Mire & Associates, Inc.€¦ · Oil IP30 (BOPD) Gas IP30 (MCFD) Oil Eq. (BOEPD) GOR MBO MMCF MBOE Enerplus 10 1,257 1,634 1,529 1,300 858 1,048 1,033 Halcon (HRC) 36 1,014 1,014 1,183

Mire &Associates,

Inc.www.mireandassociates.com

2015 Bakken ShaleActivity & Performance

Review

June 2016

2015 WellLocator

Map

2015 wells in red

Introduction

2015 Bakken Performance & Activity Review 3Copyright Mire & Associates, Inc. 2016

• The Bakken Shale Play is one of the most active horizontal drilling areas of the US.

• It is located in western North Dakota and eastern Montana.

• The play includes the Bakken shale formation along with the deeper Three Forks

dolomite formation.

• Mire & Associates, Inc. has analyzed the available well data through 2015 and

published operator reports from 2016.

• Our focus was to analyze 2015 activity, well performance, and drilling economics at

current oil & gas prices (June 2016)

Summary

Copyright Mire & Associates, Inc. 2016 2015 Bakken Performance & Activity Review 4

• 37 operators brought 1,413 new wells on production in 2015

• Average reserves per well are 540 MBO & 889 MMCF

• Initial 30 day avg. production rates are 615 BOPD & 742 MCFD

• Average new well reserves increased 40% from 2014 to 2015

• Average new well production rates increased 12% from 2014 to 2015

• Fracture stages & proppant volumes have increased each year

• Well costs for 2016 are about $6.4 million

• 2016 drilling economics - internal rate of return (IRR) should be ~ 19%

• Most active operator was Hess with 215 new wells in 2015

• Total Bakken play production peaked in late 2014 at 1.2 Million barrels/day

Horizontal Development


Typical surface padlocation withmultiple horizontalwell paths

Cross sectional view of horizontal Bakkenand Three Forks wells

2015 Bakken Performance & Activity Review 6Copyright Mire & Associates, Inc. 2016

Multiple hydraulicfracture stagesalong horizontalportion of well

2009 2010 2011 2012 2013 2014 2015

EUR MBOE(6) 542 560 566 485 513 493 688

Oil IP30 (BOEPD) 459 559 564 549 598 654 739

GOR (scf/bbl) 930 1,078 1,191 1,244 1,430 1,527 1,646

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EUR MBOE(6)

Oil IP30 (BOEPD)

GOR (scf/bbl)

New Well Performance Trends


2015 saw an increase in

Reserves per well

(EUR), Initial productionrates (IP30) and gas oilratios (GOR)

Monthly Activity Trends


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Oil

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Production Starts

Oil Price

Production starts exceededwell drills in 2015, Thisshould reduce the inventoryof drilled but not completedwells (DUCs)

2009 2010 2011 2012 2013 2014 2015

385

656

1,022

1,3961,254

1,372

892103

178

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566 810

865

521

Three Forks Completions

Bakken Completions

Spuds

Seven-year Activity Trend


Drilling &completionactivity downsubstantiallyin 2015

Production Trend


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Average Well Count

Year to yearproduction continuedto increase through2015

Top Operators – Production Trends


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Barrels of oil per day

SM Energy

XTO

Whiting

Continental

EOG

Burlington

Hess

Marathon

Oasis

Statoil

Total Play

Total BakkenProduction ratepeaked in late 2014at 1.2 millionbarrels per day

Top Operators –Total 2015 Production


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ion

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2015 Oil (BBL)

2015 Gas (MCF)

2015 Results by County


Oil IP30

(BOPD)

Gas IP30

(MCFD)

Oil Eq.

