Copyright © 2014 IHS Inc. and its affiliated and subsidiary companies, all rights reserved. Unconventional and Deepwater Developments have Transformed the U.S. Oil & Gas Supply IHS ENERGY 2013 Well Completions • Horizontal - Gas • Horizontal - Oil • Vertical - Gas • Vertical - Oil Primary Play Type Shale/Tight Gas Shale/Tight Oil Sub-Salt Miocene and Lower Tertiary Plays Fuel Growth in the Deepwater GOM Analysis of permitting activity in the Gulf of Mexico (GOM) suggests the Miocene and the overlapping Miocene Sub-Salt and Lower Tertiary play areas remain the hot spot for permitting activity in the post-Macondo period, with other play areas seeing only sporadic permitting activity. Examination of new well permit submissions across plays reveals a concentration of planned activity in the Miocene and the overlapping Miocene Sub-Salt and Lower Tertiary plays, accounting for close to 90% of total permits submitted in deepwater GOM. The decline in permitting submissions in the Miocene play is of concern, as it is responsible for the bulk of current production from the GOM deepwater and is in need of both infill drilling and close-in exploration in order to offset field decline. The continued focus on the Lower Tertiary and Miocene sub-salt portends significant longer-term growth and IHS expects future oil production from new developments to reach > 1.5 mmb/d over the next 10 years. 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Kaskida Heidelberg 0 200 400 600 800 1000 1200 1400 1600 1800 Gulf of Mexico production by project (‘000 b/d) Sub-Salt Miocene and Lower Tertiary Plays Fuel Growth in the Deepwater GOM, Source: IHS Energy Vantage and Growth Play Service Two Plays Leading The Charge Tight-oil development has led the resurgence in North America’s oil production. Two plays — the Bakken Shale in North Dakota’s Williston Basin, and the Eagle Ford Shale in Texas’s Gulf Coast Basin — have provided the most significant volumes and are each producing more than 1,000,000 b/d. Exploration and development continue in prospective basins across the continent, although no play has yet yielded the commercial opportunities for growth found in the Bakken or Eagle Ford. For more about IHS Energy information, analytics, and insight: [email protected] 888.OIL.DATA (645-3282) Supply Transformation Economics Once a play is delineated, resource play development is generally characterized by offering lower risk profiles than many conventional opportunities, and providing greater scalability for aggressive product growth. However, the range in breakeven economics for domestic tight-oil investments can differ significantly by play, and even within a play. Insight gathered using IHS tools such as IHS Fekete and IHS Enerdeq Browser combined with the forward-looking commercial analysis from IHS North America Supply Analytics aids operators in their search for the most prospective acreage within resource plays. Breakeven point for select North American Oil Plays. Average breakeven economics denoted in red. Source: IHS North America Supply Analytics 100 90 80 70 60 50 40 30 20 10 0 Eagle Ford Bakken Niobrara Utica Updip Oil US $/bbl 0 100 200 300 400 500 600 700 800 900 1,000 1,100 0 12 24 36 48 60 72 84 96 108 120 132 144 156 Thousands of barrels per day Months Production Trajectory for Major Tight Oil Plays Eagle Ford (IHS Jan 09 - Oct 13) Niobrara (IHS Jan 10 - Oct 13) Wolfcamp (IHS Jan 06 - Sep 13) Bone Spring (IHS Jan 03 - Sep 13) Mississippian (IHS Jan 09 - Jul 13) Bakken, Three Forks (IHS Jan 00 - Oct 13) Transforming Reserve Compositions The unconventional revolution has not only transformed the supply outlook in the United States, but has also transformed the oil and gas companies developing this large resource. As the oil-to-gas price ratio has remained at historically high levels, operators have been allocating a larger proportion of capital expenditures toward liquid weighted unconventional plays. As a result, we’ve seen a dramatic shift in the reserve composition for many producers in a very short period of time. 2009 – 2012 Liquid Weighted Reserve Compositions. Source: IHS Energy 450 400 350 300 250 200 150 100 50 0 Chesapeake EOG Exxon Mobile ConocoPhillips Chevron Continental Marathon Hess Apache Devon Anadarko Range Antero Royal Dutch Pioneer Occidental SandRidge Murphy EnCana Whiting Oil/Liquids F&D Additions, MMbbl 2009 2010 2011 2012 ihs.com March 2014 About IHS Energy IHS Energy, part of IHS (NYSE: IHS), is the industry’s authoritative provider of information, analytics, and insight to help clients understand the interconnected, dynamic forces that shape energy markets and asset performance. Our experts and analytical tools enable clients to continuously improve their strategy and operations across the entire energy value chain, covering oil & gas, coal, power, and renewables.