Layne Energy Exec summary

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  • 1

    Layne Energy Project Overview

    Phil Winner

  • Project Overview

    2

    Agenda Operations/Overview

    Production Cost Structure Business Intelligence Dashboards

    Geoscience/Upside Inventory PDP Reserve Write-Up Resource Mapping Burgess Sand Reserve additions Cattleman Sand Discovery and Waterflood Weiser Shallow Oil Sand Redevelopment Miss Lime Exploration and Discovery

  • Operations/Overview

    3

    Wells Gas/Oil: 620/31 Spacing: 160 acres Disposal: 33 Potential 160s: 244

    Reserves (1/31/12) Gas (Bcf): 22.1 Oil (Mbo): 66.4 PV10 ($MM): $31.3

    Net Daily Production Gas (MMcf): 12.0 Oil (Bbls): 50.0

    Pipeline Miles: 750 Compression HP: 8,000

    Acres Total: 223,454 Kansas: 184,191 Indiana: 39,263

    Headcount Total: 32 Denver 6 Independence 26

    6 Miles

    Cherryvale

    Sycamore

  • Operations/Overview

    4

    $1,310

    $967

    $761

    $609 $497

    $-

    $200

    $400

    $600

    $800

    $1,000

    $1,200

    $1,400

    FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

    $/w

    ell/

    mon

    th

    Lease Operating Expense

    50.1

    16.6 16.5 18.5 22.1

    0.59 0.40

    0

    10

    20

    30

    40

    50

    60

    FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

    Reserve Volumes

    Gas (Bcf)

    Oil (Bcfe @ 6:1)

    Bcfe

    $86.5

    $40.2 $22.4 $28.1 $28.9

    $3.3 $2.4

    $0.00

    $1.00

    $2.00

    $3.00

    $4.00

    $5.00

    $6.00

    $7.00

    $8.00

    $0$10$20$30$40$50$60$70$80$90

    $100

    FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

    Reserve Value (PV10)

    GasOil

    $MM Gas Price ($/Mcf)

    P & L

    Production (Bcfe) 4.6 $/Mcfe

    Revenue $ 20,388 $ 4.40

    EBITDA $ 7,630 $ 1.65

    IBT $ 501 $ 0.11

    Reduction due to cost controls on compression and chemical

    treatments

    LOE reduction Upward adjustment on PDP Conventional targets

  • 0

    5

    10

    15

    20

    25

    0

    5,000

    10,000

    15,000

    20,000

    Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

    Pres

    sure

    (psi

    g)

    Rate

    (mcf

    /d)

    Time

    Kansas Production by Year Connected

    Oil as MCFEColt Gas2011 - 12 Wells2010 - 14 Wells2009 - 18 Wells2008 - 116 Wells2007 - 104 Wells2006 - 154 Wells2005 - 72 Wells2004 - 54 Wells2003 and beforeAverage Line Pressure (psig)

    Operations/Overview

    5

    Increase Line Pressure to

    Curtail Production During Low Gas Prices

    Multi-stage fracs

    Single-stage fracs

    Multi-stage fracs

  • Operations/Overview

    6

    $(1,000)

    $(500)

    $-

    $500

    $1,000

    $1,500

    $0.00 $1.00 $2.00 $3.00 $4.00 $5.00

    EBITDA

    IBT

    EBIDA and IBT Gas Price Sensitivity (last 14 months)

    EBIT

    DA, I

    BT

    $M

    Gas Price ($/Mcf)

    Break-even cash flow $2.20/Mcf

    Detailed knowledge of cost structure leads to good understanding of profitability

    Break-even IBT $3.75/Mcf

  • Operations/Overview

    7

    All of Laynes wells and compressor stations are self reporting on radio-based SCADA system, greatly enhancing operational efficiency

    Data captured on central server Allows management by exceptions

    SCADA remote data collection system

  • Operations/Overview

    8

    By well

    By month

    By year

    By Pumper

    Laynes accounting system (Bolo) is interfaced with Tableau to identify areas for improvement or enhancement

    Developed custom business intelligence dashboards: Reduced costs Streamline decision making

  • Operations/Overview

    9

    Sort for most profitable wells

    Developed custom business intelligence dashboards: Reduced costs Streamline decision making

  • Geoscience/Upside Inventory

    10

    PDP Performance shows CGA decline is too steep.

    Probable CBM: 244 locations on 160 acre spacing (40-60 A quality locations). Miss Chat Mississippian Lime

    Possible Weiser oil sand, Burgess

  • Geoscience/Upside Inventory: PDP

    11

    Well Count

    Field performance has consistently outperformed

    reserve forecasts

  • 12

    Resource Mapping: Gas in Place

    Geoscience/Upside Inventory

  • Geoscience/Upside Inventory: Burgess Sand Before

    13

    Top of Burgess sand 750 Mcfd 125 Mcfd Top of Burgess

    sand

    1 Mile

    Previously, Burgess Sand wells were completed topset so extent of reservoir and reserve potential was unknow

    ? ?

