swift presentation

This might be of interest to you all from the swift presentation, there are slides to view as well.

John Branca – Vice President, Exploration & Geosciences
Yeah, I am going to take you through our Central Louisiana/East Texas area. Okay, the, what we call, CLAETX is comprised of four fields, Brookeland, Burr Ferry, and Masters Creek, which are Austin Chalk fields, and then we have to the South here, South Bearhead Creek, which is a Wilcox field.

And we are really excited about these fields. We are doing things in each one of them and I’ll take you through those, but at a highlight in Burr Ferry, we see numerous locations to drill within our area of mutual interest. And we estimate the resource potential to be $30 to $40 million barrels. In Masters Creek, this field has been drilled on 2000 acre units and we are testing the concept of infilling this and drilling on smaller spacing and this will yield about 15 million to 20 million barrels potential. And then in South Bearhead Creek, this is the field of Wilcox. We are – there has been a lot of offset activity, which has caused us to re-look at the field and we are looking at some applying or almost horizontal technology there. And particularly important is this is a very oily area and 65% of this resource is oil and natural gas liquids, further its brand pricing, so we get the uplift on the West Texas in immediate.

We have significant acreage position in these fields and that’s really a good thing for us. In Brookeland, we have 105,000 gross acres, 68,000 net; Burr Ferry 122,000 gross, 74 net; Masters Creek, we have 51,000 gross and 38 net; and South Bearhead Creek, we have about 6,000 acres gross to net. So, you can see the totals about 284,000 acres, 186,000 net acres in this area.

Okay. Starting with Burr Ferry, Burr Ferry is our chalk field and it sits here. We have a couple of wells that we have drilled there, we partner. And in 2010 and we have previously announced this, but I want to remind you those, there is a GASRS 5-1 and the GASRS 18-1. And both of these wells had some pretty impressive IPs. The 5-1 was 1,000 barrels a day and 13 million cubic feet of gas and the 18-1 was 10 million and 840 barrels a day. And both those wells are still producing today about 200 plus, 300 plus barrels of oil a day, so not only high IPs, but a more moderate decline, so very, very nice wells. We have drilled two wells in the past year here and I’ll talk about those in a little bit and show you the implications.

Okay. So, in 2012 with our joint venture partner following on the success of the 5-1 and the 18-1, we are going to drill six wells in this area. And so that’s where we are going to focus and you can see the locations in the order of drilling on this slide. The 5-1, I mentioned it. Here is the decline curve. And so they started out at about 1,000 barrels a day and you can see they are coming down here still at about 200 barrels, this is approximately today. We estimate these wells to produce 318,000 barrels of oil and NGLs of 209,000 barrels, an additional 1.5 Bcf of gas. This will pay out in 14 or has paid out in 14 months. 18-1, 350,000 barrels of oil and 385,000 barrels of natural gas liquids, 2.7 Bcf of gas, this one paid out in 8.1 months, so very, very strong oils.

We drilled off with partner on the 16-1. This was near the southern end of our only mutual interest. We had a 6,000 foot lateral. We were disappointed in as well it only encountered seven or six shows and we’ve interpreted this to be sooner at the limits of the high fractured density that we needed for production. So, we’re going to continue to look at this, but we’re going to stay away from this part of the AMI for now. There is a picture of the wellbore, up top you have the (indiscernible) that we ran while drilling. This is the Austin Chalk interval, the greening interval; the blue line is well trajectory as it was drilled. The star shows during drilling fractures and this is very low fracture density. So, there is a disappointment, but we’ve learned a lot about the area and we’re going drill all well based on that.

The 20-1 is an infill well. And this well had 21 shows and no indications of depletion. We drilled 3,600 foot lateral. We encountered some mechanical problems during the completion phase, but that doesn’t make us any less excited about this. This has excellent shows while drilling and we’re evaluating the possibility of side tracking this because we want to get a completion in this zone. And here is the well bore, now if you recall the 16-1, it only had six shows and here we have 20 odd shows in this 3,600 foot lateral. So, this looks like a very, very excellent piece of rock here. We’re going to do another wellbore in that to produce.

