The Debrosse Memorial Report 2016 Oil & Gas Activity in Ohio

70th Annual Winter Meeting

Prepared by:Marty Shumway – Locus Bio-Energy Solutions LLC; Shumway Resources LLC

Bill Arnholt - Northwood Energy CorporationTim Knobloch - James Knobloch Petroleum Consultants, Inc.

The Debrosse Memorial Report 2016 Oil & Gas Activity in Ohio - Outline

• General overview of Ohio oil & gas production

• Permits & completion summaries

• Operator activity (footage drilled, number of wells)

• Activity by county (footage drilled, number of wells)

• IP analysis for horizontal wells

• Change of owners

• Production summary

• Utica EUR summary

• Class II injection well summary

Oil & Gas Production in Ohio

• More than 275,000 oil and gas wells drilled in Ohio since 1860

• More than 50,000 producing wells in 49 of 88 Ohio counties

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1000

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BEREA OHIO SHALE CLINTON TRENTON ROSE RUN CAMBRIAN

NW Ohio Lima-Indiana

Technologic Advance: Hydraulic FracturingClinton/Berea Plays

Morrow County Trempealeau Play

Clinton PlayTight Gas

Sands

Clinton Play

History of Ohio Wells Drilled by Year and Reservoir

2016 Permit & Completion Activity

PHOTOGRAPHS COURTESY OF LARRY WICKSTROM

Permits & Completions - 2011 - 2016

TYPE 2011 2012 2013 2014 2015 2016

▲

(’15 to’16) ▲%

PERMIT 690 903 1,608 1,659 997 561 -436 -44%

COMPLETION 460 553 580 654 534 620 86 16%

PLUG 571 473 630 629 511 439 -118 -14%

TOTAL 1,533 1,929 2,818 2,942 2,318 1,113 -1205 -52%

Permit and Completions By Month

JAN FEB MAR APRIL MAY JUNE JULY AUG SEP OCT NOV DEC

31

58

3243

3046 41

59

3544

57

8513

10

117

12

101

12

0

7

25

5

39

21

3839

23

52

44

45

35

40

26

37

Permits Completions Plugging Permits

Permitted Formations

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150

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300

350

400 372

111

28 18 13 7 4 4 2 1 1

2016

CompletionsPermits to DrillPermits to Plug

_̂ COMPLETIONS (620)

PERMITS (561)

PLUG PERMITS (439)

2016

CompletionsPermits to DrillPermits to Plug

Operators Completing Wells By Year

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

116 127147

162182

143126 121 112 113

89 8771

Wells Completed – Type620 Total Completions

Horizontal 477, 77%

Vertical 136, 22%

Directional5, 1%

Unknown2, 0%

COMPLETIONS - TD FORMATION

_̂ UTICA/POINT PLEASANT (466)

_̂ MARCELLUS SHALE (7)

_̂ CLINTON (2)

2016

Horizontal Completions By

Formation

_̂ BEREA & SHALLOWER (16)

_̂ DEVONIAN SHALE (5)

_̂ BIG LIME, NEWBURG (4)

_̂ CLINTON-MEDINA (33)

_̂ POINT PLEASANT (4)

_̂ TRENTON-BLACK RVR (7)

_̂ KNOX UNCONFORMITY (21)

_̂ ROME FORMATION (1)

_̂ UNKNOWN (22)

2016

Vertical Completions By

Formation

2016Class II

Injection Well Completions

By TD Formation

_̂ CONASAUGA FORMATION

_̂ ROME FORMATION

Completions By Month

JAN FEB MAR APRIL MAY JUNE JULY AUG SEP OCT NOV DEC

48 5056

42

5764

16

67

1017

8

40

13 10

11

7

1210

1

12

0

7 25

5

Horizontal Wells Vertical Wells

Completions – Top 10 CountiesCOUNTY TOTAL HORIZONTAL VERTICAL*

BELMONT 120 110 10

HARRISON 102 98 4

MONROE 87 77 10

NOBLE 56 54 2

CARROLL 47 47 0

GUERNSEY 45 44 1

JEFFERSON 24 23 1

KNOX 15 0 15

LICKING 13 0 13

TUSCARAWAS 10 4 6

OTHER COUNTIES 75 20 55

TOTAL 594 477 117

*INCLUDES “DIRECTIONAL” AND “UNKNOWN”

