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Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000 100,000 MCF/Mnth BBLS/Mnth 1987 1988 1989 1991 1990 1992 1993 1994 1995 1996 YEAR Entire State Hugoton Embayment Infill ‘97 ‘98 3661 3060 2864 3616 298 388 409 423 260 192 3152 2394 2034 1863 1752 1513 242 409 461 309 326 143 833 1622 49 61 2.0
33

Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Dec 21, 2015

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Page 1: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration 10 Year History & Future Strategies

Kansas Oil and Gas Production# of Wells drilled by Year

100,000,000

10,000,000

1,000,000

100,000

MC

F/M

nth

BB

LS

/Mn

th

1987 1988 1989 19911990 1992 1993 1994 1995 1996YEAR

Entire State

Hugoton Embayment Infill

‘97 ‘98

3661

30602864

3616

298 388 409 423260 192

3152

2394

20341863

17521513

242409 461

309 326

143

833

1622

4961

2.0

Page 2: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesExploration Activity

1987 to 1996 Well Completions by County(All Wells)

2 2

7

832

6

1 73

4

19

98

555

5673

79

96

93 38

66

86433

326

54

3

344

287

464 387

124

88 21

46

39 906

241

208 433

130

30

115

199 99

233 182

15133

422

589334 411

492208 426

41

679

169

181

11

55

183

690

224

195

204206

384

595

203

991

208

329424166

99

445

299

38

800221

755716

167141

428

284

786

703 235

305

724363

172

590503

552

340

Hugoton Embayment WC & SC Kansas Eastern Kansas

Page 3: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesExploration Activity

1.34

3.93

1.74

0.69

8.80 1.48

1.17

1.86

6.28

1.40 2.69

1.87

0.32

0.66

36.55

0.35

6.56

9.53 2.40

0.72

3.48 2.04

2.610.28

1.61 1.34

2.351.29 1.91

0.52

0.40

0.19 0.10

0.89

2.60

0.85

0.03

0.01

2.47

0.25

6.53

6.76

3.22

0.711.33

4.38

0.83

0.50

3.63

0.03

0.33

0.19 2.842.171.37

36.18

0.000.02

0.01

0.221.92

0.47

1.88

0.071.44

0.41

0.01

0.05

0.15

0.16

0.54

0.01

40.10 81.39

0.58

0.36

33.83

0.530.37

0.520.03

1.78

36.72

0.34

0.00

0.94

43.10

61.38

EUR NEB (Millions) by County1987 to 1996 Well Completions

NEB Conversion: 6 mcf = 1 bbl122 MM bbls oil

2.2 tcf gas

1,381 bcf - Hugoton Infill

856 bcf - all others

Hugoton

Embayment

83.0% of NEB

89% Gas

50% Oil

WC & SC

Kansas

9.7% of NEB

Eastern

Kansas

3.1% of NEB

Page 4: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesExploration Activity

Well Completions by YearHugoton-Panoma-Bradshaw-Greenwood (HPBG) Infill Wells

291

376386 409

248164

219

377446

281

0

50

100

150

200

250

300

350

400

450

500

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Year

# o

f C

om

ple

tio

ns

SERVICE

GAS

DRY

Page 5: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

7 0

39143

75

74

58

191

347

115331

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesExploration Activity

EUR Gas (BCF) by County

1987 to 1996 HPBG Infill Well Completions

EUR = Current Cumulative + (Current Monthly * 60)

Total EUR: 1,381 bcf

Page 6: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesExploration Activity

Average Welltest Shut-in Pressure

Hugoton Field

-

50

100

150

200

250

300

350

400

450

500

1925 1935 1945 1955 1965 1975 1985 1995 2005

Year

Av

era

ge

SIP

(p

si)

Original Wells

Infill Wells

Infill Wells

EUR: 1,381 bcf

Original Wells

Cum. Production

21.7 tcf

Page 7: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesExploration Activity

1987 to 1996 Well Completions by Year No HPBG Infill Wells

16631215 1107 1208 1123

871 740 600 526 557

1327

10871083

15441344

904755

495 522 463

599

702617

752

494

421

409

686 617411

0

500

1000

1500

2000

2500

3000

3500

4000

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Year

# o

f C

om

ple

tio

ns

SERVICE

O&G

GAS

OIL

DRY

Page 8: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesExploration Activity

1987 to 1996 Well Completions by County(No HPBG Infill Wells)

