Stacked-Pay Spotlight
Stacked-Pay Spotlight
Eagle Ford Plus Chalk East Of The Arch
Mark A. Houser
EVP and COO, EnerVest Ltd. & President and CEO, EV Energy Partners, L.P. September 17, 2014
Forward-Looking Statement Statements made in this presentation that are not historical facts are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements include information about the sale of our Utica Shale and Eagle Ford assets, our midstream investments and expansion plans, future plans, our reserve quantities and the present value of our reserves, estimates of maintenance capital and other statements which include words such as “anticipates,” “plans,” “projects,” “expects,” “intends,” “believes,” ”should,” and similar expressions of forward-looking information. Forward-looking statements are inherently uncertain and necessarily involve risks that may affect the business prospects and performance of EV Energy Partners, L.P. Actual results may differ materially from those discussed in this presentation. Such risks and uncertainties include, but are not limited to, changes in commodity prices, changes in reserve estimates, requirements and actions of purchasers of properties (including the Utica Shale and Eagle Ford assets), changes in the metrics and procedures used to value midstream assets, exploration and development activities in the Utica Shale and elsewhere, the availability and cost of financing, the returns on our capital investments and acquisition strategies, the availability of sufficient cash flow to pay distributions and execute our business plan and general economic conditions. Additional information on risks and uncertainties that could affect our business prospects and performance are provided in the most recent reports of EV Energy Partners with the Securities and Exchange Commission. All forward-looking statements included in this presentation are expressly qualified in their entirety by the foregoing cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made and EVEP undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.
2
What a difference a decade makes Estimated Potential Gas Resources in the U.S. Texas Average Daily Oil Production Texas Rank Among Global Oil Producers If It Were a Nation Average Cost of a Barrel of Brent Crude Average Cost of a Barrel of West Texas Intermediate Mentions of Hydraulic Fracturing in News Stores Carried on the Bloomberg Terminal
Million Barrels of Crude Imported by the U.S. a Day, on Average Barrels of Diesel Exported by the U.S. a Week, on Average Barrels of Gasoline Exported by the U.S. a Day, on Average U. S. Railcars Carrying Petroleum Private Equity Acquisitions of U.S. Oil & Gas Companies Announced in a 12-Month Period Active U.S. Rigs
2004 1,308 tcf 1.1 million 21 $38 $41.47
2014 2,384 tcf 2.8 million 10 $107.24 $95.90
80 a year
240 a year
10 176,000 123,000 5,781
7.5 1.3 million 542,000 14,290
$963 million 1,192
$3.5 million 1,762
ENERVEST, LTD. Business Model ENERVEST, LTD.
▶ ▶
Institutional PE Funds Private investors
▶
Focus on reserves with more upside 60% PDP/40% upside
▶
Acquire/Exploit/Sell model
▶
IRR focused
▶ ▶ ▶
4
EV Energy Partners (EVEP) Public investors
▶
Focus on mostly producing reserves >80% PDP
▶
Buy and hold
▶
Yield and ROR focused
▶
Logical alternative buyer for certain assets from Institutional PE Funds
EnerVest Operating Maintain basin expertise over the long-term Economies of scale Flexible, acquisition oriented development company
ENERVEST, LTD. Assets Under Management EnerVest Basin Status & Producer Ranking Austin Chalk Appalachia
• #1 Producer • Top 10 Producer • #3 Conventional
Barnett Shale
• #5 Producer
Michigan
• #5 Producer
Ohio
Texas
• #6 Natural Gas Producer
Uinta
• Top 10 Producer
Utica
• #2 Acreage Holder
U.S.
• Top 25 Producer
2P Reserves – 6.8 Tcfe (68% Gas) Net Production – 837 Mmcfe/d Operated Wells – 28,000 Leases – 5.5 million acres
Appalachia
• #1 Conventional Producer
Dominant basin positions provide operating synergies & cost advantages
5
In last 3 years, over 30 transactions representing ~$3.4B in Acquisitions & ~$1.9B in Divestitures
Rockies
Greater MidCon
Barnett
Permian
Austin Chalk
Building Basin Positions: Utica
Largest acreage holder in Ohio with over 1.2 million gross acres
Largest conventional producer in Ohio operating ~9,000 wells
JV participant with Chesapeake and Total >50% of all wells drilled in the Utica
6
EVEP holds significant midstream positions in dominant gathering and processing facilities (UEO & CGS)
UEO Midstream Facilities Penn.
