MIDLAND BASIN REPORTFebruary 2017
REPORT SAMPLE
1
Midland Basin Report | Table of Contents
This presentation is for discussion purposes only. Information is provided "as is" without warranty of any kind, either expressed or implied. You assume all risk using the information. In no event shall Detring & Associates, LLC or its representatives be liable for any direct, indirect, special or consequential damages resulting from the use of this information.
The materials are confidential, for your private use only, and may not be shared with others (other than your advisors) without Detring & Associates, LLC’s written permission.
1. Introduction
2. Horizontal Activity Update
3. Public Disclosure
4. Top Operator Detail
5. County Detail
6. Well Performance Analysis
7. Lower Spraberry
8. Wolfcamp A
9. Wolfcamp B
10. Wolfcamp C
11. Wolfcamp D
12. Middle Spraberry
Pecos
Irion
Crockett
Upton Reagan
Scurry
Martin
Borden
Sterling
MitchellHoward
Dawson
Midland
Gaines
Ector
Crane
Glasscock
Andrews
Schleicher
2
Introduction | Location Map
4236%
1412%14
12%
1311%
108%
109%
98%
54%
Midland Howard Martin Upton
Glasscock Reagan Andrews Other
Rigs by County
1. Horizontal wells spud since 1/1/2010.
3
Introduction | Top Zones Location Map(1)
Pecos
Irion
Crockett
Upton Reagan
Scurry
Martin
Borden
Sterling
MitchellHoward
Dawson
Midland
Gaines
Ector
Crane
Glasscock
Andrews
Wolfcamp DSpraberry (NA)Wolfcamp (NA)
Wolfcamp AWolfcamp BWolfcamp C
Lower Spraberry
Upper SpraberryMiddle Spraberry
Legend
Total Spuds(1)
13%
34%
2%3%
6%
42%
Wolfcamp A Wolfcamp BWolfcamp C Wolfcamp DLower Spraberry NA
1. Horizontal wells spud since 1/1/2010.
0
100
200
300
400
500
600
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Jan-
14
Jan-
15
Jan-
16
Jan-
17
Act
ual
Mon
thly
Sp
ud
s
0
20
40
60
80
100
120
Oct
-14
Apr
-15
Oct
-15
Apr
-16
Oct
-16
Mon
thly
Sp
ud
s vs
. Oct
-14
42
39
30 29
2220
17 16 15 15 14 14 14 13 1311 10 10 10 9
Mid
land
(TX
)
Ree
ves
(TX
)
Lov
ing
(TX
)
Bla
ine
(OK
)
Lea
(NM
)
Wel
d (C
O)
Kar
nes
(TX
)
De
Soto
(LA
)
McK
enzi
e (N
D)
Edd
y (N
M)
How
ard
(TX
)
Gra
dy (O
K)
Mar
tin (T
X)
Upt
on (T
X)
Kin
gfis
her
(OK
)
Cul
bers
on (T
X)
Rea
gan
(TX
)
Dim
mit
(TX
)
Gla
ssco
ck (T
X)
Pec
os (T
X)
20%
24%
16%
12%
6%
4%
4% 14%Midland
Delaware
SCOOP/STACK
Eagle Ford
Appalachian
Williston
DJ
Other
4
Introduction | Midland Basin vs. Top U.S. Resource Plays
Hz Rigs Running by County
Hz Spuds Through Time
590 Hz Rigs Running
Nov-14 collapse in oil pricing
Nov-14 collapse in oil pricing
30%
43%
43%
136%
121%
Midland Delaware Eagle Ford SCOOP/STACK Williston
5
Introduction | U.S. Resource Play A&D Activity Update
Unconventional Oil A&D activity has re-focused on the Permian & STACK following the
collapse in oil price, while the Bakken and Eagleford have cooled. Valuations remain elevated in
high returning plays - $10M-$15M in STACK and ~$30M+/ac in the Permian.
