A Service Company Perspective on Effective Engagement

Unconventional Gas

8 May 2013

Dr Iain Paton

Region Business Unit Manager – Petroleum Consulting Asia Pacific

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Unconventional: Satisfaction Survey

0% 10% 20% 30% 40% 50%

TOTAL SAMPLE

BARNETT SHALE

MID-CONTINENT

GULF COAST

ROCKIES

WILLISTON/ BAKKEN

MARCELLUS/ UTICA SHALE

PERMIAN BASIN

EAGLE FORD SHALE

HAYNESVILLE + FAYETTEVILLE

CANADA

INTERNATIONAL

24%

47%

35%

33%

32%

30%

25%

22%

21%

21%

19%

19%

Source: Welling & Company

SHARE OF FRAC JOBS NOT MEETING PERFORMANCE EXPECTATIONS

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Root Cause to Challenges in Unconventional Exploitation

0% 20% 40% 60% 80%

FAILURE TO UNDERSTANDSUBSURFACE

POOR FRAC DESIGN

DOWNHOLE EQUIPMENT/TOOLS

INEXPERIENCED CREWS /HUMAN ERROR

SURFACE EQUIPMENT

GEL NOT BROKEN UP

73%

18%

14%

13%

12%

1%

ROOT CAUSE OF FRAC JOBS NOT MEETING PERFORMANCE EXPECTATIONS

Source: Welling & Company

4© 2012 Weatherford. All rights reserved.

Engagement Strategy

• The most effective

strategy is to position the

service company as a

solution provider,

focused on delivering

answers rather than tools

• This is a very different

approach to conventional

O&G

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Conventional Developments as Analogs?

• “Shale Reservoirs” are different

• Economics of two wells 1km apart might be very different

• Compare to conventional reservoirs – homogeneous over several kms

Ultra-Thin Sections

2D Nano-Scale ImagingElemental Fabric Mapping

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Technical Advantages of Delivering Solutions

FE

LWD

SLS

Shuttle

Geomechanics

Shale Variability

Completions

Efficiencies

Production

Microseismic

Frac Design

Variable Model

• Production

Logging

• ALS

Formation Evaluation Calibration

Measurements/Properties:

• Velocities analysis

• Lithology

• Geomechanics

• Petrophysics

• Geology

• Core Analysis

Build & Modify Reservoir Characterization Model Reservoir Management & Surveillance

Productivity = ƒ (geology, completion)

Appraisal & Development Development & ProductionProduction &

Surveillance

Update the reservoir model

Where to drill: image the zone of interest / target

How to land the well in zone?

How to keep the well in zone?

Characterizing for fracability

Completion design: Where to frac / selection of equipment / ALS

Initial Production?

Monitor Production• Neighboring

results

• Seismic

• Core analysis

• Logs: WL & LWD

• SAGR, CXD, LWD

to surface, Core,

CMI

Exploration

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Realizing the Technical Advantages

Treatment wellMonitor Well Grid spacing = 100 m (sidetrack)

Big Natural Fracture into the Lower Limestone

Region of Complex Fracturing in theTarget Shale Interval

Map View All Stages – 6,722 events (100 meter grid lines),

with large natural fracture in underlying limestone

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Effective Engagement

• Outstanding critical questions

– Where to drill – are there sweet spots?

– Which sections are most frackable?

– How to measure fracture performance?

– To re-frac or not to re-frac?

– Reservoir characterization – learning from experience

• Genuine case for “partnership” between operator and service companies

– This is not an off the shelf offering

– Appraising and developing unconventionals – technologies and experience

10© 2012 Weatherford. All rights reserved.

Summary

• Shifting emphasis from tools

to solutions

• Solution provider and

operator working together

• Regulatory environment

accepting closer relationships

• Commercial success lies in

working together to solve the

problem, not client-vendor

relationship