Completions By County

11098

7754 47 44

234

20

10

4

10

20 1

1

15 13 6

55

HORIZONTAL VERTICAL

Top 12 Most Active Operators – By Wells

OPERATOR% TOTWELLS

2016 WELLS

▲%2015

CHESAPEAKE EXPLORATION LLC 17% 99 -31%

ASCENT RESOURCES UTICA LLC 11% 66 200%

ANTERO RESOURCES CORPORATION 11% 64 31%

GULFPORT ENERGY CORPORATION 10% 62 -13%

ECLIPSE RESOURCES I LP 8% 46 156%

CNX GAS COMPANY LLC 5% 29 N/A

XTO ENERGY INC. 4% 24 300%

RICE DRILLING D LLC 3% 18 -5%

ATLAS NOBLE LLC 3% 17 750%

AMERICAN ENERGY CORP. 3% 17 1600%

HESS OHIO DEVELOPMENTS LLC 2% 11 -59%

R E GAS DEVELOPMENT LLC 2% 11 22%

TOP 12 OPERATORS DRILLED APPROXIMATELY 78% OF

TOTAL WELLS IN 2016

Hess Ohio – CNXGUE10N7W #H-8

PHOTOGRAPH COURTESY OF LARRY WICKSTROM

Top 12 Most Active Operators – By Footage

OPERATOR% TOTALFOOTAGE

2016FOOTAGE

▲%2015

CHESAPEAKE EXPLORATION LLC 20% 1,600,323 -41%

ANTERO RESOURCES CORPORATION 14% 1,086,226 25%

GULFPORT ENERGY CORPORATION 13% 1,069,335 -8%

ASCENT RESOURCES UTICA LLC 13% 1,000,606 67%

ECLIPSE RESOURCES I LP 9% 728,559 62%

XTO ENERGY INC. 6% 449,723 78%

CNX GAS COMPANY LLC 5% 415,226 100%

RICE DRILLING D LLC 4% 298,320 9%

HESS OHIO DEVELOPMENTS LLC 2% 187,974 -148%

ATLAS NOBLE LLC 2% 186,037 88%

R E GAS DEVELOPMENT LLC 2% 135,725 10%

PDC ENERGY INC 1% 115,876 29%

TOP 12 OPERATORS DRILLED APPROXIMATELY 91% OF

TOTAL FOOTAGE DRILLED IN 2016

Top 12 Most Active Counties – By Wells

COUNTY% TOTWELLS

2016WELLS

▲%2015

BELMONT 20% 120 67%

HARRISON 17% 102 13%

MONROE 15% 87 64%

NOBLE 9% 56 33%

CARROLL 8% 47 -42%

GUERNSEY 8% 45 -8%

JEFFERSON 4% 24 2300%

KNOX 3% 15 0%

LICKING 2% 13 30%

TUSCARAWAS 2% 10 150%

COLUMBIANA 1% 8 -43%

MEIGS 1% 7 -22%

OPERATORS REPORTED COMPLETIONS IN 36 OF 89 COUNTIES IN

2016 VERSUS 34 IN 2015. TOP 12 COUNTIES – 90% TOTAL WELLS

Top 12 Most Active Counties – By Footage

COUNTY% TOT

FOOTAGE2016

FOOTAGE▲%2015

BELMONT 24% 1,944,150 72%

HARRISON 20% 1,562,810 8%

MONROE 16% 1,283,768 68%

NOBLE 11% 858,620 53%

CARROLL 9% 705,687 -44%

GUERNSEY 8% 642,440 -8%

JEFFERSON 5% 363,946 3772%

COLUMBIANA 1% 118,211 -43%

MAHONING 1% 100,365 N/A

TUSCARAWAS 1% 72,388 139%

WASHINGTON 1% 46,608 -35%

LICKING 1% 42,232 106%

TOP 12 COUNTIES ACCOUNTED FOR 97% OF TOTAL FOOTAGE

DRILLED IN 2016

Drilling Footage and Wells – By Year

YEARTOTAL

FOOTAGE WELLSFOOTAGEPER WELL

AVG IP GAS

AVG IP OIL

2016 7,955,832 594 14,206 6,095 196

2015 6,587,714 534 12,336 5,432 279

2014 5,854,693 654 10,398 2,703 122

2013 3,898,408 569 7,570 1,361 97

2012 2,580,821 511 5,388 481 34

2011 1,832,121 454 4,192 136 7

2010 2,224,761 633 3,883 50 3

