kansas oil and gas exploration 10 year history & future strategies
DESCRIPTION
Kansas Oil and Gas Exploration 10 Year History & Future Strategies. Kansas Oil and Gas Production # of Wells drilled by Year. Entire State. Hugoton Embayment Infill. 100,000,000. 61. 49. MCF/Mnth. 3661. 3616. 3152. 3060. 10,000,000. 2864. 2394. 2.0. BBLS/Mnth. 2034. 1863. 1752. - PowerPoint PPT PresentationTRANSCRIPT
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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)
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
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
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
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
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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
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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
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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
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
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
)
Seward
Morton
Stevens
Stanton
Haskell
Finney
MeadeBarber
NessStaffordComancheGrant
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
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%
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
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
Av
e. C
um
. Oil,
M b
bls
Cum. Oil per Frmn.
Ave. Cum. Oil per Lease
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%
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
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
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
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
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