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E I A E N E R G Y C O N F E R E N C E
J U N E 2 6 , 2 0 1 7
2
0 20 40 60 80 100 120 140 160
Ghawar, Saudi Arabia
Permian Basin, USA
Burgan, Kuwait
Safaniyah, Saudi Arabia
Eagle Ford Shale, USA
Samotlorskoye, Russia
Shaybah, Saudi Arabia
Romashkinskoye, Russia
ADCO, UAE
Zuluf, Saudi Arabia
Cantarell, Mexico
Total Recoverable Resource (BBOE)1
PERMIAN BASIN TAKES GLOBAL STAGE
“U.S. now holds more oil reserves than
Saudi Arabia” – Rystad Energy, July 4, 2016
1) Total recoverable resource includes oil and gas for all fields
Source: Wood Mackenzie for international fields; Permian Basin from internal estimates
Produced To Date Midland Basin Delaware Basin
“The Midland and Delaware basins hold the largest number of undrilled, low-cost tight
oil locations in the Lower 48. No other region comes close.” – Wood Mackenzie
3
IMPACT OF HORIZONTAL TECHNOLOGY IN THE MIDLAND BASIN
From 2009 to 2012, production growth primarily attributable to increased vertical activity
Post 2012, production growth driven by horizontal activity
Spraberry/Wolfcamp production has
increased ~1,000,000 BOEPD since 2009
Source: IHS Energy monthly data through March 2017 for the Spraberry, Credo East, Garden City South
and Lin Fields; 2-stream production data
Midland Basin Spraberry/Wolfcamp Production
4
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Mil
lio
n B
arre
ls O
il P
er
Da
yPERMIAN BASIN ONLY GROWING OIL SHALE PLAY
Eagle Ford
Bakken
Permian
Basin
Source: EIA, Drilling Productivity Report, June 2017
Permian Basin is the only growing major U.S. oil shale since downturn began
Niobrara
Nov. 2014
OPEC Decision
Other regions in
EIA’s Drilling
Productivity
Report
5
$0
$20
$40
$60
$80
$100
$120
$140
$160
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
WT
I P
ric
e (
$/
BB
L)
Da
ily
Oil
Pro
du
cti
on
(M
MB
OP
D)
PERMIAN BASIN HORIZONTALS ARE A GAME CHANGER
Source: Production data from EIA (U.S. tight oil production – selected plays) through May 2017; historical WTI price from EIA
The Permian Basin has produced >35 BBOE in the past 90 years with an
estimated >150 BBOE recoverable resource remaining
Oil Price
Permian Basin Tight
Oil Production
Horizontal Drilling Begins
6
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17
MM
BO
PD
Average Monthly Oil Production
Weekly Data Monthly Data
U.S. OIL PRODUCTION
Source: EIA, monthly data through March 2017, weekly data through June 9th 2017
7
PRODUCTION GROWTH FORECAST
204
234
249
2015 2016 Q1 Q2 Q3 Q4 2026E52% Oil
Total Net Production (MBOEPD)
1) Assumes ethane rejection continues in Spraberry/Wolfcamp (~5 MBOEPD of ethane was rejected in Q1 2017)
>70% Oil
1
57% Oil
2017E1
~60% Oil
269 - 276
59% Oil
254 - 259
~1 MMBOEPD
8
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016
Ch
an
ge
in
We
ll P
rod
uc
tiv
ity
1
Ch
an
ge
in
We
ll C
ost
s2WELL PRODUCTIVITY AND COSTS CONTINUE TO IMPROVE
PXD D&C Cost per Well2
Permian Well
Productivity1
Increases in well productivity coupled with decreasing well costs
allow for strong returns in the current oil price environment
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Q4
2016
1) Source: IHS Energy Blog “The Permian Basin: A magnet for risk capital” January 31, 2017
2) Drilling and completion costs per perforated lateral foot; represents all PXD horizontal wells in Spraberry/Wolfcamp since Q4 2014
Well Productivity Drivers
– Increased water volumes
– Increased sand volumes
– Reduced cluster spacing
– Longer lateral lengths
Cost Reduction Drivers
– Focused drilling on
3 zones vs. 8 zones
– Decreased drilling and
completion times
– Reduced service costs
9
THE TWO LARGEST U.S. OIL SHALE PLAYS
Eagle Ford
CondensateMarcellus
Bakken
Source: PXD
Niobrara
Wolfcamp D
“Cline”
Wolfcamp A
Wolfcamp B
L. Spraberry
M. Spraberry
Clear Fork
JoMill
Midland
Basin
Delaware
Basin
Avalon Shale
1st Bone Spring
2nd Bone Spring
3rd Bone Spring
Wolfcamp A / X-Y Ss
Wolfcamp D
Wolfcamp B
~75 BBOE recoverable resource potential
Midland Basin Delaware Basin
Estimates indicate
similar resource
potential to the
Midland Basin
10
MIDLAND BASIN: STACKED PLAY POTENTIAL
“Delta log R” (excess electrical resistance)
Red intervals indicate hydrocarbons
Petrophysical analysis indicates significantly more oil in place in the
Wolfcamp and Spraberry Shale intervals in the Midland Basin compared to
other major U.S. shale oil plays
20
0 f
t
Eagle Ford
Condensate
Barnett
Combo Marcellus
Barnett
Miss Lime
Woodford
Wolfcamp D
“Cline”
Wolfcamp A
Wolfcamp B
L. Spraberry
Shale
M. Spraberry
Shale
Clear Fork
Bakken
Jo Mill Shale
Midland Basin
Source: PXD
Dean
Wolfcamp C
U. Spraberry
Atoka
Strawn
Niobrara
11
EVOLUTION OF EIA’S US LOWER-48 PRODUCTION FORECAST
5.6
5.8
6.0
6.2
6.4
6.6
6.8
7.0
7.2
7.4
7.6
MM
BO
PD
Source: EIA Short Term Energy Outlook
May ‘17April ‘17
November ‘16
August ‘16
Forecast
Date
June ‘17