Ohio
West Virginia Ohio Acquisitions
Building Basin Positions: Barnett
5th largest producer in the play with over 1,400 gross wells (86% operated)
Robust liquids production for play with 31% oil/NGLs and 69% gas; currently producing ~230 Mmcfe/d
~140,000 gross acres
92% of EnerVest acreage is under 3D seismic coverage UNDISCLOSED
7
Ongoing 3 rig program drilling ~70 wells during 2014
Building Basin Positions: Mid-Continent
EnerVest and FourPoint Energy (former Cordillera I-III team) formed a joint venture during early 2014 to partner in building and exploiting a position of large size, scale and concentration
AMI spanning 14 counties in Texas and Oklahoma
$1.2 billion investment to date
EnerVest will operate, while FourPoint will lead geological and leasing activities
8
JV AMI
Re-Entering the Permian: Acquisition of HighMount E&P, LLC
Sold most Midland Basin assets to QEP Resources for $950MM in December 2013
Signed PSA in August 2014 to acquire HighMount with capital from Fund XIII 585,000 net acres in Texas and Oklahoma >5,000 operated wells 120 Mmcfe/d (70% gas)
Asset requires efficient operations, but represents a meaningful opportunity to deploy capital prudently
9
Austin Chalk: ENERVEST Position Overview
~800,000 gross acres acquired through several asset purchases beginning in 2007
Largest producer with 92 Mmcfe/d (>50% liquids)
>1,500 wellbores
Development programs Grassroots multi-stage Multi-stage re-entry
Brazos
Burleson
Lee
Washington
Austin
Meaningful upside potential Eagle Ford formation Buda and Georgetown formations Fayette
10
Grimes
Austin Chalk: Industry & EV Timeline Late 1970’s: Vertical drilling boom began with Southland Royalty 2D seismic & hydraulic fracturing successfully applied Early 1990’s: Horizontal drilling boom began as formation is naturally fractured Horizontal drilling technology & hydraulic fracturing Late 2000’s: Underlying Eagle Ford formation became topic of interest Began seeing Eagle Ford traction in EnerVest/EVEP area last year
EnerVest/EVEP Austin Chalk Acquisition & JV History Anadarko
(2007)
Initial JV w/ Apache (2007)
Emerald
(2008)
Chesapeake & Marathon (2009)
Total Acquisition Cost: ~$950MM 11
Exxon
(2010)
Amended JV w/Apache (2013)
Austin Chalk: Production Characteristics
In the Austin Chalk: Some wells continue to “de-water” and get better for months after they are drilled New wells give reserves to old wells When wells water out, sometimes you can get them back
In
other fields: When a well comes on line, it is as good as it will ever get New wells steal reserves from old wells When a well waters out, it is gone forever Austin Chalk has superior production characteristics compared to many other U.S. plays
12
Austin Chalk: ENERVEST Multi-Stage Grassroots Program
Drilled 22 wells over 5 years
$6.5MM average cost per well
~230 MBOE/well in reserves
20-30 additional possible well locations
Completion technology improvements
Great recent Dos Equis well
13
Perf and plug Pad acid Increased sand to 250lbs/ft
IP 700 Bbl/d & 1 MMcf/d Offset wells identified
EV Chalk Acreage EV Chalk Wells
EnerVest Dos Equis well
Austin Chalk: EnerVest Multi-Stage Re-entry Program
14
Pilot program: Completed 5 wells and received encouraging results Operational takeaways helped to improve full program economics
Current program: ~$1MM per well Large, 24 hour service rig Internally designed rotatable packer 2013 program average ROI was >50%
Post Re-entry
Pre Re-entry
Upper Gulf Coast Stacked Oil & Gas Plays Austin Chalk most lucrative zone to date, but Eagle Ford showing encouraging results Surface
Assorted formations
Navarro Taylor Pecan Gap Austin Chalk Eagle Ford Buda Georgetown Edwards Glen Rose
For illustrative purposes only. Source (Graphic): UT Bureau of Economic Geology
15
Eagle Ford: Area Activity Update
Play currently being delineated with windows loosely defined
19 rigs running in area
Major players include: Apache Halcon Anadarko Venado Clayton Williams
16
EF Rights Under Sale Agreement Permitted EF Wells
Halcon
Completed EF Wells
Anadarko Clayton Williams Apache
ENERVEST
Venado
Eagle Ford: ENERVEST Position Update
17
EF formation
