Tight oil drives L48 investment - ncac-usaee
www.woodmac.com
NCAC-USAEE Energy Policy Conference Washington, D.C. April 3, 2012
Tight oil drives L48 investment 1
Delivering commercial insight to the global energy industry
www.woodmac.com
Agenda
Tight oil development has revitalized North American oil production • Onshore oil production rebounds in US • Shale specialists seek acreage, partnerships Bakken, Eagle Ford drive production to date • Bakken continues to improve as true-oil play • Eagle Ford proves success as mixed-phase play Operators test tight oil concept on emerging plays • Core acreage will drive production • Tight oil investment to continue in low-gas price environment
2
Delivering commercial insight to the global energy industry
www.woodmac.com
US, Texas oil production rebound as a result of tight-oil development Texas recovers to pre-2000 levels
2011 US volumes lead non-OPEC growth 5%
Syria South Sudan
monthly % change in Texas oil production since 1999
Mexico Norw ay Malaysia Indonesia (Non-OPEC) Denmark Tunisia Congo Thailand Vietnam India Azerbaijan Australia China Colombia Kazakhstan
0%
-5%
-10%
-15%
Canada Brazil
Source: Wood Mackenzie
Jan-11
Jan-10
Jan-09
Production Change 2011 to 2012 (000 b/d)
600
Jan-08
500
Jan-07
400
Jan-06
300
Jan-05
200
Jan-04
100
Jan-03
0
Jan-02
-100
Jan-01
-200
Jan-00
-20%
United States
Source: Wood Mackenzie, Texas RRC In 1999, Texas produced an average of 1.22 mmb/d
3
Delivering commercial insight to the global energy industry
www.woodmac.com
Tight oil investment changes the face of L48 activity Eagle Ford, Bakken drive investment 100%
40,000
800 Directional 700
35,000
Horizontal Vertical
Tight Oil capex (US$ mm)
600
L48 oil rigs
500
400
300
30,000
Bakken
Eagle Ford
Barnett
Mid-Con
Utica
Niobrara
Permian
Austin Chalk
Monterey
Percentage
90% 80% 70%
25,000
60%
50%
20,000
40%
15,000
200
30% 10,000
100
Tight oil capex as % of L48 spend
Horizontal oil rigs surpass vertical
20% 5,000
10%
So urce: Wo o d M ackenzie, Smith
20/02/12
22/12/11
23/10/11
24/08/11
25/06/11
26/04/11
25/02/11
27/12/10
28/10/10
29/08/10
30/06/10
01/05/10
02/03/10
01/01/10
0
0
0% 2002
2004
2006
2008
2010
2012
So urce: Wo o d M ackenzie
4
Delivering commercial insight to the global energy industry
www.woodmac.com
Relative to shale gas, international and super-majors enter plays early Tight-oil entry costs have averaged nearly $10,000/acre since 2009
25,000.0
US$/acre
20,000.0
15,000.0
10,000.0
5,000.0
Soure: Wood Mackenzie
Niobrara
Bakken
Eagle Ford
12/23/2011
9/14/2011
6/6/2011
2/26/2011
11/18/2010
8/10/2010
5/2/2010
1/22/2010
10/14/2009
-
Utica Corporate logos indicate buyers
5
Delivering commercial insight to the global energy industry
www.woodmac.com
Tight oil is competitive with other growth options Range of breakeven prices for resource themes
Oil Sands - Integrated
Oil Sands - Bitumen
Ultra-Deepwater
Deepwater
Offshore
L48 Core Tight Oil
Onshore
0
20
40
60
80
100
120
US$/bbl (Brent) Source: Wood Mackenzie 6
Delivering commercial insight to the global energy industry
www.woodmac.com
Independents apply experience from shale gas to tight oil plays Tight oil investment is resulting in material reserve adds Wolfcamp
3,000
Niobrara Monterey Bone Spring
Commercial Reserves (mmboe)
2,500
Cleveland Barnett Austin Chalk
2,000
