SCOOP HORIZONTAL WOODFORD PROJECT

Transcription

1 SCOOP HORIZONTAL WOODFORD PROJECT

2 Far West Development (FWD) Proposes a non operated Horizontal Woodford Shale well (10,000 lateral) in the South Central Oklahoma Oil Province SCOOP. Newfield Exploration will operate the Initial well with expected Estimated Ultimate Recovery (EUR) 1.2 MMBOE (Newfield Exploration Co. and Continental Resources published analogue Type Curves 2016). Initial well : McCorn 1H-18X, Sections 19 and 18 7N 4W McClain county Oklahoma. Well cost : $9.145 MM

3 FWD is a privately held independent Oklahoma oil and gas company, Kent Phillips as President and CEO, FWD operating team with 40 years industry experience, Engaged in acquisition and development of high-quality lowrisk oil and gas investment opportunities across the US midcontinent, Operation areas include: Oklahoma, Texas, Louisiana and Mississippi.

4 Dibble Area Dibble Area GEOLOGIC PROVINCES OF OKLAHOMA Far West Development LLC SCOOP Woodford Shale Horizontal Prospect March 2016

5 Located in a prolific oil producing province (McClain County), South Central Oklahoma. Province has produced 1.4 Billion bo from the Sho-Vel-Tum Field (discovered 1905) and that combined with other Fields (Golden Trend, Dibble) has produced over 3.0 Billion bo. The majority of this oil has been sourced from the target Woodford Shale. Research suggests that up to 80% of the hydrocarbon generated in the Woodford Shale and other source rocks still remains to be recovered. Prospect located in Sections 19 and 18 Township 7 North and Range 4 West covering 1,262 acres. Further FWD has sole development rights to Proven conventional/unconventional oil-bearing Osborne Sand and Hunton Limestone. Commercial development potential for these formations is very high.

6 Dibble Area Dibble Area OIL & GAS FIELDS OF OKLAHOMA Far West Development LLC SCOOP Woodford Shale Horizontal Prospect March 2016

7 Woodford Play Dibble Brian Cardott Woodford Congress 2015

8 Haygood C-71.6 MBO, 49 MMCFG to IP 359 BOPD-110 MCFD Wherrell 1H-29 Rig Released Completing Dibble Prospect McClain & Grady Co. s, Ok Triple Rimer XH C-324 MBO EST, 419 MMCFG TO MCFD Current McCorn 1H-18X C-21.1 MBO EST, 43 MMCFG 1.3 MMCFGPD ON BOPD Carole 1H-21X to C-256 MM, Est 244 MBO IP 862 BOPD 829 MCFD 1200 MCFD Current Woodford Producer Far West Acreage Key Woodford Horizontals Completed Woodford Horizontals Drilling, Location,or WOCU Green Acres 1-36H C-189 MBO EST, 262 MMCFG to MCFD Current Harmon 1H-31XR to C-171 MBO EST, 171 MMCFG IP 400 BOPD, 300 MCFD 650 MCFD Current Allen 1H-29X to C-12.9 MBO EST, 18.5 MMCFG 500 MCFD ON PRODUCTION MAP Woodford Production established in and around Dibble Area. Deep vertical penetrations provide local control and reduce risk.

9 General Petroleum Geology SCOOP Horizontal Woodford Prospect Geology The Woodford Shale is Devonian in age. Devonian age shales across the United States and the world have been the focus of horizontal well exploitation over the last decade. The Woodford, like most shale reservoirs is actually a heterogeneous blend of interbedded shales, siltstones, and chert beds. It has long been recognized as organic rich and considered the generative source of the hydrocarbons that have been historically produced vertically from several other formations, but was itself, generally considered an uneconomic target vertically. With the advent and steady improvement of horizontal drilling and modern day fracture stimulation techniques, this widespread source rock became an essentially vast undeveloped resource. Though the entire Woodford contains kerogen and the associated generated hydrocarbons, the upper portion of the Woodford is the most attractive target across most of the area. It has a higher silica and lower clay content which is crucial for effective fracture treatments. This section typically is a somewhat coarser-grained sediment which lends itself to having better permeability as well. It is an organic-rich deposit where the inter-dispersed kerogen has been partially converted to hyrdrocarbons as a result of exposure to heat and pressure that occurred with burial. This conversion process also creates micron scale porosity which contributes to the present day reservoir and trap. This upper interval is most expansive and present in the Dibble area proper.

