World Shale Gas Argentina Pluspetrol Unconventional Projects
Javier Iguacel VP Business Development
August 2014
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PLUSPETROL IS A PRIVATE E&P COMPANY, FOCUSED MAINLY ON LATIN AMERICA AND AFRICA Locations
2013 Key Figures Operated Oil & Gas Production
537 Mboed
Net Oil & Gas Production
158 Mboed
Total Proven Net Reserves
Oil Gas
30% 70%
886 MMboe
Strategic Partners
Production History (Mboe/d) 600 500 400
Oil
537
Gas
300 200 100 0 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13
2
First Vaca Muerta Horizontal Well Completed by Pluspetrol
3
Agenda
1. Unconventional reservoirs impact in the US 2. Pluspetrol’s project 3. Massive Development in Argentina
4
US unconventional activity is a game changer, with impact in several areas US Natural Gas Production 80 (Bcf/D)
70
US Crude Oil Production 15
Shale
Shale Oil
(MMBBL/D)
Tight
60
Conventional
Conventional
39%
50 40 21%
30
25,6 Bcf/D
10
14,3 Bcf/D
28%
3,5 MMBBL/D
72%
8,9 MMBBL/D
5
20 40%
10
26,3 Bcf/D
0
0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Fiscal 1,3% of Revenues
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Investments
Employment
Energy Deficit
Acreage Value
1% of GDP
2% of Labor Force
17% of consumption 30% (5.098)
Eagle Ford, based on transactions
172.541
87.302
17% (2.689)
3,0
108 0
Bln USD
2005 2012 2020
0
2005 2012 2020
Bln USD
0,0
2005
M/People
2012
2020
8.500
6% (1.106)
1,7
60
19.500
USD/Acre
MMBoe
2005
2012
2020
2010
2014
Argentina is the 2nd shale producer with 22.000 boe/d from 240 wells Source: EIA, IHS, Giga.
5
Agenda
1. Unconvetnional reservoirs impact in the US 2. Pluspetrol’s project 3. Massive Development in Argentina
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In June 2011 an Unconventional Reservoirs group was formed. Goals were defined. June 2011 Jan 2011
Start Point
Jan 2012
Jan 2013
Jan 2014
Pluspetrol Unconventional Business Team Vision:
By developing unconventional resources we aim to take the company to the next growth level maximizing Company's equity Objective
To develop unconventional reservoirs to contribute to achieve a desired growth goal set by the company Short Term Focus: Our Acreage: Understand and estimate the amount of unconventional resources available Understand what technical development, operation optimization, economics and market conditions are needed to convert this resources into reserves Other Acreage: Identify and acquire/participate in high potential unconventional blocks
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A five phase exploration plan was designed
Phase 0 Regional Screening
Phase 1
Phase 2
Phase 3
Phase 4
Acreage Pre-seleciton
Drilling of vertical wells & sweet-spot identification
Drilling of productivity pilot
Early production pilot
Full commercial development
Description
• Select focus areas • Obtain “big picture”
• Detailed research • Acquire data with little investment
• Drill vertical pilot • Drill production to characterize and pilot, vertical or obtain information horizontal • Start operational • Drill additional optimization verticals if needed
• Develop early • Roll out the pilot production scheme • Scale production • Optimize drilling, completion and facilities
Objective
• Identify sweetspots
• Identify locations for vertical pilots
• Identify location for early production pilot
• Obtain all necessary information to start commercial development
Currently here
• Understand how and how much to produce
Working plan was executed during 2011 and 2012. Wells were tested during 2013.
Jan 2011
June 2011
Jul 2012 to Jan 2013
(Start Point)
Jan 2012 Vertical Drilling
Jan 2013
Jan 2014
Drilling wells
Regional Map
• 8 wells with Vaca Muerta as primary objective
• 3 wells with VM as secondary objective • 7 Tight Gas wells to Los Molles in Centenario and Zapala • 1 Horizontal well in Puesto Silva (Starts testing in Sep 14) Puesto Silva Horiozntal Well Microseismic mapping
L. Jarillosa 3 wells
P. Silva 3 wells Monitor well
Zapala 1 Tight Gas well
A. Baguales 1 explo well
Cinco Saltos 2 explo well
Horizontal well
Centenario 2 wells VM + 6 Tight gas
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TIGHT GAS: Visualized Business Case Objective 1A - Understand and estimate the amount of unconventional resources remaining
Jan 2011
June 2011
Jul 2012 to Jan 2013
(Start Point)
Jan 2012
Drilling
Feb 2013 Jan 2013
Jan 2014
Completion days improvement
Map showing potential locations Central Norte 35 wells
Noreste 10 wells
Days
40
MOLLES (Only Tight)
29
Sudeste I 16 Wells
1st Frac/d +200% 0.5
MOLLES + LAJAS
1st
Sudoeste 5 Wells Infill 14 Wells
2nd
-38%
28 20
21
18
3rd
4th
5th
6th 1.5
1
1
3rd
4th
1.3 0.5
2nd
5th
6th
1st stage gas project in Centenario
45 wells development Source: Internal Presentation Feb 2013
