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Delaware Basin Activity & Performance · PDF file • The Delaware Basin is one of the most active drilling areas of the U.S., located in the Permian Basin of Texas & New...

May 20, 2020

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  • Copyright Mire & Associates, Inc. 2017 Delaware Basin Performance & Activity Review 1

    www.mireandassociates.com

    Delaware Basin Activity &

    Performance Review

    August 2017

    EOG Resources 2016 Q4 Investor Presentation

    Delaware Basin

  • Introduction & Findings

    Delaware Basin Performance & Activity Review 2Copyright Mire & Associates, Inc. 2017

    • The Delaware Basin is one of the most active drilling areas of the U.S., located in the

    Permian Basin of Texas & New Mexico.

    • The most frequently drilled reservoirs are the Bone Spring sand formation along with

    the deeper Wolfcamp shale formation

    • Mire & Associates, Inc. has reviewed data for over six thousand horizontal wells that

    began producing from 2010 – 2016 along with published operator results.

    • Our focus was to analyze the well performance trends from 2010-2016, operator activity

    in 2016, and drilling economics at current oil & gas prices ($47 / BBL and $3 / MCF)

    • Delaware Basin activity reflects economics; good for Bone Spring, very good for Wolfcamp

    • IP30 rates and EURs have increased, linked to longer laterals & more proppant.

    • Wolfcamp proppant loading could be yielding diminishing returns with regard to EUR

    • To justify the recently reported lease acquisition prices of up to $60,000 per

    acre, multiple, stacked benches (reservoirs) must be included & exploited.

  • U.S. Play Summary 2014, 2015, 2016

    Copyright Mire & Associates, Inc. 2017 Delaware Basin Performance & Activity Review 3

    Wolfcamp Shale is the only horizontal play that had an increase in drilling for 2016.

  • Delaware Basin Overview

    Copyright Mire & Associates, Inc. 2017 Delaware Basin Performance & Activity Review 4

    Production in the Delaware Basin doubled in 2 years, from 500,000 BOEPD in mid 2014 to 1,000,000 BOEPD in mid 2016.

    Production in the Delaware Basin doubled in 2 years, from 500,000 BOEPD in mid 2014 to 1,000,000 BOEPD in mid 2016.

    Only Wolfcamp & Bone Spring wells included

    Texas NM

  • Activity trends 2010-2016

    Copyright Mire & Associates, Inc. 2017 Delaware Basin Performance & Activity Review 5

    0

    200

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    2010 2011 2012 2013 2014 2015 2016

    Production Starts 2010 - 2016

    Wolfcamp

    Bone Spring

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    2010 2011 2012 2013 2014 2015 2016

    Well Type 2010 - 2016

    Horizontal

    Directional

    Vertical

  • Completion Trends

    Copyright Mire & Associates, Inc. 2017 Delaware Basin Performance & Activity Review 6

    0

    2

    4

    6

    8

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    2010 2011 2012 2013 2014 2015 2016

    M ill

    io n

    lb s.

    Total Proppant 2010 - 2016

    Average per well

    BONE SPRING

    WOLFCAMP

    0

    1,000

    2,000

    3,000

    4,000

    5,000

    6,000

    7,000

    2010 2011 2012 2013 2014 2015 2016

    Fe et

    Lateral Length 2010 - 2016

    Average per well

    BONE SPRING

    WOLFCAMP

  • IP30 Rate and Reserves

    Copyright Mire & Associates, Inc. 2017 Delaware Basin Performance & Activity Review 7

    0

    200

    400

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    2010 2011 2012 2013 2014 2015 2016

    BOE per Day MBOE (6)

    Wolfcamp 2010 – 2016 IP30 & EUR

    0

    200

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    1200

    2010 2011 2012 2013 2014 2015 2016

    BOE per Day MBOE (6)

    Per well rate & reserves are increasing, linked to increases in lateral length and proppant

    Bone Spring 2010 – 2016 IP30 & EUR

  • Well Performance Trends 2010 - 2016

    Copyright Mire & Associates, Inc. 2017 Delaware Basin Performance & Activity Review 8

    BOPD MCFD GOR BOEPD MBO MMCF GOR MBOE avg lat len avg # prop/lat ft

    2010 120 310 1,209 3,900 512 137 1,344 9,810 361 4,427 474

    2011 256 385 855 2,221 528 168 991 5,899 333 4,653 513

    2012 423 480 941 1,960 637 223 1,254 5,623 432 4,762 579

    2013 638 525 1,082 2,061 705 244 1,250 5,123 452 4,970 578

    2014 678 600 1,056 1,760 776 306 1,517 4,958 559 5,227 870

    2015 593 605 1,048 1,732 780 399 1,809 4,534 701 5,392 1,222 2016 301 761 1,439 1,891 1,001 457 2,028 4,438 795 5,740 1,452

