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Role of Service Companies in Supporting Appraisal/Development Activity

Role of Service Companies in Supporting Appraisal/Development Activity. IPAA April 19 th New York Michael Raleigh. Field Development Solution Projects. A collaborative effort between Operator and Service Parties

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Role of Service Companies in Supporting Appraisal/Development Activity

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  1. Role of Service Companies in Supporting Appraisal/Development Activity IPAA April 19th New York Michael Raleigh

  2. Field Development Solution Projects • A collaborative effort between Operator and Service Parties • Leverages the knowledge and experience of the Operator with the specific technologies and intellectual resources of Service Parties • Goal: Increase the value and/or accelerate the cash flow for Operator’s oil and gas properties • Commitment: Risk intellectual resources (field studies) and a percentage of oilfield products and services as proof of commitment to outcome • Reward: Re-payment based only upon production (value added) proportional to success and amount of risk taken

  3. Major US Oil & Gas Basins Oil Basin Gas Basin Mixture Williston Basin Michigan Basin Green River Basin Washakie Basin 11 Appalachian Basin 2 Uinta Basin San Joaquin Basin 1 10 3 San Juan Basin Santa Barbara-Ventura Basin 4 1. Piceance Basin 2. Denver (Julesberg) Basin 3. Hugoton Embayment 4. Anadarko Basin 5. East Texas Salt Basin 6. Austin Chalk 7. South Texas Salt Basin 8. North Louisiana Salt Basin 9. South Louisiana Salt Basin 10. Illinios Basin 11. Lima-Indiana District 12. Colville Basin Arkoma Basin Black Warrior Basin Tatum Basin Permian Basin 5 8 Delaware Basin 12 9 6 7 600,000 active wells

  4. Field Development Solution Relationship Selection Portfolio Ranking Tech Application Production Limit Screening Collaboration Opportunity Priority for Company Capital Operator’s Relative Value of property Divest iture Out source - Trades

  5. Service Company Role • Resource Exploitation Solutions • Leveraging specific region/play knowledge and differentiating technology • Design, Implementation, Evaluation (learning curve optimization) • Commercial Alignment • Participate in aligned common goal (ie reduced $/Mscf) • Structure demands higher accountability/risk by service providers • Commensurate share of value • Enabling Independents • Portfolio rationalization priority mix of underdeveloped assets • Prove the value of the asset (appraisal) • Accelerate cash flow (development) • Support Enterprise Growth/Value (reserves)

  6. Collaborative Project Governance Client Asset Owner Approval Reporting Project Coordinator Bridging Document Field Ops Coordinator Logistics Supervision Policies and Procedures Preparation of Dev Plan Prospect Generation Drilling/Completions Procedures Assist in AFE Preparation Accounting Production Monitoring Work Over Services Ancillary Services Completion Services Drilling Services Equipment Tangibles

  7. One Multi-Party Agreement • Full disclosure • Relationships between parties aligned under one specific project agreement • 3rd Party Capital • An enabling and independent contribution • Oilfield Service • Specific technology/process tailored to play/basin exploitation Field Project Agreement Administered by Executive Committee Asset Owner Oilfield Services Third Party Capital

  8. Project Cumulative Cash Flow Oilfield Contractor Share 3rd Party Capital Share Client Share Non-Equity Financing Commercial Model + Payout X % Cumulative Cash Flow AFE -

  9. Historical OFS /Operator Projects

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