1

2

3

The V. E. McKelvey diagram explains the relationship between resourcesand reserves

We are interested on economic reserves, i.e. reserves that can beeconomically exploited

The progress on geological and geophysical knowledge increases theidentified reserves

The progress on petrophysical knowledge of potential reservoirs and thedevelopment of new technology on well engineering (improving welldesign, well building and well completion) increases the amount ofreserves economically exploitable by decreasing the overall costs orimproving the productivity

The gas market can improve or reduces the amount of the economicreserves

4

Any economic history of a field can be split in four phases:

Exploration – Appraisal - development – production with different caskflow.

The utilization of new technology is sensible since exploration time andcan improve the final cash flow profile or reduce the break even time, evenif appears as higher initial cost

The two single most critical issues that minimizes the net value of a gas shaleasset are:

1. An incomplete understanding of the reservoir and

2. An under-utilization of modern technology”

The gas shale reservoir does not take the form of a conventional reservoir.These reservoirs do not require a trapping mechanism or structure inorder for HC to accumulate. While conventional reservoirs are porous andpermeable, shale gas reservoirs are assessed by measures of TotalOrganic Content (TOC), Thermal Maturity, and Mineralogy.

Whereas permeability is “micro or nano Darcy” and measurement is not ascritical as for conventional reservoirs.

The challenge in Continuous Formations (like Shale Gas) is not to find theShale, but rather to find those areas within the shale that will producecommercial amounts of gas.

Gas is stored in three ways within the shale

5

The development of shale has been possible thanks two alreadydevelopment techniques: horizontals wells and fracturing

Horizontal wells: this technology has been developed around the ‘80s , thefield “Rospo mare” in Adriatic sea has been the first oil filed developedwith horizontal wells in the world, since that the drilling increased

Fracturing: the artificial stimulation of rock by fracturing the reservoir rock,improving the permeability around the borehole started after the end of 2Nd

World War.

The two technology has been combined to have shale gas wells with aneconomic productivity

6

Characterize a shale gas reservoir:

Baker Hughes Shale Evaluation Suite™ services feature a customizedlogging program that delivers quality petrophysical analysis, includingmineralogy, resistivity, porosity, and geomechanical properties, as well asother key measurements.

In addition to conventional coring services, Baker Hughes offers awide range of wireline coring services, including rotary coring withPowerCOR™ (1-in. diameter) and MaxCOR™ (1.5-in. diameter) tools

7

8

Baker Hughes’ Shale Gas Evaluation Suite offers a variety of criticalanswers necessary for a comprehensive understanding of shale reservoirs.

By combining the Formation Lithology eXplorer™ (FLeX™) tool,RockView™ interpretation system, XMAC™ F1 acoustic service, andthe STAR™ product line of imaging tools, Baker Hughes can help tooptimize well placement, length, and orientation. Thoroughknowledge of the formation fracture systems and reservoir stressesallows for optimum completion and stimulation designs to maximizerecovery.

The data can also be used to improve drilling fluids design and tooptimize bit selections on future wells for a higher rate of penetration(ROP) with fewer borehole problems.

Determine the appropriate stimulation zones: the Shale EvaluationSuite provides an integrated approach for evaluating the formationand identifying reservoir sweet spots.

Baker Hughes integrates multidisciplinary expertise to determine reservoireconomics and to understand well architecture.

The experts minimize geological uncertainty using data acquisitioninstrumentation, geologic modeling software, and sophisticated loggingtechnologies designed to characterize subsurface environments.

Determine the economic value: the Reservoir Development Services (RDS)team uses computer mapping and volumetrics, advanced modeling, andrisk analysis to help to realize the potential of the reservoir and optimizefieldwide well placement

Reservoir characteristics have to be tied down as far as possible and thelikelihood of economically exploitable reserves assessed with a highdegree of confidence. RDS focuses frontier petrophysics on theoptimisation of field predictions of porosity, permeability and hydrocarbonsaturation in the absence of the usual controls on log interpretation.

10

It is evident from this example of comparison of five shale gas reservoirsfrom 5 different gas basing, that the mineralogy is not uniform, and eachfield need appropriates evaluation

11

AutoTrak™ and Reservoir Navigation Services let to drill with easydirectional control and reliable rotary steerable system performance.

Optimized well placement is achieved with monitored reservoir navigation.

Actual example of a typical completion of a shale gas well

Baker Hughes rotary steerable drilling systems and highperformance motors let you drill curved and lateral sections withprecise directional control, lowering your costs and reducingoperating time through higher ROP.

And by incorporating reliable Hughes Christensen Quantec™ bitsinto your BHA, you can achieve deep-penetrating cuttingperformance, even in extended-reach horizontal wells.

12

This is Kymera a new drill bit– combination of two products, pulling thebest of both to optimize the drilling action through tough and problemdrilling formations.

Rely on Baker Hughes Reservoir Navigation Services™ to adjustplanned wellbore trajectories in real time to accommodate formationdips and/or faults, ensuring optimal well placement for efficientcompletion, optimal stimulation, and maximum production.

13

The new drill bit technology improves the ROP (rate of peentartion)reducing the drilling time, reducing costs and the environmental footprint

14

15

An explorative pilot hole is necessary in order to explore directly the entireshale gas sequence, understand its stratigraphy and petrophysicalpaarmeters.

Once the target zone has been identified it is important to place the wellbore in the optimal part of reservoir following the natural dips in theformations and moving to follow faults. Today it is possible to usereservoir navigation services where engineers use the shale analysis withavailable seismic and offset well data to plan the trajectory of the well bore.During the drilling of the LWD data is monitored by experts located inremote centers and modifications are made to the trajectory to maintain thewell bore in the optimal zone..

Fractures made are contained in the shales

Reduce completion time by minimizing the number of trips into thewell

Baker Hughes customized fracture and completion systems,including the FracPoint™ system, can stimulate wells with 30 stagesor more, while our line of fluid systems and technologies increasesefficiency and maximizes wellbore performance.

16

Any fracturing job must be accurately planned , performed and monitored

17

Fracture Migration predicts the pressures necessary to initiate a formationbreakdown and propagate a vertical fracture.

A computed delta pressure profile is computed to indicate the increase intreatment pressure required to continue vertical fracture migration. Thatpressure has to exceed the closure pressure of the rock at each interval.

Zones where the closure pressure is higher may serve as barriers tofracture growth. Closure pressure can be considered a lower limitapproximation of fracture pressure

The profile takes overburden stress, pore pressure and dynamic Poisson’sratio (calculated from dynamic mechanical properties) as input.

18

Understand the rock mechanics and changes in stress regime duringfracturing Baker Hughes IntelliFrac™ service combines advancedmicroseismic services and pumping expertise to deliver cost-effective fracturing with real-time monitoring to maximize yourproduction.

The fracturing experts can optimize the efficiency of current andfuture stimulation job designs by accurately modeling the physicalparameters throughout the entire field.

19

The first proppant used were small round sand grains, now we offerceramic artificial well round and well sorted ceramic grains which do notcrush under closing fractures pressure

20

Today the technology offers alternatives solution to the water utilization forfracturing,

21

22