BP plc · LSE:BP.
BP — Investor Day (June 2016)
84 slides from BP's investor day presentation, June 2016
Slide 1: Cost and Capital Efficiency – Making it Stick
Cost and Capital Efficiency – Making it Stick June 2016 Deepwater Gunashli, Azerbaijan 1
Slide 2: How we make the changes stick
How we make the changes stick Our aim is to create a margin focused mentality irrespective of the price environment through: • Rigorous capital allocation • Simplified organisation with strict headcount management • Striving for safe, top quartile performance in every basin on cost and capital effic
Slide 3: Rigorous capital allocation – making choices
Rigorous capital allocation – making choices Where we spend the money • Refocusing exploration Exploration LTO • No compromising safety or integrity • Optimising pre FID spend Major Projects • Using defined hurdle rates Drilling – New Greenfield projects mid teens return – Drilling Programmes > 20%
Slide 4: Resetting production cost to top quartile
Resetting production cost to top quartile Production cost $/boe Upstream Headcount 18 16 Chevron -33% 30,000 14 Shell 12 Exxon 20,000 20,000 10 BP 10,000 8 Total * 6 0 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 Goal estimate Agency BP Staff * Total excludes Adco 4
Slide 5: Improving capital efficiency – drilling execution
Improving capital efficiency – drilling execution % of Top Quartile offshore wells Non Productive Time Day / 10k % 64% 33% 31% 28% 26% 45% 19% 34% 25% 2013 2014 2015 1Q 2016 2012 2013 2014 2015 1Q 2016 * Source – BP Internal 5
Slide 6: Improving capital efficiency – examples
Improving capital efficiency – examples Egypt West Nile Delta* Program Delivering Top Quartile Drilling Performance (Days/10k ft drilled) 110 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile Days/10k West Nile Delta Taurus Libra BP-operated (2015-16) 0 Individual wells drilled in the Nile Delta b
Slide 7: Improving capital efficiency – examples
Improving capital efficiency – examples Q204 / Deepsea Aberdeen Oman Khazzan Day / 10k Driving lower cost per well 50.0 14.8 13.4 11.4 31.6 27.3 20.4 Well 1 Well 2 Well 3 Well 4 2014 2015 2016 3rd Quartile 2nd Quartile Top Quartile Best in class 7
Slide 8: Working with suppliers to aggressively deflate costs
Working with suppliers to aggressively deflate costs Reduction range by Sector Includes 2016 spend (opex + capex) Well Services Rigs RDT Operations & Maintenance Logistics Installation Fabrication & Construction Equipment & Technology EPMS Engineering Services & Subsea 0% 10% 20% 30% 40% 50% 60% Fur
Slide 9: Collaborating with third parties
Collaborating with third parties Standardisation & supplier collaboration Expanding competitive source options Water Injection Manifold Valves Piping 9
Slide 10: Building a continuous improvement mentality
Building a continuous improvement mentality Initiating a step-change to embed continuous improvement into our DNA Leverage functional expertise within a Leverage global processes and cross regional context functional integration GWO & Sub surface- $2/ bbl improvement Tangguh Expansion Project - >$3b
Slide 11: There is more to do..
