2013 PVA Analyst Day – Penn Virginia Resource Partners Lp

Penn Virginia Resource Partners Lp · Nov 19, 2013 · 146 slides

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Getting back into the swing of things 2013 PVA Analyst Day Company Presentation November 19, 2013 NYSE: PVA
Agenda November 19, 2013 Overview 7:30 a.m. Marketing 9:30 a.m. H. Baird Whitehead Jill T. Zivley President and CEO VP, Marketing Operations Overview 7:40 a.m. Financial Review and Outlook 9:45 a.m. John A. Brooks Steven A.…
Overview 3
2013 Year to Date Accomplishments Made a transformational Eagle Ford Shale acquisition Have increased our acreage position 25% since the acquisition closed Have increased 3P Eagle Ford reserves from 140 MMBOE pro forma to 170 MMBOE…
Penn Virginia Today Eagle Ford Shale will Drive the Growth Contiguous and highquality acreage position in the Eagle Ford Shale 67,000 net acres with approximately 890 remaining drilling locations and growing Approximately a…
Operating Areas Emerging Oil and LiquidsRich Plays Plus Optionality in Significant Gas Plays Eagle Ford Shale and Other Play Types Appalachian Region MidContinent Cotton Valley Marcellus/Other MY13 proved reserves: 10.8 MMBOE MY13…
Growing Acreage, Inventory, Reserves & Production The Eagle Ford Shale is PVAs Growth Engine Our Eagle Ford asset base and results has 100 Growth in Net Acreage and Drilling Locations 1,000 transitioned PVA to a period of execution…
Leading U.S. Producer That Has Transitioned To Oil Among the Top U.S. Producers of Oil, With a NearBest Leverage to Oil per Unit of Investment 33 U.S. Oil Producer Among Public Independents 4 Leverage to U.S. Oil Production Among…
PVA is an Eagle Ford Shale Oil Growth Story PVAs Positioning Among Oil Producers is Expected to Increase We have significantly increased our oil production over the past three years and we expect that trend to continue Other plays,…
YTD 2013 Stock Chart vs. Peers Catching Up to and Passing the Pack After lagging peers for most of 2013, PVA has closed the gap over the past two months YTD 2013, PVA is up 127%, while proxy peers are up 49% on average and the S&P…
Strategy Focused on execution of the drilling program and further expansion in the Eagle Ford Five operated rigs and one nonoperated rig in 2014 and 2015 Could opportunistically increase the rig count further and accelerate the value…
Key Messages for Today We have an excellent team in place We have an attractive Eagle Ford asset base that we can continue to grow We are drilling very economical wells that will provide production and financial growth and…
Operations Review 13
Overview of the Eagle Ford Shale Eastern Volatile Oil and Condensate Rich Gas Windows(1) Volatile Oil Condensate Rich Gas EFS Operators Gonzales PVA BHP San Antonio CHK Wilson COG Bexar COP Lavaca CRK CRZO Atascosa EOG…
Overview of PVAs Eagle Ford Shale Position Emerging Presence in Leading U.S. Oil Shale Play 107,100 gross (67,000 net) acres in Gonzales and Lavaca Counties, TX Gonzales Operator of 93,800 (60,500 net) acres 64% WI Nonoperator of…
Growing Our Eagle Ford Shale Position Net Acreage and Well Locations Growth in Net Acreage and Drilling Locations 100 1,000 Successful Downspacing 90 900 80 800 Recent Leasing Thousands of Net Acres 70 700 Drilling…
PVAs Eagle Ford Shale Evolution As of YearEnd 2010 Acreage Acquisition History Fayette Gonzales Cortez (2010) 0 Lavaca 0 1 mi 2 mi 17 0 5,280 10,560
