What are my 3P Reserves? Haas Petroleum Engineering Services

Texas Registered Engineering Firm F-002950

Texas Registered Engineering Firm F-002950

What Are My 3P Reserves?

An Independent Evaluator’s Recommendation for

Undeveloped Reserve Estimatesin Resource Plays

Disclaimers

• Estimated Ultimate Recoveries in this presentation have been forecasted using a Stretched Exponential Production Decline (SEPD) methodology as outlined in SPE 134231 (Valko and Lee).

• Proved, Probable, and Possible Reserves in this presentation are for demonstration purposes only.

Haas Petroleum Engineering Services, Inc.

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CONFIDENCE

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80% Confidence Interval


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P90 P10

Heat Distribution


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1) How many Barnett Shale wells have produced as of Jan 1, 2014?

P10 _______ P90 _______

2) How long is the Nile River?

P10 _______ P90 _______

3) How many career home runs did Roger Maris have?

P10 _______ P90 _______

4) What was the average WTI oil price @ Cushing in January 2000?

P10 _______ P90 _______

5) How many public airports are in the state of Tex as?

P10 _______ P90 _______


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Pop Quiz! Define 80% Confidence IntervalYour

Pop Quiz! Define 80% Confidence Interval

1) How many Barnett Shale wells have produced as of Jan 1, 2014?

P10 _______ P90 _______ __19,823__

2) How long is the Nile River?

P10 _______ P90 _______ __4132 mi__

3) How many career home runs did Roger Maris have?

P10 _______ P90 _______ ___275____

4) What was the average WTI oil price @ Cushing in January 2000?

P10 _______ P90 _______ __$27.26___

5) How many public airports are in the state of Tex as?

P10 _______ P90 _______ _ __393____


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Your

Why Didn’t Everyone Score 4/5?

• P10s and P90s are difficult to comprehend.

• Pre-conceived expectations bias us to a narrow range of outcomes.


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Development Phase Definition

• SPEE Monograph 3 provides guidelines for necessary sample size to achieve the Mean less 10% with 90% confidence.

• < 1 Sample Size = “Early”

• 1 – 3 Sample Sizes = “Intermediate”

• > 3 Sample Sizes = “Statistical/Mature”


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Example 3P Stick Maps for Each Development Phase


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Early < 1 Sample

Intermediate 1-3 Samples

Mature > 3 Samples

Why is This Important?

• Knowing the development phase of the area can impact how you develop your property.

• No surprises from your reserves consultants.

11Haas Petroleum Engineering Services, Inc.

Source: SPEE’s Perspectives on the Fair Market Value of Oil and Gas Interests

CASE STUDIES

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Bakken Shale – Jan 2000 Bakken Development


Bakken Heat Map


Bakken Development - Jan 2012

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A

B

C


Initial Filtering to Area A


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A

Geologic Area of consistent

LithologyThicknessPorosityPermeabilityFluid Type

Area A EUR Bubble Map

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A

Anticline performance indicates separate geologic area.

Poorer performance as Bakken thins to SW.


Filtering to Analogous Rock

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A


Area A Distribution

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Area A EUR Distribution by Vintage


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Filtering Out Older Vintage

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Area A EUR Distribution by Operator

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Filtering Out Anomalous Operators

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Area A Distribution (Filtered)


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Aggregate to Total Number of Locations


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1

2

3

n

n = 35

Area A Distribution (Filtered)


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> 3 Samples

Statistical / Mature

Area A - 3P Undeveloped Reserves


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A

B

C


Initial Filtering to Area B

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B


Area B EUR Bubble Map

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B

Sweet Spot? Or Better Operator?


Area B Operator Bubble Map

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One operator’s performance indicates variance in rock/fluid properties is the cause of poorer wells surrounding acreage B.

B


Area B EUR Bubble Map

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Removing wells in better geologic area.

B


Area B Distribution (Filtered)

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1

2

3

n

n = 35

Area B Distribution (Filtered)


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~ 2 Samples

Intermediate

Area B - 3P Undeveloped Reserves


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A

B

C


Initial Filtering to Area C

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C


Area C EUR Bubble Map


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C

Area C Distribution (Risked)

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105,000 3.0




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1

2

3

n

n = 35

Area C - 3P Undeveloped Reserves


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Let the Debate Begin!

• Aggregate Proved to Total Number of Analogous Locations?

• Include PDP in Aggregation?

…Case by Case Considerations


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Effect of Aggregation on Smaller Well Counts


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n = 35 n = 6

SUMMARY AND CONCLUSIONS

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Consider P90 and P10 in Your Expectations


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The Nile River is 4132

miles long!

You Will Drill a Distribution!


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Source: EOG

Connected Pore Space

Conclusions

• Your 3P Reserves are directly related to the development phase of the geologic area.– Early, Intermediate, Statistical/Mature

• Your 3P Reserves are directly related to the sample size of human dependencies.– Drilling, Completion, and Development Practices

• Your 3P Reserves are directly related to the number of analogous locations in the development plan.


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THANK YOU!

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Contact Us

Haas Petroleum Engineering Services, Inc.Registered Firm # F-002950

2100 Ross Ave, Ste 600Dallas, TX 75201(214) [email protected]

www.haasengineering.com


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What are my 3P Reserves? Haas Petroleum Engineering Services