There is more to do.. Reduce Inventory Increase “Wrench Modernise and Optimise Logistics Time” standardise systems Global initiative to Modernise & significantly improve standardise our Create efficiency Step change to reduce wrench time and purchasing systems. across our operations inventory holdin
Slide 12: Summary - how we make the changes stick
Summary - how we make the changes stick Our aim is to create a margin focused mentality irrespective of the price environment through: • Rigorous capital allocation • Simplified organisation with strict headcount management • Striving for safe, top quartile performance in every basin on cost and cap
Slide 13: Base Management
Base Management June 2016 West Chirag, Azerbaijan 1
Slide 14: The base and our track record
The base and our track record Resource pull through BP Managed Decline 45bnboe of discovered resources (1) %CAGR New opportunities 5% Prospect Inventory Target 4% range 3-5% Reservoir Major Projects Development pre-FID 3% Options 9.4bn boe 25.4bn boe 2% Infill Drilling Major post FID Projects Actual
Slide 15: Regionally focused, globally connected
Regionally focused, globally connected Alaska Water/Gas Injection North Sea Rig and non-rig wells activity System Optimization Plant reliability New Wells & Well work Azerbaijan Lower 48 Operating efficiency Capital efficiency Middle East New Wells & Well work Technology deployment Reservoir & Well
Slide 16: Reservoir Management
Reservoir Management Increasing water injected into key waterfloods Improving recovery at the giant Prudhoe Bay mbwpd (excl GPB) Field, Alaska 1000 0 2011 2012 2013 2014 2015 4
Slide 17: Wedge delivery
Wedge delivery Target quality and execution efficiency Better images at lower cost Wedge production rates mboe/d BP Ocean Bottom Seismic 200 Acquisition cost Image density 100% 1000% 100 - 0% 0% 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 2016 2017 WW NWD Excludes: L48, Iraq, PAE 5
Slide 18: Wedge delivery
Wedge delivery Target quality and execution efficiency Better images at lower cost Wedge production rates mboe/d BP Ocean Bottom Seismic 200 100 - 2011 2012 2013 2014 2015 WW NWD Excludes: L48, Iraq, PAE 6
Slide 19: Operating Efficiency
Operating Efficiency Planned outages and Operating efficiency turnaround performance and plant reliability % mboe/d TARs on schedule Plant Reliability Operating Efficiency deferred 100% 180 92 93 95 90% 160 88 84 81 80% 140 77 79 mboed deferred % TARs on time 70% 69 67 120 60% 100 50% 80 40% 60 30%
Slide 20: Production Optimization
Production Optimization Optimization unlocks additional production Application of leading edge technologies % Production 3% 2% 1% 0% 2011 2012 2013 2014 2015 8
Slide 21: Managed decline forecasted at 3-5%
Managed decline forecasted at 3-5% Reservoir Management Wedge Delivery • Strong performance track record with more to come • Managed decline target range of 3-5% to 2020 and beyond: • Giant field reservoir management Operating Efficiency Production Optimization • Capital Efficiency of wedge delivery
Slide 22: Projects
Projects June 2016 Quad 204, North Sea Glen Lyon FPSO in tow1
Slide 23: Track record of project delivery
Track record of project delivery 2014 – 2016 Major projects start-ups Matt to provide pic 2014 2015 2016 Chirag Oil Kizomba Satellites In Salah Southern Mars B Phase 2 Fields NaKika Phase 3 Greater Plutonio Thunder Horse Phase 3 Water Injection Atlantis North Expansion Phase 2 West
Slide 24: Major projects growth to 2020
Major projects growth to 2020 mboed BP net production from 1,000 new major projects 500mboed of new capacity online by end 2017 2016 2017 In Salah Southern Fields Quad 204 Thunder Horse Water Injection Clair Ridge Point Thomson Juniper Angola LNG Khazzan Persephone Thunder Horse South Expansion In A
Slide 25: North Sea
