1. Calgary Petroleum Club – February 19, 2013 “Production Performance Unique Type Curve for Horizontal, Multi-Stage Frac'd Gas Wells: WHY, HOW and WHEN!” FLORIN HATEGAN Devon Canada Corporation

2. PRESENTATION OVERVIEW INTRODUCTION SPE 162749: HZ-MSF Production Type Curve Motivation: WHY? Simplicity: HOW? Timing: WHEN? Pre-Frac Testing Practices Review CONCLUSIONS

3. INTRODUCTION HZ Drilling, Multi-Stage Hydraulic Fracturing: Today is the norm throughout the industry Very High Drilling & Completion costs In WCSB over 5600 HZ Wells Drilled Over 4000 Wells for Gas and Liquid Rich Cost > 6 MM $$/well EUR > 4 Bcfe Low Commodity Prices Predicted SUCCESS IS RESERVOIR SPECIFIC “ONE SIZE FITS ALL” IS NOT THE ANSWER FIELD ANALOGIES ARE DANGEREOUS

4. INTRODUCTION HZ-MSF well EUR is critical! Stimulated Reservoir Volume (SRV) Fracture Contact Area (FCA) Linear Flow Spreadsheets Decline Curve Analysis Methods Power Law “Modified” “Stretched” Conventional Reservoir Engineering Models Consider right balance between reservoir properties and stimulation effectiveness

5. INTRODUCTION SPE 162749: HZ-MSF Production Type Curve

6. INTRODUCTION SPE 162749: HZ-MSF Production Type Curve

7. Motivation: WHY? (AEO2012) (1) by US EIA cut TRR by 42% Production Performance Overestimated Reservoir Engineering Abandoned Well Stimulation Misrepresented Arbitrary EUR Evaluation Techniques

8. Motivation: WHY?  Basic Reservoir Engineering Concepts Abandoned  Well Completion Effectiveness Misrepresented

9. Motivation: WHY? Production Performance Overestimated  MONTNEY British Columbia 19 HZ-MSF Wells 9 + stages 1600 m HZ lateral 12 – 50 months of production  CARDIUM Alberta 21 HZ-MSF Wells 10 – 12 stages 900 – 1200 m HZ lateral 8 – 24 months of production

10. Motivation: WHY? Production Performance Overestimated  MONTNEY British Columbia kh [ mDm ] 20 Yrs. ∆G [Bscf] 0.0803.65 0.0402.56 0.0161.60

11. Motivation: WHY? Production Performance Overestimated  CARDIUM Alberta

12. Motivation: WHY? Stimulated Reservoir Volume (SRV)  Mike Mayerhofer  =  “Godfather” of SRV Between 2006 – 2010 many SPE papers, articles  SPE 163833 ( February 4 – 6, 2013 ) “Change of heart” Authors distance themselves from SRV CONCLUDE: “Reservoir permeability is the main driver…..”

13. Motivation: WHY? Stimulated Reservoir Volume (SRV)

14. Motivation: WHY? Stimulated Reservoir Volume (SRV)

15. Motivation: WHY? Linear Flow Spreadsheets

16. Motivation: WHY? Linear Flow Spreadsheets

17. Motivation: WHY? Linear Flow Spreadsheets Input Data Results Production Type Curve

18. Motivation: WHY? Arbitrary Decline Curves & HIGHER “IP” = HIGER “EUR” Production Type Curve

19. Simplicity: HOW? Production Type Curve:  Pseudo Steady State Equation  Four Parameters Initial Pressure (Pi) Matrix Permeability (k m ) Wellbore Completion Skin (s’) Effective Drainage Area (A)

20. Simplicity: HOW? Conventional Flow & Buildup TestsProduction Type Curve: Pressure Permeability Skin

21. Simplicity: HOW? Modern Production AnalysisProduction Type Curve: Pressure Permeability Skin

22. Simplicity: HOW? Production Type Curve:  “Effective” Drainage Area

23. Simplicity: HOW? Production Type Curve:  HZ-MSF 9 Stages (Update: 1.3 Years)

24. Simplicity: HOW? Production Type Curve:  Divide HZ-MSF Total Well Production: Initial Pressure (Pseudo-Pressure) Formation Flow Capacity (km & h) Nr. of Frac Stages

25. Simplicity: HOW? Production Type Curve  15 HZ-MSF Wells 4 Fields (4 to 15 Stages)  HZ-MSF Well Production Examples

26. Simplicity: HOW?

27. Timing: WHEN? BEFORE COMMITTING TO HZ-MSF LARGE CAPITAL! $$$$$$

28. Timing: WHEN? THINGS TO DO:  VERTICAL WELL PILOT  PRE-FRAC TESTING Reservoir Pressure Net Pay & Matrix Permeability ===  Drainage Area HYDROCARBON VOLUM IN PLACE  HZ-MSF OPTIMIZATION STUDY  START WITH PRODUCTION TYPE CURVE Drilling & Completion Costs HZ Well Length Stage Frac Spacing & Well Spacing VERTICAL TO HZ WELL MULTIPLIER  RUN ECONOMICS  START HZ-MSF PROJECT

