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Jefferies LLC November 2015/

Jefferies Energy ConferencePermian Basin Technical Overview


Permian Basin Play Outlines

Permian Basin Activity Map with Type Curve Areas

Key Points

The Permian Basin is one of the most prolific oil and gas basins in the onshore U.S.─ Several thousands of feet of

horizontal targets─ 20+ target intervals

economic at today’s commodity pricing

The Midland Basin has 1,500+ horizontal shale wells completed in Spraberry and Wolfcamp benches─ Completion optimization has

advanced rapidly compared to other basins

─ OOIP up to 300+ MMBo / section

The Delaware Basin has 4,500+ horizontal shale wells, with highly economical results in the Avalon, Bone Spring, Delaware Sands, Wolfcamp, and Yeso horizons─ OOIP up to 500+ MMBo /

section─ Until recently, completion

evolution has lagged the Midland Basin

─ Horizontal targets can have more geologic complexity than the Midland Basin

3

Wolfcamp

Avalon

Bone Spring

Middle Spraberry

Lower Spraberry

Wolfcamp

TX

NM

Delaware Basin

Midland Basin

Central Basin Platform

Wolfcamp

Bone Spring

Middle Spraberry

Lower Spraberry

Avalon


Evolution of Permian Hydraulic Fracturing

Key Points

The ability to create complexity and reservoir contact area through a fracture system depends on the well completion and the fracture treatment design

Permian productivity enhancement is highly correlated towards operators’ adaptation of highly-propped slickwater fracs

Tightening spacing while maintaining as complex a fracture as possible near-wellbore will provide the most efficient and economic development

HIGHER IPHIGHER EURHIGHER RF

MODERATE IPLOW EURLOW RF

FRAC INTENSITY / COMPLEXITY

Illustrative Stimulation OptimizationReagan County

Levers to Pull on Frac

Slickwater frac efficacy is tied to many key factors, including:

─ Pump rate─ Fluid type─ Fluid vol─ Sand vol─ Sand type

─ Prop conc / ramp─ Pad size─ Stage spacing ─ Cluster spacing─ Perforated hole size

─ Limited entry─ Perforating schedule─ Diversion (induced or material)─ Nano-surfactants

Higher Rate, Large Volume Slickwater, Plug & Perf

Low Rate, Small Volume Gel, Plug & Perf

Low Rate, Small Volume Gel, Sliding Sleeves

10

100

1,000

- 20 40 60 80 100 120

WH

Dai

ly P

rodu

ctio

n (B

o/d)

Months

589 MBo, 1,705 lbs / ft

447 MBo, 1,191 lbs / ft

345 MBo, 795 lbs / ft

Permian Completion Evolution

4


Midland Basin Technical Review

5


Wolfcamp / Spraberry GOR

Midland Basin Overview

Midland Basin

Core area is in the deeper part of the basin and is the most oil-rich with highest deliverability reservoirs

Moving updip to Irion County, the Wolfcamp becomes gassier as type III kerogen is more prevalent

Horizontal development program

─ Horizontal drilling / stimulation has been employed successfully since 2009

─ Southern Reagan / Irion County area has been a great incubator for

stimulation advances as completions evolved from gel to slickwater with higher proppant concentrations to improve economics

2,000'+ column of stacked oil plays encompassing 300+ MMBo / section, including:

─ Clearfork

─ Spraberry (Upper & Lower)

─ Wolfcamp A,B,C & D

─ Cline

─ Strawn and Deeper

Midland Basin Structure – top of Wolfcamp (Subsea Datum)

Source: DrillingInfo.

