classification: external 05-23-12 tweaking the frac russell rankin | bakken bu | may 23, 2012

Classification: External 05-23-12

Tweaking the FracRussell Rankin | Bakken BU | May 23, 2012


This presentation contains certain forward-looking statements that involve risks and uncertainties. In some cases, we use words such as "believe", "intend", "expect", "anticipate", "plan", "target" and similar expressions to identify forward-looking statements.

All statements other than statements of historical fact, including, among others, statements such as those regarding: plans for future development and operation of projects; reserve information; expected exploration and development activities and plans; expected start-up dates for projects and expected production and capacity of projects; the expected impact of USD/NOK exchange rate fluctuations on our financial position; oil, gas and alternative fuel price levels; oil, gas and alternative fuel supply and demand; the completion of acquisitions; and the obtaining of regulatory and contractual approvals are forward-looking statements.

These forward-looking statements reflect current views with respect to future events and are, by their nature, subject to significant risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including levels of industry product supply, demand and pricing; price and availability of alternative fuels; currency exchange rates; political and economic policies of Norway and other oil-producing countries; general economic conditions; political stability and economic growth in relevant areas of the world; global political events and actions, including war, terrorism and sanctions; the timing of bringing new fields on stream; material differences from reserves estimates; inability to find and develop reserves; adverse changes in tax regimes; development and use of new technology; geological or technical difficulties; the actions of competitors; the actions of field partners; the actions of governments; relevant governmental approvals; industrial actions by workers; prolonged adverse weather conditions; natural disasters and other changes to business conditions. Additional information, including information on factors which may affect Statoil's business, is contained in Statoil's 2010 Annual Report on Form 20-F filed with the US Securities and Exchange Commission, which can be found on Statoil's web site at www.statoil.com.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that our future results, level of activity, performance or achievements will meet these expectations. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. Unless we are required by law to update these statements, we will not necessarily update any of these statements after this Capital Markets Day, either to make them conform to actual results or changes in our expectations.

Forward Looking Statements

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Agenda

Evolution of Statoil in the W.B.

Pilot programs

Applying other technologies

Evolution of the frac

HSE

Background

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Statoil - 40 years of growth

MARKET CAPITALISATION OF ABOUT *

USD 88 billionListed on New York and Oslo stock exchanges

* Updated March 23, 2012

EMPLOYEES WORLDWIDE

21,300

COUNTRIES OPERATING

36HEADQUARTERS

Norway

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Classification: External 05-23-125 -


Marcellus – Dry Gas

• Joint development with Chesapeake since 2008

• 665,000 net acres

• 24 Chesapeake operated rigs

• Resource potential: 2.5-3.0 billion boe

Eagle Ford – Wet Gas

• Joint development with Talisman since 2010

• ~82,000 net acres across

• 8 Talisman operated rigs

• Resource potential: ~640 million boe

Bakken - Oil

• Statoil acquisition of Brigham, Dec 2011

• ~375,000 net acres across

• 17 operated rigs

• Resource potential: ~300-500 million boe

NORTH AMERICA

Statoil’s Onshore Portfolio

Statoil’s Onshore Portfolio Driving Growth

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• Objective is zero harm to areas where we operate

• Statoil expects its operators and suppliers to follow relevant regulations and best practices

• Actively manage environmental risks and employ advanced technology to mitigate impact

• “Good Neighbor”

STATOIL IS RECOGNIZED FOR

HSE & Integrity Focus#1 ranked in sustainability amongst O&G companies in 2011

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8

ENGINEERING EVOLVES OVER TIME

Evolution of the Frac

1947 – Stanolind Oil, Hugoton field, Kansas

* Photo credit: JPT Online, Hydraulic Fracturing: History of an Enduring Technology

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Evolution of the Frac

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2012 – Statoil, Williston Basin, North Dakota


Late 1980’sHorizontal DrillingBicentennial / Elkhorn

2009

2001-2005

2006

Introduction of Fracture Stimulation

1st Long Lateral High Frac Stage Completion

2012 More Fracs/Smaller Frac Intervals

Elm Coulee (MT)

Parshall / Austin / Sanish Swell Packers

2006North Dakota

~EUR(2)

