6th Frac Sand Supply & Logistics Conference

Petroleum ConnectionSeptember 28, 2017

http://www.energentgroup.com@EnergentGroup

THE STATE OF FRAC SANDA DATA-DRIVEN VIEW

1. Introduction

2. Macroeconomic

Outlook

3. Frac Sand Trends

4. Permian Forecast

5. Conclusions

Key Topics

2

01 Introduction

ABOUT ENERGENT

3

Provide market

intelligence services

Deliver daily shale data for

supply chain

Enable field and office to

access well-lifecycle details

• Rig forecasts

• HHP tracking

• Basin & market studies

• Benchmarking

• Permits, rigs, and wells

• Rig equipment

• Frac sand & fluids

• Oil & gas production

• Monitor operators & suppliers

• Review completion designs

• Integrate with your workflow

• Forecast wells, proppant, &

materials

DATARESEARCH SOFTWARE

CONFIDENTIAL

Unconventional market intelligence

for the O&G value chain

ABOUT WESTWOOD GLOBAL ENERGY

4

Global

exploration

intelligence

focused on

industry

performance

and opportunity

analysis

Brands

Products

NW Europe

upstream oil

and gas market

intelligence,

analysis and

insight

Global

upstream deal

making and

opportunity

analysis for

business

development

Global oilfield

services (OFS)

market

intelligence with

online analysis

and

visualisation

tools

Track and

benchmark oil

& gas trends in

top US shale

plays—

research, apps,

& data updated

daily

Independent research and consulting for the global E&P industry

UPCOMING NEW OFFERINGS

Basin Frac Sand Study

• Supply/demand forecasts

• Pricing outlook

• Logistics constraints

• Market opportunities

Energent Platform

• Weekly satellite imagery

• Mine & transload capacity

• Rig activity

• Production statistics

5

1. Introduction

2. Macroeconomic

Outlook

3. Frac Sand Trends

4. Permian Forecast

5. Conclusions

Key Topics

6

02Macroeconomic

Outlook

BETTER THAN 2016, BUT …

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• Oil prices stable for first 3 months

• Turbulent since and trending down

• US inventories have generally fallen

• 2017 average 17% higher than 2014

• Production cut extended but little effect on oil price

• $55/bbl ceiling?

Weekly Oil Prices

Source: EIA, Westwood Global Energy Group

CONSENSUS WTI FORECAST

• Compiled from ~50 different views

• Latest oil forecasts adjusted downward

• Recent trading well below 2017 consensus

• Mean forecast reaches $61/bbl in 2020

• Low forecast reaches $58/bbl in 2022

• High forecast reaches $65/bbl in 2018

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Source: Westwood Global Energy Group

5361

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1. Introduction

2. Macroeconomic

Outlook

3. Frac Sand Trends

4. Permian Forecast

5. Conclusions

Key Topics

9

03Frac Sand

Trends

KEY FRAC SAND DRIVERS

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• 62% y-o-y 17’Q1

• Expect growth in

final Q2 sand

volume

• Key drivers:

– Rig efficiency

– Larger pads

– Longer lateral

– Higher intensity

• Impact of DUCs

SAND PER WELL DECLINING?

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Proppant Per Well By Basin

PERMIAN – OPTIMIZED COMPLETIONS

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1) Black triangle denotes sand mine, black square transload

Transload & Regional Mine Supply

+31%

LEAD TO OVERSUPPLY?

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Q1’18 will be key

with 6 local sand

mines entering

production

SAMPLE OF Q1’18 MINES

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1) Three of the six mines that are estimated for Q1’18 production

• Privately owned by Preferred Sands of Monahans LLC and operated by Adelphi Construction.

• Contains 100% fine-mesh reserves.

• Located in Ector county within 100 miles from ~90% of Permian proppant demand, and East of Monahans, Texas, the facility is strategically located along highway 20, equidistance to both Midland and Delaware basins.

Premium Sand: 40/70, 100 mesh

Est.: Q1’18

Current Capacity: 0

Name: Monahans

• Nameplate capacity estimates are ~83MM tons over 25 years reserve life. Capacity estimated to be 3.3MM TPY.

• No apparent factors limiting capacity growth

• As of 1Q17, largest customers include Halliburton, Encana and Schlumberger.