10 Regionally, Dibble is on the southeast flank of the Anadarko Basin. To the east is the Nemaha ridge where sediments thin or are eroded. This is a hydrocarbon migration barrier and helps form a regional hydrocarbon trap for many of the formations that produce regionally and locally. The Woodford rests on an unconformity surface where it thins over ancient paleo-highs and thickens in the ancient lows. Moving deeper into the basin, the Woodford generally is thicker and gassier. Continental resources has been very active proving this area up with horizontal wells only 2-3 miles away. Moving updip from our acreage position, or shallower, the Woodford is still present and has already been drilled by Newfield horizontally with similar thickness and is producing which is key in proving the viability of this prospect. Locally, an erosional deposit, the Misener, sometimes is at the base of the Woodford, just above the Hunton Lime. Both of those formations produce as well. Above the Woodford are Mississippian age deposits of the Kinderhook, Osage, Meramec, and Caney. Though not as attractive locally as where they have here-to-for been drilled horizontally, these may someday be targeted as well since they share some of the same characteristics

11 Key Wells McCorn 1H-18X. This well traverses 2 sections that Far West has working interest in, section 19 and 18 of 7N-4W. The well has recently been completed in June 2016 and is producing at an above average rate. As of July 28, 2016, this well had made 43 MMCFG AND an estimated 21 MBO. Current rate was 1.3 MMCFGPD AND between 700 and 875 BOPD. This well alone supports the development of the Woodford across our acreage. Allen 1H-29X. This well was drilled from the same pad as the McCorn to produce the Woodford in the western half of sections 29 and 32 of 7N-4W. It was completed June 21, As of July 28 th, it had made an estimated 12.9 MBO AND 18.5 MMCFG. Current rate was 500 mcfd. Since it was drilled from north to south and thus toe-down, it will not have gravity drainage to maximize production. Carole 1H-21X. Surface location in the SW SW of section 28-7N-4W and a bottom hole location in the NW NW of section 21 of 7N-4W. This well is a 2 mile lateral just over a mile east of our location. It was drilled by Newfield and completed in June of It has already made over an estimated 244 MBO. Gas production as of 7/31/16 was 256,000 MCF. It is still making 1200 MCFD. The Carole is approximately 200 updip, has a similar thickness to our Dibble Prospect, and is key in establishing production updip between our acreage and where the Woodford is absent on the Nemaha Ridge. Triple Rimer XH. SL: SE SW SE 35-7N-5W, BHL: NE NW NE 26-7N-5W. This is a 2 mile lateral approximately 2.25 miles west of our location. It was completed in May 2014 by Continental Resources. It has made an estimated 324 MBO and 419 MMCF as of This well is 500 downdip. The Woodford thickness here is 130 thick as compared with the 115 we expect and the targeted pay section is 48 thick as compared with 30.

12 Green Acres 1-36H. SL: SE SE SW 36-7N-5W, BHL: NE NE NW 36-7N-5W. This is a 1 mile lateral approximately 2 miles to the southwest of our location. It was completed in February 2014 by Continental Resources. It has made an estimated 189 MBO as of The cumulative gas is at 262,000 as of 7/15/16. This well is downdip, has an overall thickness of 130 and a target thickness of 45. This is only a one mile lateral, yet has performed very well. Harmon 1H-31XR. SL: SW SW SW 6-6N-4W, BHL: NW NW NW 31-7N-4W. This is a 2 mile lateral approximately 1 mile southwest of our location. It was completed in November 2015 by Newfield Exploration. It has already made an estimated 171 MBO as of and 171,000 MCF as of the same date. In addition to these wells, both Continental and Newfield continue to drill wells in this area. Continental has done 2 multiwell pilots in 6N-5W, the May Unit and the Good Martin unit showing their faith in the area.