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SHALE OIL Objective 1A - Understand and estimate the amount of unconventional resources available
Jan 2011
June 2011
Jul 2012 to Jan 2013
(Start Point)
Jan 2012
Drilling
Nov 2013
Testing
Jan 2013
Jan 2014
Regional Map
Findings 1) Proved acreage Horizontal wells: 320
Proved acreage (25,000 acres)
Technically Recoverable Reserves: 160 MMstb
2) Vaca Muerta is a world class shale with similar productivities than Eagle Ford. 1400 1200
P10
Vaca Muerta well type (1)
1000 800
P50
600 400
2000 m Horizontal length well type based on vertical well data
Eagle Ford well type (2) P90
200 0
1
2
3
4
5
6
7
8
9
10 11 12 Month
Source (1): Pluspetrol internal report Source (2): modified from Merryl Lynch well type for Eagle Ford (EOG)
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Objective A2 - Understand what technical development, operation optimization, economic and martket conditions are needed to convert this resources into reserves
Jan 2011
June 2011
Jul 2012 to Jan 2013
(Start Point)
Jan 2012
250
Drilling
Break Even @15% (u$s/Bbl)
Nov 2013 Jan 2013
Testing
Jan 2014
P90 EUR
200
150
P50 EUR
100 87 USD/bbl P10 EUR
2013 Costs
50 US Costs
Drilling and completion Cost
0
Source: Pluspetrol internal report (Nov 2013)
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Objective B – Work with BD to identify and aquire/participate in high potential unconventional blocks
Jan 2011
June 2011
Jul 2012 to Jan 2013
(Start Point)
Jan 2012
Nov 2013 Jan 2013
Jan 2014
Regional Map
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Objective B – Work with BD to identify and aquire/participate in high potential unconventional blocks
Jan 2011
June 2011
Jul 2012 to Jan 2013
(Start Point)
Jan 2012
Nov 2013 Feb 2014 Jan 2013
Regional Map
Jan 2014
Assets Aquired Total acreage : 687.000 acres Blocks operated by Pluspetrol La Calera Meseta B. Esperanza Aguada Villanueva
50% Pluspetrol 50% YPF
Blocks operated by YPF Las Tacanas Chasquivil Cerro Arena
45% Pluspetrol 45% YPF 10% G&P
Salinas del Huitrín All maturity windows included Oil Gas & Condensate Dry Gas
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Agenda
1. Unconventional reservoirs impact in the US 2. Pluspetrol’s project 3. Massive Development in Argentina
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Vaca Muerta development feasibility assessment
Critical Factors for Unconventional Resource Development
Pacer today (will change) for speed of market developments
Source: Accenture report
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Pluspetrol competitive advantages
Key competitive advantages for a successful shale development “If you don’t have a competitive advantage, don’t compete”, Jack Welch Normalized drilling & completion cost
1. Good quality acreage
2. Low cost operator
1st operator
41
1st operator
47
3. Reservoir understanding
Pluspetrol
43
Pluspetrol
51
4. Organization
3rd Operator
49
3rd Operator
• A multidisciplinary team was assigned full time to the project • The learning curve was transited
2013 Vertical wells
4th Operator
94
5th Operator
100
2013/14 Horizontal wells
4th Operator
62
100
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GROWING PRODUCTION FROM UNCONVENTIONALS COULD HAVE A MASSIVE SOCIAL AND ECONOMIC IMPACT IN ARGENTINA Production Rig Count
Oil (Mbbl/d)* 1000
Shale Production
800
Conventional Production
600 400 200 2033
2031
2029
2027
2025
2023
2021
2019
2017
2015
2013
2011
2009
2007
2005
2003
2001
0
350 300 250 200 150 100 50 0
298
286 Rigs in Eagle-Ford 2010-2014
220
Proj rigs in Vaca Muerta from 2014
113 41 14
18
30
40
45
45
1
2
3
4
5
6
years
Gas (BCF/d)* 12,0 10,0 8,0 6,0 4,0 2,0 0,0
Expected impact in Argentina
Shale Production Conventional Production
• Generate quality jobs • Reduce energy deficit • Improve commercial balance
2033
2031
2029
2027
2025
2023
2021
2019
2017
2015
2013
2011
2009
2007
2005
2003
2001
• Increase fiscal income • Spillover effect on regional and national general development Some key challenges…
Capex and Wells 2015 - 2017
2018-2025
2026-2035
• Efficient and safe operations
Capex
3 B$/year
10 B$/year
15 B$/year
• Water management
% GDP
0.7%
2%
2.3%
20
55
80
Rigs
Total 2015-2035
Capex : 250 B$ Hor. Wells: 10,000
Vaca Muerta Recoverable Resources Development: 12%
• Cost optimization • Attracting and developing talent • Growing local infrastructure • Win-win new paradigm: relationship with unions • Renew technical and managerial mindset: from conventional to unconventional
* Assumes conventional supply declining at 3% per year and demand growing at 3% per year. Conventional gas production includes tight gas. ** According to EIA R2013 ecoverable Resources Estimates
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