PESA Annual Meeting

Outlook for Domestic 

Unconventional Resources 

October, 2012

Boerne, Texas
CHARACTERISTICS OF THE SAMPLE

COMPANY TYPE

MAJOR, MULTINATIONAL

12%

LARGE 

INDEPENDENT

41%

MEDIUM/ SMALL 

INDEPENDENT

43%

NOC/ STATE 

OWNED

4%

PERCENT OF TOTAL SAMPLE

TOTAL RES

2

COMPANY 

U.S. LA

CANAD

INTERNAT

2012 Hydraulic Fracturing Report

July, 2012
ANTICIPATED HYDRAULIC FRACTURING ACTI

2012 AND 2013 – BY SELECTED U.S. REGIONS

0 50 100 

EAGLE FORD

PERMIAN BASIN (W. TX / NM)

BARNETT SHALE

EAST TX/ HAYNESVILLE

MARCELLUS/ UTICA SHALES

 OKLAHOMA/ KANSAS/ MID CONTINENT

WILLISTON BASIN & BAKKEN SHALE

ROCKIES COMBINED

97.5

103.4

1

48.6

71.4

94.0

106.7

67.6

109.1

1

12

81.7

12

12

80.8

2012 2013

AVERAGE NUMBER OF WELLS TO FRAC PER COMPANY 
EXPECTED TREND IN FRAC ACTIVITY 

2014/2015 vs. 2012/2013

______________________________________________________

36%

30%

7%

70%

20%

58%

3

0%

20%40%60%80%

U.S. LAND TOTAL CANADA INTERNATI

EXPECT INCREASE NO CHANGE EXPECT DECRE

PERCENT OF TOTAL SAMPLE

NET UP 7.4% UP 11.4% UP 3
EXPECTED TREND IN FRAC ACTIVITY

2014/2015 vs. 2012/2013

______________________________________________________

0%

25%50%75%

100%

TOTAL SAMPLE MAJORS LARGE

INDEPENDENTS

MED/ SMALL

INDEPENDENTS

46% 50% 43% 44%

8

30% 29% 33% 31%

5% 7% 4% 5%

EXPECT INCREASE NO CHANGE EXPECT DECRE

PERCENT OF TOTAL SAMPLE

NET +15.5% +9.6% +12.6% +12.5% +
EXPECTED TREND IN FRAC ACTIVITY (2014/2015 vs. 201

NET INCREASE/DECREASE BY SELECTED U.S. REGIONS

_______________________________________________________________

0% 10% 20% 

EAGLE FORD SHALE

HAYNESVILLE + FAYETTEVILLE

MARCELLUS/ UTICA SHALE

MID-CONTINENT

PERMIAN BASIN

ROCKIES

WILLISTON/ BAKKEN

GULF COAST

BARNETT SHALE

5.8%

1.2%

14.0%

13.8%

10.7%

7.0%

10.0%

8.4%

NET PERCENT CHANGE 
AVERAGE PER WELL EXPENDITURES FOR WELL FRAC SE

BY COMPANY TYPE AND FOCUS

_____________________________________________________________

$1.0$2.0$3.0$4.0$5.0

MAJORS

LARGE INDY

MED/ SMALL INDY

NOC

U.S. LAND

CANADA

2.02

2.17

1.76

3.33

2.01 2.03 

AVERAGE EXPENDITURE PER MARKET SEGMENT (IN MILLIONS OF DOLLARS,) 
OIL/ GAS PRICE POINTS USED IN ACTIVITY PLA

POINT AT WHICH FRAC PROJECTS BECOME COMMERCIALLY VIAB

__________________________________________________________________

$0.00

$25.00$50.00$75.00

$100.00

OIL PRICE (PER BARREL) GAS PRICE (PER 

$76.75

$4.87

$71.67

$5.75

$78.85

$4.94

$76.63

$4.53

$70.00

$6.

