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Unconventional and Deepwater Developments have Transformed the U.S. Oil & Gas SupplyIHS ENERGY

2013 Well Completions

• Horizontal - Gas

• Horizontal - Oil

• Vertical - Gas

• Vertical - Oil

Primary Play Type

Shale/Tight Gas

Shale/Tight Oil

Sub-Salt Miocene and Lower Tertiary Plays Fuel Growth in the Deepwater GOMAnalysis of permitting activity in the Gulf of Mexico (GOM) suggests the Miocene and the overlapping Miocene Sub-Salt and Lower Tertiary play areas remain the hot spot for permitting activity in the post-Macondo period, with other play areas seeing only sporadic permitting activity. Examination of new well permit submissions across plays reveals a concentration of planned activity in the Miocene and the overlapping Miocene Sub-Salt and Lower Tertiary plays, accounting for close to 90% of total permits submitted in deepwater GOM. The decline in permitting submissions in the Miocene play is of concern, as it is responsible for the bulk of current production from the GOM deepwater and is in need of both infill drilling and close-in exploration in order to offset field decline. The continued focus on the Lower Tertiary and Miocene sub-salt portends significant longer-term growth and IHS expects future oil production from new developments to reach > 1.5 mmb/d over the next 10 years.

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Kaskida Heidelberg

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Sub-Salt Miocene and Lower Tertiary Plays Fuel Growth in the Deepwater GOM, Source: IHS Energy Vantage and Growth Play Service

Two Plays Leading The ChargeTight-oil development has led the resurgence in North America’s oil production. Two plays — the Bakken Shale in North Dakota’s Williston Basin, and the Eagle Ford Shale in Texas’s Gulf Coast Basin — have provided the most significant volumes and are each producing more than 1,000,000 b/d. Exploration and development continue in prospective basins across the continent, although no play has yet yielded the commercial opportunities for growth found in the Bakken or Eagle Ford.

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Supply Transformation EconomicsOnce a play is delineated, resource play development is generally characterized by offering lower risk profiles than many conventional opportunities, and providing greater scalability for aggressive product growth. However, the range in breakeven economics for domestic tight-oil investments can differ significantly by play, and even within a play. Insight gathered using IHS tools such as IHS Fekete and IHS Enerdeq Browser combined with the forward-looking commercial analysis from IHS North America Supply Analytics aids operators in their search for the most prospective acreage within resource plays.

Breakeven point for select North American Oil Plays. Average breakeven economics denoted in red. Source: IHS North America Supply Analytics

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Production Trajectory for Major Tight Oil Plays

Eagle Ford (IHS Jan 09 - Oct 13)

Niobrara (IHS Jan 10 - Oct 13)

Wolfcamp (IHS Jan 06 - Sep 13)

Bone Spring (IHS Jan 03 - Sep 13)

Mississippian (IHS Jan 09 - Jul 13)

Bakken, Three Forks (IHS Jan 00 - Oct 13)

Transforming Reserve CompositionsThe unconventional revolution has not only transformed the supply outlook in the United States, but has also transformed the oil and gas companies developing this large resource. As the oil-to-gas price ratio has remained at historically high levels, operators have been allocating a larger proportion of capital expenditures toward liquid weighted unconventional plays. As a result, we’ve seen a dramatic shift in the reserve composition for many producers in a very short period of time.

2009 – 2012 Liquid Weighted Reserve Compositions. Source: IHS Energy

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ihs.com

March 2014

About IHS EnergyIHS Energy, part of IHS (NYSE: IHS), is the industry’s authoritative provider of information, analytics, and insight to help clients understand the interconnected, dynamic forces that shape energy markets and asset performance. Our experts and analytical tools enable clients to continuously improve their strategy and operations across the entire energy value chain, covering oil & gas, coal, power, and renewables.