Utica Mississippian Eagle Ford
1,500
Bakken
1,000
Shell
Devon Energy
Reliance
Talisman
ExxonMobil
Cimarex Energy
Rosetta Resources
CNOOC Ltd
Whiting
Pioneer
Occidental
SM Energy
Noble Energy
Marathon
SandRidge Energy
Statoil
Hess Corporation
BHP Billiton
Anadarko
Continental Resources
Source: Wood Mackenzie
ConocoPhillips
Chesapeake
0
EOG Resources
500
7
Delivering commercial insight to the global energy industry
www.woodmac.com
Tight oil opportunities span the Lower 48
Delivering commercial insight to the global energy industry
www.woodmac.com 10 4° W
103 °W
1 02 °W
1 01 °W
Bakken Shale – True oil play z zz z zzz zz
z z
z
z z zz zzz z zzz
z zz z z z z z
z zzz z z
Montana
R oosevelt
4 8° N
Brigham (Statoil), Whiting lead operators in initial productivity
Richland
End of Study
33% growth from 2011-12 700
500 Wibaux
400 D aws on
300 200
4 7° N
Oil Production ('000 b/d)
600
z
z
z z
z
z z z z zz z zz z z zz z z zzzz z zz z z z zzz z zz z z z z z zz zz zz z zz z z z zzzzzz z zz zz z z zz z zz zzzzz z z z zz zzzzzzzz z z
z
z z
z
z z z z z zz zz
Burke
z
Renville
z zzz Ward z z z z z z z z z z zz z z z Williams z z COTTONWOOD z z z z z zz z z z Mountrail z z zzz z zzzzz z z zz zz z z z zz z z z KITTLESON SLOUGH z z zz zz z z z z zz z zz zzz z zz zzz z z z z z zz zz z z zz z zz zz z z z z z z z ALGER z z zzzzzz z z zz z z z z z z zz zz zz z z zz z z z zzz ROSS z z z z zzzz z z zz z z z z zzz z z zz LODGE zzz z z z z zzBEAVER zz z z z z z z z z z z z z z z zz z zz z z z zz z z z zzz z zz zz z zz z zz z z zz zz z z zz zz zz z z z z zz z z zz z z zz z zz zzzz z zz z z z zz zz z z zzz z zz z zzzzz z z z z zz z z z zz zz z z zz zz z zz zz zz z zz z z z zz z zz z zz z z z zz z z z zzz z z z zzzzzz z z z zz z z z z z zzz zzz zz zzz zSANISH z zz z z z z z z z zz z z z z z z z z z z zzzz PARSHALL zz z zz z z z z z zz z zz z z z z z zz z zz zz zzz z zz z zzz z zz zz z z z z z z z z zz z z z zz z z z z z z z zz z zz z z z zz z z z zzzz zzzz zz z zz zz z z z z z z z z z z z zz z z z z zz z z z z z z z zzz z z zzz z zz zz z zz zzz z z z z zzz z z z z z zz z z z z z z zz z z z zzz z zzzz zzzz zzz zzzz z z z z z z z zz z zz z zz zz zz z z zz z z z zzz zz z z zz z z z zz z z z z zz z z zz z zz z z z z z zz z z z z zz zz z z zzzzzz z z zz zz z zz z z zzzz z zz z zzz z zzzzz z zz z z zzz z z zz z z z zzz z z zz z zz z zzz z z z z z z z z zzz z z zz z z zz zzzz z z zz z z z z zz z z z zz z z z z zz zz zz zz z z z z z z z z z z z z z z z z z z z z z z z z z zz z z zz zz zz z z z zz z z z z zz zz zz z zz z z z zz z z z zzzz z zzz z z z zz z z z zzz z z z z z z z z z zzz zz zz zz z z z z z z z z zzz zz z zz z zz z z z zz zzzz zz z zz zz z z z z z zz zz zz z z zz z z z z z z zz zzz zz z z zz z zz z zz zzzz z zz z z z z z z zz zzz zz zz zzz zz z z z z z z zzzzz z zz z z z z zz z z zz zz z z Mercer zzz zz z z z z zz z z z z z z z z z zz z z zz zz z zz z zz zz z z z zz z z z zz z zz z z z z z z z z zz zz z z zz z zz z z z zzz zzzzzz zzz z z z z z zzzzzz z zzzz z zz z z z zz z z z zz z zz zz z z z z z zz z zz z zz z z McKenzie z zz z z z zzz z zz z z z z z z z z z z z z zz zz z zz z z z z z z zzzzz z z z z z z z z zzz z zz zz zz z z z z z z z z z z z z ELKHORN RANCHz zz zzz z zz zzz z z z z z z z z z z z z z z LEWIS & z Dunn z zz z CLARKE z z
North Dakota
Repeatability proven across trend
z
z
U.S.A.