2009 3,036,431 927 3,767 223 2

2008 4,249,247 1149 3,750 54 3

2007 4,030,319 1094 3,928 70 3

2006 3,601,375 945 3,927 79 4

2005 2,718,759 673 4,095 123 4

2004 2,324,308 589 4,107 133 4

2003 2,419,254 561 4,359 88 5

2002 2,780,935 643 4,507 91 4

2015 TO 2016 AVG IP-GAS UP 12%; AVG IP-OIL DOWN 30%2015 TO 2016 AVG FOOTAGE PER WELL UP 15%

Change of Owner – Wells By Year

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

33793568

4411

2412

7438

3054

2274

5908

4758

11341696

31423603

1694

YEAR 2016 NO LARGE CHANGE OF OWNER RECORDS, LARGEST WAS 269 WELLS

Rice Energy “Razin Kane” and “Krazy Train”

PHOTOGRAPH COURTESY OF LARRY WICKSTROM

Top 12 Counties – By Average IP (MCFE)

COUNTY WELLSAVG IP GAS

(MCF)AVG IP OIL

(BBLS)AVG IP (MCFE)

HARRISON 100 5,188 449 14,176

JEFFERSON 21 12,000 0 12,000

GUERNSEY 44 3,145 396 11,055

BELMONT 105 9,960 20 10,367

MONROE 72 9,225 52 10,267

CARROLL 45 4,230 302 10,260

NOBLE 54 4,686 194 8,564

TUSCARAWAS 7 1,629 269 7,009

MAHONING 7 3,941 32 4,581

WASHINGTON 5 2,632 78 4,200

COLUMBIANA 6 3,506 0 3,506

LICKING 9 182 22 617

COUNTIES WITH LESS THAN 4 WELLS ARE NOT INCLUDEDMCFE CALCULATED USING OIL GAS RATIO OF 20:1

Top 12 Operators – By Average IP (MCFE)

OPERATOR WELLS

AVG IP GAS

(MCF)

AVG IP OIL

(BBLS)AVG IP (MCFE)

ASCENT RESOURCES UTICA LLC 66 9,776 493 19,645

HESS OHIO DEVELOPMENTS LLC 11 13,372 277 18,920

CNX GAS COMPANY LLC 29 4,693 667 18,033

R E GAS DEVELOPMENT LLC 11 3,242 568 14,604

GULFPORT ENERGY CORPORATION 62 11,208 40 12,012

CHESAPEAKE EXPLORATION LLC 99 5,538 279 11,119

ECLIPSE RESOURCES I LP 46 6,214 210 10,423

CHESAPEAKE APPALACHIA LLC 5 8,853 0 8,853

ANTERO RESOURCES CORPORATION 64 6,938 91 8,767

XTO ENERGY INC. 24 6,630 0 6,630

PDC ENERGY INC 9 1,102 231 5,731

HILCORP ENERGY COMPANY 7 5,327 0 5,327

OPERATORS WITH LESS THAN 4 WELLS ARE NOT INCLUDED. MCFE CALCULATED USING OIL GAS RATIO OF 20:1

Top 12 Operators – By Average IP (MCFE)

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8.9

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6.6

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5.3

Ave

rage

IP (

MC

FE)

Tho

usa

nd

s

OPERATORS WITH LESS THAN 4 WELLS ARE NOT INCLUDED. MCFE CALCULATED USING OIL GAS RATIO OF 20:1

2016Top 10 Operators – By

Average IP (MCFE)Well Locations

!( ASCENT RESOURCES UTICA LLC

!( HESS OHIO DEVELOPMENTS LLC

!( CNX GAS COMPANY LLC

!( R E GAS DEVELOPMENT LLC

!( GULFPORT ENERGY CORPORATION

!( CHESAPEAKE EXPLORATION LLC

!( ECLIPSE RESOURCES I LP

!( CHESAPEAKE APPALACHIA LLC

!( ANTERO RESOURCES CORPORATION

!( XTO ENERGY INC.