(BOEPD)GOR MBO MMCF MBOE

Mckenzie ND 514 739 1,109 924 1,500 734 1,183 931

Williams ND 332 524 681 638 1,300 444 754 570

Dunn ND 237 705 670 817 950 905 829 1,043

Mountrail ND 217 615 554 707 900 664 717 784

Divide ND 53 342 257 385 750 323 365 384

Richland MT 29 572 429 644 750 423 405 491

Burke ND 9 375 413 444 1,100 387 482 467

Stark ND 9 347 382 411 1,100 257 290 305

Billings ND 6 575 633 680 1,100 490 723 611

Roosevelt MT 6 917 1,284 1,131 1,400 576 396 642

Total / Avg 1,412 571 641 678 1,122 520 614 623

Mclean ND 1 1,642 1,232 1,847 750 1,070 951 1,229

1 well (not included in avg)

Init Prod Rates IP302015

WellsCounty

Reserves per well (EUR)

Oil IP30

(BOPD)

Gas IP30

(MCFD)

Oil Eq.

(BOEPD)GOR MBO MMCF MBOE

Enerplus 10 1,257 1,634 1,529 1,300 858 1,048 1,033

Halcon (HRC) 36 1,014 1,014 1,183 1,000 775 769 903

QEP 62 917 1,284 1,131 1,400 960 1,477 1,206

Hess 215 845 1,521 1,099 1,800 367 551 459

Zavanna 24 880 1,056 1,056 1,200 910 2,373 1,306

Newfield 37 728 1,456 971 2,000 503 1,491 752

Marathon 55 837 586 935 700 614 462 691

EOG 36 775 698 891 900 532 606 633

Whiting 200 681 1,022 851 1,500 441 858 584

Oasis 62 713 642 820 900 694 537 784

Burlington 105 584 818 720 1,400 590 1,039 763

Abraxas 7 545 954 704 1,750 571 624 675

Liberty Resources 11 594 624 698 1,050 406 788 537

XTO 154 513 923 667 1,800 427 748 552

Triangle USA 23 568 568 663 1,000 408 294 457

WPX Energy 23 568 483 648 850 826 784 957

Petro-Hunt 17 477 563 571 1,180 514 719 634

Continental 142 439 615 541 1,400 660 658 770

Samson 11 490 294 539 600 281 304 332

Statoil 55 440 572 535 1,300 649 775 778

Emerald 14 437 350 495 800 337 283 384

Slawson 22 402 241 442 600 345 437 418

SM Energy 42 370 370 432 1,000 409 416 478

Lime Rock 10 326 156 352 480 395 224 432

Hunt 10 295 207 329 700 361 289 409

Cresent Point Energy 8 265 199 298 750 187 151 212

Total / Avg 1,391 614 725 735 1,181 539 719 659

Operator2015

Wells

Init Prod Rates IP30 Reserves per well (EUR)

2015 Average Results by Operator


2015 Results by Operator


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Initial Prod Rate vs Reserves per Well (EUR)

Halcon

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Whiting

Crescent Point

Hess

Continental& Statoil

XTO

Burlington

EOG

Oasis

Zavanna

Most Active Fields in 2015


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Most Active Fields in 2015


2015 Average Completion Data


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Frac Stages

2015 AveragesLateral Length: 10,030 ft.Stages: 35Proppant: 4,716 Mlbs

Completion Trends


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Avg Lateral (ft)

Avg Proppant (Mlbs)

Avg Stages

Proppant volumes andfracture stages haveincreased every year

Bakken Completion Trends


R² = 0.2006

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Initial Production Rate vs Proppant

EOG

Enerplus

Hess

QEP

Halcon

More proppantgenerally yieldshigher productionrates

Best wells for 2015


Oil BOPD Gas MCFD BOEPD Oil MBO Gas MMCF MBOE(6)

FLATLAND FEDERAL 11-4-5TFH Oct 33-053-06747 Whiting Oil & Gas Mckenzie, ND 2,400 5,520 3,320 2,486 4,743 3,277

RIVERVIEW 102-32H Jun 33-053-06603 EOG Resources Mckenzie, ND 2,900 4,930 3,722 1,598 3,071 2,110

P JOHNSON 153-98-1 Aug 33-105-03589 Whiting Oil & Gas Williams, ND 2,223 4,446 2,964 1,025 2,335 1,414