  • Geoscience/Upside Inventory Burgess Sand: After

    14

    Top of Burgess sand 750 Mcfd 125 Mcfd

    Top Mississippian

    72 of neutron/density x-over in Burgess

    26 of neutron/density x-over in Mississippian

    Complete penetration and core in Burgess sand revealed significant reservoir potential and supported significant reserve additions

  • Geoscience/Upside Inventory: Waterflood

    15 0

    50

    100

    150

    200

    250

    300

    40 50 60 70 80 90 100

    Btax

    IRR

    Oil Price ($/bbl)

    Oil Well Price Sensitivity, Primary Recovery Only

    SINGLE WELL ECONOMICS NPV10 ($M): $87.7 ROI (disc./undisc.): 1.2/1.6 CapEx: ($M): $72.0 Net Reserves (Mbo): 3.4 F&D ($/Bbl): $22.00 Wells

    Producers: 18 Injectors: 9

    020406080

    100120140160180200220240

    Daily Oil Volume

  • 16

    0

    20

    40

    60

    80

    100

    Primary EUR = 100 Mbo

    Secondary + Primary EUR = 270 Mbo (27% Recovery Factor)

    170 Mbo incremental

    La Fontaine Unit Cattleman Waterflood Av

    erag

    e an

    nual

    Bop

    d

    Forecast Actual

    Waterflood Economics Oil in Place (Mbo): 1.0 CapEx (M$): $533.7 Btax IRR: 577% Disc. ROI: 10.1 F&D cost($/Bbl): $3.15/Bbl

    Geoscience/Upside Inventory: Waterflood

  • Geoscience/Upside Inventory: Weiser shallow oil sand

    17

    Areas with reported Weiser Production

    (stats below are fieldwide, from KGS) Elk City Northeast Cum 2.2 Mbo / 17.6 MMcf 15 wells (146 Bo/well) Lansing / Marmaton

    Elk City Field 178 Mbo / 2,660 MMcf 79 wells (2,253 Bo/well) Marmaton / Bartlesville

    Sorghum Hollow Field 1,050 Mbo / 101 MMcf 144 wells (7,292 Bo/well) Marmaton / Arbuckle

    Wayside-Havana Field 8,471 Mbo / 5,484 MMcf 1,311 wells (6,461 Bo/well) Lansing / Marmaton / Bartlesville /

    CBM / Mississippian / Arbuckle

    Frasier North & Frasier Fields 381 Mbo / 3,378 MMcf 191 wells (1,995 Bo/well) Lansing / Peru / Marmaton / CBM /

    Mississippian

    Jefferson-Sycamore Field 10,034 Mbo / 25,753 MMcf 1,185 wells (8,468/well) Marmaton / Bartlesville / CBM /

    Arbuckle

  • Geoscience/Upside Inventory: Weiser shallow oil sand

    18

    Oliver 14G 20 Weiser development and water flood

    reactivation

    24 of sand with 25-28% porosity. Average SW for this interval is 46%.

  • Geoscience/Upside Inventory: Miss Lime

    19

    Approximate relative position of Layne leasehold

  • 20

    Geoscience/Upside Inventory: Miss Lime

  • Upside Inventory: Mississippian Lime

    21

  • Geoscience: Miss Lime Regional Work to Thin Sections

    22

  • 23

    Geoscience/Upside Inventory: Miss Lime

  • 24

    Geoscience/Upside Inventory: Miss Lime

  • 25

    Geoscience/Upside Inventory: Miss Lime

  • 26

    Geoscience/Upside Inventory: Miss Lime

  • 27

    170 of Oil Shows (fluorescence and free oil)

    Geoscience/Upside Inventory: Miss Lime

  • 28

    Miss Chat Fluorescence and 10 oil

    saturated core

    Miss Lime Fluorescence and 40 oil

    saturated core

    Mudlog Microlog

    Miss Lime 30 of Microlog perm in

    zone of core and mudlog shows

    MissChat 5 of Microlog perm in

    zone of core and mudlog shows

    Miss Lime Completed in perm zones IP 45 Bopd, 80% WOR $250,000 CWC

    Geoscience/Upside Inventory: Miss Lime

  • 29

    White Light UV Light

    Geoscience/Upside Inventory: Miss Lime

  • 30

    White Light UV Light

    2393.15

    2393.15

    2393.70

    2393.70

    Geoscience/Upside Inventory: Miss Lime

  • 31

    Woodford shale Strong odor, Strong hotwire show Excellent RockEval data

    Mudlog Microlog

    Geoscience/Upside Inventory: Miss Lime

  • 2,550

    2,555

    2,560

    2,565

    2,570

    2,575

    2,580

    2,585

    2,590

    2,595

    2,6000 5 10 15 20

    Good - Excellent Po Fair 2,550

    2,555

    2,560

    2,565

    2,570

    2,575

    2,580

    2,585

    2,590

    2,595

    2,6000 200 400 600 800 1000

    Oil (Type II) Gas Mix Oil (Type 0 20 40 60 80 100

    2,550

    2,555

    2,560

    2,565

    2,570

    2,575

    2,580

    2,585

    2,590

    2,595

    2,6000 2 4 6 8 10 12Total Organic Carbon (wt% HC)

    TOC% Carbonate

    Upside: Woodford Shale Rock Eval Data

    32

    Hydrogen Index (S2/TOC) Oil Potential S2 (mg HC/g) Total Organic Carbon (wt% HC)