z
z
zz
4 9° N
z
Bakken Shale
Stark
Golden Valley
100
Billings
z
z
Morton
Williston Basin 4 8° N
Parshall/Sanish fields lead play
z
Wells by operator z
Continental
z
EOG
z
Hess
z
Oxy
z
Statoil
z
Whiting
z
All other companies
IP (b/d) 0 - 149 149 - 247
4 7° N
4 9° N
CANADA Sheridan Divide
247 - 390 390 - 582
z
582 - 783
0 Jan-08 Source: Wood Mackenzie
> 783
Jan-09
Jan-10
Jan-11
Jan-12 0
10
20
km 40
10 4° W
103 °W
1 02 °W
1 01 °W
Source: Wood M ack enz ie
9
Delivering commercial insight to the global energy industry
www.woodmac.com
Most Bakken completions are competitive at $80/bbl WTI Operators seek more attractive returns by railing crude to Louisiana $140.00
1,000 peak month 900
breakeven $120.00
800
b/d
600
$80.00
500 $60.00
400 300
$40.00
WTI breakeven (US$/bbl)
$100.00
700
200 $20.00 100 $0.00
0 195 (P10) Source: Wood Mackenzie, Lasser Inc.
317 (P25)
494 (P50)
731 (P75)
980 (P90)
EUR (mbo)
10
Delivering commercial insight to the global energy industry
www.woodmac.com 98°W
Caldwell Ken dall Bandera
Real
Comal
Fayette
Bexar
Medina
Kinney Uvalde
San Anto nio
lf Gu
Co
as
a tB
sin
30
NGLs drive economics in Webb County, parts of Hawkville
50
60
28°N
500
Edward s Reef Trend
Oil production ('000 b/d)
MEX ICO
300
Jackson
DeWitt Victor ia
60
Calhoun Refugio
Live Oak Bee
Eagle Ford Shale Pla y
San Patricio Jim Wells
C orpus C hristi Nueces
Duval Gonzale s S an Ant oni o
COP EP
Zapata
Jim Hogg
NFX
ord eF gl Ea
MUR
EOG
MRO
CHK
PXD
BHP APC
TLM
MEXICO SM
39 - 62 (P75) 63 - 210 (P90)
Webb
19 - 38 (P50)
ROSE BP
Starr
MUR Corpus Christ i
Laredo
Eagle Ford Well
Lavaca
0 - 4.2 (P10)
100
Goliad
McMullen
La Salle
4.3 - 18 (P25)
Source: Wood Mackenzie
Sligo Reef Tren d
Ea gle Ford 6 mo. Cum. Oil Produc tion bbl ('000 ) (Pe rce ntile)
200
Karnes
400
50
40
+250% growth from 2011-12
40
Dimmit
Pearsal l Arch
Maverick
Wilson
Atascosa Z avala Frio
Chitti m Anticl ine
Maverick Basin
Gas-drive improves economics
Guadalupe
Colorado
Gonzales
28°N
Edwards
Liquids yield varies across trend
0 Jan-08
30°N
30°N
Eagle Ford – Mixed-phase play
100°W
API contour
Jan-09
Jan-10
Jan-11
Jan-12
100°W 0
20
40
98°W km 80
Source: Wood Mac kenzie
11
Delivering commercial insight to the global energy industry
www.woodmac.com
Liquids exposure varies across Eagle Ford
County
Avg API Gravity
Webb
60
Dewitt
54
14.0
Live Oak
54
12.0
Dimmit
49
10.0
Karnes
49
8.0
LaSalle
47
6.0
Gonzales
43
McMullen
42
Maverick
40
-2.0
Frio
40
-4.0
Atascosa
39
-6.0
Wilson
38
Zavala
35
Returns in condensate counties lead play
Post-tax NPV10 (US$M)
16.0
4.0 2.0
Source: Wood Mackenzie
Za va la M av er ic k
Fr io
on At as co sa
W i ls
m it im D
Be e
ak Ka rn es La va ca W eb b La S al le M cM ul le n G on za le s
O
Li ve
D
eW i tt
-
Source: Wood Mackenzie, RRC
12
Delivering commercial insight to the global energy industry
www.woodmac.com
Liquids exposure can vary by play, and even by acreage within a play Several plays are dependent on NGL prices for returns in a low-gas price environment Later life, True oil
Later life, Rich gas Austin Chalk
Wolfberry Bakken Piceance Mesaverde Barnett Combo
Granite Wash Eagle Ford
Legend