Activity & Valuation Through Time(1)
Key Statistics by Time Period(3)
2011-2012 ($11Bn/23 Tnx) 2013-2014 ($45Bn/62 Tnx) 2015-2017 YTD ($55Bn/95 Tnx)
1. Upside $/Acre = (Total Value – Est. PDP Value)/Net Acres. A&D transactions plotted by announced date. 2. Values = Avg. 2013-14/2015-16. 3. Pie graphs representative of value by play.
Pre-Collapse (2011-2014)Bakken & Eagleford Dominate A&D Landscape
Midland Ramps in 2014
Post-Collapse (2015-Present)Midland Continues Momentum
Delaware Gains Steam
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17
Ups
ide
Val
ue (
$/A
cre)
Delaware Bakken Eagle Ford SCOOP/STACK Midland
WTI (Scale Not Shown)
11%
63%
21%
5% 0%0%
Midland Bakken Delaware Eagleford Denver Julesberg SCOOP/STACK
39%
24%2%
34%
1%
0%
21%
4%
52%
11%
1%11%
[Bubble Size = Tnx Size ($)]
Horizontal Activity Update | Development Through Time
Pecos
Irion
Crockett
Upton Reagan
Scurry
Martin
Borden
Sterling
MitchellHoward
Dawson
Midland
Gaines
Ector
Crane
Glasscock
Andrews
2013
2016-1720152014
Legend
6
2016-17 activity focused in the northern portion of the basin.
Horizontal Activity Update | Treated Lateral Length Heat Map
Pecos
Irion
Crockett
Upton Reagan
Scurry
Martin
Borden
Sterling
MitchellHoward
Dawson
Midland
Gaines
Ector
Crane
Glasscock
Andrews
Coke
< 4,0004,000 - 5,0005,000 - 6,0006,000 - 7,0007,000 - 8,0008,000 - 9,000
> 9,000
TLL (Ft)
7
Horizontal Activity Update | Well Performance Map
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Pecos Crockett
Irion
Upton Reagan
Martin
Sterling
Howard
Midland
Mitchell
Ector
Crane
Glasscock
Andrews
ScurryBordenDawsonGaines
Terrell
Schleicher
Coke
Sutton
EUR vs. GOR (Entire Midland)
Legend (Size = EUR)
100% Oil 100% Gas
8
Horizontal Activity Update | Wellhead Production Detail
Production Through Time (MBoed)
Top Operators & Counties (July 2016)
9
171
52
50
46
45
Pioneer
XTO
Apache
Encana
Laredo
211
131
113
111
63
Midland (TX)
Reagan (TX)
Upton (TX)
Martin (TX)
Glasscock (TX)
0
100
200
300
400
500
600
700
800
900
Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Gas (Boed) Oil (Bbld)Oil Gas
4,157 horizontal wells were declined across the Midland Basin (Wolfcamp & Spraberry)(1)
– Both hydrocarbon streams forecast (wellhead oil and gas)
– Wells parsed by data quality to increase accuracy (see following page)
Economics by well generated using actual & forecast production and economic parameters above
– Capex calculated by well based on lateral length, measured depth and proppant pumped
Type curve subsets generated within each play based on well vintage, geography, performance, hydrocarbon content and completion parameters
– IP-30 and EUR based on statistical distributions (wellhead oil and gas) per pound of proppant
– Curvature (“b” factor) and final decline (“Dm”) based on average of Type 1A wells within subset
– Initial decline (“Di”) varied until IP-30 and EUR match statistical data
Type curves generated by area normalized to 15 MMlb frac’s (i.e., 7,500 ft laterals at 2,000 lb/ft)
Well Performance Analysis | Summary
Location Map
Methodology
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s Crockett
IrionUpton
ws
es
Reagan
tor
Martin
ane T
Sch
Sterling
MitchellHoward
Midland
ScurryBorden
Glasscock
Dawson
Legend
DeclinedUndeclined
Economic Assumptions
Pricing: NYMEX strip as of 1/29/2017
Differentials: ($5.00)/Bbl oil, ($0.50)/Mcf, 35% of NYMEX NGL realized pricing
LOE:– Fixed $10,000/well/month for 12 months,
$5,000/well/month thereafter– Variable $4.00/Boe
Gas Stream: 25% shrink, 120 Bbl/MMcf NGL yield Production Taxes:
– Severance: 4.6% Oil, 7.5% Gas– Ad Valorem: 2.5%
Capex: Based on public disclosure (Avg. ~$6MM/well at 7,500 ft)
Acreage Valuation/Drill-Out (Base Case): Rigs: 1 rig Spud-to-Spud Timing: 30 days Gross Acres: 15,000 Spacing: 120 acres Location Count: 125 gross locations
10
2017 2018 2019 2020 2021+Oil ($/Bbl) $53.57 $53.93 $54.08 $54.61 $55.32Gas ($/MMBtu) $3.38 $3.04 $2.90 $2.91 $2.94