GOR (Mcf/Bbl)

6


Wells Permitted Since 2010Energen - Wolfcamp AJones-Holton #1-01H

30-Day IP: 1,171 Boe/dLat Length: 6,675 ft

RSP - Wolfcamp BCross Bar Ranch 1811H30-Day IP: 650 Boe/dLat Length: 6,967 ft

Pioneer – SpraberryUniversity 7-43 #16H

IP: 1,660 Boe/dLat Length: 7,502 ft

Pioneer - Wolfcamp D/ClineUniversity 7-43 10H


Athlon - Wolfcamp BDavidson 27C #12H


SM Energy - Wolfcamp BDorcus 3035H


Diamondback - Wolfcamp BMabee Breedlove #22-1H


Energen – Wolfcamp BWilbanks SN 16-15 101H

IP: 970 Boe/dLat Length: 6,930’

Apache- Wolfcamp AEastland 15 #2WH

IP: 1,124 Boe/dLat Length: 4,700’

Big Star- Wolfcamp ARyder Unit #A2H

IP30: 1,417 Boe/dLat Length: 7,500’

Pioneer - Wolfcamp DScharbauer Ranch #201H


Pioneer - SpraberryScharbauer Ranch #5-01H

IP: 691 Boe/dLat Length: 7,052 ft

Pioneer - Wolfcamp BET O’Daniel #1HIP: 2,801 Boe/d

Lat Length: 9,229 ft

Athlon – Wolfcamp ATubb 39 #5H

30 Day IP: 1,594 Boe/dLat Length: 6,705’

Laredo - Wolfcamp DGlass-Glass 10-153H


Parsley - SpraberryTexas Ten Y #17H


Element - SpraberryWright Unit 44-41 3H

IP: 776 Boe/d (90% oil)Lat Length: 6,776 ft

AEP - Wolfcamp ALoftin Hughes 13-1212 1HIP: 1,549 Boe/d (82% oil)

Lat Length: 5,123 ft

Midland Basin Activity Map

Key Points Rig pace moderating with lower crude

price─ 99 rigs running in the Midland

Basin

Core of play is expected to remain active

Downspacing activity underway in the south

(1) Source: DrillingInfo.(2) Normalized.

Peak IP Rates Range Up to 3,000+ Boe/d

Pioneer - Wolfcamp BUniversity 2-20 #12


Foreland – Wolfcamp A Elmira 34 1H

IP: 500+ Boe/dLat Length: 7,016 ft

Devon - Wolfcamp BHarris Ranch BB2-8 1H

Day IP: 1,437 Boe/dLat Length: 6,902 ft

Parsley - Wolfcamp BChar-Hughes 2H

IP24: 1,107 Boe/dLat Length: 7,500 ft(2)

EP Energy – Wolfcamp B University E 43-17-AH


7


Stratigraphic Column and Type Log

Key Points

World-class source rock

50 BBoe of recoverable resource-in-place(1)

Found at depths of 5,300’ – 10,000’

Gross thickness of Wolfcamp A+B+C is up to 1,100’

Regional pressure gradients range from 0.55 – 0.70 psi/ft(1)

The Wolfcamp, Spraberry, and Cline Shales are highly economic plays with multiple de-risked target zones

Predominantly oil-bearing

High BTU gas (1,300 – 1,400) with attractive NGL content for further enhanced value

Well and completion designs have trended toward 10,000+ foot laterals with 50+ fracture stimulation stages

Additional upside resource in Strawn, Atoka, Mississippi Lime, and Woodford


(1) Pioneer Natural Resources, November 2013 Investor Presentation.

D

Penn/Cline Shale

C

L. Spraberry

Dean

Wolfcamp A

Wolfcamp C

Wolfcamp D

Strawn

Wolfcamp /Cline

Industry’s Current Primary Midland Basin Horizontal

Targets

U. Spraberry

Type LogMidland Basin

Clearfork

Wolfcamp B

Spraberry Clastic

Jo Mill

Target OOIP

Upper / Middle Spraberry

20 - 55 MMBo / Section

Lower Spraberry 15 - 70 MMBo / Section

Wolfcamp A 25 - 60 MMBo / Section

Wolfcamp B 25 - 60 MMBo / Section

Wolfcamp C 10 - 50 MMBo / Section

Wolfcamp D / Cline 10 - 45 MMBo / Section

8


Proppant Concentration (lbs) per Lateral Foot

Heat Map of Proppant/Ft Over the Midland Basin

Key Points

More mature basin relative to completions progression than the Delaware Basin

─ 13% of Wolfcamp or Spraberry horizontal / directional wells with proppant data have over 1,500 lbs / ft proppant

