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Scoop-Stack Playbook 2017

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SCOOP/STACK: OVERVIEW 8 | September 2017 | Showboat will include about 25 wells across four landing zones. Newfi eld Exploration and Marathon Petroleum Corp. also plan to average 10 rigs in the Scoop/Stack by year-end 2017 (Newfi eld is currently running 10 in the Anadarko Basin), while Cimarex Energy indicated it would hold at fi ve to six. Newfi eld, an early leader in the Scoop, found the Stack when in late 2011 it decided to go updip in the Cana gas fi eld in search of oil—a "wild and risky concept at the time in a fi eld that had only 2% to 5% porosity," said Steve Campbell, vice president of investor relations. The E&P company's initial Stack well took a core of Meramec shale on its way to the Woodford and found live oil. Campbell said Stack/Scoop economics can weather lower crude prices because the oil is high quality and lease operating expenses are contained due to little or no for- mation water. Further, producers can sell into Cushing for a Nymex price $4 or $5 better than Perm- ian barrels fetch. The company's rigs will be split about equally between Scoop and Stack this year, with $850 million of its $1.1 billion capital budget earmarked for the Anadarko Basin. Chairman, president and CEO Lee K. Boothby said the company would test well densities, opti- mize completions and explore new stacked pay potential across its position in 2017, and that the Stack is the foundation for the company's transi- tion to a company that "can sustainably grow its production by double-digits within cash fl ow—even if today's oil prices persist." Through its new "Score" program, the company will test Sycamore and Caney in the Scoop and Osage in the Stack to ascertain commerciality and drilling sequencing. Newfi eld has allocated $100 million to test these horizons. In mid-May, the company, which holds more than 300,000 net Stack acres, released news of its stellar Burgess well in Kingfi sher County, which yielded a 24-hour fl ow rate of 2,931 boe/d (69% oil) and a 30-day average rate of 2,492 boe/d (70% oil). It was a Scoop/Stack record for 24-hour oil produc- tion per 1,000 ft of gross perforated interval, or 417 bbl of oil per interval. "The Burgess had the largest completion put on to date, almost two times as large as the standard completion we've used," Campbell said. "It was a way of stepping out. There is a point at which it's only bigger, not more economic, however, so we are seeking that point of diminishing returns and then will back off. The Burgess is far above our type curve, but we don't know how long that production level will last." The Burgess is one of 16 wells with enhanced completion designs using 2,100 lb of proppant and 2,100 gal of liquids per interval. The 13 wells with 60 days of production history were outperforming the company's 1.1 MMboe estimated average type curve by an impressive 45%. Newfi eld plans to drill about 90 wells in the Stack, about 50 in the Scoop and fi ve to seven in the Score effort this year, according to Campbell. The company has baked in a 10% increase in service costs. It curtailed drilling on its Bakken assets and cut Utah activity to zero to direct more capital to the Midcon effort. Scoop/Stack returns justify the capital injection. "We can generate through our current position, at current service costs, returns of more than 40% at today's oil prices," Campbell said. Cimarex Stack Over the last six months, Cimarex Energy has been drilling mostly long laterals to secure acreage and delineate and expand the scope of the Meramec play. Cimarex is focused on just two plays—the Delaware Basin and the Stack. "Given current strip pricing and cost structure, right now certain aspects of the Stack compete very nicely with the Delaware," said John Lambuth, senior vice presi- dent of exploration. Operators agree that sharing best practices of major players has fast forwarded development in the Scoop/Stack. Spacing pilots underway will help defi ne ultimate development so companies can begin to monetize acreage, Lambuth said. Steve Campbell

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