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HOW UNCONVENTIONAL OIL & GAS REPORTAUDIENCES CONSUME DIGITAL MEDIA67% COMPUTERVIEW OUR MEDIAON WEB BROWSERS ON AANNUAL INCREMENTALGOVERNMENT REVENUE*160130FederalrevenueBENTEK’S ESTIMATED INTERNAL RATE OF RETURN AT VARIOUS WTI PRICES*State andlocal revenue 50/bbl 60/bbl 70/bbl40352014%30201510UintaBarnettPiceanceUtica dryDuvernayHaynesvilleFayettevilleGreen RiverPowder RiverGranite WashMarcellus dryCana WoodfordArkoma WoodfordSCOOPBakkenUtica wetMontney BCAnadarkoMississippianEagle Ford oilMarcellus wetDenver-JuesburgPermian MidlandPermian Delaware*June 9 price assumptions: Gas 12-month forward cure for each regional pricing unit ( range 1.86-2.95/Mcf ). NGLs weighted average /bbl, 12-month forward average Mont Belvieu, Tex., prices (range 2005-27.10/bbl). For oil, Bentek’s model used the 12-month forward curve average for West Texas Intermediate plus or minus a basin price diferential (range 48.06-66.17/bbl) depending on the basinand its diferential.Source: Slide presented at Benposium 2015 hosted by Bentek Energy, a unit of Platts.mated IRR for a typical well. The Bentek analysis forecasts the relative viability of each region.The IRR generally drives rig movements and drilling activity, Comptonacknowledged “exogenous factors” suchas hedging also influence well economics.Bentek’s IRR estimates, which cover some 20 basins, are unadjusted forhedges. The IRR model analyzes information from earnings calls, investorpresentations, financial statements, andnews releases.The model devised by Bentek con-siders drilling and completion (D&C)costs, operating expenses, initial production rates, decline curves, production taxes, and royalty rates.As of June, Bentek said D&C costsranged from 4-12 million/well depending upon the unconventional play.The June IRR analysis was based onfirst-quarter results.“The IRR is largely driven by whatproducers are reporting,” Comptonsaid. Price assumptions included the12-month forward curve average for regional gas pricing. For NGLS, Bentekused the 12-month forward curve aver-age for Mont Belvieu, Tex., by productprices applied to each basin’s individualNLGs composition.For oil, Bentek’s model used the12-month forward curve average forWest Texas Intermediate plus or minus a basin differential. As of June 9,the oil price range was 48.06-66.17/bbl depending on the basin and its differential.“We can get a smaller level than justthe basin level,” Compton said, addingBentek has been hired to provide suchanalysis for specific areas within a particular play.Study outlines policy strategy for unconventional developmentUnconventional oil and gas presentsperhaps the single largest opportunity to improve the trajectory of the USeconomy, said a report released by Harvard University Business School (HBS)and Boston Consulting Group Inc.(BCG).Economic benefits can be achievedwhile mitigating environmental risksfrom horizontal drilling and hydraulic fracturing, researchers said, notingthat “unproductive, divisive, and oftenmisinformed debate about our energystrategy” currently threatens economicgoals.The report was written by Harvardbusiness professor Michael E. Porterand BCG partner and managing director David S. Gee in Washington, DC,181507uogr 18 18SPECIAL REPORT T H EJ O U R N A LO FE N E R G YF R O MI N N O V A T I O NVOLUME 3 NUMBER 4JULY/AUGUST 2015Dakota Prairie Refining sells diesel, mulls expansionPaula DittrickEditorDakota Prairie Refining LLC officialshosted a grand opening in late June tocelebrate the start up of the first US refinery in about 40 years. DPR startedselling commercial diesel from production at its recently commissioned refinery west of Dickinson, ND, in StarkCounty during May.Impetus behind the refinery, whichprocesses Bakken crude oil, was accelerated by North Dakota’s increasing demand for diesel fuel for trucks and in-dustrial demand. Much of that increasestemmed from activities associated withBakken formation oil and gas development.“An opportunity like this only happens once in a lifetime–to be at a newstartup refinery,” Mary Trost, DPR plantmanager, told reporters during the June29 grand opening. “Everything was builtat once, everything was sized correctly,it all fits together.”She compared that to working withrefineries that have been upgraded asneeded throughout the life of the plant.