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Unconventional Yearbook 2018

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98 | January 2018 | 2018 UNCONVENTIONAL YEARBOOK | PRODUCTION FORECAST ers of hydrocarbon-prone resources primed for pro- duction. And no place epitomizes this more than the Permian Basin, with some industry experts say- ing there could upwards of 40 formations available for eventual production, the most prolific of which is the Wolfcamp Shale. The Wolfcamp Shale The Wolfcamp is comprised of multiple produc- tive zones within what are commonly referred to as the A, B, C and D benches. The formation consists of interbedded organic-rich siliceous and calcareous mudstones, fine-grained limestone and organic-poor muds high in clay content. In other words, present is a mix of different stuff that just happens to include oil and/or gas. Operators have been focusing on the A and B benches where clay volumes tend to be lower, ranging from 10% to 36%, with relatively equal amounts of silica and carbon- ate, which makes it brittle and easier to fracture. Breakeven prices for Delaware Basin Wolfcamp wells have been some of the best in the Permian. Top wells can post breakeven prices well below $50/bbl. Meanwhile, improvements in the Midland Basin Wolfcamp have led to a "most improved" sta- tus. Midland Basin Wolfcamp wells are increasingly competitive with other top wells. Two other unconventional resources in the Permian remain on our radar—the Bone Spring and Alpine High—both of which have attractive aspects as well as detractions. Beginning with the Bone Spring, solid economics and attractive breakeven prices are likely for opera- tors sitting on good acreage. The second and third Bone Spring formations remain the go-to opportu- nities. Unfortunately, the Bone Spring encompasses a relatively small areal extent encompassing approx- imately 1,800 sq miles. As such, Stratas believes the economic opportunities are likely to be fully devel- oped by the early- to mid-2020s. The Alpine High has all the trappings of an early lifecycle play. Little production history on few wells leaves a lot of risk on the table. It also leaves a lot of upside. The other factor that raises some concern is the few operators participating in the play. History has shown that successful shales tend to begin with many operators conducting parallel "experiments" until the "code" is cracked. While we have great respect for Apache's capabilities, we would welcome more "scientists" to this experiment. The Eagle Ford Turning our attention to the Eagle Ford, opera- tors have arrested declining production by putting about twice the number of rigs to work in the play since the trough of mid-2016. While the Eagle Ford boasts some of the best economics in North America shale, large swaths of the play are densely developed, which is both good and bad. On the good side, highly predictable results are had with operators having a keen understanding of the play and its opportunities. On the bad side, keen knowl- edge of the play means that there is limited upside potential. With an average thickness of about 150 ft, multizone development opportunities in the Eagle Ford are limited. However, sweet spots in thick sections of the overpressured oil window along the northeast-southwest trend will continue to produce great results. In recent years, the Eagle Ford has produced the largest share of highly eco- nomic wells in shale with well over half its wells posting breakeven prices below $50/bbl. Despite this, Stratas projects slower Eagle Ford production growth for several years as operators increasingly view the play as an asset to harvest. As a harvest asset, the Eagle Ford remains a good prize. Geologically, the Eagle Ford Shale is calcar- eous (carbonate rich) and organic rich, making it conducive to enhanced production from hydrau- lically induced fractures. Average lateral lengths in the Eagle Ford play ranged from 5,800 ft to 6,000 ft in recent years. As in other plays, operators have been experimenting with extended length laterals. Chesapeake Energy drilled a record 16,926-ft lateral in the play with improved projected production. Ongoing experimentation with laterals and com- pletion designs should bode well for the Eagle Ford longer term. The Scoop/Stack Tracking north, the Scoop and Stack plays have quickly become some of the most interesting plays in the U.S. Targets include the Woodford, Osage, Sycamore, Meramec and Springer reservoirs. In

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