Denver Overview Presentation FEBRUARY 2014 › asxpdf › 20140211 › pdf › 42mn93ryf3vtcq.pdf2014/02/11 · Slide 9 Denver Overview Presentation - February 2014 258 Day Av. Rates

Denver Overview Presentation

FEBRUARY 2014

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Disclosure Statement

Denver Overview Presentation - February 2014 Slide 2

This presentation may include forward-looking statements within the meaning of section

27a of the United States securities act of 1933, as amended, and section 21e of the United

States securities and exchange act of 1934, as amended, with respect to achieving

corporate objectives, developing additional project interests, the company's analysis of

opportunities in the acquisition and development of various project interests and certain

other matters. These statements involve risks and uncertainties which could cause actual

results to differ materially from those in the forward-looking statements contained herein.

Given these uncertainties, undue reliance should not be placed on forward-looking

statements.

1,000

10,000

100,000

1-Jan-13 1-Feb-13 1-Mar-13 1-Apr-13 1-May-13 1-Jun-13 1-Jul-13 1-Aug-13 1-Sep-13 1-Oct-13 1-Nov-13 1-Dec-13

All Stars Production - Net to AEC WI

BOE NWI

BO NWI

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AEC Project Area Locator Map


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2012 Compared to 2013 Production


1,000

10,000

100,000

1,000,000

BO

/B

OE

All Stars Drilling Campaigns - Gross Monthly Production

BOE

Oil

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Southern Star


Robinson No. 1 – first PDP well Northern Extension

Well completed with best frac recipe from Operated areas

Robinson No.1 – 258 Day Rates 135 BOPD, 161 MCFD,

162 BOEPD

Production logging – 68% Wolfcamp contribution

Robinson No. 2 – Completed to Sales

SLKT No. 1 – Completed to Sales

Barnes No.1 – Completed to Sales

SUMMARY OPPORTUNITY 5,824 gross (4,697 net) acres

53 wells in production

2013 Net WI Production – 944 BOEPD (1,197 BOEPD Gross)

January-August 2013 -DCP curtails gas/liquids production by 50%

Production affected by freezing - December 2013 - February 2014

10,300 ft. wells: Spraberry, Dean, Wolfcamp, Cline, Strawn,

Mississippian & Woodford For

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Regional Lower Mississippian Isopach

Slide 7

200’

240’

320’

280’

360’

400’

Robinson No. 1

Paleo Arch – Fracture Focus

Denver Overview Presentation - February 2014

Robinson No. 2

Northern Star Project

Big Star Project

Southern Star Project

Barnes No. 1

SLKT No. 1

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1. Contiguous, Operated Acreage Position

4,697 net acres (5,824 gross)

Over 73% of position HBP

2. Proven Position

Current ~944 net WI boe/d from 53 producing vertical

Missberry wells (58% oil, 42% liquids-rich gas)

Results support >200 Mboe EUR type curve

3. Growth from Additional Inventory

~80 undeveloped 40-acre vertical Wolfberry locations

(85% oil, 15% liquids-rich gas recent wells)

Further growth from horizontal (~ 20 wells) or 20-acre

infill development (~85 vertical wells)

Missberry Objectives

Slide 8

SY

ST

EM

PERIODMIDLAND

BASIN

PER

MIA

N

GU

AD

ALU

PE

Queen

Grayburg

WH

ITEH

OR

SE

Tansill

Yates

7 Rivers

San Andres

WARD

VIRGIL

MISSOURI

DES MOINES

ATOKA

MORROW

CHESTER

MERAMEC

OSAGE

KINDERHOOK

UPPER

LOWER

CANADIAN

OZARKIAN

Upper

Leonard

PER

MIA

N

GU

AD

ALU

PE

San Andres

San Angelo

LEO

NA

RD

WARD

CLEA

R

FO

RK

Wolfcamp A (Upper)

Wolfcamp B (Middle)

Wolfcamp C (Lower)