Cana Woodford
Current Production = 100 mboed
Niobrara
Woodbine
Avalon
Bone Spring
Hz Mississippian
Monterey
Early life, Rich gas NGLs
TMS
Utica Wolfcamp
So urce Wo o d M ackenzie
`
Alberta Bakken
Low er Smackover
Early life, True oil Oil 13
Delivering commercial insight to the global energy industry
www.woodmac.com
Ten of 31 productive counties account for 90% of current liquids volumes Similar to shale gas, core acreage drives production
County
Share
Mountrail
27%
Mc Kenzie
13%
Dunn
11%
Williams
9%
Karnes (Eagle Ford)
6%
DeWitt (Eagle Ford)
6%
Richland
6%
Gonzales (Eagle Ford)
4%
Dimmit (Eagle Ford)
4%
Webb (Eagle Ford)
3%
Other Eagle Ford
7%
Other Bakken
3%
600 Bakken (pre-2009 w ells)
Bakken
Eagle Ford
Eagle Ford (gas)
500
mboed
400
300
200
100
Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11
0
Source: Wood Mackenzie, Lasser Inc.
Source: Wood Mackenzie, Lasser Inc.
14
Delivering commercial insight to the global energy industry
www.woodmac.com
Operators will maintain commitment to tight oil in low-gas price environment Most shale gas plays don’t rival Bakken margins until US$8/mcf 100.00
Bakken (P50) Woodford
Barnett Fayetteville
Haynesville Marcellus (NEPA)
90.00 80.00
post-tax IRR (%)
70.00 60.00 50.00 40.00 30.00 20.00 10.00 $4.00 0.00 Source: Wood Mackenzie
$4.80
$5.60
$6.40
$7.20
$8.00
gas price (US$/mcf) All economics assume US$80/bbl flat
15
Delivering commercial insight to the global energy industry
www.woodmac.com
Conclusion
Tight oil has changed the conversation on North American energy Successes in Bakken, Eagle Ford encourage search for sweet spots in emerging plays Investment to continue in high oil, low gas price environment
16
Delivering commercial insight to the global energy industry
www.woodmac.com
Contacts For any questions regarding the content of this presentation, or the commercial analysis Wood Mackenzie provides, please contact:
Hill Vaden Senior Analyst, US Lower 48 Upstream T: 713-470-1652 E: [email protected]
17
Delivering commercial insight to the global energy industry
www.woodmac.com
Wood Mackenzie
Global Contact Details
Kintore House 74-77 Queen Street Edinburgh EH2 4NS
Europe Americas Asia Pacific Email
+44 (0)131 243 4400 +1 713 470 1600 +65 6518 0800 [email protected]
Global Offices Australia - Canada - China - Japan - Malaysia - Russia - Singapore - South Africa - United Arab Emirates - United Kingdom - United States
Wood Mackenzie has been providing its unique range of research products and consulting services to the Energy industry for over 30 years. Wood Mackenzie provides forward-looking commercial insight that enables clients to make better business decisions. For more information visit: www.woodmac.com
18
Delivering commercial insight to the global energy industry
NCAC-USAEE Energy Policy Conference Washington, D.C. April 3, 2012
Tight oil drives L48 investment 1
Delivering commercial insight to the global energy industry
www.woodmac.com
Agenda
