The New Encana: the clear energy choice USA Division HAYNESVILLE SHALE & EAST TEXAS Danny Dickerson, Team Lead, East Texas & North Texas
Haynesville Shale, East Texas, Fort Worth
Haynesville Shale Advancing the 2010 Development Program 24 hour IPs Production MMcfe/d 325 10 2008 71 2009 2010F 50 miles 9 6 9 5 9 8 16 10 4 13 11 21 20 D 31 13 10 C 15 10 12 20 17 18 21 19 19 20 18 8 25 8 C 17 20 D 22 20 23 37 23 20 18 22 D D 2010 Objectives Drill bit land retention Mid Bossier testing Gas Factory pilot San Augustine extension 4 11 Industry HSVL Industry MBSR 20 20 ECA JV HSVL ECA JV MBSR NGIP Encana Acreage: 429,000 net; including 63,000 net mineral interest AMI area
Haynesville Land Retention Strategy Top performing asset in Encana portfolio Superb shale quality Massive NGIP (175-225 Bcf/Sec) Up to 8 Tcf recoverable* High deliverability Close proximity to infrastructure 2010 budget is focused on retaining land 109 net wells (225 gross) Gas Factory pilot 20-25 operated rigs 7-10 non-operated rigs (Shell) Will lead Encana s production and reserve growth NGIP = Natural Gas in Place *Based on 2P Proved + Probable Reserves & 2C Economic Contingent Resources
Haynesville Well Performance Confidence in Productivity Well rates limited by infrastructure flowing pressures: 7,000 to 10,000 psi Gas Rate (MMcf/d) 40 35 30 25 20 stages Productivity increases driven by: Additional frac stages Refining perforation clusters Increased proppant concentrations 20 15 12 stages 10 5 7.5 Bcf Type Curve 12 Fracs 0 0 500 1,000 1,500 2,000 2,500 3,000 Cumulative Gas (MMcf)
Horizontal Haynesville Completion Design Longer laterals, more frac stages = better wells Current Frac Design 5 production casing 10-14 stages 300-350K lb proppant per stage 12,000 bbl of slick water & linear gel per stage Pump rate of 70-75 bpm Forward Testing 5 ½ production casing 12-16 stages Increased proppant concentrations Sand and other proppants More perf clusters per stage Increased lateral length (>4,200 ft) 250-300' Stages 50-70 Spacing 1-2 Clusters @ 6 Shots/ft X X X X X X X Stage 10 Stage 9 Stage 8 Stage 7 Stage 6 Stage 5 Stage 11 Note: Diagram not to scale X X Stage 4 Stage 3 Stage 2 Stage 1 10K Composite Bridge Plugs BHT: 370-400 degrees BHP: 11,000 psi X X
Haynesville Focus on Cost Reductions Improving Operational Performance DC&T Costs $MM IP (30 Day) MMcf/d 12 16.9 15.6 10.7 9.7 9.3 8.8 9.0 8.2 6 9.8 7.0 12.4 13.3 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10F Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10F DC&T Costs reduced 40% Best 3 well average $7.4 million Drilling longer laterals Spud to release decreased by 16 days IP (30 day) increasing Increasing number of frac stages Increasing clusters per frac stage More proppant & fluid pumped Gathering system growth
Haynesville Horizontal Drilling Design Bit and Motor Optimization Surface Hole 13 3 / 8 @ 1,850 Fresh Water Inter Hole 9 5 / 8 @ 10,500 Water Based Mud 11.5 ppg Current Drill Design 55 day spud to release Faster rig moves Built for purpose bits and use of faster motors More geological control Well section accountability Improved formation pressure control Lateral Section 6 1 / 2 Hole @ 12,500 TVD, 16,500 MD Oil Based Mud 16 ppg Drill Design Progression <35 day spud to release Consistency Pre-set surface casing Drill lateral with water based mud Optimization casing, bit selection, motors, etc. Utilizing 3D Seismic
Haynesville Manufacturing Process Step Change in Development Gas Factory Multi-well pads; simultaneous operations Manufacturing process Skidding FFP rigs Single pipeline connection Reduced overall foot print Downhole spacing ~660 feet Well orientation N-S 4,000 + laterals (12+ stages) Improved overall gas recovery 510 390 330 430 550 1 Mile 380 = pressure monitoring well