$75.82

$87.00

TOTAL SAMPLE MAJORS LARGE IND MED/ SMALL IND NOC N. AMERICA 

AVERAGE PRICING LEVEL USED (IN US $)
SHARE OF FRAC JOBS TARGETING OIL OR G

______________________________________________________

OIL

54%

GAS LIQUIDS/ 

CONDENSATE

25%

DRY GAS

21%

PERCENT OF FRAC JOBS (2010 SURVEY IN RED)

NORTH AMERICA INTERNATION

DRY GAS

38%

(33%)
INTENDED PURPOSE OF FRAC JOBS 

NEW COMPLETIONS vs RE-FRAC EXISTING WELLS 

______________________________________________________

NEW 

COMPLETIONS

89%

RE-FRAC 

EXISTING 

ZONES

11%

AVERAGE SHARE OF FRAC JOBS PER COMPANY

2012 2013

NEW 

COMPLETIONS

90%
SHARE OF FRAC JOBS TARGETING SELECTED FORMAT

______________________________________________________

SHALES

59%

CARBONATES

17%

CONSOLIDATED 

SANDSTONES

18%

TIGHT GAS

4%

COAL BED 

METHANE

<1% OTHER 2%

PERCENT OF FRAC JOBS BY SELECTED TARGET FORMATIONS (2010 SURVEY IN RED) 

NORTH AMERICA SAMPLE INTERNATIONAL SA

CONSOLIDATED 

SANDSTONES

35%

TIGHT GAS

23%

COAL BE

METHAN

9%

(57%)

(15%)

(53%)

(2%)

(18%)

(11%)(10%)
OPTIMAL SPACING BETWEEN LATERAL

_____________________________________________

0%

10%20%30%40%

200 FEET OR

LESS

201 TO 500

FEET

501 TO 750

FEET

751 TO 1,000

FEET

1,001 TO 2,000

FEET

O

10%

19%

25%

27%

18%

PERCENT OF TOTAL 

AVERAG
SHARE OF FRAC JOBS NOT MEETING PERFORMANCE EXPE

0% 10% 20% 30% 40% 

TOTAL SAMPLE

BARNETT SHALE

MID-CONTINENT

GULF COAST

ROCKIES

WILLISTON/ BAKKEN

MARCELLUS/ UTICA SHALE

PERMIAN BASIN

EAGLE FORD SHALE

HAYNESVILLE + FAYETTEVILLE

CANADA

INTERNATIONAL

24%

35%

33%

32%

30%

25%

22%

21%

21%

19%19%

PERCENT OF TOTAL SAMPLE (2010 SURVEY IN RED) 