North Sea Quad 204 - Glen Lyon FPSO Quad 204 • New FPSO to extend life of Schiehallion field (BP ~36%) • 14 new wells, 53 existing wells • Peak production ~ 120 mboed, gross • Project ~ 90% complete with start-up planned early 2017 • FPSO arrived safely from Korea with installation West of Shetland
Slide 26: Oman Khazzan: 10.5 tcf of gross recoverable gas resources
Oman Khazzan: 10.5 tcf of gross recoverable gas resources • Acreage: 3,700 km2 • Production plateau 1.5 bcf/d by 2020 • Ph1 Facilities (2 trains) ~70% complete – ~30 wells drilled – 2017 start-up on track and on budget • Khazzan Train3 and 125 wells with 2020 start-up • BP technology enabled step ch
Slide 27: West Nile Delta
West Nile Delta Two projects expected to develop 5tcf of gas resources, gross (BP ~83%) • 21 total development wells • Peak production ~ 290 mboed, gross Taurus/Libra • Production through BG’s Burullus facilities • Facilities ~ 55% complete with 2017 start-up planned Quad 204 - Glen Lyon FPSO (Namin
Slide 28: Juniper
Juniper New normally unmanned platform will produce gas from Corallita and Lantana fields (BP 70%)1 • First subsea development for bpTT, 5 subsea wells • Production capacity of 590 million standard cubic feet per day • Peak production ~95mboed gross Topsides at TOFCO, Trinidad • Project ~75% complet
Slide 29: Shah Deniz Stage 2
Shah Deniz Stage 2 Offshore facilities Shah Deniz is BP’s largest ever gas discovery with Alternative pic? 40tcf of gas in place (BP ~29%) • 2 offshore platforms and onshore processing and compression facilities • 26 total development wells • South Caucasus pipeline expansion • Also includes two new
Slide 30: Enhancing project execution
Enhancing project execution BP Relative performance has improved according to IPA “…your efforts are clearly setting you up Quartile ahead of your peers to thrive in the current 1st market and take advantage when the market picks up…” IPA Director 2nd • Leveraging our global execution model • Implem
Slide 31: Optimizing pre-FID projects
Optimizing pre-FID projects • We have around 40 projects in the pipeline for post-2020 start-up – Balance of resource types and a range of development types – Global portfolio with significant exposure to low development cost regions • Centralized project creation – ‘Global Concept Development’ – Si
Slide 32: Summary
Summary • High-quality and material project portfolio to underpin growth to 2020 and beyond – 4 major project start-ups achieved year-to-date, another on-track for start-up before year-end – 500 mboed of new net capacity by end-2017 – 800 mboed of new net production by end-2020, ~85% under construct
Slide 33: Future growth
Future growth June 2016 LR5 Drilling Rig in Khazzan, Oman 1
Slide 34: Future Growth
Future Growth Andy Hopwood, EVP, Chief Operating Officer Strategy and Regions Hesham Mekawi, Regional President North Africa Howard Leach, Head of Exploration Agenda • Strong incumbent positions growing value • Examples of real growth today – Oman & Egypt • Focused exploration – extending positions
Slide 35: Growing value with today's resources
Growing value with today’s resources Resource Depth and Quality… …underpins production growth 800-1000mboed of new projects 45 bnboe of discovered resources (2) 800mboed from 2020 projects New opportunities Prospect Inventory 15-20 bnboe Non-Proved Resource 34.8 bn boe Infill, extensions, imp. Major
Slide 36: New Opportunities, returns focused
New Opportunities, returns focused Strong Incumbent positions to fuel growth Material Growth options Future Major Project Value accretion -45.0 -40.0 -35.0 -30.0 -25.0 -20.0 -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 2020 Base business inc future drilling wedge activity 60.0 Current average unit DD&A • Dril
Slide 37: Portfolio Balance providing resilience