“You don’t have a lot of the problems [as] with an older refinery,” gettingequipment to fit in a plant built decadesearlier, Trost said, adding “You have allthis work to do,” in a typical modernization.Named DPR plant manager in January, she has 25 years of experience inrefining and petrochemicals, most recently as operations manager at BP PLC’sCherry Point Refinery in Blaine, Wash.Another difference between DPR andother refineries is that DPR processescrude oil produced regionally vs. crudeoil delivered by tankers or interstatepipelines. Trost noted she welcomesworking with oil produced regionally, ashift from her previous jobs at refineriesin Washington and Texas.“To be out here where all these wellsare–you have a much closer interactionwith the people doing the drilling andproduction,” Trost said. “That’s been fantastic.”DPR also is evaluating the potential forimplementing modifications that couldincrease the plant’s crude throughputcont’d on p. 3Dakota Prairie Refining built a large tank farm to hold Bakken crude oil for processing and also to temporarily store products. Photo from MDU Resources Group Inc.p. 14p. 19PRSRT STDUS POSTAGEPAIDLEBANONJUNCTION KY PERMIT#848ELECTRONIC SERVICE REQUESTEP.O. Box 3264, Northbrook, IL 60065-3261507uogr 1 1FGE:US shale shows resilence as OPEC reactsPOINT OF VIEW: Volker sees Whiting Petroleumrigged to run and prosper at 50-60 oil7/27/15 3:07 PM2030Source: Boston Consulting Group and Harvard Business School CompetitiveImpacts Model (please refer to Appendix 1 for detailed methodology) inreport entitled “America’s Unconventional Energy Opportunity” by MichaelE. Porter, David S. Gee, and Gregory J. ages/unconventional-energy.aspx502020*From unconventional oil and gas**Figures include incremental impacts from possibly reversing the ban oncrude oil exports as well as incremental impacts from LNG exports.Government revenues include personal and corporate taxes. State and localtaxes also include severance and ad valorem taxes. Revenues includeincome generated from federal royalties and lease payments to privatelandowners. Figures are rough estimates.25along with Gregory J. Pope, BCG principal in San Francisco.Researchers outlined a policy strategy for unconventional oil and gas development. The report, entitled “America’sUnconventional Energy Opportunity,”concentrated on shale plays and tightoil. Researchers excluded oil sands,extra-heavy oil, coal-to-gas conversion,and coalbed methane from the report.Previously, HBS launched a US Competitiveness Project, which showed thebusiness environment’s overall quality has declined in key areas, including skills, infrastructure, cost of doingbusiness, and corporate tax structure.Among various reasons, HBS blamed“partisan political gridlock.”Unconventional oil and gas presents“a once-in-a-generation opportunity tochange the nation’s economic and energy trajectory,” the HBS-BCG reportsaid. So far, much of the unconventional focus has been on the upstream.“With proper policies and actionsby the industry and other stakeholders,this economic opportunity can furtherspread into downstream industries, suchas petrochemicals and energy-intensiveindustries, and more broadly throughout the economy,” the report said.Threats to energy developmentLow commodity prices are unlikelyto hinder a fundamental US competitive advantage over the next severaldecades, researchers noted. But publicsupport for unconventional develop-ment, and especially hydraulic fracturing, appears to be declining and is considered a threat.Opposition reflects both legitimateconcerns and widespread confusion, researchers said. The HBS-BCG report listed the following issues that the US mustaddress to ensure its unconventional oiland gas potential can be achieved: Continue timely development of additional pipelines, gathering systems, and processing plants. Deliver a skilled workforce across awide variety of occupations. Eliminate outdated restrictions ongas and oil exports. Minimize local environmental risksto water, air, land, and communities. Develop transparent and consistentUnconventional Oil & Gas Report July/August 20157/27/15 3:08 PMenvironmental performance data. Set robust regulatory standards tospeed adoption of industry-bestpractices. Strengthen regulatory enforcementand producer compliance.Significant progress has been madein improving regulatory standards inmost energy-producing states, the report said.