2 2

7

832

6

1 73

4

19

98

35

555

5673

79

96

93 38

66

44233

326

54

3

344

287

464 387

124

88 21

46

39 906

241

208 433

130

30

115

99

233 182

15133

422

589334 411

492208 426

41

147

169

181

11

55

183

690

224

164

204206

384

331

203

366

208

329424165

99

241

299

38

800221

755477

167141

428

284

786

391 235

305

126363

172

590503

552

340

Hugoton

Embayment

WC & SC

Kansas

Eastern

Kansas

Page 9: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

1.33.9

1.7

0.7

8.8 1.5

1.2

1.9

6.3

1.4 2.7

1.9

0.3

0.7

0.3

0.1

9.5 2.4

0.712.6

0.0

3.5

0.0

2.0

2.60.3

1.6 1.3

0.0

2.3

0.0

1.3 1.9

0.5

0.4

0.2 0.1

4.4

0.92.6

0.0

0.8

0.0

0.0

2.5

0.3

6.5

6.8

2.10.7

1.3

4.4

0.8

0.5

3.6

0.0

0.0

0.0

0.0

0.3

0.0

0.00.0

0.2 2.82.21.30.0

0.00.0

0.0

0.21.9

0.5

1.9

0.1

0.0

1.4

0.4

0.0

0.0

0.0

0.9

0.1

0.2

6.2 0.5

0.0

0.60.0

0.4

27.6 23.5

0.50.4

21.5

0.50.0

1.8

33.4

0.3

17.5

0.0

0.0

0.0

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesExploration Activity

EUR NEB (Millions) by County

1987 to 1996 O&G Well Completions (No HPBG Infill)

EUR = Current Cumulative + (Current Monthly*48) / NEB Conversion: 6 mcf = 1 bbl

Hugoton

Embayment

146.8 mmNEB

WC & SC

Kansas

47.7 mmNEB

Eastern

Kansas

15.2 mmNEB

Page 10: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

1.31.7

0.7

0.6

1.2 1.0

0.9

1.9

6.3

1.4 2.7

1.9

0.0

0.2

0.3

0.0

0.7 0.6

0.312.4

0.0

3.4

0.0

2.0

2.30.2

1.6 1.3

0.0

2.3

0.0

1.3 1.9

0.5

0.4

0.2 0.1

3.6

0.90.4

0.0

0.8

0.0

0.0

0.5

0.3

4.9

2.3

1.90.2

0.6

3.0

5.6

0.5

4.4

0.3

0.7

0.0

0.0

0.0

0.0

0.3

0.0

0.00.0

0.2 1.32.21.10.0

3.9

0.00.0

0.0

0.00.3

0.2

0.99.1

0.1

0.0

0.5

0.4

0.0

0.0

0.0

0.9

8.8 0.0

0.0

5.8 0.1

0.0

0.30.0

0.30.20.2

0.50.0

0.5

0.0

0.0

0.0

0.0

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesExploration Activity

EUR Oil (Million BBLs) by County

1987 to 1996 Oil Well Completions (No HPBG Infill )

EUR = Current Cumulative + (Current Monthly*48)

Hugoton

Embayment

53.6 mmBBL

WC & SC

Kansas

34.7 mmBBL

Eastern

Kansas

7.8 mmBBL

Page 11: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

0.0

1.8

6.0

0.3

2.8

1.8

0.0

0.0

0.0 0.0

0.0

1.9

2.9

0.1

0.4

2.7

0.0

0.4

13.7

0.0

0.2

1.70.5

0.0 0.0

0.0

0.0

0.0

0.0 0.0

0.0

0.0

0.0 0.0

4.9

0.3

0.0

0.0

0.0

0.0

45.5

0.0

9.8

0.73.1

4.6

8.5

1.8

1.20.0

0.0

0.0

0.0

0.0

0.0

0.00.0

0.0 9.40.01.40.0

52.8 10.5

0.00.0

0.0

1.2

1.6

6.0

0.0

0.0

5.7

13.0

0.3

0.0

0.0

0.0

0.1

0.7

0.8

2.1 2.5

11.6

0.0

26.7

1.70.0

0.3

17.5

1.81.1

0.40.0

7.4

10.0

2.0

52.4

131.9 114.9

0.0

0.0

105.7

145.9

0.0

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesExploration Activity

EUR Gas (BCF) by County

1987 to 1996 Gas Well Completions (No HPBG Infill )

EUR = Current Cumulative + (Current Monthly*48)

Hugoton

Embayment

560.0 BCF

WC & SC

Kansas

88.8 BCF

Eastern

Kansas

43.0 BCF

Page 12: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesFuture Strategies

Two Major Factors Effecting Future Exploration

Inter-dependence of Three Principal Variables

Product Price

Drilling Activity

New Reserves Discovered

Historical Trends of Kansas Oil & Gas Reserves

… The Past is the Key to the Future ...

