Randy Freeborn, P. Eng.

Pembina Cardium Oil Forecasting:A Modern Approach

Agenda

• Methodology description: Value Navigator Analog Forecasting and Auto-forecasting

• Validation of methodology• Results• Further investigation: Principle operators oil EUR

per well by year• Tips, Pitfalls and Conclusions

Scope: How would Energy Navigator Forecastthese wells?

984 wells drilled into the Pembina Cardium on production 2003-2013 for forecasting [45-01W5 to 51-13W5].

Four major operators have placed more than 500 wells on production

EN divided the dataset into 19 geographical areas, well counts ranged from 4 to 193

Four areas were selected to validate the Analog Forecast methodology.

14 wells were not forecast because they were suspended, injecting water, gas producers or sub-economic.

SCOPE: 984 Cardium wells on production 2003-2013

provided by client for forecasting. Created 19 geographical areas, well counts from

4 to 193 Four areas selected to validate Analog Forecast

methodology.

SCOPE: 984 Cardium wells on production 2003-2013

provided by client for forecasting. Created 19 geographical areas, well counts from

4 to 193 Four areas selected to validate Analog Forecast

methodology.

Methodology

• Approximately 700 wells with sufficient history were forecast using the Five Year Equation, a hyperbolic transitioning to exponential five years from the start of the forecast.

• The balance of forecasts were created using Energy Navigator’s Analog forecast method that imposes a type well shape onto existing production.

• Analog wells were created for each of the19 areas.

Validation of Methodology• Predict 2011 wells using type wells created from prior

years drilling, compare against 2012 production for four areas with well counts ranging from five to 36

• P50 type wells were created from wells placed on production during 2009 to 2010 with production to YE2010

• Type well forecasts were vertically shifted to align with available from new wells on production in 2011 with production to YE2011

• Actual data from January 2012 to February 2013 was compared with results from type well approach. Forecasts ranged from -7% to + 9% versus actual oil production

Validation Using Historical Data

0

5,000

10,000

15,000

Aug-10Feb-11 Sep-11 Apr-12 Oct-12May-13

BOPD

West Pembina-North 85 Wells Forecast Test FORECAST

-6%-6% -500

500

1,500

2,500

Jul-09 Nov-10 Apr-12 Aug-13

BOPD

West Pembina 31 WELLS FORECAST [SPARSE EARLY DATA TEST]

CALENDAR DAY FORECAST

+9+9

0

2,000

4,000

6,000

8,000

Aug-10Feb-11Sep-11Apr-12Oct-12May-13

BOPD

Rat Creek 70 WELLS Forecast Test

CALENDAR DAY FORECAST cd actuals

+3+30

500

1,000

1,500

2,000

2,500

Jul-09 Nov-10 Apr-12 Aug-13

East Pembina Tight Rock 55 Well Forecast Test

Jan 2012 FORECAST BOCD ACTUAL_BOCD

-7%-7%

Validation Details

AREA Nominal Location# Early wells available for Type Well development

Average TW Production [months]

# 2011 Wells Forecast

EN vs. Jan 2012-Feb 2013 Actuals [cumulative oil volume]

West Pembina-North 50-11 to 51-13W5 28 6 85 -6%

West Pembina 49-12 to 51-13W5 5 8 31 +9%Rat Creek 48-11 to 49-12W5 36 17 70 +3%East Pembina Tight Rock 47-01 to 50-10W5 19 9 55 -7%

Finally, Forecast Results

0

200

400

600

800

1000

1200

0

10,000

20,000

30,000

40,000

50,000

Jul-09 Nov-10 Apr-12 Aug-13 Dec-14 May-16 Sep-17 Feb-19 Jun-20

bocd

PEMBINA CARDIUM FORECAST vs. TimeALL CARDIUM WELLS BOCD WELLCOUNT

020040060080010001200

0

10,000

20,000

30,000

40,000

50,000

0 10 20 30 40 50 60

bocd

Cummulative oil, mmbbls

PEMBINA CARDIUM FORECAST vs. Cummulative Oil

ALL CARDIUM WELLS BOCD FORECAST START WELLCOUNT

Has the Pembina Cardium Oil EUR improved over time?

