AssessingTheCostVs.Effec2venessOfHotOilingAndHotWateringToQuan2fyROIAndJus2fyInvestmentInHeatTreatments

SteveHochanadelSeniorStaffProduc3onEngineerJune29,2016

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Agenda�  Introduc3ontoEPEnergy�  ChemicalTrea3ngandMethodsinEagleFord�  Hot-Watering

!  Examples!  Economics

�  Summary

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EPEnergy

ALTAMONT

WOLFCAMP

EAGLEFORD

AtEPEnergy,wehaveapassionforfindingandproducingtheoilandnatural

gasthatenrichespeople’slives

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EagleFord

Wolfcamp

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EagleFord:FranchiseOilProgram

!  Onedrillingrigcurrentlyrunning!  Increasedmodelingcapabili3es(landing

zonesandcomple3onop3miza3on)!  Con3nuedwellcostreduc3onandtop

3erLOEperformance

!  Reducetoonerigin1H’16!  Focusonhighestqualityacreageand

leasecommitments!  Maintainopera3onalefficiencies!  Con3nuetostaggerlandingzoneson

adjacentwells!  Con3nuetofocusonbaseop3miza3on

andcostreduc3ons(capitalandLOE)

1QHighlights

2016Outlook

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EPEAr3ficialLi\MixinEagleFord

75%

16%

6%3% GasLi\

RodPumpJetPumpFreeFlowing

579NetOperatedwells(asof3/31/16)

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WhatAreWeChemicallyTrea3ng

� Paraffin� Corrosion� Scale� Bacteria� Emulsions� H2S

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ChemicalTrea3ngMethods� Con3nuoustreatmentdownannulus� Batchortrucktreatment� Capillarystrings

! Internal,external� Sidestreamflushtreatmentsdownbackside� Hotoiling,i.e.,hotwatering� Downholechemicalscreen� Solventcircula3ontreatments� Applychemicalproductwithproppantduring

comple3on� Chemicalsoaksonbacksideandintubing

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CrudeOilVaria3onsWaxAppearanceTemperatures,oF

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Hot-WateringMethod�  Purpose

!  Primarilytreatparaffin!  Secondarilypreventcorrosion

�  Generalprocedureandrecipe!  35bblleasewaterheatedto210–230oF

�  25bbldowntubingorbackside�  10bblforsurfaceequipment

!  Chemicalcomponents�  Paraffindispersant,e.g.,PAO2020�  Corrosioninhibitor,e.g.,CRW172�  Biocide

�  Overallcostof$500to$1,500pertreatment

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Example1–GasLi\Well

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Example2–GasLi\Well

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Example3–GasLi\Well

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Example4–GasLi\Well

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Example5–GasLi\Well

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RodPumpWellResultsBeforeimplemen3nghot-watering

A\erregularhot-watering

Savesmoneyonrig3me!

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EconomicAnalysisMethodologyProduc2onUpliYModeledproduc3onupli\flatforonemonthbeforegoingbacktooriginaltrendOilPrice$45/bblflatSensi2vi2es•  Variedupli\with$1,500treatmentcost•  Variedtreatmentcostwith15Bopdupli\EconomicDetermina2ons•  NetPresentValue(NPV)at10%discountrate;a\ertaxcase•  ReturnonInvestment(ROI)=(NPV+InvestmentCost)/(InvestmentCost)

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Upli\Sensi3vityEconomics

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ROIandNPVfor$1,500TreatmentCostUpli\Sensi3vity

ROI NPV@10%

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TreatmentCostSensi3vityEconomics

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NPV

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TreatmentCost($M)

ROIandNPVfor15BopdUpliYTreatmentCostSensi3vity

ROI NPV@10%

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Summary� Paraffinforma3oninEagleFordwellboreslendsitselftohot-wateringtreatments! Inexpensive! Poten3alforproduc3onincrease! Canreduceopera3ngexpensesandprolong

theneedforworkoverinterven3on! Favorableeconomics! Needtotreatatregularintervals