Niobrara Resource Play

Niobrara, Colorado/Wyoming

January 18th, 2012

Ryan Landry & Nate Wilke

General Outline

Introduction

Beginning the Project

Formation of the team

Monitor wells and data acquisition

Early well design

First horizontal

Lessons Learned

Wellbore stability issues

Well construction and design

Current Drilling Techniques

BHA design

Directional planning/considerations

Geosteering

Future Plans

Drilling/Completion optimization

2

Beginning the Project

3

Spreading our HES culture

New area, same culture

Formation of Highly Integrated Team

Diversified, yet focused

Ensure overall project success

– Efficiency

– Adaptability

– Flexibility

– Creativity

General DJ Basin Information

4

Pierre Shale

Tertiary

PrecambrianBasement

Wyoming

Colorado

• Ranges from 275 to 400 feet thick in the DJ Basin

• Thickness increases to the west

• Interbedded brittle chalk and ductile shale

• Three main carbonate-rich benches 10 to 25 feet per bench, total thickness up to 70 feet thick

• 5 to 12% porosity

• Small faults are common in Niobrara

• Oil is self-sourced from interbedded organic-rich shales

Evaluating the Niobrara

Monitor/Test Wells

Data Acquisition

Drilling data

Geological samples

Extensive wireline logging

Reservoir data

Frac Monitoring/Evaluation

Vertical Seismic Profiles

Permit two possible horizontals, choose one.

Establish development areas/techniques

5

Sh-max/Sh-min orientation and lateral placementDrill the lateral as perpendicular to SHmax as possible (parallel with Sh-min) in order to maximize the hydraulic fracture

stimulation.

6

DIF

BKO

SH-Max

Sh-min

S h max

S h min

35

4.5

ft o

f w

ho

le

core

A

B

C

Fort Hays

Greenhorn

Sharon Springs

UB

LC

90.2

5 ft

90 f

t90

.25f

t

SHmax

Fault and N. Fractures showing N 58 E strike directions in line with the present day stress Field.

Static Dynamic

Greenhorn (calcite –rich siltstone showing Inoceramus traces)

Natural fracture stained with oil (core depth at 6873 ft)

Oil seeping out from Niobrara chalks and marls

10 ft

40 ft

84.0

4 ft

NaturalFractures

0 90

Fault

1 ft

Coring Operations

8

Early Horizontal Well Design

13-3/8” Surface

9-5/8” Production

6 deg./100’ Curve

20” Conductor+/- 90’

+/- 750’

+/- 6500’ TVD

KOP +/-5500’

Nio A

Nio C

Nio B

Set 20” conductor at +/- 90’

Drill 17-1/2” hole to +/- 750’

Set 13-3/8” surface casing

Drill 12-1/4” intermediate hole Vertical to KOP @ +/- 5500’

Drill curve w/ 6 deg./100’ BR – land @ ~90 deg.

Drill +/- 5000’ lateral to +/-11000’ TMD

Set 9-5/8” intermediate casing

Drill 8-3/4” production hole

Set 5-1/2” production casing

First Horizontal

9

0

2000

4000

6000

8000

10000

12000

14000

0 10 20 30 40 50 60

De

pth

Days

DVD actual DVD planned

Not getting BR’s, TOH to dial up motor multiple times

Multiple wiper trips due to Sharon Springs

Ran 9 5/8” casing - could not get through Sharon Springs

Drill out of 9 5/8” casing

Attempt to run 7” liner multiple times

Run drillable casing with reamer shoe to get throughSharon Springs

Obviously, we ran into a few problems…

First Horizontal

10

Lessons Learned

11

In-house drilling specialists conducted wellbore stability research from horizontal well data, monitor well logs, & directional plan

Discovered root cause – mechanical instability, not chemical

Back to the drawing board

Tailored directional plan to incorporate findings

Well Construction:

Smaller hole sizes, smaller directional tools, higher build rates, less shale exposure

Discussed with company men the importance of monitoring hole conditions through curve

12

Current Niobrara Well Design

9-5/8” Surface

7” Production

11000’ TD

6” Hole

Set 16” conductor at +/- 90’

Drill 12-1/4” hole to +/- 750’

Set 9-5/8” surface casing

Drill 8-3/4” intermediate hole Vertical to KOP @ +/- 5500’

Drill curve w/ 10-12 deg./100’ BR

Land curve in Nio B interval at +/-90 deg. inc.

Set 7” intermediate casing

Drill +/- 5000’ of 6” lateral to +/- 11,000’ TD

Run 4-1/2” cemented liner10-12 deg./100’ Build

16” Conductor+/- 90’

+/- 750’

KOP +/-5500’

Nio A

Nio C

Nio B

13

Niobrara B

Niobrara B_sh

1 mile

NW SE

Niobrara A 25 10 15 5010 5 25

Codell

SE

Drilling Issues - Faulting

Courtesy of Geophysical Pursuit, Inc - Geokinetics

14

Geosteering - Faulting

VS

MD

TVD

Saw most faults on seismic, able to plan wellbore through them, threading the

needle.

Well

Horizon Key:

Sharon Springs

Niobrara ANiobrara BMid B

Lwr BHeel, assuming 700’ from SL

18’ fault

12’ fault

35’ fault

BHL

*Depth Lines every 50’

Geosteering - Faulting

Courtesy of Geophysical Pursuit, Inc - Geokinetics

16

Geosteering - Faulting

Thrust Fault60’ of throw

Not seen on seismic

Bed dips of ~10°/100 °Wellbore incs of over 103 °

VS

MD

TVD

Where we are now

17

0

2000

4000

6000

8000

10000

12000

0 5 10 15 20 25 30 35 40 45 50

De

pth

Days

Horizontal Wells Days vs. Depth

Moving Forward

Pushing the technical limit

Implementing drilling technology/equipment

Evaluation of current contractors and service

Multi-well pads

Reducing rig move distance/time

Evaluating fracs through monitor wells –optimizing design

Deeper horizons?

18

Niobrara Resource Play

19

•Ray Steppe

•Mike Olson

•Darrell Eubanks

•Etc

Questions?