Tight oil development has revitalized North American oil production • Onshore oil production rebounds in US • Shale specialists seek acreage, partnerships Bakken, Eagle Ford drive production to date • Bakken continues to improve as true-oil play • Eagle Ford proves success as mixed-phase play Operators test tight oil concept on emerging plays • Core acreage will drive production • Tight oil investment to continue in low-gas price environment
2
Delivering commercial insight to the global energy industry
www.woodmac.com
US, Texas oil production rebound as a result of tight-oil development Texas recovers to pre-2000 levels
2011 US volumes lead non-OPEC growth 5%
Syria South Sudan
monthly % change in Texas oil production since 1999
Mexico Norw ay Malaysia Indonesia (Non-OPEC) Denmark Tunisia Congo Thailand Vietnam India Azerbaijan Australia China Colombia Kazakhstan
0%
-5%
-10%
-15%
Canada Brazil
Source: Wood Mackenzie
Jan-11
Jan-10
Jan-09
Production Change 2011 to 2012 (000 b/d)
600
Jan-08
500
Jan-07
400
Jan-06
300
Jan-05
200
Jan-04
100
Jan-03
0
Jan-02
-100
Jan-01
-200
Jan-00
-20%
United States
Source: Wood Mackenzie, Texas RRC In 1999, Texas produced an average of 1.22 mmb/d
3
Delivering commercial insight to the global energy industry
www.woodmac.com
Tight oil investment changes the face of L48 activity Eagle Ford, Bakken drive investment 100%
40,000
800 Directional 700
35,000
Horizontal Vertical
Tight Oil capex (US$ mm)
600
L48 oil rigs
500
400
300
30,000
Bakken
Eagle Ford
Barnett
Mid-Con
Utica
Niobrara
Permian
Austin Chalk
Monterey
Percentage
90% 80% 70%
25,000
60%
50%
20,000
40%
15,000
200
30% 10,000
100
Tight oil capex as % of L48 spend
Horizontal oil rigs surpass vertical
20% 5,000
10%
So urce: Wo o d M ackenzie, Smith
20/02/12
22/12/11
23/10/11
24/08/11
25/06/11
26/04/11
25/02/11
27/12/10
28/10/10
29/08/10
30/06/10
01/05/10
02/03/10
01/01/10
0
0
0% 2002
2004
2006
2008
2010
2012
So urce: Wo o d M ackenzie
4
Delivering commercial insight to the global energy industry
www.woodmac.com
Relative to shale gas, international and super-majors enter plays early Tight-oil entry costs have averaged nearly $10,000/acre since 2009
25,000.0
US$/acre
20,000.0
15,000.0
10,000.0
5,000.0
Soure: Wood Mackenzie
Niobrara
Bakken
Eagle Ford
12/23/2011
9/14/2011
6/6/2011
2/26/2011
11/18/2010
8/10/2010
5/2/2010
1/22/2010
10/14/2009
-
Utica Corporate logos indicate buyers
5
Delivering commercial insight to the global energy industry
www.woodmac.com
Tight oil is competitive with other growth options Range of breakeven prices for resource themes
Oil Sands - Integrated
Oil Sands - Bitumen
Ultra-Deepwater
Deepwater
Offshore
L48 Core Tight Oil
Onshore
0
20
40
60
80
100
120
US$/bbl (Brent) Source: Wood Mackenzie 6
Delivering commercial insight to the global energy industry
www.woodmac.com
Independents apply experience from shale gas to tight oil plays Tight oil investment is resulting in material reserve adds Wolfcamp
3,000
Niobrara Monterey Bone Spring
Commercial Reserves (mmboe)
2,500
Cleveland Barnett Austin Chalk
2,000
Utica Mississippian Eagle Ford
1,500
Bakken
1,000
Shell
Devon Energy
Reliance
Talisman
ExxonMobil
Cimarex Energy
Rosetta Resources
CNOOC Ltd
Whiting
Pioneer
Occidental
SM Energy
Noble Energy
Marathon
SandRidge Energy