─ These wells have shown definitive evidence of sustained productivity trends versus more lightly propped wells

─ Most completion progression has taken place in the south where operators have needed larger stimulations to deliver economic results in more challenging reservoirs

Many operators in the deeper parts of the basin have not yet tested the larger completions that were effective in the south

Operator Well Count (Horizontal Wells) (1)

(1) Source: IHS

Wel

l C

ount

9

400

350

300

250

200

150

100

50

0PXD DVN APA EOG EPE LPI AREX FANG HUNT CXO CPE EGN OXY END PE CVX XOM ECA RSPP


30-Day IP (Bo/d) (1)

348 501

876

1 2 3

Proppant (Pounds / Ft)

Case Study: Completion Optimization, Reagan County, TX

Key Points

Well #1 was stimulated with gel / hybrid frac and 857 lbs/ft proppant

─ Completed: 9/12/2012

─ EUR: 31 Bo/ft

Well #2 was stimulated with slickwater and 1,715 lbs/ftproppant


─ EUR: 69 Bo/ft

Well #3 was stimulated with slickwater and 1,900 lbs/ftproppant


─ EUR: 85 Bo/ft

Complexity of slickwater fracsis driving higher early-time production and higher EURs

Lateral Length (Bo / Ft)

+152%

+174%

+122%Generation 11

Best Practice3

Generation 22

Source: Company investor presentations.(1) Normalized to 7,500’ lateral.

31

69 85

1 2 3

857

1,7151,900

1 2 3

10


Type Curve Comparison

Case Study: Optimized Completion Analysis in Sugg Area, Irion County

Key Assumptions

On average, high-proppant wells exhibited substantially lower initial decline rates

High-proppant wells average 61% more proppant and are estimated to have an approximately 60% higher EUR than low-proppant wells

High-proppant wells (>1,500 lbs/ft):

─ Average proppant: 1,840 lbs/ft

─ 24hr IP: 600 Bo/d

─ 30-day IP: 505 Bo/d

─ Di: 75%

─ B-factor: 1.60

─ EUR: 507 MBo (5,000’)

Low-proppant wells (<1,500 lbs/ft):

─ Average proppant: 1,145 lbs/ft

─ 24hr IP: 600 Bo/d

─ 30-day IP: 428 Bo/d

─ Di: 85%

─ B-factor: 1.60

─ EUR: 304 Mbo (5,000’)

11

100

1,000

10,000

100,000

0 3 6 9 12 15 18 21 24

Oil, Bbl/M

o

Months

Low Proppant Type Curve

High Proppant Type Curve

Low Proppant Avg

High Proppant Avg


Oil Type Curve Trend Plot – Normalized to 7,500’

Midland Basin Illustrative Wolfcamp A / B Type Curve

Key Assumptions

Type curve derived by fitting to the average oil production curve of 30 analog wellbores normalized to 7,500’ lateral lengths

Type curve EUR (50-year life): 709 MBoe

Technical parameters:

─ 30-day IP: 979 Bo/d

─ Dinit: 87%

─ B-Factor: 1.45

─ Dfinal: 6%

─ GOR: 1.500 Mcf/Bbl

12

Peak Month 30-day IP (per day) 1st-day IP (per day) Di (%) Df (%) b GOR (Mcf/Bbl) Shrink NGL (bbl/MMcf)

Oil (bbl) 29,765 979 1390

Gas (Mcf) 44,647 1468 2085

EUR Gas (Mmcf) EUR Oil (Mbbl)EUR Sales

Gas (Bcf)