(24%)
ROOT CAUSE OF FRAC JOBS NOT MEETING PERFORMANCE EXP

0% 20% 40% 60% 

FAILURE TO UNDERSTAND

SUBSURFACEPOOR FRAC DESIGN

DOWNHOLE EQUIPMENT/

TOOLS

INEXPERIENCED CREWS /

HUMAN ERROR

SURFACE EQUIPMENT

GEL NOT BROKEN UP

18%

14%

13%

12%

1%

PERCENT OF SAMPLE WITH JOBS NOT MEETING EXPECTATIONS 
PRIMARY FOCUS OF RESERVOIR CHARACTERIZ

BY SELECTED REGIONS

PERCENT OF TOTAL SAMPLE 

0% 25% 50% 75% 

CONVENTIONAL CLASTICS

UNCONVENTIONAL SHALES

CARBONATES

TIGHT GAS SANDS

HEAVY OIL

15%

73

15%

14%

52%

27%

28%

3%

15%

11%

US LAND INTERNATIONAL LAND O

2013 Reser

Characterization 
SHARE OF GEOSCIENCE GROUP’S TIME SPENT ON SELECTE

-LAND SAMPLEDATA GATH

LOADING/ Q

MANAGE

17%

L

SEI

CO

WELL 

DATA 

PETROPHYSICA

ROCK PHYSICS 

ANALYSIS

11%

SEISMIC INVERSION, 

ATTRIBUTE 

CALCULATIONS

11%

SEISMIC TO ROCK 

PROPERTY VOLUME 

CREATION

6%

RESERVOIR 

MODELING OF 

STRUCTURAL 

COMPONENTS

7%

GEOSTATISTICS 

FOR SPATIAL 

MODELING OF 

SPARSE DATA

5%

SEDIMENTOLOGY & 

FACIES MAPPING

8%

RESERVOIR 

MODELING OF 

ROCK PROPERTIES 

7%

RESERVOIR 

MODELING OF 

FLUID PROPERTIES 

5%

AVERAGE SHARE OF TIME 

AVERAGE NUMBER OF MONTHS

REQUIRED TO COMPLETE INITIAL

CHARACTERIZATION ON TYPICAL

RESERVOIR:

5.4 MONTHS

SHARE OF PROJECTS THAT

REACH THE STAGE OF SIMULATION

AND HISTORY MATCHING:

53%

2013 Reservoir

Characterization report
AGREEMENT WITH SELECTED STATEME

“MY HYDRAULIC FRACTURING PROJECTS DO NOT REQUIRE A HIGH DEGREE OF 

EXPERTISE. ALL I REQUIRE IS RELIABLE HORSEPOWER”

-100% -75% -50% -25% 0% 25% 50% 

TOTAL SAMPLE

MAJORS

LARGE INDY

MED/ SMALL INDY

NOC

US LAND

CANADA

INTERNATIONAL

-62%

-63%

-57%

-65%

-67%

-49%

-57%

-87%

29%

31%

28%

29%

17%

40%

29%

5%

TEND TO DISAGREE TEND TO AGREE

PERCENT OF TOTAL SAMPLE 
MOST IMPORTANT TECHNOLOGY DEVELOPM

FOR FRAC SUPPLIERS TO FOCUS ON GOING FORWAR

0% 10% 20% 30% 40% 

MULTI-STAGE FRAC

TECHNIQUES

ENVIRONMENTALLY FRIENDLY

FLUIDS

EQUIPMENT QUALITY/

RELIABILITY

WATER MANAGEMENT &

TREATMENT

FRAC SIMULATION AND

MODELING

FRACTURE MAPPING

TECHNOLOGIES

WATERLESS FRAC

TECHNOLOGIES

PROPPANT ISSUES

27%

24%

18%

12%

PERCENT OF TOTAL SAMPLE (MULTIPLE RESPONSES ALLOWED) 
SHARE OF JOBS TO USE OF MULTI-ZONE FRACTU

0% 25% 50% 75% 100%

TOTAL SAMPLE

WILLISTON/ BAKKEN

MARCELLUS/ UTICA SHALE

BARNETT SHALE

ROCKIES

EAGLE FORD SHALE

MID-CONTINENT

HAYNESVILLE + FAYETTEVILLE

PERMIAN BASIN

GULF COAST

CANADA

INTERNATIONAL

84%

9

9

95%

93%

91%91%

83%

73%

96%

47%

PERCENT OF TOTAL SAMPLE (2010 SURVEY IN RED)
TREND IN AVERAGE NUMBER OF FRAC STAGES PER W

EXPECTING INCREASE OR DECREASE OVER NEXT 2-3 YEARS

EXPECT 

INCREASE

31%

EXPECT 

DECREASE

NO CHANGE 4%

65%

PERCENT OF SAMPLE USING MULTI-STAGE FRACTURING

REASONS FOR 

LONGER LATE

SHORTER FRAC IN

TECHNOLOGY AD

INCREASED REC

ECONOMIC

OTHER 

REASONS FOR 

COST/ ECONO

INCREASED REC
PREFERRED METHOD FOR MULTI-ZONE FRACTU

0% 25% 50% 75% 

PLUG AND PERF

GRADUATED BALL DROP SYSTEM

SLIDING SLEEVE SOLUTIONS

BALLS AND BAFFLES

C-T W/ JETTING TOOL (WITHOUT PACKER)

C-T W/ JETTING TOOL (WITH PACKER)

