DJ Basin. Dan Kelly Vice President Wattenberg

Transcription

1 DJ Basin Dan Kelly Vice President Wattenberg

2 NBL Leading the Way Wattenberg and Northern Colorado Premier Oil Play that Compares Favorably to Other Plays Net Resources Dramatically Increased to 2.1 BBoe Delivering Five Year Production CAGR Over 2% Rapidly Accelerating Development Program with 5 Wells per Year in 216 Technical Leader in Unconventional Exploration and Development 2

3 Niobrara is a Top Oil Resource Play Superior resources and low development costs NBL Nio Oil Window Standard Length NBL Nio Oil Window Extended Reach NBL East Pony Standard Length Oil Play Characteristics Depth (Feet) Thickness (Feet) OOIP (MMBoe / Section) Avg. EUR (MBoe) Well Characteristics Avg. Liquids % D&C Capital $MM Lateral Length (Feet) Net* F&D ($/Boe) 5,5-8, % $4.5 4,5 $ ,5-8, % $8.3 9,1 $ ,5-8, % $4.9 4,5 $17.75 Eagle Ford Oil 4,-8, % $6. 5,5 $16.67 Bakken 7,-11, % $9.5 1, $19.79 * 8% NRI assumed 3 Source: Internal, Wood Mackenzie, External Company Presentations, Tudor Pickering

4 Niobrara is a Top Oil Resource Play Outstanding well economics Various Analyst Quotes Wattenberg and North Colorado Niobrara among the most economic plays 6% 4% Before Tax Returns 2% We believe NBL has cracked the code in northern Colorado the success of the horizontal Niobrara program is dramatically pulling the growth rate forward % Niobrara Eagle Ford Bakken $/BOE Net Present Value at 1% Niobrara Eagle Ford Bakken Source: Credit Suisse 4

5 Premier Acreage Position 8, locations in oil window 64, Net Acres 8% in the oil window 41, Net Acres in the Greater Wattenberg Area (GWA) 29, net acres in the oil window (liquids above 5%) 12, net acres in the gas window (liquids below 5%) 23, Net Acres in Northern Colorado Oil content over 8% Wyoming Northern Colorado Nebraska GWA NBL Acreage Gas Window Oil Window 5

6 Dramatic Growth in Recoverable Resources Well established and still unlocking potential Risked Recoverable Resource Up Over 6% to 2.1 BBoe Nearly Doubled Risked Hz Locations to 9,5 Avg. 66-acre spacing Hz EURs Continue to Improve Avg. increased to 335 MBoe Continued Improvement Expected as Technical Efforts Prove Up Concepts.8 55% Net Risked Resources (BBoe) % % Liquids Gas 6

7 DJ Basin Resources and Drilling Inventory Development strategy focused on oil 2.1 BBoe Net Risked Resources GWA oil 1,4 MMBoe GWA gas 4 MMBoe N. Colorado oil 3 MMBoe 9,5 Total Risked Gross Hz Locations GWA oil 6,4 locations at 47-acre spacing GWA gas 1,35 locations at 8-acre spacing N. Colorado oil 1,75 locations at 89-acre spacing GWA Gas Window Northern Colorado GWA Oil Window 7

8 DJ Basin Well Economics Strong returns over a broad price range BT Economics* GWA Gas Window GWA Oil Window East Pony EUR (MBoe) Liquids (%) 45% 65% 85% Well Cost ($MM) $4.5 $4.5 $4.9 NPV1 ($MM) $3.6 $3.9 $6. ROR (%) 65% 7% 19% Payout (Years) Boe/d 75 5 Type Curves GWA Gas Window GWA Oil Window East Pony BT ROR 16% 12% ROR Sensitivity to Oil Price** Reference Price 25 8% 4% Months * Utilizing reference price case. See appendix, 8% NRI. ** NYMEX gas flat at $3.5/ MMBtu in all cases. 8% NRI. % $7 $8 $9 $1 WTI Crude Oil ($/Bbl) 8

9 Accelerating Development Program Double 212 activity in two years 5% More Wells in 213 than actual wells or 35 standardized on 4,5 ft. lateral lengths Additional 1,1 Wells Over Next Five Years vs. 211 Plan 5 Wells Per Year by 216 Wells Horizontal Wells Cum Wells 3, 2, 1, Over 7% of Acreage in Development Stage Northern Colorado HZ Well Count GWA Hz Well Count Cum HZ Well Count 211 Forecast Cum Hz Well Count 9