Largest & Average, Oil & Gas Discoveries

Best & Average New Discovery Proven Reserves

Oil & Gas Reserve Replacement Rate

# of new producing leases

Page 13: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesFuture Strategies - Interdependence of Three Principal Variables

R2 = 0.5537

R2 = 0.9423

R2 = 0.3123

0

2,000

4,000

6,000

8,000

10,000

$- $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00

Oil Price (Real $/bbl)

An

nu

al D

rilli

ng

Ac

tiv

ity

Years: 1949 - 1973Years: 1974 - 1986Years: 1987 - 1996Linear (Years: 1987 - 1996)Linear (Years: 1974 - 1986)Linear (Years: 1949 - 1973)

Drilling Activity vs Oil Price

Future Price Perception

Drilling Activity not Price Dependent

(many large reserve fields to discovered)1998

833 wells

Page 14: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

y = 1E+06x - 8E+06

R2 = 0.4136

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

$- $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00

Oil Price (Real $/bbl)

An

nu

al R

es

erv

e R

ep

lac

em

en

t (b

bls

)

Years: 1949 - 1973

Years: 1974 - 1986

Years: 1987 - 1996

Linear (Years: 1987 - 1996)

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesFuture Strategies - Interdependence of Three Principal Variables

Oil Reserve Replacement vs Oil PriceR

es

erv

e R

ep

lac

em

en

t

no

t P

ric

e D

ep

en

de

nt

Page 15: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

y = 8722.9x + 7E+06

R2 = 0.7211

y = 8983.3x - 678255

R2 = 0.7742

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

0 500 1000 1500 2000 2500 3000 3500 4000

Annual Drilling Activity

An

nu

al R

es

erv

e R

ep

lac

em

en

t (N

EB

)

Years: 1987 - 1996

9 Counties in NW KS

9 Counties in SW KSLinear (Years: 1987 - 1996)

Linear (9 Counties in NW KS)

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesFuture Strategies - Interdependence of Three Principal Variables

Oil & Gas Reserve Replacement vs Drilling Activity(excludes HPBG Infill Drilling & Reserves)

Average Finding Cost

State: $9.59 / NEB

NW KS: $28.69 / NEB

SW KS: $3.99 / NEB

Reserve Replacement

not Activity or Price Dependent

(many large reserve fields to discovered)

Page 16: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

10

100

1,000

10,000

100,000

1915 1925 1935 1945 1955 1965 1975 1985 1995

EU

R O

il (M

bb

ls)

EUR Oil, Largest Lease

EUR Oil, Typical Lease

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesFuture Strategies - Historical Trends of Kansas Oil & Gas Production

‘87 to ‘96 Average

Typical Lease

34,296 bbls

‘87 to ‘96 Average

Largest Lease

1,296,483 bbls

EUR Oil for New Discoveries

Largest and Typical Lease

Page 17: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

0.1

1.0

10.0

100.0

1925 1935 1945 1955 1965 1975 1985 1995

EU

R G

as

, bc

f

EUR Gas, Largest Lease

EUR Gas, Average Lease

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesFuture Strategies - Historical Trends of Kansas Oil & Gas Production

‘87 to ‘96 Average

Typical Lease

471,112 mcf

‘87 to ‘96 Average

Largest Lease

6,511,460 mcf

EUR Gas for New Discoveries

Largest and Typical Lease

Page 18: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesFuture Strategies

Types of Exploration Strategies

Which Companies have the Lowest Finding Costs ?Corporate Strategies

companies with discoveries > 500 mNEB EUR (over 10 years)

companies with lowest finding costs

Which Counties produce the greatest EUR per Foot Drilled ?Geographical Strategies

counties ranked by EUR and Finding Cost

Which Formations yield the Largest Reserves ?Reservoir Strategies

historical and recent percentage contribution

Page 19: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesCorporate Strategies - Success & Failure at Three Different Budgets

Corporate StrategiesDiscoveries > 500 mNEB EUR, 1987 to 1996, No HPBG Infill

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

28,000

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600

Total Footage Drilled (mFt)

EU

R (

mN

EB

)

M ajor Oil Co

M ajor Oil Co

Large IndependentM ajor Oil Co

LargeIndependent

SmallIndependent

Small Independent

Lots of We llsOil Co.

