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Haynesville Re-Frac Study

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Presented by Todd Bush of Energent Group at The Energy Forum in Houston, Texas (modified from original to remove sensitive data). The purpose of the Haynesville Refrac Study was to determine operators, service companies, and suppliers involved in refracs. 40 initial completions and refracs were examined to understand economics, performance, and products. Most refracs utilized less proppant & showed ROI within 12 months. Production uplift varied across operators & material used.

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Haynesville Re-Frac Study

  1. 1. Todd Bush Principal, Energent Group todd.bush@energentgroup.com http://www.energentgroup.com @EnergentGroup HAYNESVILLE RE-FRAC STUDY THE ENERGY FORUM HOUSTON, TX
  2. 2. TODAY’S DISCUSSION • About Energent Group • Landscape for 2015 • Company perspectives • Re-frac study goals • Initial findings 2
  3. 3. ABOUT ENERGENT GROUP 3 Energent Group is a market research firm focused on well life- cycle & frac market intelligence. We help sales & marketing teams commercialize new products, work with up-to-date operator data, & track well completions in top U.S. shale plays. FEATURED IN DATARESEARCH SOFTWARE
  4. 4. HAYNESVILLE HISTORY 4 1) EIA - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 - 50 100 150 200 250 300 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Total production Rig count
  5. 5. REFRAC POTENTIAL BUT TOO EARLY? Using the Haynesville play as their testing grounds for refracs before they move to other plays like the Eagle Ford. Refracing a small portion of the wellbore and that the technology needs to advance before it is brought to a larger scale Identified more then 270 potential candidates in the Haynesville with a current natural gas breakeven price of $3.00/Mcf looking to achieve a breakeven price of $2.35/Mcf in the future About 100 wells in their scope for potential refracs which were drilled between 2010 and 2012 that used a completion technique that used longer stage spacing and less proppant per foot Has not pursed refrac opportunities and believes economics of drilling new wells are better as drilling costs head lower 5
  6. 6. HAL & SLB SEE U.S. DEMAND • Successful refracs which have been used in 12 basins around the world • Have seen an increase in demand for use in the U.S • The economics are appealing to not only them but their clients as well and their technology was built with refracing in mind • Identified 10,000 wells in the U.S. and has high- graded 2,000 of them – Willing to cover the cost of the refrac and get paid off of production – Relying on their expertise and technological developments they have made • Looking at group of wells to refrac instead of single well candidates 6
  7. 7. APPROACH TO HAYNESVILLE STUDY Purpose Determine operators, service companies, and suppliers involved in re- fracs in the Haynesville Scope Examine 40 initial completions and re- fracs in the Haynesville to understand economics, performance, and products Initial Findings • Most re-fracs utilize less proppant • Many show ROI within 12 months • Production uplift varies across operators & material used 7
  8. 8. WORKING ASSUMPTIONS • Selected Haynesville due to operator activity and vintage of horizontal completions • Find cases where initial completion and refrac identified • Sample size of 40 wells with historical data Well Cost Assumptions: • Stage • Proppants (sand, rcs, & ceramic) • Water • Chemicals 8 Data Available: • Original Well Costs • Frac job (dates, stages, proppants, etc.) • Production volumes • Lateral length
  9. 9. REFRAC LOCATIONS BY OPERATOR 9 1) Energent data, Loouisiana DNR, FracFocus
  10. 10. SAMPLE WELL COSTS Original Well Cost $7.9 MM $9.4 MM $10.3 MM Estimated Refrac Cost $1.7 MM $1.1 MM $1.2 MM Percent of Original Cost 22% 12% 12% 10 Using $1.5 MM for estimated refrac costs for presentation. Report estimates refrac based on stages, water, proppant, and chemicals costs. OPERATOR A OPERATOR B OPERATOR C
  11. 11. RED RIVER PARRISH REFRAC 1 10 100 1,000 10,000 100,000 1,000,000 -24 -23 -22 -21 -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 ProductionMCF OPERATOR A Actual (MCF) Forecast No Refrac 11 1) Refrac costs $1.5M 2) NPV and IRR based on 24 months of uplift with no terminal value Notes: • 40x increase in 1st month’s production • ~14 month payback • $228K NPV@10% (39.1% IRR) • Hybrid fluid with Nu Flow (FTSI) • 40% less water, 8% less proppant