EUR NGL

(Mbbl)EUR Mboe EUR Bcfe

Exponential

Switch (Yrs)

850.9 567 0.851 0.0 709.1 4.25 11.1

87 6.0 1.45 1.500 100% 0

1

10

100

1,000

100

1,000

10,000

100,000

0 3 6 9 12 15 18 21 24

Well Cou

nt

Oil, Bbl/M

o

Months

"All Wells" Type Curve

"All Wells" Average

Well Count


Midland Basin Illustrative Lower Spraberry Type Curve

Key Points

Type curve derived by fitting to the average oil production curve of 14 analog wellbores normalized to 7,500’ lateral lengths

Type curve EUR (50-year life): 1,230 MBoe

Technical parameters:

─ 30-day IP: 1,221 Bo/d

─ Dinit: 82%

─ B-Factor: 1.60

─ Dfinal: 6%

─ GOR: 1.600 Mcf/Bbl

Oil Type Curve Trend Plot – Normalized to 7,500’

13


Oil (bbl) 37,132 1221 1600

Gas (Mcf) 59,411 1953 2560

EUR Gas (M mcf) EUR Oil (M bbl) EUR Sales Gas (Bcf)

EUR NGL (M bbl)

EUR M boe EUR Bcfe Exponent ial Switch (Yrs)

1,553.0 971 1.553 0.0 1,229.5 7.38 10.0

082 6.0 1.60 1.600 100%

1

10

100

1,000

10,000

100,000

0 3 6 9 12

Well Cou

nt

Oil, Bbl/M

o

Months


Delaware Basin Technical Review

14


Wolfcamp / Bone Spring GOR

Delaware Basin Overview

Delaware Basin

Basin is oilier in the deeper eastern portion of the basin and gassier in the shallow west─ Combination of depth, pressure, rock quality, thickness / number of

targets, and hydrocarbon mix makes this one of the highest-performing resource plays

Horizontal development progression

─ Horizontal drilling has been employed successfully on a broad scale since 2012 in the Avalon, Bone Spring and Wolfcamp

─ Recently, highly-propped slick water / thin fluid fracs have dramatically improved well results

─ Targeting specific facies has also improved results and exposed new areas to develop

3,500’+ column of stacked oil pays encompassing 10+ potential target horizons with up to 500+ MMBo per section, including:

─ Delaware Sands

─ Avalon Shale (Upper and Lower)

─ 1st / 2nd / 3rd Bone Spring Sands

─ Wolfcamp A / B / C / D (multiple potential targets in each)

─ Strawn and deeper

Delaware Basin Structure – top of Wolfcamp (Subsea Datum)

Source: DrillingInfo.

GOR (Mcf/Bbl)

15


Activity Map

State Mercury IOH2,123 Boe/d IP24

1st Bone SpringEOG Resources

Delaware Basin Poised for Play Expansion and Optimization

Key Points

Most of the basin has converted from a vertical commingled play to a horizontal play (80% of current activity is horizontal)

Plays such as the Wolfcamp and Bone Spring appear to be pervasive across basin, while Yeso and Avalon plays are more discrete

Concho, Cimarex, Devon, Anadarko, EOG, Oxy, and others have led horizontal development in the basin

Completion optimization and targeting of specific facies has yielded some of the highest-performing wells of any basin─ Slickwater and increased

proppant concentrations have been effective by increasing frac complexity

Multiple stacked targets ranging from black shale to sandstones

Source: Publicly available information.