13 WHERRELL 1H-29X 7N 5W Dibble Prospect McClain & Grady Co. s, Ok Woodford Producer Far West Acreage Key Woodford Production Well Name WOODFORD PRODUCTION Attractive production on and offsetting Far West acreage Proves Far West acreage is within productive limits of oil window 6N 5W 6N 4W

14 Haygood 1H-13X >500 Updip C-71.6 MBO, 49 MMCFG to BOPD-110 MCFD Wherrell 1H-29X Rig released Completing Dibble Prospect McClain & Grady Co. s, Ok Structure Map: Top of Woodford Shale Triple Rimer Downdip C-324 MBO, 419 MMCFG to CR 389 MCFD McCorn C-21.1 MBO EST, 43 MMCFG IP NA 1.3 MMCFGPD ON BOPD ON Carole Updip to C-256 MM, EST 244 MBO IP 862 BOPD 829 MCFD 1200 MCFD Current Posted Well Data WDFD TOP (SS) Woodford Producer Far West Acreage Operator Well Name LOC OR DRLG Well Name SS Top of Woodford Cumulative Prod Dates IP s WOODFORD STRUCTURE Woodford production downdip, along trend, and updip. Far West Development Dibble 1-30H BH LOC Green Acres Downdip C-189 MBO EST, 262 MMCFG to MCFD Harmon Downdip to C-171 MBO EST, 171 MMCFG 400 BOPD, 300 MCFD >650 MCFD Allen Downdip to C-12.9 MBO EST, 18.5 MMCFG 500 MCFD Current Alvis Downdip IP 766 BOPD, 557 MCFD Proven horizontal production on Far West acreage. Updip or shallower producers important because deeper FarWest acreage should be more thermally mature or cooked. Proves Far West acreage is within productive limits of Woodford oil window.

15 Haygood Thick C-71.6 MBO, 49 MMCFG to BOPD-110 MCFD Wherrell Thick Rig released Completing Dibble Prospect McClain & Grady Co. s, Ok Woodford Shale Interval Isopach Map Triple Rimer Thick C-324 MBO, 419 MMCFG to CR 389 McCorn Thick C-21.1 MBO EST, 43 MMCFG IP NA 1.3 MMCFGPD ON BOPD ON Carole Thick to C-256 MM, EST 244 MBO IP 862 BOPD 829 MCFD 1200 MCFD Current Posted Well Data WDFD Thickness (Ft) Woodford Producer Far West Acreage Operator Well Name LOC OR DRLG Woodford Interval Well Name Avg. Ft. Woodford Cumulative Prod Dates IP s Far West Development Dibble 1-30H BH LOC Green Acres Thick C-189 MBO EST, 262 MMCFG to MCFD Harmon Thick to C-171 MBO EST, 171 MMCFG 400 BOPD, 300 MCFD >650 MCFD Allen Thick to C-12.9 MBO EST, 18.5 MMCFG 500 MCFD Current Alvis Thick IP 766 BOPD, 557 MCFD Woodford thickens to SW into Anadarko Basin. Approximately 115 Woodford present in 19-7N-4W. Horizontal production from equal thickness here and along trend.

16 Haygood Thick C-71.6 MBO, 49 MMCFG to BOPD-110 MCFD Wherrell 1H-29X Rig released Completing Dibble Prospect McClain & Grady Co. s, Ok Woodford Shale Pay Map McCorn Thick Woodford Producer Triple Rimer Thick C-324 MBO, 419 MMCFG to CR 389 C-21.1 MBO EST, 43 MMCFG IP NA 1.3 MMCFGPD ON BOPD ON Carole Thick to C-256 MM, EST 244 MBO IP 862 BOPD 829 MCFD 1200 MCFD Current Posted Well Data WDFD Pay (Ft) Far West Acreage Operator Well Name LOC OR DRLG Woodford Pay Well Name Avg. Ft. Pay Cumulative Prod Dates IP s Pay in Upper half of Woodford in Dibble-@45 expected. Far West Development Dibble 1-30H BH LOC Green Acres Thick C-189 MBO EST, 262 MMCFG to MCFD Harmon Thick to C-171 MBO EST, 171 MMCFG 400 BOPD, 300 MCFD >650 MCFD Allen Thick to C-12.9 MBO EST, 18.5 MMCFG 500 MCFD Current Alvis Thick IP 766 BOPD, 557 MCFD New horizontal production from similar pay thickness along trend. Early results of the McCorn 1H- 18X are very encouraging supporting further development.

