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Vagabond Ventures Oil Group Searches For Fossil Fuels Winter Session 2013

Vagabond Ventures Oil Group Searches For Fossil Fuels Winter Session 2013. The Course O utline. The Basics:. Week 1: Geology & History of Hydrocarbons Week 2: Oil Exploration Week 3: Petroleum Engineering. black-gold millionaire or dry hole hobo?. The Adventure:.

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Vagabond Ventures Oil Group Searches For Fossil Fuels Winter Session 2013

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  1. Vagabond Ventures Oil Group Searches For Fossil Fuels Winter Session 2013

  2. The Course Outline The Basics: Week 1: Geology & History of Hydrocarbons Week 2: Oil Exploration Week 3: Petroleum Engineering black-gold millionaire or dry hole hobo? The Adventure: Week 4: ‘Vagabond Group’ proposes 2 prospects your investment decision Week 5: ‘Vagabond Group’ plans production Week 6: the Payout?!

  3. TODAY’S PLAN Drilling Results Return on Investments

  4. DISCLAIMER The material you are about to see was developed for the learning and enjoyment of the class participants. The diagrams and numbers have been gathered from various sources to reflect the geologic and economic scenerios of the two locations, but neither is a real prospect and neither represents an actual investment opportunity.

  5. VAGABOND GROUP 2 OPPORTUNITIES On-shore Pennsylvania Off-shore Gulf of Mexico • Drilling results • Return on investments

  6. VAGABOND GROUP On-shore: Pennsylvania 2 OPPORTUNITIES On-shore Pennsylvania Off-shore Gulf of Mexico On-shore Pennsylvania • Drilling results • Return on investments

  7. On-shore: Pennsylvania - reached Marcellus shale @ 4,935’ - found 52’ Marcellus shale - TD @ 5,060’ in salt Is there gas? Let’s look at the seismic & well logs . . . .

  8. On-shore: Pennsylvania N S our prospect DRY HOLE DISCOVERY ` MARCELLUS DRY HOLE! 52’ shale no gas! thickness ? gas ? Why? 4’ shale no gas 56’ shale 46’ gas

  9. On-shore: Pennsylvania N S our prospect DRY HOLE DISCOVERY ` MARCELLUS not organic rich organic rich 1) no organic-rich deposits in our area of Marcellus 2) gas leaked out of Marcellus shale along fault

  10. On-shore: Pennsylvania N S our prospect DRY HOLE DISCOVERY fault leaks ` sorry, Pete! MARCELLUS DRY HOLE! 1) no organic-rich deposits in our area of Marcellus 2) gas leaked out of Marcellus shale along fault One investor lost EVERYTHING!

  11. On-shore: Pennsylvania It’s not too late! N S our prospect sorry, Pete! DRY HOLE! One investor lost EVERYTHING!

  12. Upper Devonian Ohio Gas Shale It’s not too late!

  13. TIME Rocks of Northeastern USA states of eastern US 360M ybp upper DEVONIAN middle 385M ybp

  14. Upper Devonian Ohio Gas Shale extent of Ohio and related gas shales

  15. Upper Devonian Ohio Gas Shale extent of Ohio and related gas shales new study . . . oil and gas drilling by Ohio Shale Commission Ohio . . . your next investment?

  16. VAGABOND GROUP Off-shore: Gulf of Mexico 2 OPPORTUNITIES On-shore Pennsylvania Off-shore Gulf of Mexico Off-shore Gulf of Mexico • Drilling results • Return on investments

  17. Off-shore: Gulf of Mexico - reached Wilcox sand @ 12,500’ - found 2,166’ sandstone Let’ see! - TD @ 16,624’ in salt - discovered 520’ oil sands Looking at the seismic data. . . .

  18. Off-shore: Gulf of Mexico our prospect Wilcox Sandstone Reservoirs? BEST water ~6000’ sandstones Wilcox salt

  19. Off-shore: Gulf of Mexico our prospect water ~6000’ sandstones Wilcox salt

  20. Off-shore: Gulf of Mexico - fault - & sand 12,500’ 11,500’ - top sand 14,666’ - base sand 16,000’ - base sand

  21. Off-shore: Gulf of Mexico - fault - & sand 12,500’ 14,666’ - base sand 16,604’ – top salt 16,000’ - base sand

  22. Off-shore: Gulf of Mexico thickness of Wilcox sand where’s the oil! - fault - & sand 14,666’ - base sand 12,500’ – top sand 12,500’ 16,604’ – top salt 14,666’ - base sand = 2,166’ Let’s look at the well log . . . .

