South Texas: A New Look DUG Eagle Ford Conference San Antonio, Texas October 12, 2011 William E. (Bill) Deupree President & CEO
Finding Hidden Reserves in South Texas Escondido Olmos Eagle Ford
Today Company Overview Focus Strategy Well Comparisons Concluding Remarks
Company Overview Senior Management Team More than 200 wells drilled together since 2004 Bill Deupree, President & CEO Mark Semmelbeck, PhD, VP Engineering Kurt von Plonski, VP Operations David Wrather, VP Land Focused A&D…
Company Overview Escondido Resources LP: 2004 2007 Sold in three years: 250 million Equity partner: EnCap Investments LP Focus: Escondido Olmos La Salle, Webb and Dimmit counties 163 wells drilled, 95% success rate, all…
Company Overview Escondido Resources II LLC: 2007 to present 115 million sale of LaSalle County Eagle Ford rights in 2010 2nd partnership with EnCap Focus: Escondido Olmos Eagle Ford Webb, La Salle & McMullen Counties 44…
Major Events Oct 2007 SALE Nov 2004: FORM 250 MM Dec 2009 Jan 2011 Escondido Resources LP 3:1 ROI Completed best well in First Eagle Ford well Equity partner: 163 wells drilled Escondido trend ever 5,600 ft lateral EnCap Investments…
Focus South Texas
Focus South Texas EAGLE FORD OIL WINDOW EAGLE FORD RICH GAS WINDOW EAGLE FORD DRY GAS WINDOW ESCONDIDO & OLMOS SANDSTONES
Focus - Escondido & Olmos 70 horizontal Escondido and Olmos wells drilled to date in Webb County. 7,000 mcf/d Average IP for 15 completed Escondido wells Producing wells Permitted wells
Strategy 1 Apply new technology to old, established fields Escondido and Olmos Target reservoirs Escondido I: drilled vertical wells with multi-stage fracs co-mingling Escondido & Olmos Escondido II: horizontal drilling targets…
Strategy 3 Hold deep Eagle Ford rights Shallow horizontal drilling allows us to hold Wait for gas prices to improve 4. Economies of scale 95% success rate Finding & development costs +/- 2.00/mcfe Lifting costs < 0.20/mcfe
Strategy 5. Create value via: Cotulla McMULLEN LA SALLE Large acreage position of 60,000 acres Large inventory of 600 repeatable drilling locations In multiple objectives WEBB with 2.5+ tcf gross resource potential Laredo 200+…
Well Comparisons: Escondido I Post-2000 wells Pre-2000 wells IPR 500 mcf/d IPR 250 mcf/d EUR 700 mmcf EUR 500 mmcf Sun TSH Area La Salle County
Well Comparisons: Escondido II Horizontal wells IPR 7,000 mcf/d EUR 4,800 mmcf Vertical wells IPR 500 mcf/d EUR 800 mmcf Owen Area Webb County
Vertical or Horizontal Vertical Horizontal The Difference Capital Costs 1.5mm 4.5mm 3x IP Rate 500 mcf/d 7,000 mcf/d 14x EUR 0.8 bcf 4.8bcf 6x
What about the Eagle Ford IPR 7,000 mcf/d Our results there arent EUR 7.0 bcf too bad either 1st well: 1 bcf in 8 months 1.4 bcf cumulative to date 2 mmcf/d current production 5,600 lateral 19 frac stages 7.0 bcf EUR
Remember this Escondido Olmos Eagle Ford (for now)
Shallow & Deep Forecasts to 2016 Gas Production 300 250 200 Escondido/Olmos Eagle Ford gas production - mmcf/d 150 100 50 2 rigs 3 rigs 4 rigs 4 rigs 0 01/10 01/11 01/12 01/13 01/14 01/15 01/16
Takeaways We are well-positioned for growth A major player in one of the most active plays in America Acreage strategically located to take advantage of very profitable shallow drilling opportunities in the Escondido and Olmos…
A Parting Thought Find another cartoon 80% Escondido & Olmos (non-shale) and 20% Eagle Ford (shale)
Thank you Bill Deupree President & CEO Escondido Resources II BillEscondido-Resources.com 281.359.6780 Midland (Operations office) 432.683.4600 Houston (Land office) 713.662-0332 www.Escondido-Resources.com
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