refrac pulse 8.2015

$: Refrac Pulse 8.2015$
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August 2015

Refrac Pulse

Permits | Completions | Proppants | Additives | Production | Forecast

Report Summary

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Note: Bakken does not show significant recompletion activity therefore it is excluded from analysis.

Report Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

US OverviewEarly Completion Overview . . . . . . . . . . . . . . . . . . . . . . . . . . 4Refracture Tracking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Refracture Proppant Detail . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Texas OverviewState Recompletion Overview . . . . . . . . . . . . . . . . . . . . . . . . 7

Texas Refracture TrackingEagle Ford . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Permian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9MidCon. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Oklahoma OverviewState Recompletion Overview . . . . . . . . . . . . . . . . . . . . . . . . 11State Refracture Tracking. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Pennsylvania OverviewState Recompletion Overview . . . . . . . . . . . . . . . . . . . . . . . . 13State Refracture Tracking. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

West Virginia & Utah OverviewState Recompletion Overview . . . . . . . . . . . . . . . . . . . . . . . 15

Permits | Completions | Proppants | Additives | Production | Forecast 3

Report Highlights

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*Due to addition of Oklahoma permits along with refinement of permit gathering filters, there have been ~10,000 added permits to this months report.

Texas • Responsible for the largest share of recompletion permits and refractures in the United States, Texas decreased recompletion permits by 21%

and refractures by 67% in July over June.• The only Texas basin with refractures in July 2015 was the Permian, with 2 refractures. • This is the lowest number of refractures in Texas in the last twelve months.

Pennsylvania• From June to July, Pennsylvania decreased refractures by 25% after decreasing their recompletion approvals by 61%. • Pennsylvania, where completions are mainly horizontal and use raw sand proppant, has continued this trend with their refractures, which also

are horizontal completions with raw sand proppant.

Oklahoma• An addition to this report, Oklahoma has seen similar trends as Texas and Pennsylvania – declining approvals and refractures.• Oklahoma had one refracture in July 2015, after a month which yielded no refractures. • This refracture in July comes after a three month period (May – July) where there have not been any recompletion approvals.

Montana & West Virginia• These states continue to receive recompletion approvals, but have yet to see any refractured wells. • July resulted in 2 recompletion approvals, one per state. These approvals come after a month where no recompletion approvals were received

by either state.

• NavPort identifies early recompletions by the filing purpose on approved permits. The numbers above display the number of approved permits regardless of completion status.

• NavPort deems a well a refracture when a new hydraulic fracture is completed resulting in a second FracFocus disclosure, in conjunction with a permit containing a filing purpose of recompletion


Early Recompletion Overview: U.S. Only

• NavPort identifies early recompletions by the filing purpose on approved permits. The numbers above display the number of approved permits regardless of completion status.

• Overall, permit approvals declined by 34% from June 2015 to July. Prior to the decrease in July, permit approvals in 2015 have continued to see altering periods of increase and decrease; however, since January the market share for recompletion approvals has increased from 8% in February to 11% in July. This suggests that operators, though decreasing their approvals, have shifted their focus towards recompletions.

• Texas, Montana, and West Virginia all experienced an increased number of recompletion approvals in July 2015 over June. Recompletion approvals represented a 12% market share in Texas in June, and increased to 17% in July, signifying the largest percentage growth in recompletion approvals during this time.

State New Drill Recompletion Other

Texas 81% -7% 17% 42% 2% 50%

Pennsylvania 90% 11% 10% -47% 0% -

Montana 80% -20% 20% 20% 0% -

Colorado 100% - 0% - 0% -

Utah 100% - 0% - 0% -

West Virginia 54% -46% 1% 1% 45% 45%

Distribution of Filing PurposeJuly 2015 and % Change over June 2015

Detail by Filing Purpose: Permit Approved Date – Last 12 Months

Permit Tracking by Filing PurposeAugust 2015 – July 2015 by Month

Note: Table shows states where recompletion permits have been filed. Note: Includes Texas, Pennsylvania, Colorado, West Virginia, Oklahoma and Utah.

Note: Information above relates to permits only.


Refracture Tracking: U.S. Only

• NavPort deems a well a “refracture” when a new hydraulic fracture is completed resulting in a second FracFocus disclosure, in conjunction with a permit containing a filing purpose of recompletion.

• Although the market for recompletion permits has increased, over the past 8 months, the number of refractures has declined by 78%.

• In 2014 most refractures were completed on vertical wells. This is most likely due to scale and build up, which can be repaired by recompleting or reentering a well. In 2015 to date, the number of horizontal refractures has increased 11% over the same period in 2014. This is most likely due to the growing attention around refrac’s as operators return to horizontal wells in order to fracture the space in between original stages.

Refracture Completion Tracking: by State

Refracture Tracking by Month: Fracture Date August 2014 – July 2015

Refracture Completion Tracking: by Trajectory

Note: Only states where refractures have been completed. Note: Only states where refractures have been completed.

Note: Although West Virginia, Utah, Colorado, and Montana have recompletions filed, there have not yet been any reported refractures completed in those states in the above timeframe.


Refracture Tracking: U.S. Only

• Since January 2014, the percentage of wells using sand only proppant in refractures increased from 13% share to a 82% share in July 2015.

• Drilling into the Eagle Ford, 58% of refractures are using ceramic only proppant although ceramic proppant only makes up 8% of the proppant mass consumption. This suggests that in the Eagle Ford, refractures with ceramic only proppant are of lower intensity than sand only refractures.

• The Permian basin, also using premium proppant in refractures, completes 56% of refractures using sand + resin proppant. The market share by mass portrays a similar story, with well using a tail-in of premium proppant responsible for 51% of total Permian proppant mass.