Statoil
Hess Corporation
BHP Billiton
Anadarko
Continental Resources
Source: Wood Mackenzie
ConocoPhillips
Chesapeake
0
EOG Resources
500
7
Delivering commercial insight to the global energy industry
www.woodmac.com
Tight oil opportunities span the Lower 48
Delivering commercial insight to the global energy industry
www.woodmac.com 10 4° W
103 °W
1 02 °W
1 01 °W
Bakken Shale – True oil play z zz z zzz zz
z z
z
z z zz zzz z zzz
z zz z z z z z
z zzz z z
Montana
R oosevelt
4 8° N
Brigham (Statoil), Whiting lead operators in initial productivity
Richland
End of Study
33% growth from 2011-12 700
500 Wibaux
400 D aws on
300 200
4 7° N
Oil Production ('000 b/d)
600
z
z
z z
z
z z z z zz z zz z z zz z z zzzz z zz z z z zzz z zz z z z z z zz zz zz z zz z z z zzzzzz z zz zz z z zz z zz zzzzz z z z zz zzzzzzzz z z
z
z z
z
z z z z z zz zz
Burke
z
Renville
z zzz Ward z z z z z z z z z z zz z z z Williams z z COTTONWOOD z z z z z zz z z z Mountrail z z zzz z zzzzz z z zz zz z z z zz z z z KITTLESON SLOUGH z z zz zz z z z z zz z zz zzz z zz zzz z z z z z zz zz z z zz z zz zz z z z z z z z ALGER z z zzzzzz z z zz z z z z z z zz zz zz z z zz z z z zzz ROSS z z z z zzzz z z zz z z z z zzz z z zz LODGE zzz z z z z zzBEAVER zz z z z z z z z z z z z z z z zz z zz z z z zz z z z zzz z zz zz z zz z zz z z zz zz z z zz zz zz z z z z zz z z zz z z zz z zz zzzz z zz z z z zz zz z z zzz z zz z zzzzz z z z z zz z z z zz zz z z zz zz z zz zz zz z zz z z z zz z zz z zz z z z zz z z z zzz z z z zzzzzz z z z zz z z z z z zzz zzz zz zzz zSANISH z zz z z z z z z z zz z z z z z z z z z z zzzz PARSHALL zz z zz z z z z z zz z zz z z z z z zz z zz zz zzz z zz z zzz z zz zz z z z z z z z z zz z z z zz z z z z z z z zz z zz z z z zz z z z zzzz zzzz zz z zz zz z z z z z z z z z z z zz z z z z zz z z z z z z z zzz z z zzz z zz zz z zz zzz z z z z zzz z z z z z zz z z z z z z zz z z z zzz z zzzz zzzz zzz zzzz z z z z z z z zz z zz z zz zz zz z z zz z z z zzz zz z z zz z z z zz z z z z zz z z zz z zz z z z z z zz z z z z zz zz z z zzzzzz z z zz zz z zz z z zzzz z zz z zzz z zzzzz z zz z z zzz z z zz z z z zzz z z zz z zz z zzz z z z z z z z z zzz z z zz z z zz zzzz z z zz z z z z zz z z z zz z z z z zz zz zz zz z z z z z z z z z z z z z z z z z z z z z z z z z zz z z zz zz zz z z z zz z z z z zz zz zz z zz z z z zz z z z zzzz z zzz z z z zz z z z zzz z z z z z z z z z zzz zz zz zz z z z z z z z z zzz zz z zz z zz z z z zz zzzz zz z zz zz z z z z z zz zz zz z z zz z z z z z z zz zzz zz z z zz z zz z zz zzzz z zz z z z z z z zz zzz zz zz zzz zz z z z z z z zzzzz z zz z z z z zz z z zz zz z z Mercer zzz zz z z z z zz z z z z z z z z z zz z z zz zz z zz z zz zz z z z zz z z z zz z zz z z z z z z z z zz zz z z zz z zz z z z zzz zzzzzz zzz z z z z z zzzzzz z zzzz z zz z z z zz z z z zz z zz zz z z z z z zz z zz z zz z z McKenzie z zz z z z zzz z zz z z z z z z z z z z z z zz zz z zz z z z z z z zzzzz z z z z z z z z zzz z zz zz zz z z z z z z z z z z z z ELKHORN RANCHz zz zzz z zz zzz z z z z z z z z z z z z z z LEWIS & z Dunn z zz z CLARKE z z
North Dakota
Repeatability proven across trend
z
z
U.S.A.
