Durability of Eagle Ford Investment: How does the Eagle Ford Compare in North America?

Transcription

1 Durability of Eagle Ford Investment: How does the Eagle Ford Compare in North America? March 27, 2013

2 Unconventional Development Activity North American Shale Plays Source: EIA 2

3 Converging Consumption and Production U.S. Petroleum Demand, Production and Imports Increased U.S. petroleum liquid production and lower U.S. demand has led to a significant drop in U.S. petroleum imports Source: EIA 3

4 North American Shale Plays Driving Growth Expect Less Dependence on Imports 4

5 North American Unconventional Oil Growth U.S. Shale Oil Production Outlook The emergence of several promising shale oil plays (Bakken, Eagle Ford, etc.) along with an increased oil well rig count has and will lead to significant oil production growth Source: Wood Mackenzie, Baker Hughes, Inc. 5

6 How Critical Is Shale Reservoir Decline? U.S. Dry Natural Gas Production By Source Shale gas appears to account for much of the U.S. natural gas production growth out to 2040 according to government projections Source: EIA, Annual Energy Outlook 2013 Early Release 6

7 Development Activity Current U.S. Drilling Rig Distribution: Impact of Unconventional Development How much of this is unconventional? Other 26% West TX (Districts 7C,8) 20% Offshore 3% CO, WY, NE 6% OH, PA, WV 7% OK 10% ND, MT 11% South TX (Districts 1,2,3,4) 17% Eagle Ford Marcellus, Utica Woodford, Cana Woodford, Mississippi Lime Bakken Significant rig focus on exploitation and development of domestic resource plays Unconventional resource develop at least 50% of current activity! Source: EIA 7

8 Eagle Ford Advantages Quality of Reservoir & Fluids Crude, condensate & NGLs drive value Large area of high reservoir rock with great properties (strong well performance) Dry gas present and will add value later in the decade Significant Historical Infrastructure & Resources Trained base of personnel in South Texas energy space; ample additional personnel from greater San Antonio area, retired military and overall area Gas and oil pipelines already existing allowed fast start Proximity to world class oil refining capacity, chemical manufacturing & gas fractionation Stable Regulatory Environment Changes are made transparently & with consultation TRRC and TCEQ already support ~1/3 of North America rigs through permitting Gulf Coast Commodity Pricing Options Higher value per barrel of oil & condensate relative to inland volumes 8

9 Material Gas Infrastructure Historically Large & Growing Rapidly With Eagle Ford Development 9

10 Oil Commodity Price Dependent on Location Eagle Ford Permian (WTI) Western Canadian Select 10

11 Relative Returns North America Unconventional Excludes Burden of Acreage Acquisition 11

12 The Oval Office on Energy Independence Let us pledge that by 1980, under Project Independence, we shall be able to meet America s energy needs from America s own energy resources. President Richard Nixon (November 7, 1973) policy speech in reaction to the OPEC oil embargo and the resulting 1973 oil crisis Our goal should be, in 10 year s time, we are free of dependence on Middle Eastern oil. Presidential candidate Barrack Obama (October 7, 2008) during the Obama-McCain presidential debates 12

13 Thanks for Your Time Questions? 13