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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
Denver Overview Presentation - February 2014 Slide 3
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2012 Compared to 2013 Production
Denver Overview Presentation - February 2014 Slide 4
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
Denver Overview Presentation - February 2014 Slide 5
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
Denver Overview Presentation - February 2014 Slide 8
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
Denver Overview Presentation - February 2014 Slide 9
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
Denver Overview Presentation - February 2014 Slide 11
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
Denver Overview Presentation - February 2014 Slide 12
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
Denver Overview Presentation - February 2014 Slide 13
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SLKT No.1 Wolfcamp Petrophysics
Denver Overview Presentation - February 2014 Slide 14
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
Denver Overview Presentation - February 2014 Slide 15
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
Modeled 5 Well Production Profile
Denver Overview Presentation - February 2014 Slide 16
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
Denver Overview Presentation - February 2014 Slide 17
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
Denver Overview Presentation - February 2014 Slide 18
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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
Denver Overview Presentation - February 2014 Slide 19
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
Denver Overview Presentation - February 2014 Slide 20
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Modeled 10 Well Production Profile
Denver Overview Presentation - February 2014 Slide 21
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
Denver Overview Presentation - February 2014 Slide 22
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Ops Areas - Wolfcamp Character
Denver Overview Presentation - February 2014 Slide 23
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
Denver Overview Presentation - February 2014 Slide 24
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20 Well & Current Production Profile
Denver Overview Presentation - February 2014 Slide 25
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20 Well & Current Net Production Profile
Denver Overview Presentation - February 2014 Slide 26
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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
Denver Overview Presentation - February 2014 Slide 28
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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