PVAs Eagle Ford Shale Evolution As of YearEnd 2011 Acreage Acquisition History Fayette Gonzales Kona (2011) Rock Creek Ranch (2011) Cannonade Ranch (2011) Cortez (2010) 0 Lavaca 0 1 mi 2 mi 18 0 5,280 10,560
PVAs Eagle Ford Shale Evolution As of YearEnd 2012 Acreage Acquisition History Fayette Gonzales Bozka (2012) Shiner AMI (2012) Kona (2011) Rock Creek Ranch (2011) Cannonade Ranch (2011) Cortez (2010) 0 Lavaca 0 1 mi 2…
PVAs Eagle Ford Shale Evolution PostMHR Acquisition as of Late April 2013 Acreage Acquisition History Fayette Gonzales Magnum Hunter (2013) Hunt / MHR (2013) Bozka (2012) Shiner AMI (2012) Kona (2011) Rock Creek Ranch (2011)…
PVAs Eagle Ford Shale Evolution As of MidOctober 2013 Acreage Acquisition History Fayette Leasing in 2013 Gonzales Magnum Hunter (2013) Hunt / MHR (2013) Bozka (2012) Shiner AMI (2012) Kona (2011) Rock Creek Ranch (2011)…
Eagle Ford Shale Drilling Inventory Due to acquisitions and leasing efforts, our acreage position is now 107,100 gross (67,000 net) acres (1) We now have a 10year inventory of up to 890 additional gross drilling locations Successful…
Plan of Development 890 Additional Drilling Eagle Ford Shale Locations Excludes Upper Eagle Ford Shale Locations AXIS AXIS 11H 10H AXIS 9H Faye AXIS 8H AXIS 7H AXIS 6H AXIS AXIS 4H 5H AXIS 3H AXIS 2H…
Growing Our Eagle Ford Shale Position Producing Wells 24
Growing Our Eagle Ford Shale Position Net Daily Production 25
Growing Our Eagle Ford Shale Position Net Proved Reserves 26
Eagle Ford Shale Growth Quarterly Sales Revenue 27
Eagle Ford Shale Operations Update Overview as of Late October Operate 132 producing horizontal Eagle Ford Shale wells + 26 outside operated wells Since inception, spudtorig release average of 24.0 days; 3Q13 average was 20.3 days…
Eagle Ford Shale Operational Update Recent Eagle Ford Shale Well Activity and Results BongoNorthHunter 3WellPad IP3,342BOE/D Stag/PlatypusHunter 3WellPad IP6,100BOE/D GonzoHunter 3WellPad IP1,847BOE/D RhinoHunter6H…
Well Results Are Improving Quarterly Trend in Average IPs Avg. IP & 30Day Average IP 1,400 1,200 1,000 800 BOEPD 600 400 200 0 3Q12 4Q12 1Q13 2Q13 3Q13 IP / Equiv (BOE/D) 30Day IP / Equiv (BOE/D) 30
Well Costs are Declining South Texas Eagle Ford Drilling & Completion Costs Average Capital Expenditures Cost by Quarter 12 11 10 9 8 7 MM 6 5 4 3 7 wells 8 wells 11 wells 6 wells 8 wells 16 wells 2 17.4…
New Stimulation Contracts in Place Weatherford and FracTech awarded stimulation contract for next 12 months Contracts in form of pricing arrangement with no minimum payments Contracts key performance indicators (KPIs) aim for minimum…
Increased Frac Intensity Driving Better Results Further Increases Expected Going Forward 33
Increased Efficiencies and Reduced Capital Accomplished by Utilizing Pad Drilling Drill 24 (or even more) wells per pad Preset surface casing using spudder rigs Walking rigs Rotary steering Zipper fracs 34
Advantages and Disadvantages of Pad Drilling Advantages Shared location costs among multiple wells Efficiencies further enhanced by presetting surface casing with spudder rigs Smaller environmental footprint Save time and trucking…
Cost Benefits of Pad Drilling Example of per well potential cost benefits of pad drilling (assuming a fourwell pad) Location costs 200,000 Trucking costs 100,000 Time moving 135,000 Rig time PU/LD drill pipe 107,000 Shared…