z
z
zz
4 9° N
z
Bakken Shale
Stark
Golden Valley
100
Billings
z
z
Morton
Williston Basin 4 8° N
Parshall/Sanish fields lead play
z
Wells by operator z
Continental
z
EOG
z
Hess
z
Oxy
z
Statoil
z
Whiting
z
All other companies
IP (b/d) 0 - 149 149 - 247
4 7° N
4 9° N
CANADA Sheridan Divide
247 - 390 390 - 582
z
582 - 783
0 Jan-08 Source: Wood Mackenzie
> 783
Jan-09
Jan-10
Jan-11
Jan-12 0
10
20
km 40
10 4° W
103 °W
1 02 °W
1 01 °W
Source: Wood M ack enz ie
9
Delivering commercial insight to the global energy industry
www.woodmac.com
Most Bakken completions are competitive at $80/bbl WTI Operators seek more attractive returns by railing crude to Louisiana $140.00
1,000 peak month 900
breakeven $120.00
800
b/d
600
$80.00
500 $60.00
400 300
$40.00
WTI breakeven (US$/bbl)
$100.00
700
200 $20.00 100 $0.00
0 195 (P10) Source: Wood Mackenzie, Lasser Inc.
317 (P25)
494 (P50)
731 (P75)
980 (P90)
EUR (mbo)
10
Delivering commercial insight to the global energy industry
www.woodmac.com 98°W
Caldwell Ken dall Bandera
Real
Comal
Fayette
Bexar
Medina
Kinney Uvalde
San Anto nio
lf Gu
Co
as
a tB
sin
30
NGLs drive economics in Webb County, parts of Hawkville
50
60
28°N
500
Edward s Reef Trend
Oil production ('000 b/d)
MEX ICO
300
Jackson
DeWitt Victor ia
60
Calhoun Refugio
Live Oak Bee
Eagle Ford Shale Pla y
San Patricio Jim Wells
C orpus C hristi Nueces
Duval Gonzale s S an Ant oni o
COP EP
Zapata
Jim Hogg
NFX
ord eF gl Ea
MUR
EOG
MRO
CHK
PXD
BHP APC
TLM
MEXICO SM
39 - 62 (P75) 63 - 210 (P90)
Webb
19 - 38 (P50)
ROSE BP
Starr
MUR Corpus Christ i
Laredo
Eagle Ford Well
Lavaca
0 - 4.2 (P10)
100
Goliad
McMullen
La Salle
4.3 - 18 (P25)
Source: Wood Mackenzie
Sligo Reef Tren d
Ea gle Ford 6 mo. Cum. Oil Produc tion bbl ('000 ) (Pe rce ntile)
200
Karnes
400
50
40
+250% growth from 2011-12
40
Dimmit
Pearsal l Arch
Maverick
Wilson
Atascosa Z avala Frio
Chitti m Anticl ine
Maverick Basin
Gas-drive improves economics
Guadalupe
Colorado
Gonzales
28°N
Edwards
Liquids yield varies across trend
0 Jan-08
30°N
30°N
Eagle Ford – Mixed-phase play
100°W
API contour
Jan-09
Jan-10
Jan-11
Jan-12
100°W 0
20
40
98°W km 80
Source: Wood Mac kenzie
11
Delivering commercial insight to the global energy industry
www.woodmac.com
Liquids exposure varies across Eagle Ford
County
Avg API Gravity
Webb
60
Dewitt
54
14.0
Live Oak
54
12.0
Dimmit
49
10.0
Karnes
49
8.0
LaSalle
47
6.0
Gonzales
43
McMullen
42
Maverick
40
-2.0
Frio
40
-4.0
Atascosa
39
-6.0
Wilson
38
Zavala
35
Returns in condensate counties lead play
Post-tax NPV10 (US$M)
16.0
4.0 2.0
Source: Wood Mackenzie
Za va la M av er ic k
Fr io
on At as co sa
W i ls
m it im D
Be e
ak Ka rn es La va ca W eb b La S al le M cM ul le n G on za le s
O
Li ve
D
eW i tt
-
Source: Wood Mackenzie, RRC
12
Delivering commercial insight to the global energy industry
www.woodmac.com
Liquids exposure can vary by play, and even by acreage within a play Several plays are dependent on NGL prices for returns in a low-gas price environment Later life, True oil
