haynesville re-frac study
TRANSCRIPT
Todd BushPrincipal, Energent Group
http://www.energentgroup.com @EnergentGroup
HAYNESVILLE RE-FRAC STUDYTHE ENERGY FORUM
HOUSTON, TX
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TODAY’S DISCUSSION
• About Energent Group • Landscape for 2015• Company perspectives• Re-frac study goals• Initial findings
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ABOUT ENERGENT GROUPEnergent Group is a market research firm focused on well life-cycle & frac market intelligence. We help sales & marketing teams commercialize new products, work with up-to-date operator data, & track well completions in top U.S. shale
plays.
FEATURED IN
DATARESEARCH SOFTWARE
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HAYNESVILLE HISTORY
1) EIA
Jan-07
Apr-07Jul-0
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Oct-07
Jan-08
Apr-08Jul-0
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Oct-08
Jan-09
Apr-09Jul-0
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Oct-09
Jan-10
Apr-10Jul-1
0
Oct-10
Jan-11
Apr-11Jul-1
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Oct-11
Jan-12
Apr-12Jul-1
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Oct-12
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Apr-13Jul-1
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Oct-13
Jan-14
Apr-14Jul-1
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Oct-14
Jan-15
Apr-15Jul-1
5 -
50
100
150
200
250
300
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
Total production Rig count
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REFRAC POTENTIAL BUT TOO EARLY?Using the Haynesville play as their testing grounds for refracs before they move to other plays like the Eagle Ford. Refracing a small portion of the wellbore and that the technology needs to advance before it is brought to a larger scale
Identified more then 270 potential candidates in the Haynesville with a current natural gas breakeven price of $3.00/Mcf looking to achieve a breakeven price of $2.35/Mcf in the future
About 100 wells in their scope for potential refracs which were drilled between 2010 and 2012 that used a completion technique that used longer stage spacing and less proppant per foot
Has not pursed refrac opportunities and believes economics of drilling new wells are better as drilling costs head lower
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HAL & SLB SEE U.S. DEMAND
• Successful refracs which have been used in 12 basins around the world
• Have seen an increase in demand for use in the U.S
• The economics are appealing to not only them but their clients as well and their technology was built with refracing in mind
• Identified 10,000 wells in the U.S. and has high-graded 2,000 of them – Willing to cover the cost of
the refrac and get paid off of production
– Relying on their expertise and technological developments they have made
• Looking at group of wells to refrac instead of single well candidates
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APPROACH TO HAYNESVILLE STUDY
PurposeDetermine operators, service companies, and suppliers involved in re-fracs in the Haynesville
ScopeExamine 40 initial completions and re-fracs in the Haynesville to understand economics, performance, and products
Initial Findings• Most re-fracs utilize less proppant • Many show ROI within 12 months• Production uplift varies across
operators & material used
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WORKING ASSUMPTIONS• Selected Haynesville
due to operator activity and vintage of horizontal completions
• Find cases where initial completion and refrac identified
• Sample size of 40 wells with historical data
Well Cost Assumptions:• Stage• Proppants (sand, rcs, &
ceramic)• Water• ChemicalsData Available:• Original Well Costs• Frac job (dates, stages,
proppants, etc.)• Production volumes• Lateral length
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REFRAC LOCATIONS BY OPERATOR
1) Energent data, Loouisiana DNR, FracFocus
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SAMPLE WELL COSTS
Original Well Cost $7.9 MM $9.4 MM $10.3 MM
Estimated Refrac Cost $1.7 MM $1.1 MM $1.2 MM
Percent of Original Cost 22% 12% 12%
Using $1.5 MM for estimated refrac costs for presentation. Report estimates refrac based on stages, water, proppant, and
chemicals costs.