115

206

178

17

0

50

100

150

200

250

40,000

60,000

80,000

100,000

120,000

140,000

2010 2011 2012 2013Q1

Oil,

bbl

Pembina Cardium Wells; Principal OperatorsCaution: 2013 data not statistically significant

VERMILION ENERGY INC. PENN WEST PETROLEUM LTD. PETROBAKKEN ENERGY LTD.

SINOPEC DAYLIGHT ENERGY LTD. OVERALL AVERAGE EUR OVERALL COUNT

Area Summary of Oil EURs

5166

46

91

5967

74

56

115

7994

268

136

43 46

8473

84

0

50

100

150

200

250

0

50

100

150

200

250

300

Belly

But

ton

Bra

zeau

Bra

zeau

_HIG

H_G

OR

East

Bar

/Nor

th

East

Bar

/Sou

th

Islan

d T

hum

b

Lod

gepo

le W

ate

rfloo

d

NO

RTH

_EA

ST

NO

RTH

_EA

ST_P

10 P

OD

Wes

t Pem

bina

Wes

t Pem

bina

-Nor

th

Nor

thW

est F

lood

s

Rat C

reek

Flo

ods

East

Pem

bina

Tig

ht R

ock

Tier 3

Dee

p

Wa

rbur

g

Wa

rbur

g W

ate

rfloo

d

Rat C

reek

WEL

L C

OUN

T

EUR

MST

B O

IL P

ER W

ELL

EUR mstb

Well Count

Tips and Pitfalls

The Val Nav auto-forecast feature [below left] should generally be applied rather than type curves when more than a handful of ‘fit’ points are found:

13-26-045-11W5M:

Tips and Pitfalls continued

Review results carefully for reasonableness: When groups of wells are fit with the Tools>Apply/Remove Type

Curve, forecasts must be reviewed for reasonableness. In rare cases an N/A forecast is returned which drops a well from the forecast.

Wells with less than a few hundred hours of production were assigned a type curve factor of 1 to 1.5. The auto type-fit in Value Navigator would sometimes pick values far too high [for example, an EUR of three million barrels] over short production periods.

The evaluator must be careful the type wells created in Value Navigator point to the desired EUR.

Conclusions and Extensions

Over 900 Pembina Cardium wells were forecast; a quarter of these were validated and resulted in accuracy of -7% to +9% versus observed actuals.

Results could be extended with volumetric calculations and geological mapping.

Wells appear to be performing on the order of 35% less than published in various news releases, this was not analysed in detail.

Resources

• http://www.onepetro.org/• Omatsone, E., Bagheri, M. A., Galas, C., Curtis, B., & Frankiw, K. (2010). Redevelopment of the Cardium

Formation Using Fractured Horizontal Wells: Reservoir Engineering Perspectives and Early Case Histories. Society of Petroleum Engineers. doi:10.2118/137737-MS

• Freeborn, R., Russell, B., & Keinick, W. (2012). Creating Analogs, Fact and Fiction. Society of Petroleum Engineers. doi:10.2118/162630-MS

• Haskett, W. (2011). Unconventional Type Curves: Useful, or Sirens of Destruction? Society of Petroleum Engineers. doi:10.2118/147059-MS

• Laustsen, D. (1996). Practical Decline Analysis Part 1-Uses And Misuses. Journal of Canadian Petroleum Technology, 35(9). doi:10.2118/96-09-DAS

• Justen, J. (1957). Canada’s Pembina Field. Journal of Petroleum Technology, 9(9). doi:10.2118/856-G• Purvis, R., & Bober, W. (1979). A Reserves Review of the Pembina Cardium Oil Pool. Journal of Canadian

Petroleum Technology. doi:10.2118/79-03-02• Wadsworth, J. A., & Walker, R. G. (1991). Morphology and origin of erosion surfaces in the Cardium

Formation (Upper Cretaceous, Western Interior Seaway, Alberta) and their implications for rapid sea level fluctuations. Canadian Journal of Earth Sciences, 28, 1507–1520. doi:10.1139/e91-135

• Walker, R. G., & Eyles, C. H. (1991). Topography and significance of a basin-wide sequence-bounding erosion surface in the Cretaceous Cardium Formation, Alberta, Canada. Journal of Sedimentary Research, 61(4), 473–496. doi:10.1306/D426773F-2B26-11D7-8648000102C1865D