NaClO Sodium Hypochlorite 3,859 NaOH Sodium Hydroxide 0 PEG Polyethylene Glycol Baker Hughes Calfrac Halliburton Unknown Proprietary Unknown Proprietary THPS Tetrakis (Hydroxymethyl) Phosphonium Sulfate Note: Analysis includes data from 612 fracs in the DJ Basin executed between January 2011 and September 2011 from the PacWest FracDB Client Confidential © PacWest 2011 | All rights reserved | 14

FRACDB CAPABILITIES OVERVIEW PacWest currently offers multiple unconventional market intelligence product offerings to support subscriber decision-making Market Intelligence Offerings Breakdown of pressure pumping fleets/capacity by basin and supplier with strategic analysis of latest regional supply market trends Interactive database of 100+ critical unconventional suppliers Cost escalation forecast for major D&C categories Detailed breakdown of frac activity by basin, operator, pumper Database of fracs including basin, operator, pumper, chemicals, chemical suppliers Client Confidential © PacWest 2011 | All rights reserved | 16

FRACDB CAPABILITIES OVERVIEW PumpingIQ provides the only granular breakdown of regional fleets/capacity by pressure pumper and analysis of market trends Fleet/Capacity Breakdown & Trends Focus Markets  On-going monitoring of pressure pumping  Bakken fleets and capacity in major US onshore frac  Eagle Ford markets  Permian  Granular regional breakdowns of  DJ Basin fleets/capacity by pumper  Anadarko  Key customers by pumper  Marcellus  Detailed discussion of major trends and strategic insights for each region and US  Uinta/Piceance/Green River market in aggregate  Haynesville  Fayetteville  Barnett PumpingIQ is the only granular fleet breakdown available in the market Client Confidential © PacWest 2011 | All rights reserved | 17

FRACDB CAPABILITIES OVERVIEW SupplierIQ is an interactive database of 100+ suppliers that are critical players in shale supply markets Supplier Analysis Profile Contents  Interactive database of 100+ companies that  PacWest Supplier Classification supply critical D&C products/services for  Company Overview & Analysis shale production  Service Offerings  Database is updated quarterly with new  Geographic Footprint suppliers; updates made to existing suppliers bi-annually  Financials  Subscribers can request supplier additions  Customers  Offer two forms of subscription to database:  Organizational Footprint full SupplierIQ access or a subset of suppliers,  Detailed discussion of Service customized to subscriber needs Offerings: 15 product/services that are critical for shale production SupplierIQ provides insightful snapshots of your key suppliers and competitors Client Confidential © PacWest 2011 | All rights reserved | 18

FRACDB CAPABILITIES OVERVIEW CostIQ provides a forecast of cost increases for key drilling and completion cost drivers Forecast Analysis Cost Segments  3-year forecast of D&C cost escalation,  Drilling segmented into major categories - Land rigs  Includes strategic discussion of trends driving - OCTG increases and/or decreases - Drilling fluids  Updated bi-annually (every 6 months) - Cementing services  PacWest utilizes three quantitative methods  Completion to forecast prices changes for each market segment: - Pressure pumping services - Multi-variable regression - Proppant - Demand/supply models - Frac chemicals - Macroeconomic models - Completion hardware - Completion rigs CostIQ provides 3-year cost forecasts for each key US region Client Confidential © PacWest 2011 | All rights reserved | 19

FRACDB CAPABILITIES OVERVIEW FracIQ is the source of frac activity data by operator and pressure pumper, with data broken down US-wide and regionally Product Overview Contents  The definitive subscription publication on  Aggregate US fracs: frac activity across the US - By operator  Summary of fracs by region, operator, - By pressure pumper pressure pumper  Regional breakdown of fracs:  Market share by pumper and operator across - By operator multiple metrics - By pressure pumper  Strategic analysis of frac trends and market dynamics, including implications for - By frac type operators, pressure pumpers, and other  Operator and pumper stakeholders relationships  Updated quarterly  Frac practices, including chemicals usage Your “Land Rig Newsletter” for the frac market – available late 2011 Client Confidential © PacWest 2011 | All rights reserved | 20

FRACDB CAPABILITIES OVERVIEW FracDB is the definitive database of fracs and frac chemicals that can be used to conduct sophisticated market analyses Product Overview Data Elements  Database of US fracs and frac chemicals, built  Frac date into a rich structured data set  Well number, API number - The data set already contains nearly 7,000  Operator fracs conducted in 2011  TVD  A sophisticated tool that can be used to run a  Water volume variety of analyses:  Pressure Pumper - Pressure pumping/frac market share  Play - Completion chemicals market share  Chemical type - Regional frac design practices  Chemical ingredient - And dozens of other analyses…  Chemical supplier  Updated quarterly Contact us for more detail FracDB is a powerful tool for the sophisticated market analyst – available late 2011 Client Confidential © PacWest 2011 | All rights reserved | 21

FRACDB CAPABILITIES OVERVIEW The ShaleIQ bundled product provides access to 3 useful products at a reduced price point Bundle Includes Breakdown of pressure Interactive database of Cost escalation forecast pumping fleets/capacity 100+ critical for major D&C categories by basin and supplier with unconventional suppliers strategic analysis of latest regional supply market trends The ShaleIQ bundle is a valuable resource to add to your decision - making toolkit Client Confidential © PacWest 2011 | All rights reserved | 22

FRACDB CAPABILITIES OVERVIEW PacWest delivers actionable intelligence that is designed to provide strategic recommendations to key decision-makers Actionable Intelligence  Transforms volumes of disparate market data, insider industry activity and expert input into strategic and actionable recommendations for decision-makers  Aggregates, organizes and distills a wide range of data and intelligence to provide information to our clients that is comprehensive, focused and strategic  Analyzes this information to assess its strategic implications and provide a clear path of action for each stakeholder Decision-Makers Client Confidential © PacWest 2011 | All rights reserved | 23

FRACDB CAPABILITIES OVERVIEW PacWest employs a comprehensive methodology that relies on primary intelligence and rigorous research and analysis Methodology  PacWest uses a multi-pronged approach to develop its market intelligence offerings; the team: 1) Gathers and reviews all information available publicly and via proprietary databases 2) Engages its diverse network of industry contacts to gather real-time intelligence 3) Processes and synthesizes raw information into actionable intelligence Primary Intelligence Gathering Secondary Research Insights are based on: These sources are regularly consulted:  Constant conversations with our source  Market research and reports network of field experts on-the-ground  Company annual reports, 10-Ks, 10-Qs  Surveys from operators and suppliers  Speeches and presentations by company  In-depth interviews and conversations with leadership and other industry experts operators and suppliers  Analyst reports from leading banks  Industry-leading experts and technical  Government data specialists  PacWest internal databases Client Confidential © PacWest 2011 | All rights reserved | 24

PacWest FracDB Capabilities Overview, Nov 2011

by PacWest Consulting Partners on Jan 05, 2012

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