Portfolio Balance providing resilience Cumulative Capital (2016-20) Flexible Domestic & (giant resources) European Gas Gas Value Chains Stable LNG (non-US Gas, LNG) Henry Hub Giant Fields High impact Oil (deepwater / offshore oil) Deepwater Resource Theme Price Exposure Cash Generation Characteristi
Slide 38: Oman – unlocking new growth
Oman – unlocking new growth Vertical Well Performance Cumulative well cost $m 400 Sanction Case Average ($20m per 40mmscf/d) Appraisal Wells 200 Actual Full Field Development Wells 0 0 1000 Cumulative IP30* mmscf/d *Initial Production (1st 30 days) 6
Slide 39: Oman – continuous improvement
Oman – continuous improvement Cost savings from Phase 1 effectively pays for expansion Recoverable gas, tcf Development capital, $bn 10.5 ~16 ~16 7.0 ~12 Phase 1 Phase 1 & 2 Phase 1 Phase 1 Optimized Phase 1 & 2 Integration of BP technologies illuminated reservoir quality for better well placement,
Slide 40: Egypt – deep portfolio
Egypt – deep portfolio Legend Final_Delta_Leases (Colored-Final) Others BPs BP Operated Block BP Non-Operated Block Existing Base North Leil Contracted + Discovered Exploration Potential Karawan Shorouk North El Max North Tennin N. Port Fouad N. Thekah N. El Tabya Atoll Project WND Project Atoll Bal
Slide 41: Egypt – unlocking new growth
Egypt – unlocking new growth 400 Other discovered More than tripling net Atoll resource Exploration Phase 1 production in the next potential Atoll Phase 2 four years based on Net production mboed contracted volumes West Nile Delta Phase 2 West Nile Delta Phase 1 Existing base and drilling wedge acti
Slide 42: Focused exploration and access
Focused exploration and access Russia Newfoundland North Sea /Nova Scotia Azerbaijan Egypt Gulf of Mexico China Middle East Mexico Trinidad Indonesia Angola Current exploration regions Australia Brazil Potential new profit centre Argentina 1
Slide 43: Trinidad – extending incumbency
Trinidad – extending incumbency Seismic acquisition and imaging technology renewing drilling options in a mature play Near Field Prospects Location Map Jasmin Savannah Ginger 2019 2016 2020 Coconut Deep 2018 Macademia 2017 3D Streamer Data 3D Ocean Bottom Cable 11
Slide 44: Azerbaijan – new growth opportunities – Shafag Asiman
Azerbaijan – new growth opportunities – Shafag Asiman Shafag Asiman - giant gas/condensate prospect Shah Deniz Shafag Asiman 12
Slide 45: Azerbaijan – new growth opportunities - SWAP
Azerbaijan – new growth opportunities - SWAP SWAP PSC – near shore oil potential SWAP PSC 13
Slide 46: Summary
Summary • Growing the business with the resources we have today • New opportunities, returns focused – Oman and Egypt • Portfolio balance providing resilience • We are focusing our exploration activity 14
Slide 47: The Azerbaijan-Georgia-Turkey (AGT) Region
The Azerbaijan-Georgia-Turkey (AGT) Region Shah Deniz Alpha, Azerbaijan 1
Slide 48: BP's position in Region
BP’s position in Region Diverse portfolio: • Giant oil and gas/condensate fields Tbilisi Tbilisi • Oil and gas pipelines Western Route Western Route Supsa Supsa Export Pipeline Export Pipeline • Exploration prospects Sangachal Sangachal terminal terminal Baku Baku Baku-Tbilisi-Ceyhan Baku-Tbilisi-Ce
Slide 49: AGT 20+ years of success
AGT 20+ years of success Azeri Chirag Gunashli (ACG) giant field Shah Deniz (SD) giant field ACG PSA until 2024 with Shah Deniz PSA allows for potential renewal extension until 2048 STOIIP ~16bn bbls STOIIP ~9.4bn boe 2.9 billion barrels of oil >2.5 trillion cubic feet of gas produced since 1997 and
Slide 50: Track record of developing and operating giant oil/gas fields
Track record of developing and operating giant oil/gas fields Shah Deniz Alpha West Chirag West Azeri First production First production First production Sangachal Terminal November 2006 January 2014 December 2005 First operations October 1997 Deepwater Gunashli Central Azeri Istiglal 1 First product
