STACK. Next Step in Completion Evolution: Improves Performance. Longfellow Energy s Nemaha Project

Transcription

1 STACK THE OSAGE RESERVOIR STORY UPDIP OIL LEG Next Step in Completion Evolution: Improves Performance Longfellow Energy s Nemaha Project DUG Midcontinent Conference - September 21, 2017 Presented by: Todd Dutton Longfellow Energy

2 ACKNOWLEDGEMENTS David Mitchell - VP Engineering, Longfellow Energy Longfellow Energy Geology Department - Wayne Campbell, Jennifer Eker and Jenny York Alta Mesa Holdings Mike Ellis, Hal Chappelle and Kevin Bourque Malone Mitchell Longfellow Energy Marlan Downey Roxanna Petroleum DUG Midcontinent Conference - September 21,

3 The Wisdom of the Experts At least 90% of the recoverable primary oil has been produced from the Sooner Trend Sherad A. Harris Skelly Oil Company, AAPG Bul. V. 59, No. 4, Pg. 634, August 1973 DUG Midcontinent Conference - September 21,

4 STACK ACTIVITY MAP Chester Truncation Woods Alfalfa Updip Oil Leg Garfield Major Nemaha Fault Blaine Dewey Kingfisher Custer DUG Midcontinent Conference - September 21,

5 GEOLOGY SW to NE Cross Section Across Kingfisher Co. A Updip Oil Leg A SW NE Meramec Meramec Osage Osage Thickest Woodford source rock underlies Nemaha! DUG Midcontinent Conference - September 21,

6 GEOLOGY Type Logs STACK Play - SW to NE across Kingfisher Co. SW 28/15N/9W Central 26/17N/7W NE 14/19N/5W Nemaha Project Osage Osage DUG Midcontinent Conference - September 21,

7 STACK OSAGE RESERVOIR Woodford oil source Osage sits right on top of it Oil trapped in micro-darcy rock matrix top seal from Meramec and Chester ductile rock Oil saturation over whole Osage section with gas in solution no free gas in rock matrix Alternating layers of calcite (lime) and quartz dominated rock. Quartz dominated layers have higher porosity Average 4%-8% Low clay content means brittle rock with extensive vertical natural fractures and higher leak off than the Meramec DUG Midcontinent Conference - September 21,

8 STACK OSAGE GOR IS IMPORTANT You have to touch the matrix rock with a fracture to produce oil (i.e. break new rock). Oil won t move far or fast through micro-pore system from matrix to fracture - millimeters or few inches, per year max Fracture geometry determines oil and gas EUR s in equivalent maturity matrix (rock with same oil/solution gas ratio) Producing GOR reflects fracture geometry tells how efficiently your frac treatment broke new matrix rock vs. just connecting the natural fractures. Simple fracture geometry = significant gas breakout = high GOR = low oil EUR. Complex fracture geometry = significant matrix oil near fracture = low GOR GOR rises in all wells over time and is a function of stimulation, not saturation Fast increase in GOR = poor fracture geometry (large pressure drop from matrix to wellbore - gas breaks out) Low GOR means you can stack a lot of wells in a section! DUG Midcontinent Conference - September 21,

9 NEMAHA PROJECT KINGFISHER AND GARFIELD COUNTIES Longfellow Nemaha Project Stats: 81,000 gross acres (128 contiguous sections) 60,500 net acres (75% average WI) 104 horizontal wells drilled to date 91 Mississippian wells all Osage 8 Woodford 5 Oswego 60 drilling pads built (approx. 5 acres each) 72 miles of 10 SWD pipeline constructed 4 SWD wells - 3 Arbuckle, 1 Wilcox DUG Midcontinent Conference - September 21,

10 NEMAHA PROJECT DRILLING STATS Total Osage * 91 Woodford Oswego 2 3 ** 5 SWD Total Average rig days Osage wells only * 7 Longfellow, 12 Alta Mesa, 1 Chisholm ** 1 Longfellow, 2 Chesapeake DUG Midcontinent Conference - September 21,

11 NEMAHA PROJECT - HISTORICAL FRAC EVOLUTION LF Gen 1.0 LF Gen 2.0 Alta Mesa 2.5* LF Gen 3.0 Dates Wells Completed Liner UnCemented UnCemented UnCemented UnCemented Style Packers&Sleeves Hybrid Plug & Perf Plug & Perf Packer Style Mech. Mech. Swellable Swellable Fluid Slickwater Slickwater Slickwater High Vis Slickwater Sand 30/50w 100m;30/50w 100m;30/50w 100m;30/50w Avg Lateral Length 4,078 4,740 4,441 4,475 Avg # Stages Stage Spacing Fluid Loading (Bbls/Ft) Prop Loading (Lbs/Ft) ,354 1,730 Max Prop Concentration (#Prop/Gal Fluid) Ramping Constant Constant Constant Variable Treating Rate (BPM) Average ISIP ? 1,651 * Alta Mesa August 2017 Presentation, pg. 18 DUG Midcontinent Conference - September 21,