1. Horizontal wells with first production after 1/1/2012 and publicly availableproduction data at time of publication.
Threshold Oil Price Capex ($/Bbl) @ ROR of: EUR IP30
Area Pre-Tax ROR ($MM) 10% 20% $M/Acre MBoe % Liq (Boed)Lower Spraberry 1 99% $6.1 $28.26 $33.05 $22 1,213 88% 1,034Lower Spraberry 2 32% 6.1 38.42 46.51 6 842 90% 632Lower Spraberry 3 61% 6.0 34.54 40.44 12 930 88% 1,436Lower Spraberry 4 44% 6.0 37.76 43.65 8 743 87% 887Lower Spraberry 5 52% 5.8 35.93 42.45 10 887 89% 1,240Lower Spraberry 6 137% 5.9 27.80 31.69 25 1,062 94% 1,120Middle Spraberry 1 134% 5.9 27.07 31.25 26 1,224 87% 1,132Wolfcamp A 1 78% 6.0 31.99 37.03 15 952 90% 1,220Wolfcamp A 2 44% 5.8 39.81 45.67 7 690 88% 1,235Wolfcamp A 3 31% 6.0 39.35 46.42 5 739 89% 955Wolfcamp A 4 38% 6.0 38.24 45.22 7 798 91% 1,078Wolfcamp A 5 44% 5.9 39.40 45.02 7 660 90% 1,015Wolfcamp A 6 65% 6.0 31.85 37.71 14 1,082 85% 1,276Wolfcamp A 7 25% 6.1 40.37 49.69 2 1,054 67% 882Wolfcamp A 8 60% 6.1 34.42 40.16 11 959 83% 1,387Wolfcamp A 9 28% 6.1 41.57 49.02 4 779 80% 1,000Wolfcamp A 10 92% 5.9 31.59 36.68 16 1,107 77% 1,499Wolfcamp A 11 57% 5.8 33.48 39.92 10 1,153 70% 1,336Wolfcamp A 12 11% 5.9 51.82 61.92 0 631 77% 862Wolfcamp B 1 47% 5.8 37.19 43.43 8 822 86% 1,246Wolfcamp B 2 14% 6.1 48.18 57.00 0 608 82% 762Wolfcamp B 3 13% 6.2 49.71 60.43 0 653 82% 559Wolfcamp B 4 157% 6.1 27.67 31.97 24 1,303 83% 1,813Wolfcamp B 5 18% 6.1 47.28 55.62 0 628 86% 1,165Wolfcamp B 6 46% 6.1 35.70 42.23 9 952 82% 1,019Wolfcamp B 7 53% 6.1 35.72 41.73 10 909 85% 1,535Wolfcamp B 8 42% 5.9 37.43 44.56 7 976 74% 993Wolfcamp B 9 57% 6.1 34.07 39.63 10 1,008 75% 1,505Wolfcamp B 10 50% 6.0 36.35 42.54 9 969 75% 1,381Wolfcamp B 11 45% 6.1 36.67 42.80 8 873 81% 1,182Wolfcamp B 12 84% 6.1 31.79 36.87 15 1,071 81% 1,548Wolfcamp B 13 33% 6.0 39.86 47.30 5 835 81% 1,068Wolfcamp B 14 89% 6.0 30.49 35.51 18 1,082 86% 1,203Wolfcamp B 15 40% 5.9 38.46 45.13 7 803 85% 1,067Wolfcamp B 16 33% 6.0 40.07 46.68 4 833 74% 