Dryhole Oil Co

No Dryhole Oil Co

Total Footage

~ 1,700,000 Ft

Total Footage

~ 1,000,000 FtTotal Footage

~ 400,000 Ft

Page 20: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

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Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesCorporate Strategies - Large Exploration Budgets

Major Oil Co

EUR 27.9 mmNEB

$2.41/NEB

Large Independent

EUR 16,6 mmNEB

$3.69/NEB

Lots of Wells Oil Co

EUR 2.0 mmNEB

$27.77/NEB

Spatial Distribution of Exploration & Production

Company Total Footage Drilled ~ 1,700,00 Ft

1987 to 1996, No HPBG InfillCompany

New Reserves

Est Drlg & Comp Cost

Spatially Limited to NW KS

Very Low Success Rate

Narrowly Focused on LGKC Reservoir

Page 21: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

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Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesCorporate Strategies - Medium Exploration Budgets

Major Oil Co

EUR 14.2 mmNEB

$2.51/NEB

Dryhole Oil Co

EUR 1.36 mmNEB

$26.02/NEB

No Dryhole Oil Co

EUR 1.2 mmNEB

$28.94/NEB

Spatial Distribution of Exploration & Production

Company Total Footage Drilled ~ 1,000,00 Ft

1987 to 1996, No HPBG InfillCompany

New Reserves

Est Drlg & Comp Cost

Spatially Limited

High Completion Rate

Focused on Depleted Reservoir

Spatially Unlimited

Very Low Success Rate

Poorly Focused on Reservoir

Page 22: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

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Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesCorporate Strategies - Small Exploration Budgets

Small Independent

EUR 10.1 mmNEB

$1.58/NEB

“Arbuckle” Oil Co

EUR 0.6 mmNEB

$22.20/NEB

Small Independent

EUR 2.5 mmNEB

$4.84/NEB

Spatial Distribution of Exploration & Production

Company Total Footage Drilled ~ 400,000 Ft

1987 to 1996, No HPBG InfillCompany

New Reserves

Est Drlg & Comp Cost

Spatially Limited

Focused on Single Reservoir

Page 23: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesCorporate Strategies - Companies with Lowest Finding Costs

Cost Calculation

Depth Comp Dry

$/Ft $/Ft

>4500 $45 $30

<4500 $40 $25

<2500 $35 $20

Reserves Discovered

Outside Hugoton Field

Top 15 Companies Ranked by Finding CostsDiscoveries > 500 mNEB EUR, 1987 to 1996, No HPBG Infill

$0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00

Major

Sm. Indpndnt

Major

Sm Indpndnt

Major

Sm Indpndnt

Major

V Sm Indpndnt

Sm Indpndnt

V Sm Indpndnt

Lrg Indpndnt

Lrg Indpndnt

V Sm Indpndnt

Sm Indpndnt

Sm Indpndnt

Page 24: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesGeographical Strategies

Kansas CountiesEUR NEB vs Footage Drilled1987 to 1996, No HPBG Infill

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

Total Footage Drilled (mFt)

EU

R (

mN

EB

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Seward

Morton

Stevens

Stanton

Haskell

Finney

MeadeBarber

NessStaffordComancheGrant

Page 25: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

6.60

9.31

35.36

9.78

6.56

10.88

5.22

6.56

22.52

6.96

27.01

24.15

6.21

9.31

18.45

20.71

20.81

24.29 22.51

15.75

7.20

35.86

85.03

15.332.51 3.77

18.2625.24

34.4027.32 33.94

25.3418.84 26.20

18.84

25.45

52.90

2.3212.62

31.59

73.50

50.74

9.20

3.4511.52

19.15

13.59

13.63

10.1119.34

5.124.30 13.92

19.32

14.34

31.42 30.54

25.78

21.13

52.7415.84

20.8722.19

37.04

44.47

4.91

13.54

16.43

30.56

32.2797.88

148.2039.30

28.35

10.90

61.74

13.4120.12

28.1920.63

819.13

553.97

49.72

113.38

310.63

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesGeographical Strategies

Kansas Counties Finding Cost(Drlg & Comp Cost / EUR NEB)