BALL SEALERS/ BIO-BALLS

15%

10%

7%7%

6%

2%

16%

13%

7%

5%

2%2%

CURRENT METHOD FUTURE METH

PERCENT OF USING MULTI-ZONE FRACTURING 
IMPORTANCE PLACED ON ENVIRONMENTALLY FRIENDLY 

WHEN SELECTING A FRAC SERVICE SUPPLIER 

_______________________________________________________________

0% 25% 50% 75% 

TOTAL SAMPLE

HAYNESVILLE + FAYETTEVILLE

EAGLE FORD SHALE

GULF COAST

ROCKIES

MARCELLUS / UTICA SHALE

PERMIAN BASIN

MID-CONTINENT

WILLISTON/ BAKKEN

BARNETT SHALE

CANADA

INTERNATIONAL

23%

29%

24%

17%

10%

8%8%

20%

42%

40%

29%

41%

50%

10%

33%

17%

64%

33%

40%

47%

47%

30%

29%

24%

60%

59%

50%

18%

50%

40%

MUST HAVE MAJOR FACTOR SOMEWHAT IMPORTANT NOT 

PERCENT OF RESPECTIVE SAMPLES 
SHARE OF FRAC JOBS RUNNING POST-JOB PERFORMANCE E

0% 25% 50% 75% 

TOTAL SAMPLE

MARCELLUS/ UTICA SHALE

ROCKIES

HAYNESVILLE + FAYETTEVILLE

WILLISTON/ BAKKEN

PERMIAN BASINMID-CONTINENT

GULF COAST

EAGLE FORD SHALE

BARNETT SHALE

CANADA

INTERNATIONAL

47%

69%

53%

50%

42%

39%

33%

33%

32%

30%

18%

PERCENT OF TOTAL SAMPLE 
POST-JOB PERFORMANCE EVALUATION TESTS TYPICAL

0% 20% 40% 60% 

PRODUCTION LOGS

SURFACE FLOW

MEASUREMENT

TRACERS

FRACTURE HEIGHT LOG

MASS BALANCE

MICROSEISMIC

PRESURE ANALYSIS

63%

40%

37%

12%

12%

4%

3%

PERCENT OF SAMPLE RUNNING POST-JOB EVALUATIONS (2010 SURVEY IN RED) 

(6%)

(9%)

(33%)

(24%)
SHARE OF WELLS UTILIZING PAD FRACT

CURRENT USE AND EXPECTED USE OVER NEXT 2-3 YEA

0% 25% 50% 75% 

TOTAL SAMPLE

MARCELLUS/ UTICA SHALE

EAGLE FORD SHALE

HAYNESVILLE + FAYETTEVILLE

WILLISTON/ BAKKEN

ROCKIES

MID-CONTINENT

BARNETT SHALE

GULF COAST

PERMIAN BASIN

CANADA

INTERNATIONAL

43%

57%

53%

41%

38%

34%

34%

21%

15%

9%

75

23%

44%

71%

58%

45%

52%

47%

42%

16%

10%

18%

75

24%

CURRENT USE FUTURE USE

AVERAGE SHARE OF WELLS PER COMPANY 
VALUE SEEN IN USING NATURAL GAS TO POWER FRAC EQ

____________________________________________________

GREAT

31%

MODERATE

31%

SLIGHT NO 

REAL 

VALUE

10%

NO REAL 

VALUE

28%

PERCENT OF TOTAL SAMPLE 

PERCEIVED VALUE 

MAYBE

36%

NO

26%

WILLING TO PAY M

NATURAL GAS POWE
WATER ISSUES

____________________________
“ARE YOU EXPERIENCING PROBLEMS GAINING ACCESS T

FOR YOUR FRAC OPERATIONS?”

______________________________________________________________________

0% 20% 40% 60% 80

TOTAL SAMPLE

MARCELLUS/ UTICA SHALE

EAGLE FORD SHALE

HAYNESVILLE + FAYETTEVILLE

WILLISTON/ BAKKEN

ROCKIES

MID-CONTINENT

BARNETT SHALE

GULF COAST

PERMIAN BASIN

CANADA

INTERNATIONAL

18%

17%

16%

20%

15%

12%

9%

43%

29%

19%

21%

23%

33%

32%

12%

30%

35%

26%

57%

27%

24%

38%

16%

59%

50%

52%

68%

55%

53%

65%

73%

47%

43%

63%

YES IN SOME CASES/ AREAS NO PRO

PERCENT OF TOTAL SAMPLE 
REGULATORY TRENDS RELATED TO WATER IS

“What trends concern you most?”