Ohio Oil & Gas Production

PHOTOGRAPH COURTESY OF LARRY WICKSTROM

Producing Wells – By Year

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30000

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50000

60000

1984 1989 1994 1999 2004 2009 2014

CO

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T O

F W

ELLS

YEAR

Producing Wells (ODNR) Reported Production

YEAR 2016 WELL COUNT IS ESTIMATED

Production Summary – Oil By Year8

.1

7.3

7.1

7.1

7.0

6.6 6.8

6.7

5.9

5.4 5.7 6.3

5.6

5.2

5.0

5.0

5.0 5.0 5.1

4.4 4.8

4.6

4.5

4.3

4.0

3.5

3.1

0.6 3

.7

11

.0

22

.0

17

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90

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Mill

ion

Bar

rels

of

Oil

Conventional Oil Horizontal Oil

YEAR 2016 CONVENTIONAL PRODUCTION IS ESTIMATED BY USING AVERAGE ANNUAL PERCENT DECLINE FOR YEAR 2012-2015.

2016 PRODUCTION IS ESTIMATED TO BE APPROXIMATELY

19% LESS THAN 2015 PRODUCTION

2016 CONVENTIONAL OIL PRODUCTION ESTIMATED2016 HORIZONTAL OIL ESTIMATED

(ONLY FIRST 3 QUARTERS AVAILABLE)

Production Summary – Gas By Year1

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8

90 92

89

88

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77 79

76 82

81

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72

66

60

52

46

13

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2

95

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1,3

97

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1400

16001

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Bill

ion

Cu

bic

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et o

f G

as

Conventional Gas Horizontal Gas

YEAR 2015 CONVENTIONAL PRODUCTION IS ESTIMATED BY USING AVERAGE ANNUAL PERCENT DECLINE YEAR 2012-2014.

2016 PRODUCTION IS ESTIMATED TO BE APPROXIMATELY

44% MORE THAN 2015 PRODUCTION

2016 CONVENTIONAL GAS PRODUCTION ESTIMATED2016 HORIZONTAL GAS ESTIMATED

(ONLY FIRST 3 QUARTERS AVAILABLE)

Ohio Oil Production 1886-2015

HISTORICAL DATA COURTESY OF WICKSTROM GEOSCIENCE, LLC

0

5

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25

30

1876 1886 1896 1906 1916 1926 1936 1946 1956 1966 1976 1986 1996 2006 2016

MIL

LIO

NS

OF

BA

RR

ELS

OF

OIL

YEAR

189623.9 MMBLS

TRENTON

19453.0 MMBLS

EOR

196415.9 MMBLS

TREMPEALEAU

198415.3 MMBLS

CLINTON

20104.7 MMBLS

2015

25.6 MMBLS

UTICA

1952HYDRAULIC

FRACTURING

2016

20.6 MMBLS

UTICA

Ohio’s Aging Wells

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4000

1

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10000

100000

0 5 10 15 20 25 30 35 40 45 50

CO

UN

T O

F W

ELL

OIL

(B

BLS

) /

GA

S (M

CF)

WELL AGE - YEARS

Average Annual Oil Average Annual Gas Count of Wells

54% OF ~53,000

PRODUCING WELLS ARE BETWEEN

25 & 39 YEARS OLD

UTICA

PRODUCING WELLS BY

OPERATOR

Through

12/31/2016

1st Qtr2013

2nd Qtr2013

3rd Qtr2013

4th Qtr2013

1st Qtr2014

2nd Qtr2014

3rd Qtr2014

4th Qtr2014

1st Qtr2015

2nd Qtr2015

3rd Qtr2015

4th Qtr2015

1st Qtr2016

2nd Qtr2016

3rd Qtr2016

Gas 8.30 15.07 33.51 43.06 67.28 88.62 131.98 164.78 183.59 221.86 245.83 301.96 329.54 334.26 360.68