1987 to 1996, No HPBG Infill

Hugoton

Embayment

$3.79 average

WC & SC

Kansas

$17.92 average

Page 26: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesReservoir Strategies

State of Kansas% of Cumulative Oil Production

by FormationYears: 1987 to 1998

WBNS1.2%

CHSE0.4%SIMP

1.8%VIOL2.7%

CHRK6.1%

ARBK8.1%

MARM8.2%

MISS33.1%

MRRW20.9%

LGKC16.3%

All Others1.2%

Page 27: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesReservoir Strategies

Cumulative Oil Production by FormationYears: 1987 to 1996

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

Cu

mu

lati

ve

Oil,

MM

bb

ls

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10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

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e. C

um

. Oil,

M b

bls

Cum. Oil per Frmn.

Ave. Cum. Oil per Lease

Page 28: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesReservoir Strategies

State of Kansas% of Cumulative Gas Production

by FormationYears: 1987 to 1998

CHRK0.5%

VIOL0.4%

All Others1.0%

WBNS0.6%SHWN

0.7%LGKC1.0%

MARM1.5%

CGRV2.8%

MISS9.6%

MRRW17.4%

CHSE64.5%

Page 29: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesReservoir Strategies

Cumulative Gas Production by FormationYears: 1987 to 1996

-

100.0

200.0

300.0

400.0

500.0

600.0

Cu

m. G

as

, MM

mc

f

-

100.0

200.0

300.0

400.0

500.0

600.0

Av

e. C

um

. Ga

s, M

mc

f

Cum. Gas per Frmn.

Ave. Cum. Gas per Lease

Page 30: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesSummary

Formation Strategies

Best Oil & Gas Producing Formations*Formation Total Oil Disc. Total Gas Disc. % of Discoveries w/ % of Discoveries w

EUR > 83 mbo EUR > 500 mmcf

Morrow 578 656 16% 32%Missisippian 1240 1091 7% 7%Lansing-Kansas City 660 232 8% 2%Marmaton 347 337 8% 3%Arbuckle 368 0 5% 0%Cherokee 304 0 5% 0%Viola 122 52 6% 4%Simpson 61 0 8% 0%Wabaunsee 49 30 6% 10%Shawnee 0 76 0% 5%Atokan 0 53 0% 6%Niobrara 0 35 0% 6%

* 1987 to 1996

Page 31: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesSummary

Geographical Strategies

Excellent Opportunities in almost All Counties

56 counties had at least 1 oil discovery with Lease EUR > 83,000 bbls.30 counties had at least 1 gas discovery with Lease EUR > 500,000 mcf.

County # of Oil Disc.* County # of Gas Disc.*FINNEY 43 SEWARD 84HASKELL 34 MORTON 81MORTON 25 STEVENS 64SEWARD 20 MEADE 38STEVENS 18 STANTON 34NESS 18 HASKELL 30KEARNY 17 BARBER 24STANTON 17 COMANCHE 14WALLACE 13 RENO 5STAFFORD 12 CLARK 5

* 1987 to 1996, > 83 mbo or 500 mmcf

Page 32: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesSummary

Corporate Strategies

Future Exploration Programs….

Efficiently Budgeted, Spatially Limited, with Proper Reservoir Focus

…will have the Lowest Finding Costs*Operators Drilling > 50,000 ft/yr. (10 - 15 wells/yr.)

Average Finding Cost $12.79/bbl Range($/bbl): $2.41 to $28.94

Need to focus on Southwest Kansas

Large Operators active outside of SW Kansas

ALL have Finding Cost > $10/bbl (most above $20/bbl)

Operators Drilling < 50,000 ft/yr.Average Finding Cost: $9.04/bbl Range($/bbl): $1.51 to $24.06

Operators Drilling < 20,000 ft/yr.Average Finding Cost: $6.22/bbl Range($/bbl): $2.34 to $11.04

* unless you happen to own leases in the Hugoton Gas Field

Page 33: Kansas Oil and Gas Exploration 10 Year History & Future Strategies Kansas Oil and Gas Production # of Wells drilled by Year 100,000,000 10,000,000 1,000,000.

Kansas Oil and Gas Exploration - 10 Year History & Future StrategiesFinal Slide

Acknowledgements

Kansas Geological Surveyfor support of this research

Kansas Corporation Commissionfurnishing well completion data

Kansas Department of Revenuefurnishing oil and gas production data