1,100Wolfcamp B 17 91% 5.9 29.14 34.71 15 1,399 68% 1,604Wolfcamp B 18 37% 5.9 36.84 44.46 6 1,084 68% 1,149Wolfcamp B 19 6% 5.9 59.99 71.75 0 540 76% 738Wolfcamp B 20 10% 5.7 56.00 68.12 0 798 61% 863Wolfcamp B 21 15% 5.7 48.71 59.77 0 914 61% 901Wolfcamp B 22 10% 5.6 55.70 67.72 0 823 59% 954Wolfcamp C 1 38% 6.2 33.53 40.52 8 1,039 82% 897Wolfcamp C 2 21% 6.1 45.20 54.08 1 715 82% 726Wolfcamp C 3 46% 5.9 32.66 40.89 8 1,451 64% 1,363Wolfcamp C 4 0% 5.6 80.04 99.60 0 598 61% 655Wolfcamp D 1 4% 6.2 58.43 68.54 0 434 84% 519Wolfcamp D 2 132% 6.2 31.22 35.10 18 973 83% 1,867Wolfcamp D 3 30% 6.0 41.26 49.08 4 883 74% 1,003Wolfcamp D 4 106% 6.0 28.13 33.12 17 1,388 70% 1,741Average 51% $6.0 $39.33 $46.62 $9 916 80% 1,130
Well Performance Analysis | Type Curve Summary (49 Areas)
111. EUR and IP data are three-stream values.
(1) (1)
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Pecos
IrionUpton
Crockett
Reagan
Martin
Ector Sterling
Crane
MitchellHoward
Midland
Andrews
Glasscock
Schleicher
19
6
4
3
2
Element
Encana
Surge
Oxy
ConchoNA
5
14
20
42
2012 2013 2014 2015 2016
NA
316
599 514 627
NA
68
83 83
137
NA
384
682 597
764
NA
724 696 720 801
NA
99 78 87 123
NA
822 774 807 924
2012 2013 2014 2015 2016
NA
7.0 7.3 7.8 8.5
NA
6.1
9.2
11.5
14.4
2012 2013 2014 2015 2016
TLL Proppant
NA
867
1,254
1,467
1,691
2012 2013 2014 2015 2016
12
Wolfcamp A Type Curve Area 1 | Summary
Location Map
Top Operators (Total Wells Drilled) Spuds Through Time
Avg. EUR (MBoe) and IP-30 (Boed)(1)
Oil Gas
1. 2-phase.
Avg. Frac Density (lbs/ft)
EU
RIP
-30
ROID >2.0x ROID 1.0-2.0x ROID 0.5-1.0x ROID <0.5x
Avg. TLL (Mft) and Proppant (MMlb)
Type Curve Parameters(1) Type Curve Profile
Statistical Distributions
Type Curve Cumulative Production
Wolfcamp A Type Curve Area 1 | Type Curve Summary
1. IP/EUR data in Bod/MBbl (oil), Mcfd/MMcf (gas), and Boed/MBoe (total). “Per MMlb” values assume 15 MMlb proppant.
P99
P90
P50
P10
P1
1 10 100 1,000EUR (MBbl/MMcf) & IP-30 (Bod/Mcfd) per MMlb Prop.
