TEXAS PROPPANT TRENDS: MORE SAND = BETTER WELLS?

Frac Sand Supply & Logistics ConferenceAugust 21, 2014

Todd Bushtodd.bush@energentgroup.comhttp://www.energentgroup.com

@EnergentGroup

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ABOUT ENERGENT GROUP

Energent Group is a boutique market research firm focused solely on our client’s needs for oil & gas data and research products. We

help our clients identify top operators and peers in a play, discover sales opportunities, evaluate business line and market expansion, and detect trends in the completion & frac supply

chain.

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OBSERVATIONS

• Drilling “productivity” highest in Bakken with Eagle Ford following

• Top operators focus on field development and efficiency improvements

• Vertical and horizontal well strategies in the Permian Basin

• Horizontal well focus in the Eagle Ford• Contrasting two key counties

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30% OF RIGS IN PERMIAN BASIN

558

199194

79 77 69 62 45 44 34 25

Industry continues shift (+205) to Horizontal

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BAKKEN PER RIG PRODUCTION

Source: EIA Drilling Productivity Report

Jan-1

2

Feb-1

2

Mar

-12

Apr-12

May

-12

Jun-1

2

Jul-1

2

Aug-12

Sep-1

2

Oct-1

2

Nov-1

2

Dec-1

2

Jan-1

3

Feb-1

3

Mar

-13

Apr-13

May

-13

Jun-1

3

Jul-1

3

Aug-13

Sep-1

3

Oct-1

3

Nov-1

3

Dec-1

3

Jan-1

4

Feb-1

4

Mar

-14

Apr-14

May

-14

Jun-1

4

Jul-1

4

Aug-14

Sep-1

40

100

200

300

400

500

600

900

950

1000

1050

1100

1150

Permian EFS Bakken Niabrara Rigs

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OBSERVATIONS

• Drilling “productivity” highest in Bakken with Eagle Ford following

• Top operators focus on field development and efficiency improvements

• Vertical and horizontal well strategies in the Permian Basin

• Horizontal well focus in the Eagle Ford• Contrasting two key counties

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TOP 5 OPERATORS ACROSS TEXAS

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EOG LEADING LOWER 48

Source: EOG Investor presentations

EOG Activity YTD

EOG averages 10 million pounds of frac sand per well in Eagle Ford

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PIONEER’S PERMIAN FOCUS• Increasing horizontal

rigs (5 to 16) while reducing vertical rigs (11 to 9)

• Optimizing completions– Increasing clusters per

stage– Increasing proppant per

foot– Reducing fluid volume

• 29% horizontal well completions this year

Pioneer Activity YTD

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ATHLON SCALING UP IN PERMIAN

• Scaling up oil manufacturing with 7,308 drilling locations

• Vertical & horizontal strategy in Permian

• 2% horizontal • 134,000 net acres• Active in Wolfberry

Athlon Permian Activity YTD

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EP ENERGY’S SUCCESS DRIVERS• Refining lateral

placement & improving stimulation design

• Utilizing resin-coated and white sand

• Cycle time reduction• 100% horizontal in

Permian and Eagle Ford

EP Energy Activity YTD

Source: EP Energy’s investor presentations

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OBSERVATIONS

• Drilling “productivity” highest in Bakken with Eagle Ford following

• Top operators focus on field development and efficiency improvements

• Vertical and horizontal well strategies in the Permian Basin

• Horizontal well focus in the Eagle Ford• Contrasting two key counties

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PERMIAN BASIN TOP OPERATORS• Average oil IP’s

are fairly consistent across operators

• Sandridge and Chevron have 100% vertical activity

• COG and Energen are outliers for gas IP’s

OXY

PIONEER

SANDRID

GE

ATHLON

DEVONXTO

APACHE

CHEVRONCOG

ENERGEN -

20 40 60 80

100 120 140 160 180 200 182

149

114 94

81 77 75 60 59 57

OXY

PIONEER

SANDRID

GE

ATHLON

DEVONXTO

APACHE

CHEVRONCOG

ENERGEN -

100

200

300

400

500

600

700

800

Avg IP Gas (MCF) Avg IP Oil (BBL)

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PERMIAN BASIN SAND USAGE

Midland Basin

Central Basin

Delaware Basin

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OBSERVATIONS

• Drilling “productivity” highest in Bakken with Eagle Ford following

• Top operators focus on field development and efficiency improvements

• Vertical and horizontal well strategies in the Permian Basin

• Horizontal well focus in the Eagle Ford• Contrasting two key counties

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EAGLE FORD BASIN TOP OPERATORS

• 99.6% horizontal completions

• Rosetta having success with new gas wells

• Carrizo using 8-15 million pounds of sand per well

EOG

CHESAPEAKE

MARATHON

DEVON

EP ENERG

MURPHY

PIONEER

ROSETTA

COMST

OCK

CARRIZO -

50

100

150

200

250

300 263

174

117

76 72 60 58 56 44 36

EOG

CHESAPEAKE

MARATHON

DEVON

EP ENERG

MURPHY

PIONEER

ROSETTA

COMST

OCK

CARRIZO -

500

1,000

1,500

2,000

2,500

3,000

3,500

Avg IP Gas (MCF) Avg IP Oil (BBL)

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EAGLE FORD SAND USAGE

Oil Window

Gas Window

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OBSERVATIONS

• Drilling “productivity” highest in Bakken with Eagle Ford following

• Top operators focus on field development and efficiency improvements

• Vertical and horizontal well strategies in the Permian Basin

• Horizontal well focus in the Eagle Ford• Contrasting two key counties

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TOP COUNTIES TELL THE STORY

Andrews La Salle

Well Completions 366 261

Oil IP24 Average (bbl) 86.8 905.3

Gas IP24 Average (mcf) 62.6 766.4

Water IP24 Average (bbl) 360.8 1129.6

Frac Sand Average (lbs) 277,685 9,255,944

Sand Volume (MM lbs) 69 1,073

Horizontal (%) 7% 99%

Oil (%) 100% 95%

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OBSERVATIONS

• Drilling “productivity” highest in Bakken with Eagle Ford following

• Top operators focus on field development and efficiency improvements

• Vertical and horizontal well strategies in the Permian Basin

• Horizontal well focus in the Eagle Ford• Contrasting two key counties

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CLOSING THOUGHTS• Identify who is issuing horizontal permits in

areas near or adjacent to successful operators or wells

• Determine operators taking manufacturing approach using pad drilling to quantify sales opportunities

• Assess well and frac sand locations for strategic planning efforts

• Monitor upcoming “re-frac” market as opportunity to win business

• Expect down-spacing and field development to continue at this pace through Q4 2014

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