2,700’ Lateral, Upper Bakken Shale, Openhole

152,000 Boe

9,500’ Lateral, Single-Uncontrolled Frac

304,000 Boe

9,500’ Lateral, 20 Frac Stages ~475’/interval

431,000 Boe

9,500’ Lateral, 30-38 Stages ~250’ - 300’/interval

600,000 Boe

5,000’ Lateral, 7 Frac Stages ~715’/interval

354,000 Boe

9,500’ Lateral, Single-Uncontrolled Frac

123,000 Boe


Evolution of Completions in the Williston Basin

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Reservoir Contact in Tight Rock is Critical

• Propped fractures touch more rock than multi-lateral wells• It is more effective to touch rock with a fracture than with a drill bit• Simple, single laterals designed for stimulation• With 150 fracs, estimate ~6,000,000 ft2 of contact

5 laterals drilled from one wellhead Propped fractures

*Overhead, map view

Multi-lateral: 15,000 ft of drilled length in 5 laterals

= <24,000 ft² of reservoir contact

Tiny frac, perhaps 20,000 lbs of proppant at 1 lb/sq ft

2 wings * 2 faces * 200 ft * 50 ft

= 40,000 ft² of reservoir contact

L = 200 ft

Half-length

f

h = 50 ft


0

200

400

600

800

1,000

1,200

0 25,000 50,000 75,000 100,000 125,000

Cumulative Oil, Bbls

Ra

te, B

op

d

>10 Stages<10 Stages

• Smaller dataset

• Similar lateral length and close proximity

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Field Results Learned from Short Laterals


Single stage fracs gave low, but remarkably similar production.

3

0

100

200

300

400

500

600

700

Rat

e, B

op

d

Normalized to Date of Peak Rate

Well A Well B Well C Well D

Corroborates Vertical Well Control Indicating Consistent Reservoir Attributes Across ~19 Miles in Study Area A

Single stage well IPs ~150 to 300 Bopd

BCD

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SETTING A BASELINE FOR OLD TECHNOLOGY

Field Results

Corroborates vertical well control indicating consistent reservoir attributes across ~19 miles in Study Area A

A

BCD


Operator’s first 20-stage completion:

IP: 1,200 BOPD

BCD

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COMPLETING A WELL WITH SWELL PACKERS & 20 STAGES

Field Results

0

500

1,000

1,500

0 25,000 50,000 75,000 100,000 125,000


Ra

te,

Bo

pd

Well A Well B Well C Well D Well E

Well E: 20-stage completion

4x - 9x IP

A

CD

E B


APPLYING RESULTS FROM SHORT LATERALS

Increased Stages in Long Laterals

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

0 25,000 50,000 75,000 100,000 125,000 150,000 175,000


Ra

te,

Bo

pd

29-38 Stages

26-28 Stages

23-24 Stages

18-20 Stages

10-12 Stages

7-9 Stages

Single Stage


Williams

Mountrail

McKenzie

Missouri River

Mo

nta

na

No

rth

Dak

ota

Richland

Roosevelt

Bakken Density Pilot Bakken / Three Forks Density Pilot

Increased Proppant HiWay Frac Multi-port Frac Sleeves

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Pilots


* Downtime removed

Hi-Way Frac Study

A

B

C

DHi-way fracPlug & perf frac

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A B

C

D


New technology frac sleevesPlug & perf frac

* Downtime removed

New Technology Frac Sleeves Study

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350 Lbs/ft of lateral250 Lbs/ft of lateral

* Downtime removed

Increased Proppant Volume Study

A

B

C

D

F

E

G

H

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A

B C D

F

E

GH


Microseismic Preliminary Results• 90% of the microseismic events occur within ~330’ of the lateral for both wells

• Nearly twice as many microseismic events were recorded in Well B (increased proppant) vs. Well A

0

50

100

150

200

250

300

350

100' 400' 700' 1000'

Nu

mb

er o

f E

ven

ts

Distance to Lateral

Well A

Well B

Surface location

Well A

250#s per ft

398Events

BHL

Well B

350#s per ft

762Events

BHL

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• Smart pad development

• Fluids management

• Integrated operations

• Gas lift

• Using natural gas as a fuel

• Infrastructure efforts

UNLOCKING VALUE BY APPLYING TECHNOLOGY

Above & Beyond Tweaking the Frac

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Statoil

Russell RankinBakken Business UnitE-mail address: [email protected]

www.statoil.com

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