Recently signed PSA to acreage under PSA divest Eagle Ford formation rights in Burleson, Brazos and Grimes counties; expect transaction to close 4Q EnerVest 2014 Lee Unger 1EF well EnerVest will retain Eagle Ford rights on over 280,000 gross acres in Fayette, Lee and Washington counties
Brazos
Burleson
Washington
Austin
Apache Corp. Fenn Ranch E 1H drilled 12/08
Fayette
Grimes
Eagle Ford: Industry Results in Region
18
EnerVest operated Unger 1EF well (Lee Co.) Completed Summer 2014 6100’ lateral length Peak production rate 460 BOPD and 132 Mcf/d Continues to flow at ~320 BOPD Early results encouraging
Select Eagle Ford Well Performance
BOPD
Apache Corp. operated Fenn Ranch E 1H well (Lee Co.) Completed December 2008 1000’ lateral length IP rate of 97 Bbl/d and 24 Mcf/d Scales up to 625 Boe/d for 7500’ lateral
28/64”+ choke
Conservative 15/64” choke Days
* * Indicates wells with EnerVest interest
Concluding Highlights
EnerVest continues to manage and enhance core positions
Austin Chalk delivering value through drilling programs as well as upside
Potential continued monetizations of Eagle Ford formation rights
Gaining meaningful data from operators in the area
Still early in this area of Eagle Ford formation but stable, predictable, improving performance already
19
Stacked-Pay Spotlight
Eagle Ford Plus Chalk East Of The Arch
Mark A. Houser
EVP and COO, EnerVest Ltd. & President and CEO, EV Energy Partners, L.P. September 17, 2014
Eagle Ford Plus Chalk East Of The Arch
Mark A. Houser
EVP and COO, EnerVest Ltd. & President and CEO, EV Energy Partners, L.P. September 17, 2014
Forward-Looking Statement Statements made in this presentation that are not historical facts are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements include information about the sale of our Utica Shale and Eagle Ford assets, our midstream investments and expansion plans, future plans, our reserve quantities and the present value of our reserves, estimates of maintenance capital and other statements which include words such as “anticipates,” “plans,” “projects,” “expects,” “intends,” “believes,” ”should,” and similar expressions of forward-looking information. Forward-looking statements are inherently uncertain and necessarily involve risks that may affect the business prospects and performance of EV Energy Partners, L.P. Actual results may differ materially from those discussed in this presentation. Such risks and uncertainties include, but are not limited to, changes in commodity prices, changes in reserve estimates, requirements and actions of purchasers of properties (including the Utica Shale and Eagle Ford assets), changes in the metrics and procedures used to value midstream assets, exploration and development activities in the Utica Shale and elsewhere, the availability and cost of financing, the returns on our capital investments and acquisition strategies, the availability of sufficient cash flow to pay distributions and execute our business plan and general economic conditions. Additional information on risks and uncertainties that could affect our business prospects and performance are provided in the most recent reports of EV Energy Partners with the Securities and Exchange Commission. All forward-looking statements included in this presentation are expressly qualified in their entirety by the foregoing cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made and EVEP undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.
2
What a difference a decade makes Estimated Potential Gas Resources in the U.S. Texas Average Daily Oil Production Texas Rank Among Global Oil Producers If It Were a Nation Average Cost of a Barrel of Brent Crude Average Cost of a Barrel of West Texas Intermediate Mentions of Hydraulic Fracturing in News Stores Carried on the Bloomberg Terminal
Million Barrels of Crude Imported by the U.S. a Day, on Average Barrels of Diesel Exported by the U.S. a Week, on Average Barrels of Gasoline Exported by the U.S. a Day, on Average U. S. Railcars Carrying Petroleum Private Equity Acquisitions of U.S. Oil & Gas Companies Announced in a 12-Month Period Active U.S. Rigs
2004 1,308 tcf 1.1 million 21 $38 $41.47
2014 2,384 tcf 2.8 million 10 $107.24 $95.90
80 a year
240 a year
10 176,000 123,000 5,781
7.5 1.3 million 542,000 14,290
$963 million 1,192
$3.5 million 1,762
ENERVEST, LTD. Business Model ENERVEST, LTD.
