Transcript EAGLE FORD SHALE

NYSE: GDP
1
ATTRIBUTES OF THE OIL WINDOW OF THE
EAGLE FORD SHALE
ADAM – Houston
November 19, 2010
NYSE: GDP
2
COMPANY PROFILE AND STRATEGY
Proved Reserves Growth
(Bcfe)
■
■
Rapidly growing onshore E&P company focused in
Louisiana and Texas. Repeatable development of
multiple objectives with long life reserves and near
100% success rate
358
■
■
421
2008
2009
206
173
Rapidly growing production volumes (5 yr CAGR of
34%) and reserves (5 yr CAGR of 24%)
2005
■
402
2006
Sale of non-core assets for $70 million provides
additional liquidity and drives per unit operating
costs lower
Production Growth
(Mmcfe/d)
82
66
Increasing liquids volumes and cash margin
expansion from Eagle Ford Shale oil development
Large core acreage position with 220,000 gross
(185,000 net) acres in Texas and Louisiana, with
approximately 7 Tcf of reserve exposure:
■
■
43
46
2006
2007
24
2005
91,000 net acres prospective in the Haynesville
Shale
40,000 net acres in the oil window of the Eagle
Ford Shale in La Salle and Frio counties Texas
2007
2008
2009
Reserve Replacement Ratio
1150%
1088%
311%
2005
2006
1055%
285%
2007
2008
2009
NYSE: GDP
3
EAGLE FORD SHALE – OIL WINDOW
■ Why the Eagle Ford Shale Oil Window
■ Excellent Rock Properties. Very good porosity (4-15%), matrix
permeability (40-1,300 nd) and fracture complexity for a shale play.
Allows for storage (source rock) and flow (over-pressured reservoir
rock)
■ High presence of carbonate and low presence of clay allows for very
effective fracs. Expect variability due to naturally occurring fractures,
possible communication with other zones and pressure differences
due to depth
■ Large accumulation of oil in place (25-55 MMBoe per 640 ac). Vertical
well production indicates matrix flow and hyperbolic curve. Artificial
lift a necessity once pressures drop
■ Early innings, but estimated recovery of 300-800 MBoe per well on
80-120 acre spacing based on 4,000 – 6,000 foot laterals
NYSE: GDP
4
ACREAGE AND WELL ECONOMICS
• Eagle Ford Shale Acquisition:
• Combination of leasehold acquisitions and joint ventures
• Total consideration - $1,650/ac ($575/ac in cash and $1,075/ac in future drilling
carries). Average working interest of 72.5% (56% NRI). At 80-120 acre spacing
yields 333 – 500 net locations
• Superior Economics:
• Driven by oil prices/cash margin expansion
• Eagle Ford - IRR of 45% for 6,000 foot lateral on completed well cost of $7.0
million and estimated EUR of 465 MBOE
• Buda – IRR of 58% for 6,000 foot lateral on completed well cost of $3.5 million
and estimated EUR of 265 MBOE
NYSE: GDP
5
EAGLE FORD SHALE TREND
NYSE: GDP
6
EAGLE FORD SHALE ACTIVITY
-2000
-4000
Chesapeake
Traylor North #1H
IP: 980 BOE/day
-3000
-5000
-4000
El Paso
TJ Pearsall #1H
Completing
GDP
Pan Am C 1H (EFS)
Completing
-5000
Petrohawk
Mustang Ranch #1H
IP: 350 BBL/day
HK
Petrohawk
Mustang Ranch C #1H
1st 7-day Avg. (on pump):