North Louisiana Mid Bossier Mid Bossier Shale 100 to 200 Bcf/section Encouraging results High quality shale as good as Haynesville 10-15 wells for 2010F 150,000 to 200,000 acres 6 Tcfe potential* 5 ECA JV Operated MBSR Well 50 miles C 9 12 17 E 8 20 24 hour IPs 8 5 22 Walker Jimmy Brown 9 Industry Operated MBSR Well D C ECA JV Operated - Completing D ECA JV Operated - Drilling Current ECA Acreage Jagger NGIP NGIP = Natural Gas in Place *Based on 2P Proved + Probable Reserves & 2C Economic Contingent Resources
North Louisiana Mid Bossier - Haynesville Comparison Gas Rate (MMcf/d) 25 20 ECA Walker 2H ECA Jimmy Brown 9-1 Colbert 16-1 Blackstone 12H-1 Douciere 13H-1 CHK Blackstone 26H-1 Brown SW 10H-1 Walker 2H 15 10 ECA Douciere 13-1 Rate limited EUR = 7.8 BCF HSVL 5 EUR = *2.5 BCF MBSSR 0 0 60 120 180 240 300 360 Days *3 stages producing
Haynesville and Mid Bossier NGIP Overlap of 100 Bcf/section in each zone Imagine Stacked pay 14 Tcfe total resource* Potential longer laterals Double well count Double production volumes Existing infrastructure Overlap Haynesville/Mid Bossier 100 Bcf NGIP in each interval NGIP = Natural Gas in Place *Based on 2P Proved + Probable Reserves & 2C Economic Contingent Resources
Encana Haynesville Total Resource Total net well inventory 1P + 1C = 1,600 Average F&D cost: $1.70/Mcfe Average supply cost $3.75/MMBtu Reserves (Tcfe) 1P 2P 3P 0.7 2.0 2.9 Economic Contingent Resources (Tcfe) 1C 2C 3C 5.3 13.5 21.3 World Class Shale Gas Opportunity F&D & supply cost based on 1P Reserves & 1C Economic Contingent Resources
Responsible Development Haynesville & Mid Bossier Shales Environmental Management System Use of surface water for operations Potential water recycling project Natural gas powered rigs CNG fleet trucks & filling station Multi-well drilling pad development (Gas Factory) Local workforce training Energy Summer Camps
Haynesville Shale Production Growth Production Activity MMcfe/d 400 300 200 325 2010F 110 net wells Land retention drilling Gas Factory pilot Play extension drilling 100 0 10 71 2008 2009 2010F
East Texas Growth Opportunities
Amoruso Development Expanding Growth Successful step-out to East Testing 2-4 analogous prospects Working to unlock tight sand potential in northern area Deep Bossier Development Deep Bossier Net Production MMcfe/d 400 300 Planned curtailment Amoruso 29 Bcf/Sec 200 100 E. Amoruso 66 Bcf/Sec 0 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 2 miles
East Texas Deep Bossier Strong Well Results Strongest well results in onshore North America Deep Bossier generates some of the strongest returns in Encana s portfolio Encana is the leader in identifying and developing these plays We re growing what we have and are on the hunt for more! Highest North American Average 3 Month Gross Gas Production ( 05 09) MMcf/d 80 60 62 55 54 53 51 ECA Deep Bossier Wells ECA Deep Bossier 2009 40 45 43 41 40 39 39 38 20 0 Laxson 2 Madden 9-4 Judge Digby 7 Scharff 3X McLean E-1* Charlene 1* * Indicates modeled production due to 2009 curtailment Source: HPDI Lively 7 Bonnie Ann 1 Lac Blanc 1 S. McLean B-1 Fitzhenry 1 Scharff 5 McLean A-2 Navasot 2* Russell 3 Henley GU 1 Bayou Carlin 1 AD Carr A-1* McLean E-2* Carr-Navasot 1* Constitution South 1 Scharff 4 Lily Hoppes 2*
Aggressively Pursuing Growth Gulf Coast Jurassic Trend Significant Growth Opportunities Targeting follow-up to Amoruso step-out success Expect to drill 2-4 wells in 2010
Summary Haynesville exceeding predictions 2010F land retention strategy Mid Bossier results encouraging Gas Factory pilot for 2010F East Texas assets performing very well Growth opportunities abound! Total net well inventory: 1P + 1C = 1,600 Haynesville Simultaneous Operations