Upper Spraberry

Lower Spraberry

Dean

ATOKA

CANYON

CISCO

CLIN

E

SH

ALE

STRAWN Wolf

berr

y

KINDERHOOK

DEV

O

NIA

N WOODFORDM

ISSIS

S

IPPIA

N

DEVONIAN

Lower Mississippian

Upper Mississippian

MORROWPEN

NSY

VA

NIA

N

WOLF

CAMP

SILURIAN FUSSELMAN

ELLENBERGER

CAMBRIAN

PRE-CAMBRIAN

OR

DO

VIC

IAN

Stacked Pay With Proven Targets

Wolfberry Completion Proved Zone Left BP

Significant upside in

horizontal drilling potential

9,700’

9,950’

9,400’

9,150’

9,000’

8,300’

8,050’

7,800’

7,600’

6,100 ’ – 7,600’

Low-Risk Missberry Play Position

Antares Vt Missberry well comingles L. Spraberry to Miss

□ U. Spraberry left BP – future recompletion opportunity

Stacked, Hz potential in 10 reservoir zones

Antares Missberry Wells

Modern Industry Missberry Wells

Vertical Missberry Well

Completions

Denver Overview Presentation - February 2014

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Log Suite used to pick Perfs


Permian Wolfcamp

Placed every 100’ in combo of

brittle and ductile stringers

Pennsylvanian

Placed in best cross over and

high resistivity

Mississippian

Placed in best cross over and

high resistivity

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10

100

1000

1 31 61 91 121 151 204 234 264

BO

/B

OE

/B

W

Production Days

Robinson No. 1 - Production Days

R-1 Oil

R-1 BOE

R-1 Water

Log. ( R-1 BOE)

Robinson No.1 Completion Results


258 Day Av. Rates -135 BOPD, 161 MCFD (162 BOEPD)

202 BNGL/MMCF Yield – 87% Oil & 13% Gas split

Dec 2013 Production – 7,962 BO & 13,839 MCF (9,999 BOE)

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10

100

1,000

0 1 2 3 4 5 6 7 8 9 10 11 12

Daily P

roducti

on (

bbl/

d)

Month

Best 2012 vs. 2013 Completions [Antares Type Curve (EUR 233 BOE)] Oil Values Only Plotted

Antares Type Curve

COZART 19 NO. 1

ROBINSON NO. 1

RAY NO. 5

LIVE OAK NO. 2

COTTONWOOD A NO. 1

ALOE VERA NO. 2

ALOE VERA NO. 1

NICHOLS NO. 1

PECAN NO. 1

YUCCA NO. 1

Type Curve Performance

Slide 10 Denver Overview Presentation - February 2014

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Modeled 10 Well Production Profile


R-1 Oil Produced – 42o API 85% Oil & 15% Gas Ratio

Peak WI = 1,300 BOEPD (1,105 BOPD)

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2013 Wells & 2014 Drilling Plan


PDP (53)

PDNP (1)

40 Acre Location (80)

SWD (1)

Southern

Star

Robinson-2 PDP

Barnes-2

T Stokes-1

T Stokes-2

• A single rig can HBP the entire northern portion of Southern Star acreage position and meet continuous drilling clauses

Assumptions: 20 day spud-to-spud time

Max program shown (7 likely)

80-acre “Stand-up” proration units

Robinson-1 PDP

SLKT-1 PDP

Barnes-1 PDP Nova 33-1 PDP

Nova 33-2 PDNP

Billie Jo 33-1 PDP

Billie Jo 33-2 PDP

Stokes-2 Stokes-1

Allred-2

Blagrave-1

Blagrave-2 Allred-1 Mayo-1

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Southern Star Well Locator


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SLKT No.1 Wolfcamp Petrophysics


Permian Wolfcamp A/B

Richness & mechanical properties

Permian Wolfcamp A/B

Saturations & Permeability Data

480 Gross – 170’ Net Quality Pay

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Element SFH Unit 23 No. 1H Results


SFH Unit 23 No. 1H

Wolfcamp A Objective

Ca. 7,800’ lateral

736 BOEPD Peak IP

8+ months producing

Cum Prod - 70,917+ BO & 71,975+ MCF

Source : Keith Skaar - Element December 2013 Industry Presentation

“The Wolfcamp “A” and “B” Horizontal Play of the Permian Basin:

Resource Boom 2nd Inning”