570 BBL/day
-6000
Blackbrush
Pals Ranch #9H (Buda)
IP: 530 BOE/day
-6000
GDP
Lancaster C 1H (Buda)
IP: 512 BOE/day
Cabot O & G
Patrick West #1H
IP: 355 BOE/day
COG
Cabot O & G
Arminius Trust #2H
IP: 550 BOE/day
Cabot O & G
Arminius Trust #1H
IP: 925 BOE/day
EP
CHK
-7000
GDP
Burns Ranch A 4H (EFS)
Drilling
Chesapeake
Brownlow #1H
IP: 1,220 BOE/day
Chesapeake
Lazy A Cotulla #1H
IP: 980 BOE/day
GDP
-8000
GDP
Pan Am B 1H (EFS)
Formerly (Frances Shiner B-1)
IP: 667 BOE/day
EOG
-10000
EOG
3 wells
Avg. IP: 525 BOE/day
APC
Anadarko
3 wells
Avg. IP: 685 BOE/day
GDP
Burns Ranch A 1H (EFS)
Completing
Chesapeake
Wilson A #1H
Completing
El Paso
3 wells
Avg. IP: 1,050 BOE/day
EP
-11000
-9000
-10000
-12000
NYSE: GDP
7
Drilling Procedure
• 1,000+ HP rig with top drive
• Drill time:
• EFS - 30 days spud-to-spud (approximately 22 days to TD). Targeting 6,000
foot laterals. Spud-to-sales dependent on frac availability (two dedicated frac
dates per month) and infrastructure
• Buda – 25 days drill time, 30 days spud-to-spud and spud-to-sales due to no
need for stimulation
• Casing program:
• Surface casing - 10 ¾” through Carrizo (~ 3,700’)
• Intermediate casing – None in quiet geological areas; 7 5/8” into top of EFS or
Buda (~ 7,500’) in highly fractured areas
• Production casing - 5 ½”, with 2 3/8” – 2 7/8” tubing for EFS and open hole with
tubing on Buda wells
• Mud program:
• EFS – water base (vertical), oil base (lateral)
• Buda – water base throughout
NYSE: GDP
8
Completion Procedure
• Induce complex networks of fractures with pump-down
plug and perf method
• Frac Design:
• Intervals of 300-325 feet
• Perforations (6 clusters, 5 shots per cluster = 30 perfs per stage)
• Fluids (5,500 Bbls per stage - acid, slickwater, gel)
• Proppant – 230,000 lbs per stage (100 mesh, 20/40 white, resin
coated/ceramic)
• Pump rate (65 bpm, 3-5 stages per day)
• Flowback – 50-100 BPH. Artificial lift (gas lift, pump) at
some point early in life of the well
NYSE: GDP
9
EAGLE FORD SHALE TYPE CURVE
Normalized Production (BOE/day)
700
600
500
400
300
200
100
0
1
7
13
19
25
31
37
43
49
55
Production Month
Low TC - 400 MBoe
Mid TC - 465 MBoe
High TC - 535 MBoe
NYSE: GDP
10
EAGLE FORD SHALE WELL ECONOMICS
IRR Sensitivity - $7.0 MM Capex
90%
80%
IRR (%)
70%
60%
50%
40%
30%
20%
10%
0%
$70.00 / $3.50
$80.00 / $4.00
$90.00 / $4.50
Oil Price ($/BBL) / Gas Price ($/MMBtu)
Low TC - 400 Mboe
Base TC - 465 Mboe
High TC - 535 Mboe
Note: 20:1 Gas to oil price conversion
NYSE: GDP
11
BUDA LIME TYPE CURVE
Normalized Production (Boe/day)
450
400
350
300
250
200
150
100
50
0
1
7
13
19
25
31
37
43
49
55
Producing Month
Low TC - 135 MBoe
Mid TC - 265 MBoe
High TC - 400 MBoe
NYSE: GDP
12
BUDA LIME WELL ECONOMICS
IRR Sensitivity - $3.5 MM Capex
120%
100%
IRR (%)
80%
60%
40%
20%
0%
$70.00 / $3.50
$80.00 / $4.00
$90.00 / $4.50
Oil Price ($/BBL) / Gas Price ($/MMBtu)
Low TC - 135 Mboe