EUR / MMlb Prop IP-30 / MMlb PropMBbl MMcf Bod Mcfd
Stat. Mean 51 52 70 48P10 86 85 105 67P90 23 26 40 31Skew (P10/P90) 3.7x 3.3x 2.6x 2.1xCount 30 30 30 30
Oil85%
Gas15%
IP-3
0 M
ix
Oil90%
Gas10%
EU
R M
ix
Total Per MMlb Proppant %
Oil Gas Equiv. Oil Gas Equiv. Oil
IP 1,285 793 1,417 86 53 94 91%
IP-30 1,044 722 1,164 70 48 78 90%
EUR 760 784 891 51 52 59 85%
Di 99.8% 91.9% NA NA NA NA NA
b 1.305 1.424 NA NA NA NA NA
Dm 8.0% 8.0% NA NA NA NA NA
1
10
100
1,000
10,000
0 2 4 6 8 10
Avg
. Pro
d. (
Bb
ld |
Mcf
d)
Years
Oil (Bod)
Gas (Mcfd)
0
100
200
300
400
500
600
0 2 4 6 8 10
Cu
m. P
rod
. (M
Boe
)
Years
Cum Gas
Cum Oil
1,000 MBoe
13
$14
$12
$11
$9
$16
$19
$20
$20
Spacing
Capex
Pricing
Rigs
$0
$20$40$60$80$100$120$140$160
$180$200
0
2
4
6
8
10
12
14
16
0 2 4 6 8 10 12 14 16 18
An
nu
al EB
ITD
A /
Cap
ex ($MM
)
Avg
. Pro
d. (
MB
oed
)
Year
Net Prod. EBITDA Capex
EUR DetailGas Total % Liq.
Oil WH Sales NGL WH Sales SalesEUR 760 784 588 94 891 952 90%Economic (Pre-Tax) & Capex Parameters
PV-10 PV-15 PV-20 PV-25 PV-30NPV ($MM) $6.26 $4.70 $3.68 $2.94 $2.38ROR 78%Payout (Years) (Undis. / Disc. @ 10%) 1.33 1.42ROI (Undis. / Disc. @ 10%) 3.66x 2.06xBase Case $M/Acre $15.3Capex ($MM) $6.0MD (Mft) / TLL (Mft) / Proppant (MMlb) 16.6 / 7.5 / 15.0
75%
55%
53%
50%
82%
109%
112%
136%
Opex
Type Curve
Price
Capex
$5.3
$2.1 $1.4 $1.1 $0.9
$6.6
$2.7
$1.8$1.5 $1.2
0 1 2 3 4
Year
Taxes LOE
EBITDA Revenue
0%
50%
100%
150%
200%
250%
300%
$35.00 $40.00 $45.00 $50.00 $55.00 $60.00 $65.00
Pre
-Tax
RO
R
Oil Price ($/Bbl)
$5.00$6.00$7.00
Wolfcamp A Type Curve Area 1 | Type Curve Economics
Base Case: 78%
Base Case: $15.3M
Single-Well ROR SensitivitiesType Curve Economics Summary(1)
Single-Well Revenue/EBITDA ($MM) Single-Well Oil Price/Capex Sensitivities
Drill-Out Production & FCF $M/Acre Sensitivities
14
Capex TH Price$5.00 $28.52$6.00 $31.99$7.00 $35.47
15
Wolfcamp A | Top Operators
Upton
Crockett
Irion
Reagan
Pecos
Martin
Sterling
Howard
Midland Glasscock
Mitchell
BordenDawson Scurry
Andrews
Gaines
LegendPioneer (114)Laredo (97)Energen (81)Concho (49)Apache (47)
Others (249)
Encana (42)Oxy (40)Permian Resoueces (36)XTO (34)Enduring (25)
Wolfcamp A | Structure Map (SSTVD Feet)
PecosCrockett
Terrell
Gaines
IrionUpton
Sutton
Andrews
Coke
Reagan
Ector
Scurry
Martin
Crane
Borden
Sterling
KentLynn
Mitchell
Terry
Howard
Dawson
Midland
Fisher
Schleicher
Tom Green
Garza
Ward
Glasscock
Val Verde
Winkler
Yoakum
Edwards0 25 50 75 10012.5
Miles
®
6000
5500
5000
6500
4500
4000
3000
2500
2000
3500
1500
0
- 500
1000
500
16
Top Operator Detail | Pioneer Natural Resources Position
Pioneer is the largest Midland Basin operator with its acreage position mostly held by legacy
vertical wells. The company has mostly targeted the Wolfcamp B to-date but will no doubt
develop the full oil column over the coming decades.