Note: The Marcellus was excluded as it uses 100% sand only proppant

Well Count Proppant Trend: by Well Count Proppant Detail: Fracture Date August 2014 – July 2015

Eagle Ford

MidCon

Permian

Proppant Market: by Well Count Proppant Market: by Mass


State Recompletion Overview: Texas

Recompletion Approvalsby Basin

Recompletion Tracking: Approval Date August 2014 – July 2015

• After experiencing a 56% decrease from October to November, recompletion approvals in Texas have experienced minor increases and decreases, averaging 137 recompletion approvals per month.

• Recompletion approvals have remained constant over the past 9 months, hovering around 140 approvals per month.

Note: The maps represent the areas with recompletion approvals.

Recompletion Approval Mapping


Refracture Tracking: Eagle Ford

Well Refracture Tracking: by Trajectory

Note: Market shares are representative of the top companies by refrac completions

• The Eagle Ford, with the lowest number of refractures among Texas basins, has decreased refractures since October 2014. Operators have decreased their number of refractures as well as decreasing the number of months where refractures were reported.

• Combined, Q1 and Q2 2015 have shown 55% less refractures than Q4 2014, suggesting that the operators in the Eagle Ford are not as prepared to refracture wells as those in other Texas basins.

• Cantera Operating, jumping to the top of the operator market for refractures, represents 50% of all Eagle Ford refractures.

• The service provider market was more diverse, with Trican Well Service and Halliburton accounting for a combined 57% share.

Refracture Market: June 2014 – July 2015by Operator

Refracture Market: June 2014 – July 2015by Well Service Provider


• After decreasing refractures by 56% from October to November 2014, in December, the number of Permian refractures rebounded.

• After two months (December and January) of heightened refracture numbers, the Permian decreased refractures through July 2015. Overall from February to July, the number of refractures decreased by 78%.

• The operator refracture market in the Permian was comprised of several operators. The top 5 operators were responsible for 70% of refractures since August 2014.

• Cudd, representing the largest share of the refracture market in the Permian completed 27 refractures in the Permian from August 2014 to June 2015.

Note: Market shares are representative of the top companies by refrac completions.

Refracture Market: June 2014 – July 2015by Top Operator

Refracture Market: June 2014 – July 2015by Top Well Service Provider

Refracture Tracking: Permian



Refracture Tracking: MidCon (Texas Only)

Refracture Market: June 2014 – July 2015by Top Operator

Refracture Market: June 2014 – July 2015by Top Well Service Provider

• With 85 refractures in the last 12 months, the MidCon is the second most active Texas basin for refractures.

• In April 2015, the MidCon increased refractures (by 5 times) after experiencing a 75% decrease in March. Again, in May, the MidCon increased the number of refractures suggesting that this increasing trend may continue, however there have not been any reported refractures in June or July 2015.

• Cantera Operating, with 50% of Eagle Ford refractures also represents the largest share of refractures in the MidCon among other top operators.

• Halliburton and Baker Hughes combined to represent 50% of the refracture market in the Texas MidCon.




State Recompletion Overview: Oklahoma

Recompletion ApprovalsMidCon Sub BasinRecompletion Approval Mapping



• Oklahoma, with over 400 recompletion approvals in the last 12 months, experienced a decline in recompletion approvals earlier than other states.

• September 2014 experienced a 47% decline over August. However, unlike the completions market, the number of recompletion approvals increased 74% from October 2014 through January 2015.

• Before recompletion approvals could rebound to where they were in August, they declined again in February, March, and April before resulting in no reported approvals in May, June, or July.


Refracture Tracking: Oklahoma




• Similar to the basins in Texas, the refractures in Oklahoma have been completed on mainly vertical wells.

• Correlating to the recompletion approvals, the number of refractures in Oklahoma declined at the start of 2015 and experienced a hold on refractures in May and June, before one was reported for July.

• In Oklahoma, there seems to be some interest in refractures which will become more clear as the market begins to return.

• In Oklahoma, Chesapeake and BP America each represent 15% of the market with 12 wells total.

• Baker Hughes, entering the Oklahoma refracture market in Q4 2014, is likely to surpass Performance Technologies who have slowed their refractures in 2015.

Note: Due to several companies having one refracture, the “Other” category has been included in these market shares.


State Recompletion Overview: Pennsylvania

Recompletion ApprovalsMarcellus Shale BasinRecompletion Approval Mapping



• Pennsylvania, displaying a less effected market from the drop in oil, is still showing a downward trend in recompletion approvals despite their spikes in March and June.

• In July 2015 over June 2014, the number of recompletion approvals declined by 61%.


Refracture Tracking: Pennsylvania




• The major difference between Pennsylvania and Texas refractures over the last 12 months, is the trajectory. In Texas, 8% of refractures are horizontal while in Pennsylvania 100% of refractures are horizontal.

• After refractures declined in March and April, they rebounded in May and June with 14 total refractures.

• Despite the state of the market, Pennsylvania operators continue to refracture wells. This suggests that they are interested in continuing work although they may not be working on new completions.

• Southwestern Energy, with the largest refrac market in PA, has completed 10 refractures in the last 12 months, 80% of which were in 2015.

• Schlumberger, with the largest WSP market share has completed 100% of their refractures, in the last 12 months, in 2015.



State Recompletion Overview

Recompletion Detailby State

Recompletion Approval Mapping



• With no refractures to date, Montana and West Virginia continue to file permit approvals for recompletions.

• After experiencing a growth of three times in March 2015 over February, this elevated number of recompletion approvals declined in June, where there were no approvals and with only one in each state, in July, they have not yet rebounded.

• When the market begins to turn around, hopefully there will be some movement on the recompletion permits in these states.

refrac pulse 8.2015

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