“There is no inherent trade-off between environmental protection andcompany profitability. With sound regulation and strong compliance, the costof good environmental performanceis modest and gives companies a levelplaying field,” HBS-BCG said.59% PDFVolker: Whiting Petroleum rigged to runand prosper at 50-60/bbl oilPaula DittrickEditorWhiting Petroleum Corp. has positioned itself to make money at 50-60/bbl oil, said James Volker, Whiting chiefexecutive officer, adding he believes thecompany can prosper at current oilprices and still boost production.“We have good assets, and we areimproving efficiencies through newtechnologies,” Volker said during aninterview with UOGR at Whiting’s corporate “We have used geoscience, reservoir, and operations engineering tomake our company work at 50-60/bbloil. We have approximately 133,500boe/d and 7,450 good locations in theBakken. We were taken there by corework to be where we can produce frommore than one zone. We study old vertical wells and then do core work on thenew wells we drill.”Whiting’s production and reservesare more than 80% light, sweet crudeoil, Volker said, adding he believes thecompany is one of the most oil-focusedindependents in North America.He attributed the company’s owncore lab at corporate headquarters forenabling Whiting to capture the sweetspots in the Bakken/Three Forks ofNorth Dakota and the Niobrara innortheastern Colorado.Core samples analyzed by Whiting’slab technicians and decisions madeFROM DOWNLOADABLE“The sale was consistent with ourplans to sell mature properties havinghigher lease operating expenses (LOE)per barrel of oil equivalent than ourcore Bakken and Niobrara assets,” Volker said. “LOE for the properties averaged 25/boe vs. 6.50/boe in the Bakken and 9/boe in our core Niobrara.”Whiting develops, acquires, andproduces oil, gas, and natural gas liquids primarily in the Bakken/ThreeForks plays in North Dakota, the Redtail Niobrara play in the northeasternDenver-Julesburg basin of Colorado,and an enhanced oil recovery field inthe Permian basin.POINT OF VIEWRedtail is promisingRedtail field is Whiting’s “economic sweet spot in the Niobrara,” Volkersaid, adding it’s about a 3-hr drive fromdowntown Denver to Weld County,Colo.Whiting has assembled 184,348gross (134,027 net) acres in Redtailwith an average working interest of73%. It has established production infour zones: the Niobrara A, B, C, andthe Codell/Fort Hays formations. As ofDec. 31, 2014, the independent had amix of 960 and 640-acre spacing unitsand 6,685 potential drillsites in the D-Jbasin oil window.During the first quarter, Whiting’sRedtail assets produced 13,000 boe/d,James Volker,Whiting Petroleum chairman, president, and chief executive officerwithin 48 hr while the rig remains inthe field are credited with saving thousands of dollars and eliminating theneed to move rigs back and forth pending executive decisions, he said.During April, Whiting sold older, conventional properties to a private buyerfor 108 million. The properties spanned4,000 wells, including several multiwellunits in 187 fields across 14 states.C O L O R A D O BRIEFSLilis Energy upsizesWattenberg dealLilis Energy Inc. of Denver amendedits agreement with a private seller andagreed to acquire an additional 375 netacres, bringing total undeveloped acreage being acquired in the transactionto 1,015 net acres in the core area ofWattenberg field, targeting the Niobraraand Codell formations.The additional acreage includesan average working interest of 4.48%and a total drilling commitment of 3.2million. In May, Lilis announced plansto acquire nonoperated leaseholdworking int

OKC Oilfield Expo *TBD SEPTEMBER/OCTOBER AD CLOSE: Sept 7 MATERIAL DUE: Sept 14 Bonus Distribution: NAPE Rockies, Oct 12 – 13, Denver, CO SEG Annual Meeting, Oct 16 - 21, Dallas, TX IPAA Annual Meeting, Nov 9