The State of the Industry ofDrillbit Geomechanics™

Value Proposition of Drillbit Geomechanics™

In Situ Rock Properties Along All Wells allows Operators toOptimize Completion Designs

• Improved completion through optimized placement of stage boundaries and perforations

Characterize Their Reservoirs at High Resolution• Determine frac barriers, ideal landing zones, well spacing and sweet spots

Complete Fracture Identification and Thin-Bed Analysis• High resolution rock properties determine where fractures exist along

horizontal wells and improved reservoir estimation through thin beds analysisImprove Field Development Planning

• Understanding lateral heterogeneity improves depletion models, reservoir models, and well spacing

Apply NOV’s Drilling Optimization Services• Using the same data collected for DrillBit Geomechanics™, NOV can

optimize drilling parameters to reduce drilling days and dysfunction

Fracture ID will get this data while• Costing zero rig time• Reducing open hole risk• Replacing the need for expensive and risky wireline and LWD

Over 150 wells in:DelawareMidlandAnadarkoSan JuanEagle FordWillistonDJPowder RiverAppalachianArkoma

37 Clients to date including

Devon Energy Cimarex Energy Hess Corp Lario O&GContinental Resources East Management FourPoint Energy Encana CorpLiberty Resources Noble Energy WPX Energy Anschutz CorpUnit Petroleum Rock Oil Company Bravo

Current Business

Drillbit Geomechanics Validation – Eagle Ford – FracturesBelow you can see a comparison between Fracture ID’s rock properties (all increasing to the right) and the actual core images. In this example Fracture ID data was collected while coring took place. Fractures can be seen at 196 and 198 ft.

Drillbit Geomechanics Validation – Eagle Ford – ParasequencesBelow you can see a comparison between Fracture ID’s rock properties (all increasing to the right) and the actual core images. In this example Fracture ID data was collected while coring took place. A 3.5 ft parasequence can be seen from 262 to 265.5 ft.

Drillbit Geomechanics Validation – Eagle Ford – Thin BedsBelow you can see a comparison between Fracture ID’s rock properties (all increasing to the right) and the actual core images. In this example Fracture ID data was collected while coring took place. Thin beds can be seen throughout.

Drillbit Geomechanics Validation – The Lab

While much of the assumptions Drillbit Geomechanics™ applies have been lab tested in the 1960’s, Fracture ID took it upon itself to test different bit configurations and accelerations up to much higher frequencies. The results are conclusive and will be available as a white paper in the future.

Completions Optimization – Midland Basin

Stress Balanced Completions DesignTotal Stress (red = high -> green = low)

Geometric Completion 48.5% (165/340 clusters)

Stress Equalized Completion 62.0% (204/329 clusters)

600 ft

Rock Mechanical Data

200 ft

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Perf Clusters Stages

Reservoir Characterization – Core Lab Partnered ConsortiumHorizontal Reservoir Characterization Consortium – Midland Basin to Start• Determine the effects of geologically-informed perforation strategies on production• Statistically investigate correlations between geology and hydraulic fracture treatment• Update and extend established local and regional petrophysical models• Produce 3D geologic data for input to earth models• Collect high resolution horizontal well data in Midland Basin Wolfcamp Wells for

integration into Core Lab’s Midland Basin Joint Industry Project (JIP) database of vertical well data

Reservoir Characterization - Arkoma

1,000’

Well 1

Well 2

Well 3

Optimized Well Spacing N

Optimized Well Spacing

NOV’s Drilling Optimization ServicesTiered optimization service offering that delivers performance and value to the

customer at all tier levelsINFORM• StringSense topdrive DAQ system• 24/7 Real-Time Technology Center support• Data analytics and reporting• Rig performance monitoring• Data integration and management

ADVISE• Pre-well planning and BHA design• Post-well analysis using BlackBox downhole data• Formation and depth-based parameter roadmaps • Evaluation of drilling dynamics and dysfunctions

CONTROL• Basic level for drilling automation• NOVOS apps integration• Hardware and software for enhanced control and performance• DrillShark• SoftSpeed II

AUTOMATE• Closed-loop automation with downhole data• Dashboards with real-time analytics• IntelliServ high-speed telemetry• BlackStream EMS, ASM, MWD• Drilling applications

Operator Comments"With Fracture ID we have found a high resolution, repeatable tool to directly measure rock properties and variability along our wellbores. Using this data led to confirmation of best practices regarding geo-engineering our completions, accelerated our understanding of a new basin, and has provided a resolution no other technology has been able to deliver.”

Paul WeddleCompletion ManagerLiberty Resources, LLC

“Acquiring data with Fracture ID is one of the best applications of a new technology that I have experienced in the oilfield. Being able to measure rock properties along the lateral is revolutionary for the oilfield, especially because there is minimal risk and no added rig time. I look forward to use of Fracture ID technology to continually optimize my completions.”

Matt MientkaCompletions EngineerFourPoint Energy, LLC

Thank You