12 NEW FRAC DESIGN DIFFERENCES Longfellow Gen 3.0 vs. Alta Mesa Gen 2.5 Increased pumping rate to 110 bpm vs. 100 bpm Increased proppant concentration 3.5#/gal vs. 2.0#/gal Increased and variable viscosity of fluid Pumping based on pressure profile rather than total volume DUG Midcontinent Conference - September 21,

13 NEMAHA PROJECT 2017 RESULTS DUG Midcontinent Conference - September 21,

14 NEMAHA PROJECT TYPE CURVE (STANDARDIZED TO 4,800 LATERAL) Longfellow Gen 3.0 b=0.9 Longfellow Gen 3.0 b=1.2 Alta Mesa Gen 2.5 b=1.2* Peak Rate-BOEPD Peak Rate-Oil % 60% 60% 52% 2-Stream EUR - MBO EUR - BCF EUR - MBOE Stream EUR - MBO EUR - MBNGL EUR BCF (Residual) EUR - MBOE 653 1, Cum GOR - SCF/BBL 5,878 6,668 6,320 * Alta Mesa August 2017 Presentation, pg. 51 DUG Midcontinent Conference - September 21,

15 NEMAHA PROJECT WELL ECONOMICS* * Based on actual average lateral length of 4,475 ** $50/bbl WTI and $3.00/mmbtu flat Longfellow Gen 3.0 b=0.9 Longfellow Gen 3.0 b=1.2 Per Well Cost (MM) $4.20 $4.20 IRR 74% 89% Payout (months) PV10 (MM) ** $3.94 $6.15 DUG Midcontinent Conference - September 21,

16 NEMAHA PROJECT RESULTS IP 24 Peak Rate IP 30 Well Flow # Day BO MCF BOPD MCFD * * ** *** ** , , Flowback < 30 days Average GOR (Osage only) 1, % Oil 85% 87% * Oswego well ** New wells which have not reached peak rate *** Liner failure - only 5 stages producing not included in averages on pg. 13 & 14 DUG Midcontinent Conference - September 21,

17 NEMAHA PROJECT DRILLING PLANNED 2018 Planned Wells* Osage Parent Wells (18) Oswego Infill Wells (4) Osage Infill Pilot (4) 2017 Drilled Wells Miss Wells Drilled in 2017 (20) Oswego Wells Drilled in 2017 (3) * Subject to change DUG Midcontinent Conference - September 21,

18 STACK PLAY THOUGHTS The Osage reservoir rock volume exceeds the Meramec Updip Osage oil leg should produce 50+% oil EUR s if effectivity stimulated. What we know now about optimizing oil recovery is evolving What is next? More stages, higher loading and simultaneous fracing Chemistry surfactants and other additives Open hole diversion technology Landing zone optimization DUG Midcontinent Conference - September 21,

19 STACK OSAGE THOUGHTS The updip Osage oil leg is highly economic and improving rapidly Longfellow Energy Contact Information: Todd Dutton President phone: David Mitchell VP Engineering phone: DUG Midcontinent Conference - September 21,

20 APPENDIX

21 NEW FRAC DESIGN LINER PIPE FAILURE SOLUTION Problem Pumping at high rates and pressure through an uncemented liner anchored by swellable packers causes extreme vibration frequencies causing pipe failure at or near collars in the lateral Solution Upgrade liner pipe from # HCP110 BTC to # HCP110 Hydrill 563 (modified buttress casing drilling connections) DUG Midcontinent Conference - September 21,

22 NEW FRAC DESIGN Objectives: 1. Overcome the pressure leakoff into the extensive natural fracture system - build net pressure and break new rock 2. Create complex new fracture geometry near wellbore to prevent excess pressure drop during flowback - recover more oil from reservoir rock matrix Key Features: 1. Use swellable packers for better stage isolation 2. Reduce stage spacing to break more rock 3. Build net pressure by ramping proppant concentrations quickly to plug off dominate fractures that steal your net pressure 4. Pump more fluid and more proppant per foot Old New DUG Midcontinent Conference - September 21,

23 NEMAHA PROJECT PRODUCING GOR PROFILES Production Year (8 months) 2012 Wells 2,745 4,934 5,697 8,523 8,028 7, Wells --- 4,314 6,043 8,506 10,101 10, Wells ,546 9,615 9,026 9, Wells ,660 5,033 6, Wells ,080 Longfellow Gen 3.0 frac geometry DUG Midcontinent Conference - September 21,