Overview of Directional Drilling Methodology Bent motors Rotary drilling Inefficient, creates hole problems Difficult to steer and stay in zone Shortened mechanical life for Bent Motors: Rotary Drilling downhole tools Bent…
Steerable Motor Wellbore Construction Slides Well path as planned Drilled w/ steerable motor: Repeated sliding & reorienting 38
More Precise Depth Control With NearBit Inclination Precise closed loop inclination hold Improved wellbore placement and lateral stepout Early warning of any unwanted deviation Minimize unwanted doglegs and reduce failure risk…
Rotary Steerable Systems Rotary steerable systems allow continuous adjustment of steering direction without sliding and reorienting Slide Well path as planned Drilled w/ steerable motor: Repeated sliding and reorienting…
Technical Limits Days vs. Depth 41
Drilling Performance Review OVERALL DRILLING PROGRAM TROUBLEFREE DRILLING PROGRAM 2012 2013 % Chg. 2012 2013 % Chg. Total well count 34 37 29 32 Gonzales well count 19 16 17 16 Lavaca well count 15 21 12 16 Total drilling days 750…
Improvement in Completion Efficiency Reducing Costs while Improving Results Were stimulating more stages for less capital 2012 and 1Q13 average 3.9 MM for 20 Stages 195,000 per stage 2Q13 average 2.2 MM for 22 Stages 98,000 per…
Fracture Complexity and Stimulated Rock Volume Increasing Complexity 47
Fracture Stimulation Equipment Major Equipment and Personnel 16 2,000 HHP units Five Sand Kings Two 1,500 HHP pump down pumps One Conveyor Belt w/stand by motor 10 500 barrel frac tanks One Wireline Unit One 120 ton; 110' crane Two…
Typical Eagle Ford Shale Completion Procedure Rupture rapid start initiator sleeve and establish injection rate (clean out well with coil tubing unit and perforate for first stage) Move in frac equipment and pump 1st stage Rigup…
Completion Process Flow Chart Frac /wireline eqpt./crew CT mob / prejob mobilization and CT Mob and RU MI and RU flow meeting RU/pressure test back equipment Drilling rig Rupture RSI toe Multistage well Flow well naturally CFP…
Proppant 51
Optimizing Stimulation at Significantly Reduced Cost Decreased Completion Cost while Increasing Well Production Increase perforation clusters from four to six Covers 20% to 30% more of the lateral pay section Use 2% clay stabilizer…
Optimizing Stimulation at Significantly Reduced Cost Improved Frac Design Increase sand concentration up to 4 ppm Decrease pump time by 8 to 11 hours per well, further reducing overall well cost Reduced total fluid pumped per well by…
Improvement in Completion Efficiency 1,200 12 991 Increased Efficiency - More Frac Stages Per Day 1,000 10 Total Pumping Hours, Total Stages 822 7.89 800 8 of Frac Stages/Day 686 6.73 600 6 4.54 4.53 4.16…
Eagle Ford Shale 55
Eagle Ford Shale Covers 8.2 Million Acres This 320Mile Long Play is Larger Than the Combined Lands of Maryland and Delaware 56
Eagle Ford Shale as Outlined by Drilling Locations Madison Robertson Grimes Brazos Burleson Lee Washington Bastrop Waller Austin PVA core Fayette Fayette Colorado Guadalupe Gonzales…
Map That Set the Oil vs. Gas Trend EIA 2010 Reference Map PVA core 58
North Americas Leading Oil Resource Play 59
North Americas Fastest Growing Oil Resource Play Up and to the Right. 60
Permit Activity Reported By the TRRC 11,168 Permits in Six Years and Counting 11,168 permits in six years 61