OPERATOR A OPERATOR B OPERATOR C
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RED RIVER PARRISH REFRAC
-24 -23 -22 -21 -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 1
10
100
1,000
10,000
100,000
1,000,000
OPERATOR A
Actual (MCF) Forecast No Refrac
Prod
uctio
n M
CF
1) Refrac costs $1.5M2) NPV and IRR based on 24 months of uplift with no terminal value
Notes:• 40x increase in 1st month’s production• ~14 month payback• $228K NPV@10% (39.1% IRR)• Hybrid fluid with Nu Flow (FTSI)• 40% less water, 8% less proppant
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-24 -23 -22 -21 -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 1
10
100
1,000
10,000
100,000
OPERATOR B
Actual (MCF) Forecast No Refrac
Prod
uctio
n M
CFRED RIVER PARRISH REFRAC
1) Refrac costs $1.5M2) NPV and IRR based on 24 months of uplift with no terminal value
Notes:• 13x increase in 1st month’s production• Negative 24 month NPV with $1.5M refrac costs;
however, 13 month payback at $1M refrac cost• Actual costs expected to be much less due to water
and proppant volumes• Slickwater fluid (SLB)• 64% less water, 60% less proppant
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-24 -23 -22 -21 -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 1
10
100
1,000
10,000
100,000
OPERATOR C
Actual (MCF) Forecast No Refrac
Prod
uctio
n M
CFRED RIVER PARRISH REFRAC
1) Refrac costs $1.5M2) NPV and IRR based on 24 months of uplift with no terminal value
Notes:• 55x increase in 1st month’s production• Negative 24 month NPV with $1.5M refrac costs;
however, 10 month payback at $1M refrac cost• Actual costs expected to be much less due to water
and proppant volumes• Hybrid fluid (HAL)• 39% less water, 8% less proppant
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DE SOTO PARRISH REFRAC
1) Refrac costs $1.5M2) NPV and IRR based on 24 months of uplift with no terminal value
-24 -23 -22 -21 -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 1
10
100
1,000
10,000
100,000
OPERATOR B
Actual (MCF) Forecast No Refrac
Prod
uctio
n M
CF
Notes:• 10x increase in 1st month’s production• ~12 month payback• $325k NPV@10% (48.5% IRR)• Hybrid fluid with BioVert (HAL)• 41% less water, 33% increase in proppant
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$9.1M WITH 3.2M LBS PROPPANT
2000 2500 3000 3500 4000 4500 5000 5500 -
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
Proppant Intensity (M lbs.)
Lateral Feet
Pro
pp
an
t (M
of
lbs
.)
2000 2500 3000 3500 4000 4500 5000 55000.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
Initial Well Cost ($M)
Lateral Feet
Cost
($M
)
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TOP QUARTILE SKEW REFRAC RETURNS
0 2 4 6 8 10 12 14 16 18 -
50,000
100,000
150,000
200,000
250,000
Stages
Number of Stages
Gas
Pro
ducti
on (m
cf)
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REFRACS CONTINUE TO BE ATTRACTIVE
Operator Strategy Economics Risks
• Some operators have made strategic choices to develop & execute refrac programs in Haynesville
• Several testing waters to understand plan forward
• Optimize entire field or single well
• Attractive economics compared to new well costs & timeframe
• Refracs show 2x – 10x production improvement
• Returns are dependent upon cost of refrac and well performance
• Candidate selection continues to be challenge
• High variability in production from sample
• Commodity prices may limit refrac returns
Top refrac jobs produce near 90 & 120 day IP rates, so expect more refracs discussed, tested, and evaluated
Todd BushPrincipal, Energent Group
http://www.energentgroup.com @EnergentGroup
HAYNESVILLE RE-FRAC STUDYTHE ENERGY FORUM
HOUSTON, TX
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ResearchData
Software
PRODUCT CAPABILITIES
CONFIDENTIAL 20
SPOT SHALE PLAY TRENDS
CONFIDENTIAL 21
DISCOVER PROPPANT TRENDS
Analyze all operators and basins or a combination
Review raw sand, ceramic, and resin proppant per job
View nationwide proppant trends overtime across all basins
CONFIDENTIAL 22
ONE-CLICK ANALYSIS OF OPERATOR
Analyze single operator – Pioneer selected
Identify key pressure pumpers relationships by basin or overall
CONFIDENTIAL 23
SEARCH WELL AND FRAC DETAILS
Get answers to questions like “in the last year, how many HAL frac jobs in Wyoming used resin coated sand?”
Review frac job details to get single well view
CONFIDENTIAL 24
PRODUCT LINES & PRICING
$3,000 - $50,000/month Varies depending on use $179 - $5,500/month
Provide retainer monthly, quarterly, and annual market
research services
Deliver daily and weekly shale data for Upstream companies
across US
Enable field and office workers to access drilling, completion,
& frac details
• Drilling activity• Well starts• Frac sand usage• Top operators• Top counties• Benchmarking• Play specific research
• Drilling permits• Rig activity• Rig equipment• Well completions• Wellbore details• Frac sand • Frac fluids • Oil & gas production1
• Monitor operators• Track suppliers• Review completion design and
results• Search for drilling and frac jobs• Integrate with internal workflow
1) In progress
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