MANDAREE 24-13HD Sep 33-025-02621 WPX Energy Dunn, ND 1,550 1,163 1,744 2,019 1,739 2,309

DOLL USA 12-14H Jun 33-053-06220 Marathon Oil Mckenzie, ND 2,026 1,621 2,296 1,349 1,830 1,654

JOHNSON 4-9-4BH Feb 33-053-06032 QEP Energy Mckenzie, ND 1,650 2,805 2,118 1,303 2,434 1,709

P JOHNSON 153-98-1 Sep 33-105-03587 Whiting Oil & Gas Williams, ND 1,641 3,118 2,161 1,144 2,644 1,585

HELLING TRUST FEDERAL 5494-44-2 Jan 33-061-03059 Oasis Petroleum Mountrail, ND 2,156 2,100 2,506 764 1,395 997

JONES 15-22-16 Sep 33-053-06238 QEP Energy Mckenzie, ND 1,154 1,339 1,377 1,765 2,067 2,110

SKUNK CREEK 1-8-17-15 Jul 33-025-02842 Whiting Oil & Gas Dunn, ND 1,667 1,500 1,917 1,371 946 1,529

Initial Prod Rate (IP30) Reserves (EUR )Well Name IP Mth API Operator County

The top wells have reserves of upto 3.3 million barrels of oilequivalent (MMBOE6)The best wells have initial 30 dayrates of up to 3,300 BOEPD

Best wells for 2015


The top 10 wells drilled in 2015were concentrated in the easternMcKenzie County area of NorthDakota

2016 Drilling Economics


Economic Assumptions

Leasehold: $160,000Drill & Complete: $6,200,000Facilities: $100,000NRI: 80%Oper. Expenses $15,000 / month (1st 6 mths)

$7,500 / month to ECL

Prices: June 1, 2016 NYMEXOil Differential: -14%Gas Differential: -30%Gas Shrinkage: 20%

2015 Type Curve Parameters

IP/IP30 : 721/615 Oil (BOPD)IP/IP30: 793/742 Gas (MCFD)Initial Decline: Oil 99.65% Gas 93.06%Hyperbolic factor: Oil & Gas 1.5Min Decline 5% Oil & 6% Gas

IRR: 18.9%, Payout: 3.9 years, NPV(10): 2,088 $M

Projected 2016drilling economicsyield positivereturns at currentoil prices

Abbreviations / Terminology


SPUD The first step when starting to drill a new well

BOPD is barrels of oil per day

MBO is thousands of barrels of oil

MCFD is thousands of cubic feet of gas per day

MMCF is millions of cubic feet of gas

MBW is thousands of barrels of water

MBOE(6) is thousands of barrels of oil equivalent, where 6 MCF of gas is equivalent to 1 barrel of oil

Proppant is sand or other material pumped into a well to prop open the hydraulically generated fractures

Lateral refers to the horizontal portion of the wellbore

IP30 is the average production rate over the first 30 days of production

EUR is the estimated ultimate recovery (per well) , based on decline analysis

SummaryMr. Mire is a senior reservoir and production engineer with thirty (30) years of experience in E&P. This experiencehas been gained at major and independent oil companies and by projects done for Tier I consulting firms RyderScott Company and Netherland, Sewell & Associates. Domestic experience includes Louisiana, Texas, Gulf ofMexico, Mid-Continent, and Rocky Mountains. International experience includes Mexico, South America, Iraq,Trinidad, and Asia. He has proven skills in reservoir and production engineering, operations, reserves estimation,Monte Carlo simulation, nodal analysis, field studies, and property evaluations.