Slide 51: Top quartile safety and environmental performance
Top quartile safety and environmental performance API Tier 2 Process Safety Incidents Recordable Injury frequency Flaring Intensity te / kte production frequency 0.6 20 0.6 0.3 10 0.3 0.0 0.0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 BP AGT IOGP benchmark BP AGT AP
Slide 52: Top quartile operating efficiency and plant reliability
Top quartile operating efficiency and plant reliability Efficient reliable operations… 100% • Plant Reliability and Operating Efficiency - systematic investment into sustained plant and wells reliability 90% • Turnarounds – near 100% scope and schedule 80% attainment over last 4 years 2013 2014 2015
Slide 53: Top quartile drilling performance
Top quartile drilling performance Reduced non-productive time contributes to higher delivery Decreasing well delivery duration in ACG field, days/well Annual Well count Non productive time 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 (Q1) Best in class • Continuous improvement over the last 4 y
Slide 54: ACG – flat production
ACG – flat production • Production decline mitigated • Efficient new wells • Continuous use of technology Advanced Seismic Sand Control Imaging 2011 2012 2013 2014 2015 2016 BP Well Advisor Enhanced Oil Recovery 8
Slide 55: Shah Deniz - increasing capacity and top performing wells
Shah Deniz (Phase 1 and debottlenecking) - increasing capacity and top performing wells Shah Deniz Production track record, mboed …projects ...debottlenecking… • Reliable supplier to the market Series of… • Top producing wells in BP portfolio • Optimized early field development • Near 100% operating
Slide 56: Intense Cost Management
Intense Cost Management Gross operating costs are back to 2010 level… ~30% • Cost efficiency being delivered without compromising safety and integrity • Embedding the cost management culture – making it “stick” Back to • Top down & bottoms up throughout the 2010 level organization and beyond • Drivi
Slide 57: Shah Deniz field and Southern Corridor – an integrated value chain
Shah Deniz field and Southern Corridor – an integrated value chain • New and expandable infrastructure, linking Caspian • Initial capacity of 16 BCMA underpinned by long resources to Europe term gas sales agreements • Supported by 6 transit countries, 11 shareholders and • Unlocking future Caspian g
Slide 58: Shah Deniz field and Southern Corridor – diverse sources of value
Shah Deniz field and Southern Corridor – diverse sources of value Gas Midstream Diverse markets Stable income source Large producing wells BP is shipper and owner Further volume upside Scalable for future supplies BP’s equity and sources of value are balanced through whole value chain Condensate Hig
Slide 59: Shah Deniz 2 Project Progress
Shah Deniz 2 Project Progress • 30 months post sanction • Very strong safety performance • 10% capital reduction via optimization Production & Riser Deck Subsea Construction Vessel • 20% better drilling performance vs FID • On plan to deliver 1st Gas in 2018 Waste Heat Recovery Units at North Flank
Slide 60: Beyond 2020 - future growth
Beyond 2020 - future growth Giant field extension and growth • Shah Deniz D230 • ACG New Exploration • Shafag Asiman - gas • Shallow Water Absheron Peninsula (SWAP) - oil ACG • D230 block – MOU is signed SWAP Infrastructure Shah Deniz • Unlocking future gas potential for the Southern Gas Corridor Sh
Slide 61: Future Growth Potential
Future Growth Potential • Potential for further >30 years of exploring, developing and operating projects in the Region • Strong incumbent position • Rich exploration portfolio coupled with experience and good knowledge of the basin • Good reputation and relations with government and stakeholders 15