Evolution of the Eagle Ford Play: April 2011 PVA core 62
Evolution of the Eagle Ford Play: October 2013 PVA core 63
Oil Production Reported by the TRRC 64
Gas Production Reported by the TRRC 65
Condensate Production Reported by the TRRC 66
The Hydrogen and Carbon System: Chasing TOC The organic Carbon molecule is supplied by decay of living organisms and plants. Sediment composed primarily of Commonly associated in sediment as Kerogen. quartz(SiO2) silt and sand…
Total Organic CarbonHow Rich is the Source Rock A relative abundance of kerogen is needed for the Sedimentary basins may have multiple kerogen conversion to oil and gas. types. Typical organic constituents of kerogen are algae and…
Hydrocarbon Distribution Versus Geologic Time Four Periods in Earth History Generated 95% of the Worlds Oil Reserves 1) Devonian 2) Jurassic 3) Cretaceous 4) Miocene Without source rock, the basin is barren 69
The Austin Chalk Conventional Trend Billion Barrel and 5.7 Tcf Key to Unlocking the Eagle Ford Resource Play Navasota Elgin Somerville Manor Conroe Austin Lee Fredericksburg Johnson City SYMBOL Giddings Washington OakWoodla…
Nestled in the Austin Chalk Conventional Trend Giddings Bre SYMBOL Bastrop Bastrop AUSTIN CHALK PROD Smithville La Grange s Lockhart Fayette Weimar Columbus Luling Flatonia Schulenburg Fayette Colorado Moulton…
Austin Chalk Eagle Ford Stratigraphic Relation Buda 72
Geologic Model for the Eagle Ford Play 73
A Closer Look at the Key Structural Relationship 74
Isopach Trends for the Eagle Ford Play From Outside 75
Recognition of the NGL Sweet Spot Eagle Ford Shale Liquids Sweet Spot, Intersection of GOR and High Pressure 76
Regional Trends of the Eagle Ford Hydrocarbon System 77
Eagle Ford Shale Isopach: Ash to Buda 78
Stratigraphic Profile of Austin ChalkEagle Ford EXPLOITATION PAY ZONES 79
Eagle Ford and Upper Eagle Ford Target Zones Optimized Placement of Lateral PEACH CREEK SHINER SOUTH BOSQUE MARL MARL TARGET BOULDIN FLAGS BUDA 80
Exploitation Upside Upper Eagle Ford / Marl Exploitation Fairway Upper Eagle Ford / Marl - 80 - 115 0 103 Rosher - 0 Caldwell 50 0 -10 10 14 1 - SYMBOL 0 0 00 0 MARL WELL LOG CONTROL 0…
Exploitation Upside Upper Eagle Ford / Marl Estimated Upside Potential Upper Eagle Ford / Marl Upside Based on current acreage holdings Gross locations: 249 locations, including infills Gross EUR: 350 450 MBOE per well Gross…
Eagle Ford Shale Reserves Overview 83
MidYear 2013 Reserves: Walkdown Strong Eagle Ford Growth Offset by Loss of Gassy PUDs (SEC 5Yr Rule) 150 125 11 114 (3) (21) 115 14 Net Reserves - (MMboe) Performance: 2% 100 PUDs: -21% 75 50 25 Change as a %…
Company Reserve Growth: YE04 Through MY13 Strong Growth in Oil Reserves as Company Continues Shift from Gas to Oil 1,2 Notes: 85 (1) Internal SEC Estimate of Reserves (as of 6/30/13) (2) Estimated Pro Forma YearEnd Net…
MidYear 2013 Reserves (MMBOE) Eagle Ford Represents 45% of Proved Reserves at MidYear Increased Eagle Ford proved reserves to 51 MMBOE (96% increase over YE12) MHR acquisition 11 MMBOE Drillbit 13 MMBOE Upward revisions 2 MMBOE…
Eagle Ford Reserve Growth Proved Reserves Increased 96% at MidYear 2013 180 Total 3P Reserves 170 160 140 120 Net Reserves - MMboe 100 Unproven Reserves 80 71 Proved Reserves Total Proved Reserves 60 51 40…
Time Zero Wellhead Oil Production Excellent Returns in Peach Creek and Shiner 430 Mboe) 520 Mboe) 88