29. Pre-Frac Testing Review  DST Test First commercial DST in 1926  Wireline Formation Test In operation 1953 First RFT in 1975  DFIT Test Early 90s  PID Test Introduced in 2000 by BJ Services Canada

30. Pre-Frac Testing Review DST Test  Initial pressure (?)  Reservoir fluid (NO)  Permeability (NO)  Expensive  Often miss runs happen  Questionable results very tight formations

31. Pre-Frac Testing Review WIRELINE FORMATION TESTS  Initial pressure (?)  Reservoir fluid (Yes, ?)  Permeability (NO)  Save rig time  Poor results very tight formations

32. Pre-Frac Testing Review INJECTION-BREAKDOWN (DFIT) TESTS  Can help frac design ISIP Breakdown Closure  Initial pressure (NO, ?)  Reservoir fluid (N/A)  Permeability (NO)  May work for over- pressured, permeability systems outside the scope of this presentation

33. Pre-Frac Testing Review INJECTION-BREAKDOWN (DFIT) TESTS Over-Pressured, Milidarcy Range Reservoir

34. Pre-Frac Testing Review INJECTION-BREAKDOWN (DFIT) TESTS Over-Pressured, Milidarcy Range Reservoir HZ-MSF, 550 m lateral, 8 Stages

35. Pre-Frac Testing Review INJECTION-BREAKDOWN (DFIT) TESTS Very Tight Gas (Nano-Darcy), Vertical Well, Two Intervals

36. Pre-Frac Testing Review INJECTION-BREAKDOWN (DFIT) TESTS Very Tight Gas (Nano-Darcy), DFIT 1

37. Pre-Frac Testing Review INJECTION-BREAKDOWN (DFIT) TESTS Very Tight Gas (Nano-Darcy), DFIT 2

38. Pre-Frac Testing Review INJECTION-BREAKDOWN (DFIT) TESTS Very Tight Gas (Nano-Darcy), POST-FRAC COMMINGLED Typo!

39. Pre-Frac Testing Review INJECTION-BREAKDOWN (DFIT) TESTS Very Tight Gas, (Nano-Darcy) Vertical Well, DFIT

40. Pre-Frac Testing Review INJECTION-BREAKDOWN (DFIT) TESTS Very Tight Gas, (Nano-Darcy) Vertical Well, POST-FRAC BUILDUP

41. Pre-Frac Testing Review INJECTION-BREAKDOWN (DFIT) TESTS HZ Well, DFIT (Repeat Test)

42. Pre-Frac Testing Review DFIT 1Repeat DFIT

43. Pre-Frac Testing Review INJECTION-BREAKDOWN (DFIT) TEST  Tool for frac engineers!  Pi & k may be obtained for “mD” rocks  Does not work for “sub mD” rocks UNKNOWN FRACTURE GEOMETRY UNKNOWN NET PAY TESTED

44. Pre-Frac Testing Review Perforation Inflow Diagnostic (PID) Test  Most Successful Pre-Frac Test Available INITIAL PRESSURE MATRIX PERMEABILITY RESERVOIR FLUID IDENTIFICATION  Simple Wellbore Configuration  Cost Effective  Works Every Time (> 90 %)  Easy to Analyze  Net Pay Controlled by Perforation Configuration  PROVIDE UNIQUE SOLUTION!

45. Pre-Frac Testing Review Perforation Inflow Diagnostic (PID) Test  Wellbore Configuration

46. Pre-Frac Testing Review Perforation Inflow Diagnostic (PID) Test  Vertical Well: 3 Intervals

47. Pre-Frac Testing Review Controlled Net Pay Where:n – meters of guns [m] - gun frequency [shots/m] d – perforation diameter [m] d H kfkf k v = 0 d H

48. Pre-Frac Testing Review Perforation Inflow Diagnostic (PID) Test  PID Analysis (McKinley Type Curves)

49. Pre-Frac Testing Review Perforation Inflow Diagnostic (PID) Test  PID Analysis Results & HZ-MSF OPTIMIZATION

50. CONCLUSIONS 1.UNIQUE TYPE CURVE FOR HZ-MSF WELL PRODUCTION EXISTS 2.CONVENTIONAL APPROACH FOR PRODUCTION EVELUATION OF HZ-MSF COMPLETIONS WORKS PSS Equation (P i, k m, A, s’, n) 3.IN-SITU k m & P i CONTROL AND DETERMINE HZ-MSF EUR 4.PID TESTING IS THE MOST ACCURATE PRE-FRAC TECHNIQUE P i, k m 5.DFIT TEST IS A GREAT TOOL FOR FRAC ENGINEERS ISIP, Breakdown, Closure, Tortuourosity 6.MAYERHOFER et al, PULLED THE PLUG ON “SRV”

51. THANK YOU!