  23. Off-shore: Gulf of Mexico top sand: 12,500’ base sand: 14,666’ 100’ 520’ Reservoir Rocks (sandstones) 520 feet of ‘pay’ near base of Wilcox! Presence of oil/gas

  24. Off-shore: Gulf of Mexico Lateral well perhaps more pay! ? 520’ PAY near base sand DISCOVERY! ? Great success for our investors!

  25. VAGABOND GROUP 2 OPPORTUNITIES On-shore Pennsylvania Off-shore Gulf of Mexico • Drilling results • Return on investments

  26. Environmental Overview Skip

  27. Separating FACT from FICTION UNIVERSITY OF TEXAS – AUSTIN (January 2012) (http://energy.utexas.edu/images/stories/chip_groat_shale_gas120126.pdf) • General Observations • Many of the violations are procedural and: • represent no environmental effects, or • are minor with no environmental effects • represent minor effects, such as small releases • Many of the effects noted occur in all types of oil and gas well development – not unique to shale gas • Fractured wells may experience more incidents because of additional equipment on the site PUT UT’S RESULTS ON HOLD!

  28. Separating FACT from FICTION Environmental Protection Agency Study Study started in 2010 Results due in 2012 NO RESULTS TILL 2014!

  29. Remember the offshore border dispute?

  30. Offshore development options FPSO=Floating, Production, Storage, Offloading (5840ft)

  31. Remember fpso’s?

  32. Petroleum engineer Primary Jobs: Reservoir Characterization Economic Analysis Covered in CLASS No. 6 Well Design & Drilling Production & Enhancements Covered in CLASS No. 5 36

  33. Economic Analysis

  34. Oil &gas economics O&G Tax Accounting Oil Price 6 KEY FACTORS IN O&G ECONOMIC ANALYSIS Recoverable Reserves Operating & Investment Cost Royalties & Working Interest Production Rate

  35. Oil &gas economics Factors Affecting OIL PRICE Political Technical Economic Financial • Worldwide Reserves status • Worldwide Production Capacity • Refining Capacity • Worldwide Supply & Demand • Cost of Alternatives • Transaction costs • OPEC’s Mood • Producing country’s stability • Balance of Power

  36. Oil &gas economics Factors Affecting RECOVERABLE RESERVES Modeling Selection Physical Rock Properties Drive • Quality of seismic • Geologic & Geophysical selection accuracy • Reservoir drive mechanism • Recovery Factor • Reservoir modeling accuracy • Reservoir aerial extent • Porosity • Permeability

  37. Oil &gas economics Factors Affecting PRODUCTION RATES Regulations Downhole Reservoir Production Faciliities • Quality of completions • State mandated allowables • Rate of Depletion • Byproducts produced • Capacity of Facilities

  38. Oil &gas economics Factors Affecting ROYALTIES & WORKING INTEREST Working Interest Royalties • Amount paid to property owners • Over-ride agreements • Major player or not

  39. Oil &gas economics Factors Affecting OPERATING & INVESTMENT COSTS Financial Well Cost Production Facilities Operating • Depth of well • Amt of logging • Byproducts produced • Drillingcosts • Enhancedrecoveryneeded • Disposal Needed • Fuel costs • Personnel costs & benefits • Proximity to market • Insurance Costs • Design Efficiency • Volume capacity

  40. Oil &gas economics Factors Affecting O&G TAX ACCOUNTING Tax code is written specifically for O&G investing, is complex and must be handled by specialist

  41. OIL & GAS ECONOMICS All of these factors result in an economic calculation to determine the profitability of the project The economic calculation is a called a Net Present Value (NPV) calculation NPV = ∑ (Income – Expense)*(1+DR)^t The following examples will make this understandable…

  42. OFFSHORE GOM, BAHA #2

  43. FUTURE PRODUCTION OFFSHORE Economic Calculations are based on this type of production curve

  44. Simple net present value OFFSHORE, GULF OF MEXICO, BAHA FIELD PRODUCING 100,000 BOPD INITIALLY DECLINING EXPONENTIALLY OVER 10 YEARS INFLATION DATA IS FROM APRIL 1989 TO APRIL 1999 427%

  45. Other investment returns STOCK DATA IS FROM APRIL 1989 TO APRIL 1999

  46. Other investment returns MUTUAL FUND DATA IS FROM APRIL 1989 TO APRIL 1999

  47. Other investment returns INFLATION DATA IS FROM APRIL 1989 TO APRIL 1999

  48. INVESTMENT SUMMARY (Results would vary for a different time period)

  49. PARTICIPANT RESULTS - SAGE 1 person made more than $5,000,000! congratulations . . . Four S’s Drilling Co!

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