Slide 62: Lower 48 Onshore
Lower 48 Onshore June 2016 MidCon – Multi Lateral Development Pad 1
Slide 63: Our Mission, Strategy and Commitment
Our Mission, Strategy and Commitment • Build a premier, market visible, competitive onshore operating company • Create a high performance culture based on empowerment, accountability and collegiality • Deliver high rates of return and create value on our massive, largely untested acreage • Drive cap
Slide 64: Our Assets Today
Our Assets Today • Five business units • 6.0m net acres • Produced 293 mboed in 1Q 2016 • 24,000 wells, 10,000 operated • Resource base of 7.5 bn boe at YE 2015 – 37 tcf gas and 1.2 bn boe liquids • 15,000 horizontal laterals identified L48 Relative to Other Independents Enterprise value ($ in bn):
Slide 65: Increasing Capital Efficiency Through Innovative Well Designs
Increasing Capital Efficiency Through Innovative Well Designs Evolution of Development Programs Leading to Multi-Lateral Horizontal Wells Conventional Vertical Single Tight Gas Horizontal Single Tight Oil Horizontal “W” / “Winerack” Horizontal Stacked Multilateral Horizontal Coplanar Multilateral Ho
Slide 66: North - Greater Green River Basin
North - Greater Green River Basin Material Horizontal Development Potential • 500,000 net acres • Six distinct petroleum systems Luman 10-40H IP 30: 1,473 BOED • 1.4 bn boe of resource potential Latham Draw 3-40H IP 30: 2,660 BOED • Multiple stacked liquid rich targets ~ 80 miles • ~2,000 horizontal
Slide 67: North - Greater Green River Basin
North - Greater Green River Basin Liquid Saturated Stacked Reservoirs ~7,000’ TVD Horizon Hydrocarbon Horizontals Fort Union Wet Gas ~120 Fox Hills Wet to Dry Gas ~60 ~5,000’ Lewis Oil to Condensate ~180 Almond Wet to Dry Gas ~1,600 ~14,000’ TVD 6
Slide 68: North - Greater Green River Basin
North - Greater Green River Basin Early Horizontal Wells Creating Significant Value boed Luman 10-40H Production 10,000 • 2015 – 1st horizontal in eight years 1,000 • Eight horizontal wells since September 2015 100 Actual Production Typecurve 10 • Horizontal wells delivering up to 45% IRR* 30 Day Av
Slide 69: West - San Juan Basin
West - San Juan Basin World Class Gas Resource • Applying innovative techniques to achieve premier returns Seibel B2 Horther 31-03 Peak = 5.5 MMCFD Max 30 = 5.5 MMCFD Seibel A2 • 570,000 net acres Max 30 = 5.7 MMCFD Parry E2 • Four prolific and discrete reservoirs with Max 30 = 2.2 MMCFD multiple in
Slide 70: West - San Juan Basin
West - San Juan Basin Discrete and Prolific Reservoirs with Horizontal/Multilateral Potential Horizon Reservoir Locations Hydrocarbon Coal bed 200 Fruitland Coal Dry Gas methane (270 laterals) Marine & non-marine 8,500’ Mesaverde 50 Wet Gas sands Marine Mancos ~1,600 Gas & Oil source rock Marine Dak
Slide 71: West - San Juan Basin Coal Bed Methane
West - San Juan Basin Coal Bed Methane Innovative well designs driving premier returns • Highest multilateral production in the basin • Average multi-lateral development cost of $1.9/boe • Successful tri-lateral accessing 14,600 ft of coal • Continuing to innovate with more and longer laterals Dual-
Slide 72: West - San Juan Basin Mancos
West - San Juan Basin Mancos Early Mover in Emerging Play with Tremendous Potential Stacked targets in sweet spot • Devon acquisition added material position Upside • 1,600+ horizontal locations identified* • Projecting >25% IRR and $3.0/boe development cost, at $6.8m well cost in Tier 1 area throug
Slide 73: MidCon - Anadarko and Arkoma Basins
MidCon - Anadarko and Arkoma Basins Hydrocarbon Rich Regions with Stacked Oil and Gas Pay Anadarko Basin Arkoma Basin • 900,000 net acres • 650,000 net acres • 1,200 producing wells; 100 horizontals • 1,600 producing wells; 200 horizontals • Production from 10+ different horizons • Production from 1
