Presentation to ADAM Houston Tall City Exploration August 15, 2014
Introduction Five Steps to Generate Returns to All Stakeholders Company Objective: Acquire acreage and drill a sufficient number of wells to prove that well results are repeatable 5. Exit: Asset/Company sale or IPO 4.…
Introduction Basic Building Blocks Find It : Lease / Delineate / Enable Future Development Lease Acquire unproven, low-cost acreage based on advanced geologic concepts using information from historical drilling Leaselogs and modern…
Introduction Tall City Highlights Own approximately 84,000 net acres Over 1,400 identified drilling locations (800+ MMBoe) 16 wells producing 3,927 net Boepd, 83% Oil 4 wells with IP 1,000 Boepd Drilled 17 horizontal wells…
Team Assembling a High-Quality Team Reputation and track record to attract key team members Experience Nine member management team has over 270 years of experience Average of 30 years experience/person Many team members have…
Team Management Team Biographies Extensive Prior Industry Experience Yrs. Name/Title Age Exp. Professional Biography Worked 15 years with Exxon, 7 years with Titan/Pure Resources/Unocal, 2 years with Celero/Whiting in various…
Opportunity Why Focus on the Permian Basin Its About the Rocks The Permian Basin Permian Basin Map and Key Statistics(1) provides operators Total oil produced: 15 BBo tremendous scale both in the areal extent of the Permian…
Opportunity A Concentrated Resource Base Multiple Pay Zones(1) 1,920 acres (3 sections) 64 wells / 4 zones Reserves: 44 MMBoe One-rig program: over five years of drilling Vertical and Lateral Downspacing(2) Note: (1)…
Opportunity Wolfcamp: New Opportunity in Old Basin Vertical Wolfberry Example(1) Texaco Report no porosity exists in the flow and the well is not productive. lacks the porosity to reservoir hydrocarbons. Sadly, the well…
Opportunity Horizontal Drilling Driving Production Growth Horizontal Wells Spud per Month Since 2010(1) Rig Activity and Production Forecast(1) Midland Basin Horizontal Wells Spud Since 2010(2) Tall City Tall City…
Opportunity Horizontal Drilling Driving Production Growth Dramatic Growth in Horizontal Rigs Since 2011(1) Note: (1) Source: ITG Permian Basin research, April 2014 11
Execution Transition from Acreage Acquisition to Production Tall City has acquired Operational Execution is Key 84,000 net acres, primarily located in Howard, Borden and Reagan Counties 12
Execution Accelerating Production Growth Over 8x increase in Each New Well Addition has Material Impact on Tall City production since January 2014 Surpassed 3,500 Boed net in July 2014 Increasing net-to-gross production ratio…
Execution Drilling & Completion Costs Below Forecast Tall Citys drilling & Actual D&C Costs Under AFE completions team has done an admirable job of controlling costs and avoiding any large-scale operational hiccups that are common…
Execution Economic Impact of Horizontal Well Operations Coordinating Large Number of Contractors 10 MM D&C cost Charges for Each Contractor on Individual Well 96 vendors 500,000 30K median invoice 450,000 150K sales tax…
Execution Overview of Identified Key Risks Key Risks Commodity price Permian Basin take-away capacity Water availability Execution costs Low performing wells Market dynamics and timing of exit 16
Commodity Price Permian Oil Forecast Production Expected to Almost Double Over Next Ten Years(1) Note: (1) Source: ITG Permian Basin research, April 2014 17
Commodity Price Decreasing Light Crude Imports to Gulf Coast U.S. PADD III Crude Imports Since 2005(1) U.S. Light Crude Supply Expected to Outpace Heavy Crude(2) Gulf Coast light crude imports are being displaced with growing…
Take-Away Capacity Permian Crude Infrastructure: Help is on the Way 800 MBbl/d of capacity Permian Basin Crude Takeaway Capacity (MBbl/d)(1) planned or proposed Note: (1) Source: Raymond James research 20
Water Availability Challenging Water Sourcing Across Permian Water Use Example (Acre-Feet) Top Permian Counties for Water Stress(1) 16,000 Assumptions: 14,000 64 wells on 1,920 Ac. 12,000 300 MBW / frac 10,000 18/year irrigation…
Exit Timing Tall City Formed Anticipating an Exit Robust M&A and Capital Markets(1) Began the company with the end in mind Prepared for exit before first acre was purchased Management team met with investment banks at…
Conculsion We Didnt Stray Far Current Tall City Operations Offset Original Permian Discovery Well There have been oil & gas Santa Rita Project Reagan County operations in the Permian Basin for almost 100 years Tall City has taken…
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