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...

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

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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

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Production Starts 2010 - 2016

Wolfcamp

Bone Spring

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Well Type 2010 - 2016

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Directional

Vertical

Completion Trends

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BONE SPRING

WOLFCAMP

IP30 Rate and Reserves

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

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BOE per Day MBOE (6)

Wolfcamp 2010 – 2016 IP30 & EUR

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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

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EUR (MBOE per well)

2016 Bone Spring Performance by County

Reeves

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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