So in this year, we have two rigs coming, they are going to come towards the end of this month. And the first rig is going to drill two wells and the second rig is going to drill four wells for total of six wells in Burr Ferry. So that’s going to start off pretty quick now. You could also see the similar to what Steve was showing before what these wells look like, they are going to cost little under a $11 million and here is the EUR 403, the NGL’s 447,000 barrels in the gas 2.5 Bcf. So fantastic return on these wells, so we are – that’s why we were focusing here with hard priced oil.

And now I want to move from Burr Ferry, which we just spoke off to Masters Creek, and we’ve drilled the well, entitled the Exxon Corp. 10-1 this location. We are pretty excited about this well. This is end so well it’s proposed down foot lateral, 6000 foot offset. When we drilled we encountered 24 excellent shows. We only drilled 2,500 feet in the lateral, because we had some steering problems and we decided rather than have a mechanical problem, we wanted to go ahead and complete the well and we did so. We did some testing. The IP for this well is 836 barrels oil per day and 5.4 million cubic feet of gas per day, and this well we are preparing to turn on in about 10 days or five days, excuse me.

So, here’s a look and you can see the fracture density in this well, this is fantastic. So, in a short lateral, we had over 20 fractures that we encountered. So, this is a very exciting for this input program, I will remind you that these wells have been drilled on 2,000 acre units and we are infilling. Here is a significance for this, here is the Exxon Corp 10-1, the black lines here are wells that have been drilled in the field, the orange circles with the lines are the infill locations we can go ahead and exploit this. So, this is a relatively low risk opportunity, and we have a lot of infill and so you can see the acreage and the recovery per well, and their potential.

And here is the type well for Masters Creek and 863,000 barrels of oil, 372,000 barrels of natural gas liquid and 3 Bcf gas payout in 7.4 months, $11.5 million, and you can see the returns, the rate of return, return on investment.
Bearhead Creek, I want to talk about something little bit different here, and it’s south of the Creek Chalk Field, this is a Wilcox Field. We’ve – there has been a quite a lot of activity, here’s our South Bearhead creek field, the blue outline, these green triangles and squares are activity by El Paso. The purple triangles and squares are activity by mid-states. They permitted a significant number of wells and completed a significant number of wells. They are getting great recovery and so we are re-looking at this and preparing to drill well late this year or early next. What’s really interesting is although it’s a different geologic formation. The Wilcox here is very similar to the Olmos formation in South Texas in terms of the porosity and the permeability, even similar depth.

And we almost, we’ve been very successful in drilling those horizontal wells, you saw that in the previous South Texas presentation and we haven’t tried that application here. So we are looking at drilling a horizontal well in the Wilcox in South Bearhead Creek and then doing a multistage frac. So we are working on that and we will probably do something late in 2012. So, just giving you an idea of the opportunities that in Central Louisiana, East Texas. There is Burr Ferry and Masters Creek and South Bearhead Creek. You can see the IPs. We are going to drill the six wells in Burr Ferry in 2012.

We are going to drill the whole, probably horizontal well in South Bearhead Creek and Masters Creek, the Exxon 10-1, that’s Infill well. And we have done the initial tests, you saw that has 800 barrels a day, what we want to do flow that for a while, see how it producers, see how it holds up and you will get enough information to understand the ultimate recovery and that’s why you don’t see any wells here. We’re confident that’s going to be successful, but we won’t have an idea of how successful and then we’ll in 2013 and 2014 will initiate drilling Infill program there. And the on the back of the successful South Bearhead Creek well, we will have a program in that field as well.

And just back on the economics, these wells cost $9.5 million to $11.5 million. They have between 400,000 and 800,000 barrels EUR with the associated natural gas liquids in the Chalk and 2 to 3 Bcf gas in the Chalk and so very strong returns in – return on investment. So in summary, we have got a lot of running room in Burr Ferry, numerous locations to drill. We drilled six wells in 2012 with 30 to 40 million barrels of resource in Masters Creek. We have drilled the Infill well. We’re going to turn that also production, testing the Infill of the 2,000 acres units with 15 million to 20 million barrels resource and South Bearhead Creek and looking at the offset activity and preferring a horizontal well and just reminder very liquids rich and brand pricing. Okay, that’s it.

LOTM