17Hz Rigs 2016-17 Hz Permits Hz Wells
Upton
Irion
Reagan
Martin
Sterling
Howard
Midland Glasscock
Mitchell
Borden
Crockett
Dawson Scurry
Crane
Ector
Andrews
Gaines
Pioneer / Devon (Jun-16)$435MM | $14M/Acre
Pioneer Acreage Position
170 229 295 459 772
64 118 112 158
209
234 346 407
617
982
270 325 450 654 799
52 79 108
146 177
322 405
558
800 976
2012 2013 2014 2015 2016
6.8 7.7 8.1 8.6 9.1
7.5 8.6 9.1
11.3
13.6
2012 2013 2014 2015 2016
TLL Proppant
1,099 1,121 1,121
1,326 1,489
2012 2013 2014 2015 2016
42
123
256
221
252
2012 2013 2014 2015 2016
12%
43%
1%3%
8%
33%
Wolfcamp A Wolfcamp B Wolfcamp CWolfcamp D Lower Spraberry Middle SpraberryUpper Spraberry NA 0
20
40
60
80
100
120
140
160
180
200
Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Gas (Boed)
Oil (Bbld)
Oil Gas
Top Operator Detail | Pioneer Natural Resources Operational Statistics
Spuds Through Time
Spuds by Reservoir (2010-2016) Gross Operated Production (MBoed)(2)
Avg. EUR (MBoe) and IP-30 (Boed)(1)
Avg. TLL (Mft) and Proppant (MMlb) Avg. Frac Density (lbs/ft)
EU
RIP
-30
1. 2-phase.2. Horizontal wells with first production after 1/1/2012 and publicly available production data
at time of publication.
Oil Gas
County Detail | Martin Co.
Martin County development has focused on the Wolfcamp B and Lower Spraberry to-date. We
anticipate the eastern half of the county to show rapid develop as Endeavor (the largest acreage
holder) ramps up its horizontal drilling program.
19
Martin
Midland
Dawson
Lower Spraberry Wolfcamp A Middle Spraberry Wolfcamp BUpper Spraberry Wolfcamp CSpraberry NA Wolfcamp DHz Rigs Wolfcamp NA
Legend
103 237 295
459 696
21
82 104
127
137
124
319 399
587
833
75 253 357
573 694
18
60 80
101 114
93
314 437
675 808
2012 2013 2014 2015 2016
4.3
6.6 7.1 7.9 8.1
4.9
7.1
9.9
11.2
8.7
2012 2013 2014 2015 2016
TLL Proppant
1,138 1,075
1,402 1,420
1,076
2012 2013 2014 2015 2016
8
38
186
206 195
2012 2013 2014 2015 2016
7%
20%
5%
2%16%
2%1%
47%
Wolfcamp A Wolfcamp B Wolfcamp CWolfcamp D Lower Spraberry Middle SpraberryUpper Spraberry NA 0
20
40
60
80
100
120
Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Gas (Boed)
Oil (Bbld)
County Detail | Martin Co. Operational Statistics
Spuds Through Time
Spuds by Reservoir (2010-2016) Gross Production (MBoed)(2)
Avg. EUR (MBoe) and IP-30 (Boed)(1)
Avg. TLL (Mft) and Proppant (MMlb) Avg. Frac Density (lbs/ft)
EU
RIP
-30
1. 2-phase.2. Horizontal wells with first production after 1/1/2012 and publicly available production data
at time of publication.
Oil Gas
Oil Gas