▶ ▶
Institutional PE Funds Private investors
▶
Focus on reserves with more upside 60% PDP/40% upside
▶
Acquire/Exploit/Sell model
▶
IRR focused
▶ ▶ ▶
4
EV Energy Partners (EVEP) Public investors
▶
Focus on mostly producing reserves >80% PDP
▶
Buy and hold
▶
Yield and ROR focused
▶
Logical alternative buyer for certain assets from Institutional PE Funds
EnerVest Operating Maintain basin expertise over the long-term Economies of scale Flexible, acquisition oriented development company
ENERVEST, LTD. Assets Under Management EnerVest Basin Status & Producer Ranking Austin Chalk Appalachia
• #1 Producer • Top 10 Producer • #3 Conventional
Barnett Shale
• #5 Producer
Michigan
• #5 Producer
Ohio
Texas
• #6 Natural Gas Producer
Uinta
• Top 10 Producer
Utica
• #2 Acreage Holder
U.S.
• Top 25 Producer
2P Reserves – 6.8 Tcfe (68% Gas) Net Production – 837 Mmcfe/d Operated Wells – 28,000 Leases – 5.5 million acres
Appalachia
• #1 Conventional Producer
Dominant basin positions provide operating synergies & cost advantages
5
In last 3 years, over 30 transactions representing ~$3.4B in Acquisitions & ~$1.9B in Divestitures
Rockies
Greater MidCon
Barnett
Permian
Austin Chalk
Building Basin Positions: Utica
Largest acreage holder in Ohio with over 1.2 million gross acres
Largest conventional producer in Ohio operating ~9,000 wells
JV participant with Chesapeake and Total >50% of all wells drilled in the Utica
6
EVEP holds significant midstream positions in dominant gathering and processing facilities (UEO & CGS)
UEO Midstream Facilities Penn.
Ohio
West Virginia Ohio Acquisitions
Building Basin Positions: Barnett
5th largest producer in the play with over 1,400 gross wells (86% operated)
Robust liquids production for play with 31% oil/NGLs and 69% gas; currently producing ~230 Mmcfe/d
~140,000 gross acres
92% of EnerVest acreage is under 3D seismic coverage UNDISCLOSED
7
Ongoing 3 rig program drilling ~70 wells during 2014
Building Basin Positions: Mid-Continent
EnerVest and FourPoint Energy (former Cordillera I-III team) formed a joint venture during early 2014 to partner in building and exploiting a position of large size, scale and concentration
AMI spanning 14 counties in Texas and Oklahoma
$1.2 billion investment to date
EnerVest will operate, while FourPoint will lead geological and leasing activities
8
JV AMI
Re-Entering the Permian: Acquisition of HighMount E&P, LLC
Sold most Midland Basin assets to QEP Resources for $950MM in December 2013
Signed PSA in August 2014 to acquire HighMount with capital from Fund XIII 585,000 net acres in Texas and Oklahoma >5,000 operated wells 120 Mmcfe/d (70% gas)
Asset requires efficient operations, but represents a meaningful opportunity to deploy capital prudently
9
Austin Chalk: ENERVEST Position Overview
~800,000 gross acres acquired through several asset purchases beginning in 2007
Largest producer with 92 Mmcfe/d (>50% liquids)
>1,500 wellbores
Development programs Grassroots multi-stage Multi-stage re-entry
Brazos
Burleson
Lee
Washington
Austin
Meaningful upside potential Eagle Ford formation Buda and Georgetown formations Fayette
10
Grimes
Austin Chalk: Industry & EV Timeline Late 1970’s: Vertical drilling boom began with Southland Royalty 2D seismic & hydraulic fracturing successfully applied Early 1990’s: Horizontal drilling boom began as formation is naturally fractured Horizontal drilling technology & hydraulic fracturing Late 2000’s: Underlying Eagle Ford formation became topic of interest Began seeing Eagle Ford traction in EnerVest/EVEP area last year