10 DJ Basin Production Outlook Horizontal activity driving liquids growth 5-Year CAGR Increased from 15% to 2% 213 production growth of 25% year over year Oil volumes escalates 3.5 fold in 5 years Nearly $1 Billion of Capital MBoe/d 2 15 Net Production 2% CAGR Liquid Content 42% 32% % 16% 42% 56% Crude Oil NGL Natural Gas Vertical Horizontal 211 Forecast 1

11 Dramatic Results from Accelerating Program Generating significant free cash flow Net Production Net Capital MBoe/d 2 Cum 265 MMBoe, up 35% $MM 3, Cum $9.8 B, up 22% 2, 1 1, Analyst Conference 212 Analyst Conference 211 Analyst Conference 212 Analyst Conference $MM 1, Free Cash Flow* Cum $2.4 B, up 59% 5 11 * Term defined in appendix Analyst Conference 212 Analyst Conference

12 Evolution of Total System Resource Three-fold increase in original oil in place (OOIP) Wells Ranch Example Niobrara A MMBoe/ Section Wells 3 ft. 75 ft. Niobrara B Niobrara C Niobrara D Ft Hayes Codell Niobrara B Niobrara C Niobrara D Fort Hayes Codell 24 Niobrara A 24 MMBoe/ Section Recovery Factor: ~5% of 24 MMBoe Coring Program Spacing Tests In-Situ Underground Laboratory Wells Recovery Factor: ~7% of 74 MMBoe 3 Wells Recovery Factor: ~14% of 74 MMBoe 75 ft. 3 ft. 3 ft. 12

13 Results from World-Class Data Collection Multiple strategies to optimize recoveries Estimated Oil in Place Tripled Five Strategically Placed Core Wells Over 2,1 ft. of core with proprietary unconventional laboratory analysis Extensive 3D Seismic 1,65 sq. mi. Formation Imaging Logs Monitored Completions with Microseismic on 55 Wells Wyoming 73.1 MMBoe/Sec 65.5 MMBoe/Sec 7.6 MMBoe/Sec Nebraska 6. MMBoe/Sec 9.2 MMBoe/Sec Wells Ranch NBL Acreage Gas Window Oil Window Core Well OOIP/Sec 13

14 In-Situ Underground Laboratory Applying cutting edge technology 4-Acre Spaced Wells Exhibit Best Performance to Date No Production Interference All Nine Wells Above 335 MBoe Type Curve Significant Data Acquisition 1 down hole pressure and temperature gauges 43,8 ft. of down hole fiber optic cable measuring temperatures and acoustics Direct in-situ pressure, stress, fracture mechanics measurements 3D Seismic, down hole micro seismic, Vertical Seismic Profile (VSP) Multiple advanced well logs and proppant/liquid tracers/robust reservoir model 374 ft. of whole core, geochemistry, core extracts and produced oil analysis 4 Well Pad EcoNode Facility 5 Well Pad Wells Ranch Section 25 One Section (One Square Mile) 4-acre Spacing Down hole pressure and temperature gauge Micro seismic monitoring well Fiber optic temperature and acoustics 8-acre Spacing 4-acre Spacing 8-acre Spacing 14

15 Optimizing Resource Recovery Potential for over 3 wells per section Testing Three Development Concepts/Patterns North Pad 4-acre spacing with multiple targets (potential 3+ wells per section) Center Pad 4-acre spaced B (potential 16 wells per section) South Pad 4-acre spaced B and C (potential 16 wells per section) All Wells Drilled and Completed North Pad 5 Wells EcoNode Facility South Pad 6 Wells Wells Ranch Section 24 Niobrara A, Niobrara B, Codell Center Pad 4 Wells Niobrara B Niobrara B, Niobrara C South South Pad 6 wells Cross-section View of Pads Center Pad 4 wells North Pad 5 wells One Section (One Square Mile) North C B B B C C B B B B A Cdll B A Cdll 33ft. 33ft. 33ft. 33ft. 33ft. 33ft. 33ft. 36ft. 3ft. 33ft. 38ft. 3ft. 3ft. 15