    BOPD MCFD GOR BOEPD MBO MMCF GOR MBOE avg lat len avg # prop/lat ft

    2010 83 475 994 2,093 641 253 857 3,387 396 4,307 334

    2011 136 390 1,300 3,333 607 308 1,076 3,494 487 4,575 456

    2012 181 436 1,237 2,837 642 318 1,285 4,041 532 4,709 474

    2013 222 429 1,137 2,650 619 355 1,490 4,197 603 5,065 676

    2014 405 468 1,738 3,714 758 467 2,532 5,422 889 5,484 1,058

    2015 516 506 1,807 3,571 807 531 2,898 5,458 1,014 5,857 1,328

    2016 542 695 2,180 3,137 1,058 690 2,557 3,706 1,116 6,523 1,707

    Bone Spring Annual Well Performance

    Wolfcamp Annual Well Performance

    Year Wells Initial Production (IP30) Reserves per well (EUR) Well Design & Completion

    Year Wells Initial Production (IP30) Reserves per well (EUR) Well Design & Completion

    Typical Wolfcamp well EUR > 1 million BOE

  • Well Performance Trends 2010- 2016

    Copyright Mire & Associates, Inc. 2017 Delaware Basin Performance & Activity Review 9

    Numbers in parentheses represent number of wells in the statistical sample

    Initial production rates increased significantly in 2016, primarily linked to

    increases in proppant loading

  • Initial Production Trends 2010- 2016 (Normalized)

    Copyright Mire & Associates, Inc. 2017 Delaware Basin Performance & Activity Review 10

    Numbers in parentheses represent number of wells in the statistical sample

    Proppant loading primarily drives increase

    in IP30 rates for 2016

  • EUR vs. Proppant Trends (Normalized)

    Copyright Mire & Associates, Inc. 2017 Delaware Basin Performance & Activity Review 11

    Diminishing returns for EUR in Wolfcamp?

    Bone Spring EUR trend appears to have room for continued growth.

  • 2016 Well Performance by County

    Copyright Mire & Associates, Inc. 2017 Delaware Basin Performance & Activity Review 12

    Culberson County, TX & Lea County, NM stood out in 2016

    BOPD MCFD GOR BOEPD MBO MMCF GOR MBOE avg lat len avg # prop/lat ft

    Culberson 16 800 3,200 4,000 1,333 415 4,074 9,817 1,094 5,485 998

    Eddy 90 725 1,475 2,034 971 512 2,084 4,070 859 5,735 1,324

    Lea 126 845 1,400 1,657 1,078 485 2,356 4,858 878 5,695 1,607

    Loving 28 600 1,400 2,333 833 435 1,816 4,175 738 5,480 1,544

    Reeves 21 775 1,350 1,742 1,000 603 1,261 2,091 813 7,122 1,744

    Ward 15 200 530 2,650 288 180 301 1,672 230 4,845 676

    BOPD MCFD GOR BOEPD MBO MMCF GOR MBOE avg lat len avg # prop/lat ft

    Culberson 41 525 3,900 7,429 1,175 1,027 7,232 7,042 2,232 6,772 1,959

    Eddy 47 725 3,300 4,552 1,275 689 4,712 6,839 1,474 5,779 1,880

    Lea 41 1,450 2,600 1,793 1,883 760 1,880 2,474 1,073 5,092 2,211

    Loving 180 550 760 1,382 677 759 2,142 2,822 1,116 6,072 1,549

    Pecos 31 635 750 1,181 760 529 829 1,567 667 7,855 1,995

    Reeves 161 625 2,075 3,320 971 909 3,917 4,309 1,562 7,216 1,645

    Ward 28 645 1,125 1,744 833 516 1,236 2,395 722 7,118 1,795

    Winkler 13 725 800 1,103 858 1,105 1,373 1,243 1,334 6,390 1,623

    County Wells Initial Production Rates (IP30)

    County Wells Initial Production Rates (IP30)

    Well Design & Completion

    Well Design & Completion

    2016 - Bone Spring Well Performance by County

    2016 - Wolfcamp Well Performance by County

    Reserves per well (EUR)

    Reserves per well (EUR)

  • 2016 Well Performance by County

    Copyright Mire & Associates, Inc. 2017 Delaware Basin Performance & Activity Review 13

    200

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    1,000

    1,200

    1,400

    200 300 400 500 600 700 800 900 1,000 1,100 1,200

    IP 3

    0 (B

    O E

    P D

    )

    EUR (MBOE per well)

    2016 Bone Spring Performance by County

    Reeves

    Eddy

    Loving

    Ward

    Lea

    Culberson

    0

    200

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    1,000

    1,200

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    600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 IP

    3 0

    (B O

    EP D

    )

    EUR (MBOE per well)

    2016 Wolfcamp Performance by County

    Lea

    Culberson

    Eddy

    Reeves

    Loving

    Ward

    Pecos Winkler

  • 2016 Operator Performance

    Copyright Mire & Associates, Inc. 2017 Delaware Basin Performance & Activity Review 14

    BOPD MCFD GOR BOEPD MBO MMCF GOR MBOE avg lat len avg # prop/lat ft

    Anadarko 16 750 1,500 2,000 1,000 509 944 1,855 666 4,565 536

    BTA 7 1,050 2,043 1,946 1,391 522 1,963 3,761 849 4,809 1,988

    Chevron 29 731 1,800 2,462 1,031 388 2,072 5,340 733 5,509 1,106

    Cimarex 1