Eagle Ford Well Economics Pretax IRR Sensitivities Excellent Returns in Peach Creek and Shiner Peach Creek Field (Gonzales and Lavaca Counties)(1) Shiner Field (primarily Lavaca County)(1) Assumptions Assumptions Longer lateral…
ETX Gas Well Economics Potential to Unlock Additional Value with Strengthening Gas Prices 12 3P reserve potential of over 100 Cotton Valley Haynesville MMBOE 10 Wellhead Gas Rate - MMcf/day Horizontal D&C costs have come…
YearEnd 2013 Reserve Report Impact Items Downspacing in the Eagle Ford Only 137 PUD locations were booked at midyear 2013 (1,000 1,200 spacing) Downspacing to 400 effectively doubles the number of bookable PUDs Allocation Well…
Exploration Strategy Building the Optimal Exploration Strategy SWOT analysis starting point Refine to support the goals and objectives of the corporation Work within the confines of available resources Build on experience…
SWOT Analysis Summary Strengths, Weaknesses, Opportunities & Threats SWOT summary Strong technical and management teams Solid foundation of core assets long life Competitive edge in overpressured shale resource plays,…
Exploration Consistent With Corporate Strategy Continue to expand oil and NGL reserves and drilling inventory Liquids rich plays Grow our cash flows and margins ..investment in higher rateofreturn development oil projects Maintain…
Capital and Human Resources Work Within the Confines of Given Resources FINANCIAL PERSONNEL 2014 Pre Budget 818MM Total 4 Geoscientists 5MM Land 2 Geotech/GIS 010MM Drill/Complete Admin Assistant 3MM Seismic Shared Land and…
Building on Internal and External Experiences Preserve financial flexibility Lost opportunities are unacceptable Streamline decision process Ability to react quickly is essential Be clear on objectives and goals Plan for continued…
Exploration Strategy Niche Player Preference Towards Cretaceous Geology 15 Austin Chalk Eagle Ford 29 % OIL GENERATED 25 CHANGES IN SEA LEVEL 8 8 9 6 Austin Chalk Eagle Ford OTHER SILURIAN MSSP/DEV PERM/PENN…
Resource Plays Support the Early Adopter Phase of Idea Diffusion Cycle Exploration Strategy Determines Focus Area and Play Type PVA TARGET 15% 0% EAGLE FORD EAGLE FORD STAGE CANADA EAST 1 50% MHR UTICA ACQUISITION LOW RISK…
Commercialization of Resource Plays Exploration Strategy Determines PVA ENTRY Focus Area and Play Type POINT DEVELOPMENT CONFIRMATION Optimize completion Establish lateral length, orientation and spacing Pilot well(s)…
Shale Resource Plays Exploration Playground United States Exploration Strategy Determines Focus Area Shale Plays Lower 48 states and Play Type SHALE OIL FACTS US oil output exceeded oil imports last week by the most since…
Commercialization of Conventional Plays Niche Player Conventional Plays Exploration Strategy Determines PVA ENTRY Focus Area and Play Type POINT DEVELOPMENT CONFIRMATION Simplified Model Low cost low risk vertical…
Conventional Plays Exploration Playground Niche Player Texas/Louisiana Preference To Cretaceous Geology Exploration Strategy Determines Focus Area and Play Type CONVENTIONAL CRETACEOUS RESERVOIRS (GULF COAST REGION) Escondido,…
Existing Core Area Exploration Building on Success Cretaceous Pearsall and Rodessa Pearsall Upside: 251 locations 1,000 spacing A A Impact of MHR Acquisition 500 MBOE/well More than doubled Pearsall upside to 125 MMBOE 125 MMBOE…