Kansas Oil and Gas Exploration 10 Year History

1
Kansas Oil and Gas Exploration 10 Year History
Future Strategies
Kansas Oil and Gas Production of Wells drilled
by Year
Entire State
Hugoton Embayment Infill
100,000,000
61
49
MCF/Mnth
3661
3616
3152
3060
10,000,000
2864
2394
2.0
BBLS/Mnth
2034
1863
1752
1513
1622
1,000,000
833
461
409
423
409
388
326
309
298
260
242
192
143
100,000
YEAR
1987
1988
1989
1991
1990
1992
1993
1994
1995
1996
97
98
2
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesExploration Activity
1987 to 1996 Well Completions by County (All
Wells)
Hugoton Embayment
Eastern Kansas
WC SC Kansas
3
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesExploration Activity
EUR NEB (Millions) by County 1987 to 1996 Well
Completions
122 MM bbls oil
1,381 bcf - Hugoton Infill 856 bcf - all others
NEB Conversion 6 mcf 1 bbl
2.2 tcf gas
Eastern Kansas 3.1 of NEB
WC SC Kansas 9.7 of NEB
Hugoton Embayment 83.0 of NEB 89 Gas 50 Oil
4
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesExploration Activity
5
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesExploration Activity
EUR Gas (BCF) by County 1987 to 1996 HPBG Infill
Well Completions
EUR Current Cumulative (Current Monthly 60)
6
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesExploration Activity
Average Welltest Shut-in Pressure Hugoton Field
7
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesExploration Activity
8
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesExploration Activity
1987 to 1996 Well Completions by County (No HPBG
Infill Wells)
WC SC Kansas
Eastern Kansas
Hugoton Embayment
9
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesExploration Activity
EUR NEB (Millions) by County 1987 to 1996 OG
Well Completions (No HPBG Infill)
Eastern Kansas 15.2 mmNEB
WC SC Kansas 47.7 mmNEB
Hugoton Embayment 146.8 mmNEB
EUR Current Cumulative (Current Monthly48) /
NEB Conversion 6 mcf 1 bbl
10
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesExploration Activity
EUR Oil (Million BBLs) by County 1987 to 1996 Oil
Well Completions (No HPBG Infill )
Eastern Kansas 7.8 mmBBL
WC SC Kansas 34.7 mmBBL
Hugoton Embayment 53.6 mmBBL
EUR Current Cumulative (Current Monthly48)
11
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesExploration Activity
EUR Gas (BCF) by County 1987 to 1996 Gas Well
Completions (No HPBG Infill )
Eastern Kansas 43.0 BCF
WC SC Kansas 88.8 BCF
Hugoton Embayment 560.0 BCF
EUR Current Cumulative (Current Monthly48)
12
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesFuture Strategies
Two Major Factors Effecting Future
Exploration Inter-dependence of Three Principal
Variables Product Price Drilling Activity New
Reserves Discovered Historical Trends of Kansas
Oil Gas Reserves The Past is the Key to the
Future ... Largest Average, Oil Gas
Discoveries Best Average New Discovery Proven
Reserves Oil Gas Reserve Replacement Rate of
new producing leases
13
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesFuture Strategies -
Interdependence of Three Principal Variables
Drilling Activity vs Oil Price
Future Price Perception
Drilling Activity not Price Dependent (many large
reserve fields to discovered)
1998 833 wells
14
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesFuture Strategies -
Interdependence of Three Principal Variables
Oil Reserve Replacement vs Oil Price
Reserve Replacement not Price Dependent
15
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesFuture Strategies -
Interdependence of Three Principal Variables
Oil Gas Reserve Replacement vs Drilling
Activity (excludes HPBG Infill Drilling
Reserves)
Reserve Replacement not Activity or Price
Dependent (many large reserve fields to
discovered)
Average Finding Cost State 9.59 / NEB NW KS
28.69 / NEB SW KS 3.99 / NEB
16
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesFuture Strategies -
Historical Trends of Kansas Oil Gas Production
EUR Oil for New Discoveries Largest and Typical
Lease
87 to 96 Average Largest Lease 1,296,483 bbls
87 to 96 Average Typical Lease 34,296 bbls
17
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesFuture Strategies -
Historical Trends of Kansas Oil Gas Production
EUR Gas for New Discoveries Largest and Typical
Lease
87 to 96 Average Largest Lease 6,511,460 mcf
87 to 96 Average Typical Lease 471,112 mcf
18
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesFuture Strategies
Types of Exploration Strategies Which Companies
have the Lowest Finding Costs ? Corporate
Strategies companies with discoveries gt 500 mNEB
EUR (over 10 years) companies with lowest finding
costs Which Counties produce the greatest EUR
per Foot Drilled ? Geographical
Strategies counties ranked by EUR and Finding