0% 10% 20% 

EPA/ GOVERNMENT

INTRUSION

DISPOSAL

LOCAL AVAILABILITY/

ACCESS

USAGE LIMITS/

ALLOCATIONS

TRUCKING/ TRANSPORT

RE-USE/ RECYCLING

FLOWBACK TREATMENT

PERMITTING

NO USE OF FRESHWATER

COST

22%

22%

22%

14%

11%

10%

9%

7%

7%

5%

PERCENT OF TOTAL SAMPLE 
TECHNOLOGIES SUPPLIERS SHOULD FURTHER D

TO HELP MEET OPERATIONAL REQUIREMENTS GOING FOR

0% 25% 50% 

RECYCLING OF

FLOWBACK WATER

ABILITY TO USE

WASTEWATER

TECHNOLOGIES TO

REDUCE WATER

USAGE

WATER-FREE

ALTERNATIVES

36%

31%

24%

PERCENT OF TOTAL SAMPLE 
TYPICAL WATER SOURCE FOR FRAC OPERAT

0% 20% 40% 

SURFACE WATER

SOURCE

SUBSURFACE WATER

WELL

CITY/ MUNICIPAL

SOURCE

RECYCLED WATER

FROM OPERATIONS

INDUSTRIAL

WASTEWATER SOURCE

34%

40%

17%

9%

1%

40%

36%

16%

7%

1%

13%

19%

15%

3%

TOTAL SAMPLE NORTH AMERICA INTERNAT

SHARE OF WATER USE BY SOURCE 
AVERAGE TOTAL WATER CONSUMPTIO

PER WELL

_____________________________________________

0%

10%20%30%

LESS THAN

1 MILLION

GALLONS

1.0 TO 2.0

MILLION

GALLONS

2.1 TO 3.0

MILLION

GALLONS

3.1 TO 4.0

MILLION

GALLONS

4.1 TO 5.0

MILLION

GALLONS

5.1 TO 6.0

MILLION

GALLONS

6.1 TO 8

MILLIO

GALLON

8%

22%

19%

12%

13% 12%

9%

PERCENT OF TOTAL 

MEDIAN TOTAL WATER CO

3,150,000 GALLO

REPORTED HIGH: 10.5 M
AVERAGE WATER COST PER BARREL 

_____________________________________________

0%

10%20%30%

25 CENTS

OR LESS

26 TO 50

CENTS

51 CENTS

TO $1.00

$1.01 TO

$2.00

$2.01 TO

$3.00

$3.01 TO

$5.00

18%

22%

17% 15% 15%

9%

AVERAGE PER COMPANY 

AVERAGE WATER COST PER BBL:

TOTAL SAMPLE = $1.66

U.S. LAND = $1.55

INTERNATIONAL = $1.75
FLOWBACK WATER

SHARE OF FLOWBACK WATER RECYCLED FOR REUSE vs DI

______________________________________________________________________

0% 20% 40% 60% 80

TOTAL SAMPLE

MARCELLUS/ UTICA SHALE

HAYNESVILLE + FAYETTEVILLE

MID-CONTINENT

EAGLE FORD SHALE

ROCKIES

BARNETT SHALE

GULF COAST

PERMIAN BASIN

WILLISTON/ BAKKEN

CANADA

INTERNATIONAL

23%

74%

30%

25%

16%

14%

13%

10%

7%

5%

22%

15%

77%

70%

75%

84%

86%

87%

90%

93%

95%

78%

85%

RECYCLED DISPOSED

PERCENT OF FLOWBACK WATER PER COMPANY 
METHOD OF RECYCLING WATER

PERCENT OF SAMPLE RECYCLING WATER 

FILTER 

SOLIDS ONLY

54%

ADDITIONAL 

TREATMENT 

REQUIRED

46%
EXPECTING TO INCREASE USE OF RECYCLED WATER FOR FRAC 

DURING NEXT 2-3 YEARS

______________________________________________________________________

0% 20% 40% 60% 80

TOTAL SAMPLE

MARCELLUS/ UTICA SHALE

HAYNESVILLE + FAYETTEVILLE

MID-CONTINENT

EAGLE FORD SHALE

ROCKIES

BARNETT SHALE

GULF COAST

PERMIAN BASIN

WILLISTON/ BAKKEN

CANADA

INTERNATIONAL

55%

50%

67%

68%

60%

100%

86%

100%

67%

56%

58%

26%

12%

5%

8%

10%

31%

16%

21%

20%

32%

16%

20

9%

32%

YES MAYBE NO DON'T KNOW

PERCENT OF TOTAL SAMPLE 
RECYCLING & DISPOSAL OF FLOWBACK W

AVERAGE COST PER BARREL 

_____________________________________________

0%

10%20%30%40%

$1.00 OR LESS $1.01 TO $2.00 $2.01 TO $3.00 $3.01 TO $5.00 

21%

23% 23% 23%

17%

35%

17%

21%

RECYCLING COST DISPOS

PERCENT OF TOTAL SAMPLE 

MEDIAN RECYCLING COST PER BBL: $2.50

MEDIAN DISPOSAL COST PER BBL: $2.00
“ARE YOU ANTICIPATING ANY PROBLEMS WITH ONGOING A

DISPOSAL WELLS IN THE AREAS WHERE YOU ARE DRIL

______________________________________________________________________

0% 20% 40% 60% 80

TOTAL SAMPLE

BARNETT SHALE

MARCELLUS/ UTICA SHALE

PERMIAN BASIN

EAGLE FORD SHALE

ROCKIES

MID-CONTINENT

GULF COAST

WILLISTON/ BAKKEN

HAYNESVILLE + FAYETTEVILLE

CANADA

INTERNATIONAL

22%

71%

50%

43%

33%

25%25%

22%

21%

20%

10%

11%

10%

9%

19%

4%

25%

5%

21%

8%

19%

6%

68%

41%

38

63%

50%

70%

78%

58%

72%

71%

83%

YES IN SOME CASES/ AREAS NO PRO

PERCENT OF TOTAL SAMPLE 
ACTIONS TAKEN TO ADDRESS SHORTAGE OF DISPOSA

0% 20% 40% 

DRILL OUR OWN WELLS

RECYCLING OPTIONS

TRUCK OUT

UNDER EVALUATION

46%

34%

16%

12%

PERCENT OF SAMPLE WITH ANTICIPATED SHORTAGE OF DISPOSAL WELLS 
APPROACH TO WATER TREATMENT MOST LIKELY TO 

0% 25% 50% 

WILL USE 3RD PARTY

TECHNOLOGY

PROVIDER

PERFORM WATER

TREATMENT IN HOUSE

WILL LOOK TO

SERVICE COMPANY/

FRAC PROVIDER

6

36%

27%

PERCENT OF TOTAL SAMPLE 
PREFERENCE FOR SINGLE INTEGRATED SUPPLI

FOR WATER TRANSPORT, STORAGE AND TREATMENT

______________________________________________________

0%

25%50%75%

100%

TOTAL SAMPLE MAJORS LARGE

INDEPENDENTS

MED/ S

INDEPEN

47%

73%

45% 46%

53%

27%

55% 

PREFER SINGLE INTEGRATED SUPPLIER PREFER SEPARATE S

PERCENT OF TOTAL SAMPLE 
Overall Trend & Future is Pos

Potential Risks to Monitor

• Regulatory (air emissions & water)• Economy (particularly if oil prices dip below $75)

Advances in Technology to Monitor

• Sliding Sleeves• Water recycling

• Frac techniques• Subsurface characterization and understanding
Questions?