  12. 12. 1 10 100 1,000 10,000 100,000 -24 -23 -22 -21 -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 ProductionMCF OPERATOR B Actual (MCF) Forecast No Refrac RED RIVER PARRISH REFRAC 12 1) Refrac costs $1.5M 2) NPV and IRR based on 24 months of uplift with no terminal value Notes: • 13x increase in 1st month’s production • Negative 24 month NPV with $1.5M refrac costs; however, 13 month payback at $1M refrac cost • Actual costs expected to be much less due to water and proppant volumes • Slickwater fluid (SLB) • 64% less water, 60% less proppant
  13. 13. 1 10 100 1,000 10,000 100,000 -24 -23 -22 -21 -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 ProductionMCF OPERATOR C Actual (MCF) Forecast No Refrac RED RIVER PARRISH REFRAC 13 1) Refrac costs $1.5M 2) NPV and IRR based on 24 months of uplift with no terminal value Notes: • 55x increase in 1st month’s production • Negative 24 month NPV with $1.5M refrac costs; however, 10 month payback at $1M refrac cost • Actual costs expected to be much less due to water and proppant volumes • Hybrid fluid (HAL) • 39% less water, 8% less proppant
  14. 14. DE SOTO PARRISH REFRAC 14 1) Refrac costs $1.5M 2) NPV and IRR based on 24 months of uplift with no terminal value 1 10 100 1,000 10,000 100,000 -24 -23 -22 -21 -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 ProductionMCF OPERATOR B Actual (MCF) Forecast No Refrac Notes: • 10x increase in 1st month’s production • ~12 month payback • $325k NPV@10% (48.5% IRR) • Hybrid fluid with BioVert (HAL) • 41% less water, 33% increase in proppant
  15. 15. $9.1M WITH 3.2M LBS PROPPANT 15 - 1 2 3 4 5 6 7 8 0 1000 2000 3000 4000 5000 6000 Proppant(Moflbs.) Lateral Feet Proppant Intensity (M lbs.) 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 0 1000 2000 3000 4000 5000 6000 Cost($M) Lateral Feet Initial Well Cost ($M)
  16. 16. TOP QUARTILE SKEW REFRAC RETURNS 16 - 50,000 100,000 150,000 200,000 250,000 0 2 4 6 8 10 12 14 16 18 GasProduction(mcf) Number of Stages Stages
  17. 17. REFRACS CONTINUE TO BE ATTRACTIVE Operator Strategy Economics Risks • Some operators have made strategic choices to develop & execute refrac programs in Haynesville • Several testing waters to understand plan forward • Optimize entire field or single well • Attractive economics compared to new well costs & timeframe • Refracs show 2x – 10x production improvement • Returns are dependent upon cost of refrac and well performance • Candidate selection continues to be challenge • High variability in production from sample • Commodity prices may limit refrac returns 17 Top refrac jobs produce near 90 & 120 day IP rates, so expect more refracs discussed, tested, and evaluated
  18. 18. Todd Bush Principal, Energent Group todd.bush@energentgroup.com http://www.energentgroup.com @EnergentGroup HAYNESVILLE RE-FRAC STUDY THE ENERGY FORUM HOUSTON, TX
  19. 19. Research Data Software 19 PRODUCT CAPABILITIES
  20. 20. SPOT SHALE PLAY TRENDS CONFIDENTIAL 20
  21. 21. DISCOVER PROPPANT TRENDS CONFIDENTIAL 21 Analyze all operators and basins or a combination Review raw sand, ceramic, and resin proppant per job View nationwide proppant trends overtime across all basins
  22. 22. ONE-CLICK ANALYSIS OF OPERATOR CONFIDENTIAL 22 Analyze single operator – Pioneer selected Identify key pressure pumpers relationships by basin or overall
  23. 23. SEARCH WELL AND FRAC DETAILS CONFIDENTIAL 23 Get answers to questions like “in the last year, how many HAL frac jobs in Wyoming used resin coated sand?” Review frac job details to get single well view
  24. 24. PRODUCT LINES & PRICING 24 $3,000 - $50,000/month Varies depending on use $179 - $5,500/month Provide retainer monthly, quarterly, and annual market research services Deliver daily and weekly shale data for Upstream companies across US Enable field and office workers to access drilling, completion, & frac details • Drilling activity • Well starts • Frac sand usage • Top operators • Top counties • Benchmarking • Play specific research • Drilling permits • Rig activity • Rig equipment • Well completions • Wellbore details • Frac sand • Frac fluids • Oil & gas production1 • Monitor operators • Track suppliers • Review completion design and results • Search for drilling and frac jobs • Integrate with internal workflow 1) In progress DATARESEARCH SOFTWARE CONFIDENTIAL

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