Cost Which Formations yield the Largest Reserves
? Reservoir Strategies historical and recent
percentage contribution
19
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesCorporate Strategies -
Success Failure at Three Different Budgets
Total Footage 1,000,000 Ft
Total Footage 400,000 Ft
Total Footage 1,700,000 Ft
20
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesCorporate Strategies - Large
Exploration Budgets
Spatial Distribution of Exploration
Production Company Total Footage Drilled
1,700,00 Ft 1987 to 1996, No HPBG Infill
Company New Reserves Est Drlg Comp Cost
Spatially Limited to NW KS Very Low Success
Rate Narrowly Focused on LGKC Reservoir
Major Oil Co EUR 27.9 mmNEB 2.41/NEB
Large Independent EUR 16,6 mmNEB 3.69/NEB
Lots of Wells Oil Co EUR 2.0 mmNEB 27.77/NEB
21
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesCorporate Strategies - Medium
Exploration Budgets
Spatial Distribution of Exploration
Production Company Total Footage Drilled
1,000,00 Ft 1987 to 1996, No HPBG Infill
Company New Reserves Est Drlg Comp Cost
Spatially Unlimited Very Low Success Rate Poorly
Focused on Reservoir
Major Oil Co EUR 14.2 mmNEB 2.51/NEB
No Dryhole Oil Co EUR 1.2 mmNEB 28.94/NEB
Spatially Limited High Completion Rate Focused on
Depleted Reservoir
Dryhole Oil Co EUR 1.36 mmNEB 26.02/NEB
22
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesCorporate Strategies - Small
Exploration Budgets
Spatial Distribution of Exploration
Production Company Total Footage Drilled
400,000 Ft 1987 to 1996, No HPBG Infill
Company New Reserves Est Drlg Comp Cost
Small Independent EUR 10.1 mmNEB 1.58/NEB
Small Independent EUR 2.5 mmNEB 4.84/NEB
Arbuckle Oil Co EUR 0.6 mmNEB 22.20/NEB
Spatially Limited Focused on Single Reservoir
23
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesCorporate Strategies -
Companies with Lowest Finding Costs
Reserves Discovered Outside Hugoton Field
Cost Calculation Depth Comp Dry /Ft /Ft gt4500
45 30 lt4500 40 25 lt2500 35 20
24
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesGeographical Strategies
25
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesGeographical Strategies
Kansas Counties Finding Cost (Drlg Comp Cost /
EUR NEB) 1987 to 1996, No HPBG Infill
WC SC Kansas 17.92 average
Hugoton Embayment 3.79 average
26
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesReservoir Strategies
27
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesReservoir Strategies
28
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesReservoir Strategies
29
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesReservoir Strategies
30
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesSummary
Formation Strategies Best Oil Gas Producing
Formations Formation Total Oil Disc. Total Gas
Disc. of Discoveries w/ of Discoveries
w EUR gt 83 mbo EUR gt 500
mmcf Morrow 578 656 16 32 Missisippian
1240 1091 7 7 Lansing-Kansas
City 660 232 8 2 Marmaton 347 337 8
3 Arbuckle 368 0 5 0 Cherokee 304
0 5 0 Viola 122 52 6 4 Simpson
61 0 8 0 Wabaunsee 49 30 6 10 S
hawnee 0 76 0 5 Atokan 0 53 0 6
Niobrara 0 35 0 6 1987 to 1996
31
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesSummary
Geographical Strategies Excellent Opportunities
in almost All Counties 56 counties had at least
1 oil discovery with Lease EUR gt 83,000 bbls. 30
counties had at least 1 gas discovery with Lease
EUR gt 500,000 mcf. County of Oil Disc.
County of Gas Disc. FINNEY 43 SEWARD 84 HA
SKELL 34 MORTON 81 MORTON 25
STEVENS 64 SEWARD 20 MEADE 38 STEVENS 18
STANTON 34 NESS 18 HASKELL 30 KEARNY 17
BARBER 24 STANTON 17 COMANCHE 14 WALLACE 13
RENO 5 STAFFORD 12 CLARK 5 1987 to 1996,
gt 83 mbo or 500 mmcf
32
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesSummary

• Corporate Strategies
• Future Exploration Programs.
• Efficiently Budgeted, Spatially Limited, with
  Proper Reservoir Focus
• will have the Lowest Finding Costs
• Operators Drilling gt 50,000 ft/yr. (10 - 15
  wells/yr.)
• Average Finding Cost 12.79/bbl Range(/bbl)
  2.41 to 28.94
• Need to focus on Southwest Kansas
• Large Operators active outside of SW Kansas
• ALL have Finding Cost gt 10/bbl (most above
  20/bbl)
• Operators Drilling lt 50,000 ft/yr.
• Average Finding Cost 9.04/bbl Range(/bbl)
  1.51 to 24.06
• Operators Drilling lt 20,000 ft/yr.
• Average Finding Cost 6.22/bbl Range(/bbl)
  2.34 to 11.04
• unless you happen to own leases in the Hugoton
  Gas Field

33
Kansas Oil and Gas Exploration - 10 Year History
Future StrategiesFinal Slide
Acknowledgements Kansas Geological Survey for
support of this research Kansas Corporation
Commission furnishing well completion
data Kansas Department of Revenue furnishing oil
and gas production data