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0

500

1000

1500

2000

1 31 61 91 121 151 181 211 241 271 301 331 361

Ne

t W

I BO

E P

rod

uct

ion

Days of Production

Element SFH Unit 23 1H Modeled Horizontal Contributions

SS 5H

SS 4H

SS 3H

SS 2H

SS 1H



Element SFH Unit 23 1H 85% Oil & 15% Gas Ratio

Assume Horizontal D&C $6.5 MM 5 Well Program cost similar to 10 well vertical

Peak WI = 1,972 BOEPD (1,700 BOPD)

Modeled Production Source : TRRC Public Production Data

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Northern Star


12,100 gross (11,984 net) acres

12,500’ wells: Clear Fork, Spraberry, Dean, Wolfcamp,

Cline, Strawn, Mississippian, Woodford & Devonian

300+ drilling locations on 40 acre spacing

2P Net Reserves of 15.2 MMBOE (80 ac spacing)

2013 Net WI Production – 52,514 BOE

2013 Net to WI Production – 146 BOEPD

Lease extension program underway through 2018

Wolfcamp horizontals being drilled directly adjacent

Cozart 19 No.1 – 357 Day Rates 109 BOPD & 87 MCFD

Cozart 19 No. 1 – highest NGL yield @ 258 BPMMCFG

Cozart 19 No.1 – Net WI 38,155 BO & 30,669 MCF Prod.

Debnam 22 No. 1 – Completed to Sales

Cozart 11 No. 1 – Completed to Sales

Pettaway 7 No.1 – Completed to Sales

SUMMARY OPPORTUNITY

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Lower Mississippian Setting


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10

100

10

100

10/01/2013 9/02/2013 11/03/2013 10/04/2013 10/05/2013 9/06/2013 9/07/2013 8/08/2013 7/09/2013 7/10/2013 6/11/2013 6/12/2013

MC

FD

BO

PD

/B

OE

PD

/B

WP

D

Cozart 19 No. 1 - 2013 Production

Oil

BOE

Cozart 19 No.1 Completion


357 Day Av. Rates - 109 BOPD, 87 MCFD (123 BOEPD)

212 BNGL/MMCF Yield – 84% Oil 16% Gas split

Cum Production – 38,155 BO 30,669 MCF (43,266 BOE)

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Northern Star Wells & 2014 Wells


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C 19-1 Oil Produced – 45o API 85% Oil & 15% Gas Ratio

Peak WI = 1700 BOEPD (1,445 BOPD)

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Northern Star Activity Locator


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Ops Areas - Wolfcamp Character


WFC A/B/D – 2.3 BBOOIP

115 MMBO Recoverable

WFC A/B - 68% Prod. Log

Max rate 642 BO 747 MCF For

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Horizontal Planning Criteria


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20 Well & Current Production Profile


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20 Well & Current Net Production Profile


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Select Operational Photos

Slide 27 Denver Overview Presentation - February 2014

Robinson Battery Beall Fresh Water Pit

Northern Star Pump & Battery Robinson No. 2 Drilling

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Summary


Attractive position in the Northern Midland Basin of 37,209 gross (32,297 net) acres

December 2013 – average daily production of 1,426 BOEPD (DCP Curtailment January to August 2013)

December 2013 – average WI production of 1,228 BOEPD

December 2013 – average NRI production of 920 BOEPD

9 wells drilled over the past 12 months with a 100% success rate, with 64 wells now producing

High growth profile through quickly de-risking large Northern Star acreage position (Horizontal impact)

2014 drilling program focused on - 7 vertical wells northern extension Southern Star HBP

- 1 Wolfcamp horizontal well Northern Star

Replicating Cozart 19 No. 1 Production – 10 Wells = 1,445 BOPD Net WI

Replicating Robinson No. 1 Production – 10 Wells = 1,105 BOPD Net WI

Aggregate Production – 3,500+ BOEPD (85% Oil – 42-45o API)

New horizontal results – production targets attainable with same cost exposure & half the vertical wells

Targeting gross production of 5,000 BOEPD by end of 2015CY

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Documents

Denver Overview Presentation FEBRUARY 2014 › asxpdf › 20140211 › pdf › 42mn93ryf3vtcq.pdf2014/02/11 · Slide 9 Denver Overview Presentation - February 2014 258 Day Av. Rates