Slide 74: MidCon - Anadarko and Arkoma Basins
MidCon - Anadarko and Arkoma Basins Prolific Reservoirs Sourced by Woodford and Carboniferous Shales Reservoir Petroleum Formation Basin Horizontals Anadarko Basin Type System Arkoma Basin 5,000’ Oil to Cleveland Anadarko Tight Sand 385 Wet Gas Oil to Marmaton Anadarko Tight Sand 180 Condensate Gran
Slide 75: MidCon - Anadarko Basin Industry First Innovations
MidCon - Anadarko Basin Industry First Innovations Cleveland Dual-Lateral, Cleveland Tri-Lateral and Onshore Junction Isolation • > 8,000’ of stimulated reservoir • > 12,000’ of stimulated reservoir • Projecting ~25% IRR and $5.8/boe development • Projecting 30% IRR and $5.8/boe development cost at
Slide 76: MidCon - Arkoma Basin Development Performance
MidCon - Arkoma Basin Development Performance Premier Execution in Woodford Shale mmcfd Smalley Unit Production 100,000 • 176,000 acres in the core area • Projecting 25% IRR and $2.8/boe 10,000 development cost at $4.0m well 1,000 cost 4 wells in 1 section deliver 30 mmcfd 100 • Evaluating multi-lat
Slide 77: East - East Texas Basin
East - East Texas Basin Large Lease and Mineral Position in a Prolific Basin • 1,400,000 net acres, including 1,000,000 mineral acres • Five discrete petroleum systems • 950 mmboe of resource potential • ~1,000 horizontal locations over three stacked pays 280 miles • Evaluating seven additional stac
Slide 78: East - East Texas Basin
East - East Texas Basin Robust Opportunities in Stacked Plays U&L Travis Cotton Bossier Austin Peak Valley Haynesville Chalk Wilcox Yegua Reservoir Petroleum Formation Horizontals Type System Cotton Tight Wet to Dry ~5,000’ 100 Valley Sands Gas TVD Bossier 400 Shale Dry Gas Wet to Dry Haynesville 50
Slide 79: East - East Texas Basin Haynesville Results
East - East Texas Basin Haynesville Results Delivering Premier Returns • Integrating advanced technology to optimize Wombat 1H Production completions design 100,000 10,000 • Projecting ~35% IRR and $5.9/boe Type Curve development cost at $9.1m well cost 1,000 MCFPD • Potential 50% IRR uplift on mine
Slide 80: South - Eagle Ford Development
South - Eagle Ford Development World Class Shale Gas Development Program • 190,000 net acres • Non-operated, average 41% WI • Drilled > 400 horizontal wells in five years Owen 16H IP 30: 12 MMCFD • Proven value creating relationship with Lewis Energy Group, a vertically integrated ~ 60 miles operato
Slide 81: South - Eagle Ford Development
South - Eagle Ford Development Premier Stacked Pay Opportunities ~5,000 ft TVD Formation Horizontals Reservoir Petroleum System Escondido 600 Tight Sand Wet Gas Olmos 350 Tight Sand Wet to Dry Gas ~6,000’ Austin Chalk Evaluating Limestone Oil to Dry Gas Upper 1,250 Shale Oil to Dry Gas Eagle Ford Lo
Slide 82: South - Eagle Ford Development
South - Eagle Ford Development Enhanced Frac Design Yields Step Change In Performance • New enhanced fracture stimulations initiated − Increased number of frac stages − Increased proppant loading − First three wells producing a combined 36mmcfd • IRR ~50% and $2.1/boe development cost at $5.1m well
Slide 83: Improving Cost Structure
Improving Cost Structure Production Cost $/boe 10 • Utilizing data analytics to increase efficiency 9.3 and decrease deferment Reduced $160m 9 in 1 year • Hiring in-house data scientist and matching with engineering teams 8 7.8 • Staff reduction of 54% from 2012 to 1Q 2016 7 6 5 1Q '15 1Q '16 Produc
Slide 84: Profitable and Flexible Growth Vehicle
Profitable and Flexible Growth Vehicle • 7.5 bn boe, short-cycle incumbent resource position • 15,000 horizontal lateral locations identified • Innovative approaches dramatically improving cost and capital efficiency – Data analytics – Advanced artificial lift – Multi-lateral wells – Custom completi