Later life, Rich gas Austin Chalk
Wolfberry Bakken Piceance Mesaverde Barnett Combo
Granite Wash Eagle Ford
Legend
Cana Woodford
Current Production = 100 mboed
Niobrara
Woodbine
Avalon
Bone Spring
Hz Mississippian
Monterey
Early life, Rich gas NGLs
TMS
Utica Wolfcamp
So urce Wo o d M ackenzie
`
Alberta Bakken
Low er Smackover
Early life, True oil Oil 13
Delivering commercial insight to the global energy industry
www.woodmac.com
Ten of 31 productive counties account for 90% of current liquids volumes Similar to shale gas, core acreage drives production
County
Share
Mountrail
27%
Mc Kenzie
13%
Dunn
11%
Williams
9%
Karnes (Eagle Ford)
6%
DeWitt (Eagle Ford)
6%
Richland
6%
Gonzales (Eagle Ford)
4%
Dimmit (Eagle Ford)
4%
Webb (Eagle Ford)
3%
Other Eagle Ford
7%
Other Bakken
3%
600 Bakken (pre-2009 w ells)
Bakken
Eagle Ford
Eagle Ford (gas)
500
mboed
400
300
200
100
Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11
0
Source: Wood Mackenzie, Lasser Inc.
Source: Wood Mackenzie, Lasser Inc.
14
Delivering commercial insight to the global energy industry
www.woodmac.com
Operators will maintain commitment to tight oil in low-gas price environment Most shale gas plays don’t rival Bakken margins until US$8/mcf 100.00
Bakken (P50) Woodford
Barnett Fayetteville
Haynesville Marcellus (NEPA)
90.00 80.00
post-tax IRR (%)
70.00 60.00 50.00 40.00 30.00 20.00 10.00 $4.00 0.00 Source: Wood Mackenzie
$4.80
$5.60
$6.40
$7.20
$8.00
gas price (US$/mcf) All economics assume US$80/bbl flat
15
Delivering commercial insight to the global energy industry
www.woodmac.com
Conclusion
Tight oil has changed the conversation on North American energy Successes in Bakken, Eagle Ford encourage search for sweet spots in emerging plays Investment to continue in high oil, low gas price environment
16
Delivering commercial insight to the global energy industry
www.woodmac.com
Contacts For any questions regarding the content of this presentation, or the commercial analysis Wood Mackenzie provides, please contact:
Hill Vaden Senior Analyst, US Lower 48 Upstream T: 713-470-1652 E: [email protected]
17
Delivering commercial insight to the global energy industry
www.woodmac.com
Wood Mackenzie
Global Contact Details
Kintore House 74-77 Queen Street Edinburgh EH2 4NS
Europe Americas Asia Pacific Email
+44 (0)131 243 4400 +1 713 470 1600 +65 6518 0800 [email protected]
Global Offices Australia - Canada - China - Japan - Malaysia - Russia - Singapore - South Africa - United Arab Emirates - United Kingdom - United States
Wood Mackenzie has been providing its unique range of research products and consulting services to the Energy industry for over 30 years. Wood Mackenzie provides forward-looking commercial insight that enables clients to make better business decisions. For more information visit: www.woodmac.com
18
Delivering commercial insight to the global energy industry