Guitar #202H1,273 Boe/d IP24

Wolfcamp AMatador

Langley 2-36 #1H (B Bench)

1,813 Boe/d IP30Wolfcamp B

Energen

Apache St. 57 1101H2,002 Boe/d Peak IP

Wolfcamp BEOG Resources

State Pathfinder #1H1,832 Boe/d IP24

Avalon UpperEOG Resources

State Galileo #6H3,160 Boe/d Peak IP

2nd Bone SpringEOG Resources

Big Chief 4802H 848 Boe/d IP 24 Hr

2nd Bone SpringConcho

Copperhead 34 2H1,247 Boe/d IP 24 HrWolfcamp Debris Flow

J. Cleo Thompson

Dorothy White 1H991 Boe/d IP

Wolfcamp A – X-SandMatador Resources

Harrison 29-28 1H1,650 Boe/d IP24Wolfcamp A Lower

Anadarko

Miami Beach 34-123-1H 1,500 Bo/d IP303rd Bone Spring

Cimarex

Calamity Jane 22 1H1,687 Boe/d IP30

Wolfcamp ARosetta Resources

Johnny Ringo 2H1,000 Bo/d IP 24 Hr

3rd Bone SpringRosetta

Tiger #224H1,525 Boe/d IP24

Wolfcamp BMatador

Formation Targets

Wolfcamp 7+

Bone Spring 3+

Avalon 2

Brushy Canyon 1

Strawn & Deeper NA

Trinity 15-33 1H1,271 Boe/d IP Peak

Wolfcamp AJagged Peak Energy

Count Fleet 48 State 2H1,416 Boe/d IP30

Wolfcamp DCimarex Energy

n

n

n

n

n

nn

n

n

n

n

n

n

n

n

nn

n

n

n

oHz Target Optimization

oCompletion Optimization

Coopperhead 23 - 1H837 Bo/d IP30

Wolfcamp BRed Willow Production

Macho Grande State 1H1,290 Boe/d IP24

1st Bone SpringNadel and Gussman

Big Timber State3309 Boe/d IP30

49% OilWolfcamp A

Cimarex

Ava State770 Bo/d IP24

Wolfcamp ACapitan Energy

Osprey State Un #200H1161 Boe/d IP24

56% OilUpper 3rd Bone Spring

Apache

Neal Lethco 28-27811 Boe/d IP 24 Hr

Wolfcamp A / Debris FlowBrigham Resources

Hearns 27 703 H2,465 Bo/d IP24

Wolfcamp AEOG Resources

16




Industry’s Current Primary Delaware Basin Horizontal Targets

Type LogBrackenridge 57 44 1

Type LogBrackenridge 57 44 1

175


Delaware Basin WolfcampLanding Zone Analysis

GOR by Landing Zone and Depth

18


Proppant Concentration (lbs) per Lateral Foot (1)

Proppant / Ft for Hz Wells in Delaware Basin

Key Points

The Delaware Basin is in the early stages of completion evolution

Of over 2,700 horizontal / directional Wolfcamp or Bone Spring wells with proppant data, only 3% of wells were pumped with over 1,500 lbs / ft proppant

─ Many Midland Basin operators have been pumping 1,500 lbs/ft fracs since 2012

Wide spatial distribution of highly-propped best practice completions show that only a small areal extent of the Delaware Basin has been optimally stimulated and the corresponding production data is in its early days

─ Even less optimization has occurred when multiple targets are taken into account

Wide variance in how top operators’ completions have evolved

Operator Well Count (Horizontal Wells)

(1) Source: IHS.

19

Wel

l C

ount

800

700

600

500

400

300

200

100

0CXO XEC DVN APC MEW RDS EOG YAT OXY BOP EGN LGCY RKI CVX BHP END


Proppant / Ft. Versus Time (1)

Completions Evolution By Operator

Key Operators

Delaware Basin Completions Chronology

Key Points

The bulk of wells were treated with <1,000 lbs/ft fracs before 2014

─ Bone Spring wells generally treated with less sand

Recently fracs have increased to over 1,400 lbs/ft and well performance has improved accordingly

─ Other critical factors for success include employing slick water and thin-fluid fracs

Additional optimization can include adjusting other parameters, such as:

─ Pump rate and proppant concentration (ppg)

─ Cluster spacing

─ Landing zone

─ Early-time flowback management

Operators such as EOG, Anadarko, Cimarex, and Concho have led the charge in optimizing completions

(1) Select Operators’ completions chronology (shown: horizontal wells at least 2,000’ long since 01/2009).