16 Northern Colorado Niobrara Leveraged expertise to unlock new opportunity Approximately 8 Well Program in 213 Superior Economics in East Pony 1-year payout BT Producing 8% oil Avg. 24-hour rate 78 Boe/d with 3-day avg. 62 Boe/d Avg. EUR 345 MBoe Three Well 8-Acre Pilot Yielding Best Results to Date Avg. 24-hour rate 84 Boe/d with 3-day avg. 72 Boe/d Boe/d* 1, Wyoming Nebraska East Pony Area Lilli Plant NBL Wells 17 Well Average 8-Acre Pilot 335 MBoe Type Curve * Rolling 3 day average Days 16

17 Extended-Reach Laterals Generating outstanding results Boe/d 1,4 About 6 Wells Planned for 213 Three New Wells Online Avg. lateral lengths 9,1 ft. Avg. 15 days to drill Avg. drill and complete costs $8.3 MM Returns 1%+ BT, payouts within 1 year Potential to lower F&D by ~2% 1,2 1, Days 75 MBoe Type Curve WR AF8-69 WR AF5-62 WR Average 17

18 Operational Excellence Delivering value in all phases of the business Efficiencies Driving $3 Billion of Discounted FCF* Margin Improvement 21% 23% 2% 26% 1% Key Drivers Base Well Cost Facility Consolidation Oil and Water Trucking LOE Savings Condensate Recovery * Term defined in appendix 18

19 Wattenberg Horizontal Niobrara Drilling Continuous improvement in drilling and completions Fit-for-Purpose Rigs, Pad Drilling Improving Efficiencies Spud to Rig Release Down 25% Year Over Year Projecting ~1% Reduction in Well Cost by YE 213 Water Resources, Sand and Dedicated Frac Crews in Place Completions Up Over 2% Year Over Year Days Spud to Rig Release 3Q1 4Q1 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 Horizontal Completions More Hz Wells Completed in 4Q12 than All of 211 Record Hz Well in 3Q12 at Less than 6 Days 15 3Q1 4Q1 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 19

20 Maximizing Value through Transforming Operations State-of-the-art technology and development application Centralized Facilities EcoNode EcoNodes and central processing Reduced capital, operating expenses, surface disturbance Increased operating efficiency, liquids, and flash gas recovery Infield Infrastructure Efficient transport of produced fluids and frac water Major reduction in oil and water trucking Life Cycle Water Management Program Central Processing Facility Frac water self-sourced, strategically located, at reduced prices Water recycling and re-use State-of-the-Art Production Technology Largest application of facility and well automation Immediate response to interruptions 24/7 production optimization Operations Control Center 2

21 Midstream Infrastructure Near-term development plans aligned with infrastructure build out Program Focused in Liquids Rich Areas Gas and Oil Production Within Capacity Forecast GWA Gross Operated Gas MBbl/d GWA Northern Colorado Estimated NBL Capacity MMcf/d N. Colorado Gross Operated GrossGas Operated Oil Gross Operated Production Estimated Capacity Jan-12 Jul-12 Jan-13 Jul-13 Jan-12 Jul-12 Jan-13 Jul-13 21

22 Midstream Infrastructure Expansion underway Gas Processing Expansions of 9 MMcfd NBL Oil Polishing Facility New 15 MBbl/d NGL DCP Lucerne 2 (2 MMcf/d) Pipeline Late 213 Oil Takeaway Capacity Increase of 19 MBbl/d DCP LaSalle (16 MMcf/d) NBL Lilli (15 MMcf/d) New NBL Plant (3 MMcf/d) DCP Platteville 2 (23 MMcf/d) SEMG New Oil Trunkline Infield Pipelines Increase Flow Assurance and Reduce Truck Traffic and Cost PAA Rail Terminal SEMG White Cliffs Pipeline APC Lancaster (3 MMcf/d) 22 East Pony

23 NBL Leading the Way DJ Basin a Premier Oil Play 64, Net Acres Largest Delineated Acreage Position 2.1 BBoe Largest Net Recoverable Resource Oil Production Growing 3.5 Fold Over 5 Years Technological Leader Converting Knowledge to Value Delivering Excellence in All Phases Exploration, Drilling, Completions and Infrastructure 23