EducationB.S., Petroleum EngineeringUniversity of Louisiana at Lafayette, 1982

Texas Professional Engineer #115886

Experience – 30 yearsMire & Associates, Inc., Houston 2004 – presentBP America, Houston 2001 – 2003Independent Consultant, Lafayette, LA 1999 – 2001Subsurface Consultants, Lafayette, LA 1993 – 1998Black Gold Production Co., Hammond, LA 1991 – 1993Independent Consultant, Morgan City, LA 1988 – 1991Texaco, Inc., Morgan City, LA 1983 – 1987

Kurt Mire, P.E.Reservoir Engineering/Project Management

Senior Engineering Consultant

SummaryMr. Moomaw is a petroleum engineer with 19 years of diverse E&P experience. He has performed reserves andacquisition evaluations, pressure transient analyses, field studies and has designed & supervised fracturestimulations. James has skills in reservoir engineering, well test analysis, workover identification and reservesreporting. He has worked on projects in Texas, Oklahoma, Louisiana, Alabama, New Mexico, Colorado, Utah,Wyoming, Montana, North Dakota, the Gulf of Mexico, Iraq and Tunisia.

EducationBS Petroleum Engineering, 1997, Texas A&M UniversityEIT (Engineer in Training) CertificationMBA Coursework, 2001, University of North TexasMBA Coursework, 2004 – 2005, University of HoustonNYMEX Energy Risk Management – 18 hoursGraduate Accounting and Finance Coursework

Experience – 19 yearsMire & Associates, Inc. 2011 - 2016Sierra Hamilton LLC 2013 - 2015BC Johnson Associates 2008 - 2011High Mount Exploration & Production LLC 2008 - 2008BP America Production Company 2006 - 2008El Paso Production Company 2004 - 2006Contract Engineer BP, Burlington, Chevron 2002 - 2004ARC Pressure Data 2001 - 2002BJ Services Company 1997 - 2000

James MoomawPetroleum Engineer

Consultant

SummaryMrs. Seidel is an IT professional with more than 23 years of experience in selecting, developing, and supportingscientific computing solutions for the oil industry. She worked as a project manager on systems ranging fromGeographic Information Systems, Oracle database design and maintenance, and integrated upstream G&Gsystems including Landmark and Finder/Geoquest. In 2011, Diane began working as an engineeringtechnologist/reserves analyst for Mire & Associates. Diane is proficient in using Excel and PHDWin to collect andanalyze production data in support of reserve reports, field evaluations and royalty acquisitions. She is skilled inusing online data sources such as IHS Energy, Drilling Info and various state oil & gas data sites.

EducationBachelor of Science in Computer Science, 1982Baylor University, Magna Cum Laude

Graduate coursework in Computer Science 1983 – 1985University of Texas at Dallas

Experience – 23 yearsMire & Associates, Inc., Houston 2011 – presentArco International Oil & Gas, Plano TX 1990 – 2000Arco Oil & Gas Co., Plano TX 1983 – 1990E-Systems, Inc., Greenville TX 1982 – 1983

Diane SeidelEngineering Technologist

Consultant

Mire & Associates, Inc. (MAI) is a petroleum consulting firm that was incorporated in 2005. Principal engineer is KurtMire, P.E. Based in Houston, Texas MAI has done domestic and foreign property evaluations, royalty evaluations,reserve reports, field studies and prospect evaluations for over forty (40) different clients in the last ten (10) years.Areas of expertise include:

MAI Company Profile

BP America Magnum Hunter Resources Sanchez Oil & Gas The Carlyle Group Breitling Energy TenOaks Energy Advisors Dynamic Upstream E & P Ryder Scott Company Universal Geopower

Carina Energy Winchester Energy Ltd Amazing Energy Lampert Capital Markets, Inc. Primrose Petroleum Houston Gulf Energy W&T Offshore Rockdale Resources STL Resources

Oil and Gas Property Evaluations Decline Curve Analysis Reserve Reports Project Economics Prospect Evaluations Multidisciplinary Field Studies

Monte Carlo Simulation – Probabilistic ReservesEstimates

Acquisition Evaluations PHDWin Database Creation Aries to PHDWin Database Conversions Development Drilling Evaluations

Partial Client List

Documents

Mire & Associates, Inc.€¦ · Oil IP30 (BOPD) Gas IP30 (MCFD) Oil Eq. (BOEPD) GOR MBO MMCF MBOE Enerplus 10 1,257 1,634 1,529 1,300 858 1,048 1,033 Halcon (HRC) 36 1,014 1,014 1,183