EnerVest/EVEP Austin Chalk Acquisition & JV History Anadarko
(2007)
Initial JV w/ Apache (2007)
Emerald
(2008)
Chesapeake & Marathon (2009)
Total Acquisition Cost: ~$950MM 11
Exxon
(2010)
Amended JV w/Apache (2013)
Austin Chalk: Production Characteristics
In the Austin Chalk: Some wells continue to “de-water” and get better for months after they are drilled New wells give reserves to old wells When wells water out, sometimes you can get them back
In
other fields: When a well comes on line, it is as good as it will ever get New wells steal reserves from old wells When a well waters out, it is gone forever Austin Chalk has superior production characteristics compared to many other U.S. plays
12
Austin Chalk: ENERVEST Multi-Stage Grassroots Program
Drilled 22 wells over 5 years
$6.5MM average cost per well
~230 MBOE/well in reserves
20-30 additional possible well locations
Completion technology improvements
Great recent Dos Equis well
13
Perf and plug Pad acid Increased sand to 250lbs/ft
IP 700 Bbl/d & 1 MMcf/d Offset wells identified
EV Chalk Acreage EV Chalk Wells
EnerVest Dos Equis well
Austin Chalk: EnerVest Multi-Stage Re-entry Program
14
Pilot program: Completed 5 wells and received encouraging results Operational takeaways helped to improve full program economics
Current program: ~$1MM per well Large, 24 hour service rig Internally designed rotatable packer 2013 program average ROI was >50%
Post Re-entry
Pre Re-entry
Upper Gulf Coast Stacked Oil & Gas Plays Austin Chalk most lucrative zone to date, but Eagle Ford showing encouraging results Surface
Assorted formations
Navarro Taylor Pecan Gap Austin Chalk Eagle Ford Buda Georgetown Edwards Glen Rose
For illustrative purposes only. Source (Graphic): UT Bureau of Economic Geology
15
Eagle Ford: Area Activity Update
Play currently being delineated with windows loosely defined
19 rigs running in area
Major players include: Apache Halcon Anadarko Venado Clayton Williams
16
EF Rights Under Sale Agreement Permitted EF Wells
Halcon
Completed EF Wells
Anadarko Clayton Williams Apache
ENERVEST
Venado
Eagle Ford: ENERVEST Position Update
17
EF formation
Recently signed PSA to acreage under PSA divest Eagle Ford formation rights in Burleson, Brazos and Grimes counties; expect transaction to close 4Q EnerVest 2014 Lee Unger 1EF well EnerVest will retain Eagle Ford rights on over 280,000 gross acres in Fayette, Lee and Washington counties
Brazos
Burleson
Washington
Austin
Apache Corp. Fenn Ranch E 1H drilled 12/08
Fayette
Grimes
Eagle Ford: Industry Results in Region
18
EnerVest operated Unger 1EF well (Lee Co.) Completed Summer 2014 6100’ lateral length Peak production rate 460 BOPD and 132 Mcf/d Continues to flow at ~320 BOPD Early results encouraging
Select Eagle Ford Well Performance
BOPD
Apache Corp. operated Fenn Ranch E 1H well (Lee Co.) Completed December 2008 1000’ lateral length IP rate of 97 Bbl/d and 24 Mcf/d Scales up to 625 Boe/d for 7500’ lateral
28/64”+ choke
Conservative 15/64” choke Days
* * Indicates wells with EnerVest interest
Concluding Highlights
EnerVest continues to manage and enhance core positions
Austin Chalk delivering value through drilling programs as well as upside
Potential continued monetizations of Eagle Ford formation rights
Gaining meaningful data from operators in the area
Still early in this area of Eagle Ford formation but stable, predictable, improving performance already
19
Stacked-Pay Spotlight
Eagle Ford Plus Chalk East Of The Arch
Mark A. Houser
EVP and COO, EnerVest Ltd. & President and CEO, EV Energy Partners, L.P. September 17, 2014
