DUG Rockies Conference The Outlook For Rockies Economics March 11th, 2016
Table of Contents 1. Resource Energy Summary 2. Macro Economics: Impacts on Rockies Oil 3. Bakken Case Study: Transportation, DUCs, & PUDs 4. Profitability Case Study: Field Level & Development 5. US Debt Trends and Distress…
Resource Energy Summary Fourth Iteration PE Investment with Long Term Vision Resource Energy is a recently formed private equity-backed upstream oil and gas Bakken Operations production company capitalized by funds affiliated with…
Macro Oil Environment: Strong Oversupply Industry Environment Nearing Bottom and Reversion to Mean Supply Currently 1.6 mb/d Higher than Demand 3Q2015 Supply: 96.9 mb/d 3Q2015 Demand: 95.3 mb/d WTI vs. Brent Spread is…
North America Supply Effects & Historical Futures Supply Growth and Oil Hedge Futures Free Fall Key Oil Conclusions: Saudi Arabia Extraordinary supply growth in US & Canada Progression towards self supply Russia Futures contango…
Worldwide Oil and Gas Production: Flare Filter Bakken and Permian Stand Out as High Density Production Williston Basin Powder River Basin DJ Basin Paradox Basin Arkoma San Juan Basin Basin Ft Worth Basin Rockies…
US Oil Takeaway Midstream Map Improving Differentials are Very Dynamic and Variable Across the US Takeaway/Transportation market responded to projected North Dakota production increases Region is now oversupplied with oil…
Bakken Tier Quality Map & ND Production vs Price Not All Rock Created Equal; Play Development Will Consolidate Tier 3 Tier 2 Tier 1 March 2012 March 2016 Active Rigs: 204 Active Rigs: 35 Frac Crews: 62 Frac Crews: 9…
Oil Play Break-evens by Region and Futures Price No PUDs in the Money at Current Oil Strip Pricing Q1 2016 Q2 2015 - Rockies Region DUCs Orig. JP Morgan Drilled, Un-Completed 9
Field Level Oil Profit Margins Rapidly Declining Field Profit Margins (Including G&A) 10
Oil Margins W/ Other Cost Elements Capital and Drilling Costs Reduce Margins Further 11
Oil Futures Profit Margins Gradually Increasing Field Profit Margins but PUDs Not in the Money 12
Field Level Gas Profit Margins: Rockies Rapidly Declining Field Profit Margins (Including G&A) 13
Rockies Gas Margins W/ Other Cost Elements Capital and Drilling Costs Reduce Margins Further 14
Gas Future Profit Margins Gradually Increasing Gas Profit Margins but PUDs Not in the Money 15
Senior E&P Notes Trading Data Proxy Alert for Distress Sales and Potential Bankruptcies Company Size (MM) Issue Ratings Bid Price Yield to Worst Breitburn Energy Partners 850 Caa1/CCC 10.50 84% Chesapeake Energy 1,500 Caa3/CC 18.00…
Real Estate Bankruptcy Case Study 5-7 Year Cycle with Significant Term to Resolve Asset Transfers Price Drop 2007-2009 Max Fore- Sales Drop Closures: 2005-2007 January 2009 Foreclosure sales: 5+ year cycle 2010 on 17
Conclusions and Historical Price Perspective This Too Shale Pass: Prices Will Revert to Mean Replacement Costs Conclusions: Reduced pricing yields efficiencies Upstream operations LOE improvements are abundant Midstream takeaway…
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