The Bakken

‘A Non-Shale Shale Play’

August 2010

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ConocoPhillips Unconventional Resource Experience in North America

CBMSan JuanDrunkards Wash Uinta Powder RiverHorseshoe CanyonManville

Shale BarnettHaynesvilleMuskwaMontneyAustinAnadarkoBakken

Tight GasPiceanceAnadarkoSan JuanDeep BasinUintaGreater GreenLoboBossier

ConocoPhillips is successfully using this knowledge and experience toexpand its presence in resource plays globally

Montney

Muskwa

BakkenGreater

Green River

Eagleford

Uinta

San Juan

HaynesvilleBarnett

Piceance

Anadarko

Horseshoe Canyon

Manville

Lobo

Deep Basin

Powder River

Bossier

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Oil Potential

Many Estimates of Resource PotentialDow and Williams (1974) 10 billion barrels of oil generatedWebster (1982) 92 billion barrels of oil generatedSchmoker and Hester (1983) 132 billion barrels of oil generatedPrice (unpublished USGS) 271-503 billion barrels of oil generatedFlannery and Krause (2006) 300 billion barrels of oil generated Pollastro (2008) 3.6 billion barrels recoverable

Oil-Source Correlations suggest that most of oil remains in the Bakken

Overlying Mission Canyon Formation oils distinctly different

Production Predominantly from Middle Member

Mixture of sand, silt, carbonate mudstone39-460 API oil @ ~2,600 – 3,500m TVD

Source: Headington Oil Company

Estimates of over 100 Billion Bbls of Oil in Place

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Parshall Field

Canadian Bakken Development

1980’s+ HZ development

US Bakken HZ activity

Williston Basin

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Paleozoic Stratigraphy

LeFever, North Dakota Geological Survey

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Type Log

Source: Headington Oil Company

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Lower Bakken Shale Member

LeFever 1991

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Middle Member Lithofacies

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Middle Member Lithofacies 1-3

LeFever 1991

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Middle Member Lithofacies 4+5

LeFever 1991

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Upper Bakken Shale Member

LeFever 1991

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Middle Bakken / Three Forks Pay Variation

Modified from CRI web, 2010

West East

• Middle Bakken pay not a shale lithologyComplex, laterally varying lithology & play typesStratigraphic / diagenetic trap drivers

• Underlying Three Forks ‘non-shale’ play potential established 2008Also sourced by Bakken shaleDual zone development underway

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Middle Member Log Response

LeFever (1991), North Dakota Geological Survey

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Shift From Vertical to Horizontal Wells

Source: The Oil Drum Nov 2009

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Drilling and Completion Impact

Source: The Oil Drum Nov 2009

Vertical Well Production (1961+) = 50,000 barrels Horizontal Well Production (1990+) = 100,000 - 400,000 barrels Multi-Stage Frac Production (2000+) = 500,000- 800,000 barrels

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0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2/17/2005 9/5/2005 3/24/2006 10/10/2006 4/28/2007 11/14/2007 6/1/2008 12/18/2008Date

Oil

bbls

/day

0

10

20

30

40

50

60

70

80

Wel

l Cou

nt

Gross Oil Well Count

First Hybrid Well – 650 BOPDFirst Plug & Perf Well – 725 BOPD

Multi Stage Targeted Fracs

Bakken Horizontal Play

New completion designs improves results…continually modeling and testing different types of stimulation

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Modified from Brigham web, 2010

Horizontal Drilling History

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Hybrid Bakken Completion Design

7" Shoe+/- 11,000' Swell Pkr

11,900'Swell Pkr12,800'

Swell Pkr14,600'

Swell Pkr19,100'

TD+/- 20,000'

4-1/2" Shoe+/-200' off TD

Press Operated Vent +/-19,500'Pinned at +/-4,200 psi Over Hydrostatic

SlidingSleeve18,700'2.75" Ball

SlidingSleeve17,900'3.0" Ball

SlidingSleeve17,000'3.25" Ball

4-1/2", 11.6#/ft, P-110 Liner w/4.0" ID

Five Perf & Plug IntervalsFrom 7" shoe to +/- 15,500'

Separated with swell packers

Generic WBDBakken Horizontal Well Play

Hybrid Well Bore Design September 2008

Robert Clark & Clyde Findlay IIBakken Completions Team

6" Hole

SlidingSleeve16,000'3.50" Ball

Swell Pkr15,500'

Swell Pkr17,500'

Swell Pkr18,300'

Swell Pkr16,500'

Critical Items

1) Swell packer placement at 15,500' segmenting sleeve section (toe) from P&P section (heel). 15,500' is max CT depth for plug drill out and tool retrieval.2) Greatly reduced friction pressure loss vs. all sleeve completion. Now smallest ball 2.75" in sleeve section vs. all sleeve completion with 1.25" as smallest ball.3) New hybrid completion: Five P&P intervals & five sleeve intervals. *Well bore segmentation *1-day frac on hardest 1/2 of the well (toe)

Swell Pkr13,700'

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2000 ft

Well 1 Well 2

Simul-Frac, Zipper Frac, Sequential Frac

Bakken Fracture Stimulation

Simultaneous Fracture Stimulation• Stimulating two horizontals at the same time

Zipper Frac• Alternating frac between two offsetting wells

Sequential Frac• Stimulating one horizontal after another

Possible Methods for Controlling and Steering Fracture Stimulations

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60º Phasing6 Perfs @ 300°, 0°, 60°

60º Phasing6 Perfs @ 0°, 60°, 120°, 180°, 240°, 300°

Oriented Perfs Radial PerfsUsed to direct frac initiation upwardinto the Bakken from the Three Forks.

Used to direct frac initiation radiallyin the Bakken.

Bakken Horizontal Completions

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Summary: Keys To Peak Performance

Control large resourceFocus, flexibility & speed

Understand the ReservoirNeed to integrate stratigraphy, reservoir description and rock mechanics with drilling and completion technology to pick the best combination to release the hydrocarbons from the rock

Aggressive DevelopmentEnhanced Value

Invest in Infrastructure Stage GrowthFocus on Infrastructure EfficiencyDevelop Solid Working Relationships

Be Flexible and CreativeCharacterization, stimulation, infrastructure, & materials

Keys to success are found throughout project life cycle