EAGLE FORD SHALE

MARCUS MINTONADAM CARD

JASON NORMANRYCKUR SCHUTTLER

TABLE OF CONTENTS

Description of Shale History of Eagle Ford Shale Play Current Production/Investments Challenges Future of Eagle Ford

DESCRIPTION OF SHALE• Formed millions of years ago from the layering of organic material

• After exposure to high temperatures and pressures over millions of years, the layers of organic material lithify into oil shale

• Oil Shale is a fine-grained sedimentary rock composed of significant amounts of kerogen- A solid mixture of chemical compounds from which liquid hydrocarbons can be extracted

• Estimates of global deposits range from 2.8 trillion to 3.3 trillion barrels of recoverable oil

HISTORY OF EAGLE FORD

• Named after Eagle Ford which is a small settlement between Trinity and Arcadia Park

• Occupies approximately thirty-five counties and extends from the Mexican border, north of Laredo, roughly 50 miles wide and 400 miles long

• Bedded below the Austin Chalk and above the Buda Lime with an average thickness of 475 feet

• Ages between 65 million years and 144 million years, and was formed during the Cretaceous Period

• First well drilled on the Eagle Ford Shale was in 2008 by Petrohawk

“The Eagle Ford Shale is full of oil in most locations in the eastern group of South Texas counties in the Austin Chalk trend. It is a fractured, brittle, often micaceous and fossiliferous black shale with occasional recrystallized, oil-carrying dolomite streaks as much as 10-20 feet thick.” (World Oil,” Feb. 1, 1978)

CURRENT PRODUCTION/INVESTMENTS

• First well drilled had a vertical depth of 11,141 feet and diverted 3,200 feet laterally and flowed at a rate of 7.6 million cubic feet of natural gas per day

• Numerous companies now acquiring leases –Chesapeake and Apache are the two largest with companies like Anadarko, BP, ConocoPhillips, EOG Resources, and Shell right behind them

• At least 27 companies have attained leases in the Eagle Ford Shale

• 252 of the total 851 permitted wells have been completed in the 30+ fields as of October 6, 20120

• Most wells are drilled to an average vertical depth of 11,000 feet and between 3,500 and 5,000 feet horizontally with at least 10 fracturing stages

Base of Eagle Ford Shale in Burleson Co., Tx. (Roughly middle region of shale play)

Well Log from a location in the Eagle Ford Shale

Shallow, Medium and Deep induction ray [Gamma on left (dashed line) SP on right (solid line)]

Note:At the base of the Shale in this region, all three rays are highly resistive meaning: •Low probability of water

•Rock is “tighter” or fined grained

• Formation would have to be fractured or even drilled horizontally to extract the hydrocarbons

Exploration

Obtaining land lease and mineral rights

Drilling

Profit

Ideal Scenario for Oil Companies

CHALLENGES

• Due to the fine grained compact nature of the shale, the wells have to be fractured sometimes in multiple stages to exploit the hydrocarbons

• Many recent news stories claim that formation fracturing can contaminate ground water supply—Though not proven, it is still an obstacle due to a growing public opinion

• The process of hydraulically fracturing a well requires potentially millions of gallons of water– With water being scarce in dry south Texas, the companies can not afford to make any wasteful mistakes

• The process of exploiting the Eagle Ford Shale requires companies to employ precisely engineered horizontal drilling methods—On average wells are drilled with approximately 3500 to 5000 feet of deviation

FUTURE OF EAGLE FORD SHALE• The eight major companies in the play plan to spend over $1billion in 2010

• Given the recent setbacks to deep-water drilling in the Gulf of Mexico, many companies are now giving higher priority to the Eagle Ford Shale

• Future of Eagle Ford Shale will be active with many top players vying for their share of America’s latest large scale petro-resource play

“Jan 19 (Reuters)-Oil and gas company Pioneer Natrual Resources Inc (PXD.N) siad initial production from its second well in the Eagle Ford shale in Texas beat its estimates and it is looking for a joint venture for the shale…”

“The Eagle Ford Shale play is one of these hot emerging areas” Lanny Pendill-Edward Jones Investments

“With the highest gas rate reported to date in the play, the Crawley z1 exceeded our expectations and confirms that dry gas wells provide strong economics at today’s prices” CEO Pioneer Natural Resources Scott Sheffield