INNOVATIONS ENABLING SUSTAINED PERMIAN GROWTH MCCOMBS ENERGY INITIATIVE CONFERENCE – PERMIAN 2025 David Baldwin February 8, 2019 SCF P ARTNERS
U.S. O IL AND L IQUIDS P RODUCTION 18.0 Conventional Shale Oil Oil Decline Revolution 16.0 y) r Day) 14.0 14.0 E per MMBOE 12.0 tion (MM 10.0 ductio rodu s Pro 8.0 Liquids nd Li 6.0 US Oil and 4.0 4.0 2.0 0.0 U.S. S. O Oil a l and d Liqu quids SCF P ARTNERS 2
U.S. O IL AND L IQUIDS P RODUCTION : P ERMIAN 18.0 Permian Liquids Production 5 16.0 4 3 r Day) 14.0 14.0 2 E per 1 MMBOE 12.0 0 ion (MM 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 10.0 ctio duct rodu ids Pro 8.0 Liquid nd Li 6.0 US OIl and 4.0 4.0 2.0 0.0 U.S. S. O Oil a l and d Liqu quids ( (le less ss P Per ermian si since e Se Sept 0 08) 8) Per ermian O Oil a l and L Liquids si since e Se Sept 0 08 SCF P ARTNERS 3
N ORTH A MERICAN I MPACT ON G LOBAL S UPPLY MMBOEPD Increm. % of 2010 2018 CAGR Increm. Ex Iraq / Iran Oil and Liquids US & Canada 13.1 21.9 6.6% 80% 109% Iraq & Iran 6.6 9.5 4.7% 26% Rest of World 68.5 67.8 -0.1% -6% Total 88.2 99.2 1.6% 100% Natural Gas US & Canada 16.2 19.9 2.6% 88% 148% Iraq & Iran 4.1 5.8 4.4% 40% Rest of World 38.3 37.1 -0.4% -28% Total 58.6 62.8 0.9% 100% Oil, Liquids, and Natural Gas US & Canada 29.3 41.8 4.5% 82% 118% Iraq & Iran 10.7 15.3 4.6% 30% Rest of World 106.8 104.9 -0.2% -12% Total 146.8 162.0 1.2% 100% SCF P ARTNERS 4
U.S./C ANADA VS . R USSIA VS . S AUDI A RABIA Natural Gas Price Crude Oil Price 45 ($/ MMBTU) ($/BBL) 40 Pre-Shale $10.00 $100.00 CANADA Post Shale 3.00 50.00 35 Oil, Liquids, and Natural Gas (MMBOEPD) Annual Savings = $3 Trillion 30 4% of Global GDP 25 20 U.S. 15 10 5 0 2000 2010 2018 2000 2010 2018 2000 2010 2018 2000 2010 2018 2000 2010 2018 2000 2010 2018 U.S. and Canada Russia Saudi Arabia US and Canada Russia Saudi Arabia SCF P ARTNERS 5
T HE “S HALE P ATH ” TO US E NERGY I NDEPENDENCE 50 Other US Energy Demand Biomass & Waste Solar 45 Wind Geothermal Hydroelectricity 40 Energy Production / Consumption (MMBOEPD) Nuclear 35 Coal 30 25 Natural Gas 20 15 10 Oil and Liquids 5 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 SCF P ARTNERS 6
WHY / HOW SCF P ARTNERS 7
C HEAPER , F ASTER , B ETTER ….R EPEAT ! Old - Conventional New - Unconventional Old New 32 Wells/Section 4 100’ Pay / Well 10,000’ 3200’ Reservoir Exposure 40,000’ • 1/8 th the number of wells • 10x reservoir exposure Traditional Vertical Drilling Horizontal Drilling + Fracturing Source: Energy of North Dakota SCF P ARTNERS 8
C OSTS ARE F ALLING ….. (“E FFICIENCY ”) SCF P ARTNERS 9
…A ND W ELLS ARE M UCH M ORE P ROLIFIC (“PRODUCTIVITY!”) Delaware Basin 2017 180 2016 160 2015 140 Cumulative bbls, thousands 2014 120 100 2013 80 2012 2011 60 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Months SCF P ARTNERS 10
…A ND L ATERALS A RE G ETTING L ONGER (“ RESERVOIR EXPOSURE ”) AVERAGE U.S. HORIZONTAL WELLBORE LENGTH 9000 8378 8034 7677 8000 7155 6727 7000 Wellbore Lateral Length (FT.) 6000 5000 4000 3000 2000 1000 0 2014 2015 2016 2017 2018 SCF P ARTNERS 11
E FFICIENCY AND P RODUCTIVITY I MPACT O N B REAKEVEN Efficiency X Service Costs Breakeven Prices ($/BBL) = Productivity X Reservoir Exposure Unit 2014 2015 2016 2017 2018 2019 “Efficiency” 90% 90% 90% 95% 95% (Days/Well) “Service Costs” 90% 85% 120% 110% 100% ($/Days) “Productivity” 105% 110% 110% 110% 110% (BBLS/Foot) “Lateral Length” 110% 110% 110% 105% 105% (Feet) “Breakeven Price” $100/BBL $71/BBL $45/BBL $40/BBL $36/BBL $30/BBL SCF P ARTNERS 12
T ECHNOLOGIES D RIVING E FFICIENCY G AINS (“EFFICIENCY!”) D UAL OR “Z IPPER ” C OMPLETIONS O PERATIONS P AD D EVELOPMENT A B L OCAL S AND L ARGE D IAMETER C OILED T UBING Sources: Statoil, Natural Gas Industry B, SCF P ARTNERS 13
T ECHNOLOGIES D RIVING P RODUCTIVITY G AINS (“PRODUCTIVITY!”) G REATER P ROPPANT L OADING T IGHTER S TAGE S PACING G EOSTEERING C OMPLETION T OOLS SCF P ARTNERS 14
T ECHNOLOGIES E NABLING L ONGER L ATERALS (“RESERVOIR EXPOSURE”) H IGH S PEC R IGS R OTARY S TEERABLE S YSTEMS PDC B ITS H IGH T ORQUE M UD M OTORS Sources: American Oil & Gas Reporter, Kinetic Upstream Technologies, Drilling Formulas, Ulterra SCF P ARTNERS 15
S HALE 3.0 – F IELD /C UBE D EVELOPMENT C HALLENGES I DEAL R EALITY SCF P ARTNERS 16
S USTAINING T HE R EVOLUTION …2020 AND B EYOND A DVANCED L EARNING F RAC O PTIMIZATION D ECARBONIZATION A UTOMATION SCF P ARTNERS 17
E NERGY I NNOVATION …N EXT 50 Y EARS • Big 3…Energy, Technology, Healthcare • Entrepreneurial • Global, Diverse Business • 21 st Century….“Sustainable Development” SCF P ARTNERS 18
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