International Shale Development Optimization

1. International Shale Development Optimization

2. Unconventional Resources Development Completion Quality Reservoir Quality

3. Controls for Reservoir Productivity Defining Reservoir Quality • TOC and maturation • Mineralogy • Pore Pressure • Petrophysics: porosity, saturations, permeability, thickness • Gas in place: adsorbed, interstitial Defining Completion Quality • Structure: faults, natural fractures, curvature • Hydraulic fracture containment: geomechanical anisotropy, in-situ stress • Rock fracturability: surface area per reservoir volume, texture, complexity • Retention of surface area and fracture conductivity: stress, mechanical properties • Fracturing fluid sensitivity: mineralogy, fluid chemistry Good Reservoir Quality + Good Completion Quality = Economic Success

4. Barnett Eagle Ford (oil) Woodford Fayetteville Haynesville Eagle Ford Marcellus Shales are Vertically Variable Each Shale is Unique

5. Core/Log Petrophysical Analysis RHOBRHOM ECSXRD SwPorosity TOCPerm Gasin Place GR Res Porosity ELAN Effective phi: 4 to 12 pu TOC: > 2 wt % Saturations: Sliquid < 45% Permeability: > 100 nd

6. Shale in Perspective: Permeability • 100 nD = 0.0000001 D = 1 ten millionth of a Darcy

7. 10 Year Pressure Profile 10 ft Shale in Perspective: Permeability • 100 nD = 0.0000001 D = 1 ten millionth of a Darcy Consequence of Extremely Low Matrix Permeabilities: • Majority of Pressure Drop at Fracture Face • At Initial Reservoir Pressure 10s of meters from fracture for years • Hydraulic Fracturing is a REQUIREMENT • Hydraulic Fracture Complexity can induce a pressure drop from multiple directions Hydraulic Fractures at 250 ft Spacing (400 nd)

8. Shale in Perspective: Large Stimulation Treatments

9. Initial Completion Quality Evaluation: Vertical Fracture Height Growth 80 m 300 m

10. Initial Completion Quality Evaluation: Vertical Fracture Conductivity 80 m

11. Completion Quality Variability Fayetteville Shale Outcrop Formation Micro-Imaging Logs (FMI) Reservoir 2 Reservoir 1 Reservoir 3

12. Lateral Heterogeneity – Horizontal Image Logs Reservoir 1 600 m Reservoir 2 500 m Reservoir 3 700 m

13. Clusters producing no more than 2% of total production Non-producing clusters Production Along the Lateral is Not Uniform 51% 54% Well 1 14% 31% Well 2 47% 53% Well 3 Well 4 37% 18%

14. Stage 4 Stage 3 Stage 2 Stage 1 Addressing Variable Completion Quality Wireline Horizontal Geomechanical Analysis • Quantify lateral stress variation • Indentify stress anisotropy • Group frac stages in “Like Rock” • Perforate similarly stressed rock

15. Planned Trajectory Formation Dips from Images Actual Trajectory Addressing Variable Completion Quality LWD Horizontal Geomechanical Analysis GRImage G H A I H G F E D C B B C D E F G H I Dynamic Den Image Static Den Image Den/Neu Porosity Resistivity Gamma Ray

16. Addressing Variable Completion Quality Images can Identify Natural Fractures Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

17. Reservoir Quality Completion Quality Putting it All Together Den Image HC in Place TOC Porosity / Saturations Reservoir, Pay Volumetric Spectroscopy Frac gradient Rock Strength

18. Addressing Variable Completion QualityEagle Ford Shale Example – Geometrical Staging SPE134827

19. Addressing Variable Completion QualityEagle Ford Shale Example – Selective Staging SPE134827

20. Completion Optimization to Maximize Production • New wells used Reservoir Quality and Completion Quality to optimize completions • 33% increase in 3 month average cumulative BOE on new wells compared to offsets SPE134827

21. 3 Dimensional View of Reservoir

22. Integrating Seismic Attributes with Fracture Geometry SPE131779 Microseismic event locations along with the azimuth of most negative curvature (arrows) and magnitude of most positive curvature (background color)

23. Coupling Fracture Geometry to Reservoir Simulation Evaluation of Completion Quality Unconventional Fracture Geometry Model Eclipse Reservoir Simulation shmin shmax Petrel platform allows stress heterogeneity integration

24. Eclipse Reservoir Simulation Production History Match Production Match Pressure Match

25. Reservoir Exploitation Completion Quality Optimization Estimated Ultimate Recoveries Reservoir Development Recovery Factors

26. Good Reservoir Quality + Good Completion Quality = Economic Success What is the right model for success? Model 1… Model 2… • Minimum data utilized • Accept statistical variation in well performance • Compensate by drilling more wells • Factory approach to drilling and completion • Large footprint – high rates & large fluid volumes • Collect optimum data • Understand the reservoir and completion quality • Reservoir based well placement • Utilize technology to improve drilling & completion efficiency • Reduced equipment footprint and fluid volumes

27. Thank You Contour map of Completion Quality Contour map of Reservoir Quality Good Reservoir Quality + Good Completion Quality = Economic Success