8 1534

43

67

89

132

165184

222

246

302

330 334

361

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Gas

in B

CF

25%

48%

33%

56%

12%

21%

11%

23%

SLOWING PRODUCTION

GROWTH BEGINNING 1st QTR 2016

19%

9%1%

8%

Utica – Gas Production By Quarter

1st Qtr2013

2nd Qtr2013

3rd Qtr2013

4th Qtr2013

1st Qtr2014

2nd Qtr2014

3rd Qtr2014

4th Qtr2014

1st Qtr2015

2nd Qtr2015

3rd Qtr2015

4th Qtr2015

1st Qtr2016

2nd Qtr2016

3rd Qtr2016

Oil 0.33 0.57 1.31 1.43 1.94 2.46 3.01 3.55 4.43 5.58 5.71 6.22 5.49 4.84 3.95

0.30.6

1.3 1.4

1.9

2.5

3.0

3.6

4.4

5.6

5.7

6.2

5.5

4.8

4.0

0

1

2

3

4

5

6

7

Oil

in M

illio

ns

of

Bb

lsUtica – Oil Production By Quarter

9%

36%

27%

22%

18%

25%

26%

2%9%

-12%

-12%

-18%

DECLINE BEGINNING 1st

QTR 2016

20121st Qtr2013

2ndQtr

2013

3rdQtr

2013

4thQtr

2013

1st Qtr2014

2ndQtr

2014

3rdQtr

2014

4thQtr

2014

1st Qtr2015

2ndQtr

2015

3rdQtr

2015

4thQtr

2015

1st Qtr2016

2ndQtr

2016

3rdQtr

2016

Wells 81 92 152 243 349 417 503 673 778 877 978 1093 1221 1303 1364 1442

81 92

152

243

349417

503

673

778

877

978

1093

12211303

13641442

0

200

400

600

800

1000

1200

1400

1600

We

lls O

nlin

eUtica – Wells Online By Quarter

16%

34%

21%19%

13%

12%

12%

12%

7%5%

6%

Utica EUR Estimation

• Used operator reported production to ODNR through 3rd Qtr 2016

• Calculated EUR values for each well

• Adjusted EUR to gas equivalents (BCFE)• used GAS/OIL ratio of 20:1 (based on current market prices)

• Determined treated length (stimulated interval) and then calculated EUR per 1000’ of lateral

UTICAESTIMATED

AVERAGE EUR PER 1000’ BY TOWNSHIP

USING GAS:OIL RATIO

OF 20:1(Count of data

points per township posted)

EUR Data Provided by James Knobloch Petroleum

Consultants, Inc.

Class II Injection Wells

PHOTOGRAPH COURTESY OF LARRY WICKSTROM

0

5

10

15

20

25

30

35

Wat

er

Vo

lum

e In

ject

ed

(B

bls

)

2011 2012 2013 2014 2015 2016

Series2 12,689,735 14,675,408 17,474,821 25,277,646 31,681,718 29,359,014

16%

14%

29%

20%

-8%

Annual Injection Volume - Statewide

Top 12 Class II Injection Wells – By Volume

THE TOP 12 WELLS ACCOUNTED FOR 47% OF TOTAL WATER INJECTED IN 2016

OPERATOR COUNTY WELLVOLUME

(BBLS)

REDBIRD DEVELOPMENT WASHINGTON RED BIRD (SWIW #18) 1,937,197

ENVIRONMENTAL ENERGY SOLUTIONS MUSKINGUM PATTISON TRUST (SWIW #30) 1,697,250

ELKHEAD GAS & OIL TUSCARAWAS MOZENA (SWIW #13) 1,498,932

CLEARWATER THREE, LLC GUERNSEY CLEARWATER 111 (SWIW #15) 1,486,103

CLEARWATER THREE, LLC GUERNSEY BO (SWIW #20) 1,372,107

REHYDRO LTD./MASON DRILLING TUSCARAWAS RE-HYDRO (SWIW #10) 1,033,143

BUCKEYE BRINE LLC COSHOCTON ADAMS (SWIW #12) 931,329

BUCKEYE BRINE LLC COSHOCTON ADAMS (SWIW #11) 821,424

K & H PARTNERS LLC ATHENS K & H PARTNERS LLC (SWIW #10) 813,095

HEINRICH ENT. WASHINGTON HEINRICH UNIT 800,775

NUVERRA/HECKMAN MUSKINGUM GOFF SWD (SWIW #27) 734,493

K & H PARTNERS LLC ATHENS K& H PARTNERS LLC (SWIW #8) 733,388

THANK YOU!Marty Shumway

(614) 846-1391

marty@shumwayresources.com

Special Thanks To:

Ohio Oil and Gas Association

Bill Arnholt, Northwood Energy

Tim Knobloch, James Knobloch Petroleum Consultants, Inc.

Larry Wickstrom, Wickstrom Geoscience, LLC