Base TC - 265 Mboe
High TC - 400 Mboe
Note: 20:1 Gas to oil price conversion
NYSE: GDP
13
DRILLING INVENTORY
2010 Capital Program
Net
Probable
and
Possible
Wells (2)
Net
Probable /
Possible
Reserve
Exposure
(Bcfe) (1) (3)
Net Proved,
Probable,
Possible
Reserve
Exposure
(Bcfe) (1) (3)
Gross #
of Wells
Net #
of Wells
0.00
26.00
0.0
8.0
$0.0
$64.0
8
177
0
290
0
135
0
614
8
791
Greenwood–Waskom / Metcalf / Johnson Branch
Haynesville Shale (3)
9.0
4.0
$32.0
26
57
39
177
203
Longwood
Haynesville Shale (3)
0.0
0.0
0.0
0.0
$0.0
$0.0
0
1
0
134
0
61
0
206
0
207
Texas:
Beckville – CV Vertical
Cotton Valley (Horizontal)
Haynesville Shale (3)
0.0
1.0
1.0
0.0
1.0
1.0
$0.0
$6.5
$8.0
23
105
8
0
58
163
0
51
137
0
212
462
23
317
470
Minden – CV Vertical
Cotton Valley (Horizontal)
Haynesville Shale (3)
0.0
1.0
1.0
0.0
1.0
1.0
$0.0
$6.5
$8.0
33
17
9
0
99
394
0
86
320
0
362
1,109
33
379
1,118
South Henderson – CV Vertical
Cotton Valley (Horizontal)
0.0
2.0
0.0
2.0
$0.0
$13.0
10
0
0
66
0
54
0
222
10
222
Angelina River Trend / Shelby Trough
Travis Peak / James Lime
Haynesville Shale / Bossier (3)
0.0
4.0
0.0
4.0
$0.0
$44.0
27
0
120
412
44
350
88
2,320
115
2,320
Leasehold, Other
0.0
0.0
$33.0
9
0
0
0
9
Total (Shallow Objectives, Other)
4.0
4.0
$26.0
231
343
235
884
1,115
Eagle Ford Shale Trend
7.0
6.5
$35.0
1
458
333
729
730
41.0
18.0
$156.0
220
1,450
1,042
4,888
5,108
52.0
29.0
$250.0
451
2,251
1,610
6,501
6,953
Louisiana:
Bethany Longstreet – CV Vertical
Haynesville Shale (3)
Haynesville Shale / Bossier
Total
(3)
MY10
Proved
Reserves
(Bcfe)
Gross
Probable
and
Possible
Wells (2)
2010 Net
Unrisked
Capital
Expenditures
(MM)
Area
(1)
(2)
Total Inventory
(3)
Internal estimate.
Total Inventory based on the following: 160-acre spacing on horizontal Cotton Valley (Taylor) wells at Beckville, South Henderson and 50% of Minden. James Lime horizontals at Angelina River Trend at 160-acre
spacing on Cotton Prospect acreage only, and horizontal Haynesville Shale spacing at 80 acres.
Haynesville Shale reserves estimated at 6.5 Bcf per well at Bethany-Longstreet, Greenwood-Waskom and Metcalf. Shelby Trough and Angelina River Trend estimated at 8.5 Bcf. Reserves of 4.5 Bcf at Longwood,
Beckville, and Minden. No estimated reserves for Bossier Shale or Buda Lime included.
NYSE: GDP
14
POTENTIAL IMPACT OF EAGLE FORD SHALE
TO GOODRICH PETROLEUM
• Liquids rich resource play allows for cash margin expansion
and superior rates of return
• Oil play provides great flexibility in allocation of capital
based on commodity price realizations and forecasts
• Huge resource potential for the acreage increases GDP
inventory and unrisked net asset value by 10%, and by a
much greater percent when factoring in the improved
economics due to current premium in oil prices versus gas
• Continue to acquire acreage in our core areas primarily
through JV structure (cash and carried interest)
NYSE: GDP
15