CimarexDevon

AnadarkoShell

EOGEnergen

ConchoMatador

2009 2010 2011 2012 2013 2014 2015

APC APA CVX XEC CXO DVN EGN EOG MTDR MEW OXY ROSE RDS YATE

20


Normalized EUR (Bo / Ft)

51 79

132

1 2 3

30-Day IP (Bo/d)

349

867

1,028

1 2 3

Proppant (Pounds / Ft)

1,213

1,7472,143

1 2 3

Case Study: Completion Optimization, Reeves / Pecos County, TX

Source: Company investor presentations.

Key Points

Well #1 was stimulated with gel / hybrid frac and 1,213 #/ft proppant


─ EUR: 51 Bo/ft

Well #2 was stimulated with slickwater and 1,747 #/ft proppant


─ EUR: 79 Bo/ft

Well #3 was stimulated with slickwater and 2,143 #/ft proppant


─ EUR: 132 Bo/ft

Complexity of slickwater fracsis driving higher early-time production and higher EURs

+195%

+159%

+77%Generation 11

Current Design3

Generation 22

1 Mile

21


Delaware Basin Illustrative Wolfcamp Type Curve

Key Points

High-proppant type curve parameters (5,000’ lateral):

─ Wellhead EUR of 1,007 Mboand 1.6 Bcf

─ Initial rate (30-day) oil production of 1,031 Bbls/d

─ B factor of 1.50

─ Initial decline rate of 74%

─ Well life of 50 years

Parameter Low Prop

High Prop %Δ

Avg.Proppant Conc. (lbs

/ ft)

702 1,477 +110%

30-day IP Rate

(bopd)537 1,031 +92%

B-factor 1.50 1.50 N/A

Initial Decline

(%)74% 74% N/A

EUR (MBBL)

778 1,007 +29%

22


Oil (bbl) 31,351 1031 1200

Gas (Mcf) 50,953 1675 1950


Gas (Bcf)

EUR NGL


Exponential

Switch (Yrs)

1,637.1 1,007 1.637 0.0 1,280.2 7.68 10.6

74 6.0 1.50 1.625 100% 0

1

10

100

1,000

100

1,000

10,000

100,000

0 3 6 9 12 15 18 21 24

Well Cou

nt

Oil, Bbl/M

o

Months

High Prop Average

High Prop Type Curve

Low Prop Average

Low Prop Type Curve

Well Count


Delaware Basin Illustrative 2nd Bone Spring Type Curve

Key Points

High proppant type curve parameters (5,000’ lateral):

─ Wellhead EUR of 734 Mbo and 1.1 Bcf

─ Initial rate (30-day) oil production of 1,253 Bbls/d

─ B factor of 1.30

─ Initial decline rate of 84%

─ Well life of 50 years

23

Parameter Low Prop

High Prop %Δ

Avg.Proppant Conc. (lbs

/ ft)

696 1,731 +149%

30-day IP Rate

(bopd)692 1,253 +81%

B-factor 1.30 1.30 N/A

Initial Decline

(%)84% 84% N/A

EUR (MBBL)

388 734 +89%


Oil (bbl) 38,121 1253 1600

Gas (Mcf) 57,181 1,880 2,400


Gas (Bcf)

EUR NGL


Exponential

Switch (Yrs)

1,101.5 734 1.101 0.0 917.9 5.51 12.3

84 6.0 1.30 1.5 - 1.5 100% 0

1

10

100

1,000

100

1,000

10,000

100,000

0 3 6 9 12 15 18 21 24 27 30 33 36

Well Cou

nt

Oil, Bbl/M

o

Months

Low Prop Type CurveLow Prop AverageOptimized Type CurveOptimized AverageWell Count

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