• Situated on ~31,000 acres, the facility has access to highway 20 and the UP TOYAH rail line.

Focus Mine

• Privately owned and operated by Black Mountain Sand LLC.

• Secure source of in-basin 40/70 and 100 fine-mesh reserves.

• Located in Winkler county, Texas, Vest is equidistance to both Delaware and Midland basins and in close proximity to EL Dorado mine.

Premium Sand: 40/70, 100 mesh

Est.: Q1’18

Current Capacity: 0

Name: Vest Facility

• Projected capacity of 4MM TPY premium sand.

• No apparent factors limiting capacity growth.

• Multi-year supply contract with Diamondback Energy, Inc.

• Black Mountain’s ~30,000 acres contains abundant water supply, strategic road access, and is in compliance with the Texas Conservation Plan regarding the Dunes Sagebrush Lizard habitat.

Focus Mine

• Privately owned and operated by High Roller Sand Operating, LLC.

• Strong focus on 40/70 (52%) and 100 (44%) fine-mesh reserves in addition to other mesh sizes including 50/140, 70/140.

• Located 8 miles North of Kermit, Texas and in close proximity to FM 1218. Road access provides low traffic routes to Northern Delaware and Midland basins.

Premium Sand: 40/70,100 mesh

Est.: Q1’18

Current Capacity: 0

Name: Kermit Plant • Nameplate capacity estimates are ~325MM tons over 100 years

reserve life. Capacity estimated to be ~3MM TPY.

• No apparent factors limiting growth.

• Finished products are fully tested and compliant with API and ISO specifications.

• Facility’s ~5,098 acres contains abundant water supply, strategic road access, and is in compliance with the Texas Conservation Plan regarding the Dunes Sagebrush Lizard habitat

Focus Mine

LARGER PADS, MORE STORAGE

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DUC VINTAGE IN THE DELAWARE

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1) DUC wells as of September 2017

2015 2016 2017

MIDCON - LOCAL SAND?

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Transload & Regional Mine Supply

+43%

E&PS TEST SCOOP/STACK DESIGNS

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• Industry moves

to ~4,500 tons

per well across

Mid-Con

• Devon ~40%

increase to

8,500 tons of

sand per well in

2017

• Followers are

years behind

Industry Proppant per Well in Mid-Con

Devon Proppant per Well in Mid-Con

EAGLE FORD – CONTINUED GROWTH

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Transload & Regional Mine Supply

+21%

E&PS ADOPT PROPPANT LOADING

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• Maturity of EF

• Marathon +22%

in 2017 vs 2016

• EOG +21% in

2017 to 7,800

tons per well

Industry Proppant per Well in Eagle Ford

Marathon Proppant per Well in Eagle Ford

1. Introduction

2. Macroeconomic

Outlook

3. Frac Sand Trends

4. Permian Forecast

5. Conclusions

Key Topics

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04Permian

Forecast

METHODOLOGY FOR PERMIAN

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1. Define Your Weights 3. Review Forecast2. Set Well Criteria

15 M TONS OF FRAC SAND

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• Local mines within

100 miles of ~90% of

sand demand

• Concho, Pioneer, and

EOG require more

than 1 M tons each

• Top 10 operators will

need 8.4 M tons

• What strategy wins?

1) Source: Energent App – Market Potential

1. Introduction

2. Macroeconomic

Outlook

3. Frac Sand Trends

4. Permian Forecast

5. Conclusions

Key Topics

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05 Conclusions

CLOSING THOUGHTS

• E&P capex. Expect spending to trend lower than announced capex plans with supply chain teams staying lean and flexible to respond to oil prices

• Uncompleted wells. DUCs will headline earning season as E&Ps wait to complete wells

• Pressure pumping. Smaller, regional frac companies are acquisition targets for new public pumpers –FRAC, FTSI, BDFC

• Regional mines. Additional announcements expected for regional mines to support Midland & Delaware Basin and Scoop/Stack demand

• Logistics. Joint ventures and partnerships in last mile and trucking will influence adoption of regional sand

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QUESTIONS?

Find Out More About Energent

http://www.energentgroup.com

Contact Todd Bush

281-846-4425

todd.bush@energentgroup.com

CONFIDENTIAL 26