Janette Conradson Heidi Anderson Kuzma, PhD CEO/Founder CTO/Founder Reliable Forecasts Accurate Decisions Copyright BetaZi, LLC 3/08/2016
Disruptive Innovation: BetaZi has an unfair advantage All current oil valuations are based on bad math: There has been no change in how wells are valued since 1945. The ARPS formula adds errors to forecasts. This is an open secret in…
The Problem PRODUCTION FORECASTING: The process of predicting the future of proved production from existing wells and fields. The bulk of hydrocarbon asset economic evaluation is based on production forecast numbers created by…
Production Forecasting 101 The goal is to forecast future production from a noisy, complicated curve. Partial shutins Maintenance Stimulation or new stage Odd well test Ooops 4
MANY Models to Choose From Navier-Stokes: Fluid is continuous and not moving at relativistic velocities MORE ASSUMPTIONS Stokes: Stationary, creeping, incompressible in one- dimensional, homogenous rock Darcy: Fluid of…
Standard Procedure Pick a model Find a fit Make a forecast 6
Different Possibilities Different curves all fit the model nicely, but... 7
Problems with Traditional Forecasting Internal Engineering Forecast Forecast Supplied To Lender EUR = 112,959 BBL oil EUR = 787,822 BBL oil Lifetime = 16 years Lifetime = 386 years Different choices can have radically different…
The Solution 1. Start from first principles. 2. Insist on independent verification. 3. Use statistics. 4. Automate the process. 5. Back-test. In short: Predictive analytics using physio-statistical models Specifically: Field…
All New Science DERIVATIVE TECHNOLOGY All new code. All new approach. No one else is doing this.
BetaZi is the Worlds First and Only Physio-Statistical Model Physics is cleverly encoded as solutions to physics flow equations of cascading complexity Flow regime changes Time-dependent permeability Drive mechanisms…
What BetaZi Does A physics-based predictive analytics solution that computes unbiased, accurate, automatic production forecasts with calibrated uncertainty. INPUTS: oil, gas, water, monthly OUTPUTS: forecast with volumes and…
Forecasting BetaZi is: Repeatable Accurate Fast ( a minute per well) Testable EUR Unbiased It is the first fully-automatic, calibrated, probabilistic tool for oil and gas production forecasting. It is the only way to get…
How Internal BetaZi Model Works Generates EVERY potential decline curve for the data by computing a million samples ranging from simple to complicated, using a sophisticated physio-statistical model P10 P50 P90 (Like…
Results = Significant Statistics Samples are then aggregated into true probabilistic percentiles. p1 p10 P50 p99 p90 p90 means that 90% of the time, samples fall above the p90 line
Validation Holdback of data for forecast comparison and cross-validation prove results are accurate for producing wells. Holdback Data
Quantile-Quantile Plots Q-Q testing ensures validity QQ EUR 1853 Conventional Oil Wells QQ EUR 3163 Bakken Oil Wells A straight horizontal line denotes that 90% of the time, holdback data production exceeds the p90 (85% exceeds…
Accurate Roll-Ups Uncertainty can now be correctly Risk on a group of wells is normally narrower aggregated over groups of wells than for a single well Single well ratio of risk to production 1:1 32 well ration of risk to…
The PUD Factor (Proved UnDeveloped = PUD) PUDs are a large part of value and uncertainty in any deal. Most deals claim value in undrilled assets. PUD locations are booked to have values similar to nearby producing wells. Map of…
BetaZi Type Curve The BZ Machine captures the complete statistics for a selected group of wells, generating informed type curves with the full range of uncertainty on undrilled production. The result is a unique new tool to calculate…
Type Curves May Now Be Tested Using a BetaZi type curve, it is now possible to rapidly determine whether the well population used for a company-generated type curve is based upon truly analogous wells. Results are tested using…
Sample Applications of BetaZi Science 22
Spread of risk on every well North Dakota Basin Study 23
pScores Convenient metric for determining where individual wells fall in a population as a function of production. In this case pScores decline as new wells are opened indicating reservoir de- pressurization. 24
Actionable Intelligence Fast Benefit from Lateral lengths study 25
Half life of wells 26
Verify company statements 27
How are companies using this new tool Perform rapid & reliable risk vs. uncertainty valuation Verify operator type curves Validate deal pricing Visualize lease areas/enhanced investment target id Engineer risk Determine if company…
What BetaZi Does A physics-based predictive analytics solution that computes unbiased, accurate, automatic production forecasts with calibrated uncertainty. INPUTS: oil, gas, water, monthly OUTPUTS: forecast with volumes and…
Thank You Janette Conradson, CEO jConradsonbetazi.com 530.308.9074 Heidi Anderson Kuzma, PhD CTO/Chief Innovation Officer 11209 Brockway Road Suite 302 Truckee, CA 96161 www.betazi.com 30
The following are a few examples of what we are seeing in the O&G finance space. These case studies demonstrate some of the challenges faced in accepting a deal valuation without running a BetaZi analysis to verify production forecast…
Case Study I: 150MM Deal Company forecasts supplied to lender started at a point that was significantly higher than company sales data. When asked, company provided three more databases. Well counts varied from 108 to 270 PDP wells.…
Discovered The producer was hiding the fact that the field was in severe pressure decline. Moral(s) of the story: Dont trust a database Well counts shouldnt Production (low to high) vary by 100% Demand verification tools…
Case Study II: 800MM DEAL Reserves supplied to lender were made in January. Lender hired auditor in May. Auditor rubber stamped original reserves without changing case name in Aires. Unable to match either report, we discovered that…
Case Study III: Aggressive Type Curves Production from 219 analogous wells was provided by company to make type curves. Company PUD production forecast was 2x our forecast. Discovered hidden (290%) Performance Increase Factor (PIF)…
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