17 Dibble Prospect McClain & Grady Co. s, Ok Valadez 1-19 Woodford Section Kinderhook Woodford Valadez log-representative Woodford section in 19-7N- 4W Pay is highlighted Pink highlight is high resistivity > 100 ohm-m Green highlight is targeted porosity, Density porosity > 10% Neutron porosity >10% & < 25%

18 Carole 1H- 21X Lateral Wellbore Drilled Woodford Mississippi Dibble Prospect McClain & Grady Co. s, Ok Structural Cross- Section B-B Carole 1H-21X Kinderhook Woodford Top Woodford Base Newfield Carole 1H-21X new Woodford horizontal 1 mile east. Roath A-1-28 offset representative vertical well Woodford section Pay highlighted-same parameters as Valadez in previous slide Similar pay thickness

19 Engineering Woodford Shale Oil Window

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21 Reserve Estimates In place oil reserve potential is very good for the Far West Prospect. Reserves were generated by Original Oil In Place (OOIP) calculations as per Schlumberger Analysis: Initial horizontal well and acreage is located in the Woodford Shale Oil Window of the referenced SCOOP play. Acreage is surrounded in all directions by recent commercial horizontal Woodford shale producing wells. These wells have been installed by industry leading independents Newfield Exploration Midcontinent Inc. (Newfield) and Continental Resources (Continental), who have established and published Type Curves in 2016 for Estimated Ultimate Recoveries (EUR) of 1.2 MMBOE (Million Barrel Oil Equivalent) for 2 mile laterals. The initial well is expected to recover analogue 1.2 MMBOE Woodford Shale oil (See table below). Recoverable oil via volumetric calculation is 51 MMBO per 640 acre Section (Schlumberger Analysis Summation of Far West direct offset Valadez #1-19, November 2, 2014). Initial well is a two section lateral (10,000 ) with expected 102 MMBOE OOIP (Original Oil in Place) and analogue recoverable 1.2 MMBOE. Pending initial well success, five follow up increased density horizontal wells will be installed in the Prospect spacing unit. Each are expected to recover another 1.2 MMBOE, with a Total recoverable of 7.2 MMBOE (for six wells). Investors in the Initial well will have First Right of Refusal opportunity to participate in the increased density wells. Well #1 projected recovery of 1.2 MMBOE at $52/BO is a Gross $62,400,000. Total 6 wells recovery of 7.2 MMBOE at $52/BO is Gross $374,400,000. See Engineering Section Below.

22 Woodford Shale Oil Window

23 Woodford Shale Oil Window Reservoir Original Oil In Place OOIP bbl 1,280 Acres 2 sections Recoverable Oil Calculated Recoverable bbl 1,262 Acres Woodford Shale Oil Window 102,000,000 7,200,000 Combined Gross $52/ bbl (6 wells) 100% Combined Gross $52/ bbl (6 wells) 35% $ $ $374,400,000 $131,040,000

24 TERMS, COST and REVENUE Far West has 34% Working Interest (WI) in Prospect Unit Far West is Offering 10% WI to prospective Investors Terms: Investor 100% of Working Interest (WI) Cost Through Completion. Revenue: 90% Before Payout (BPO) and 80% After Payout (APO) **The Pooling Order has not issued to date. Final owners and % unknown. Working Interest Drilling & Completion LOE BPO LOE APO Partners 10% 9% 8% Far West 5% 6% 7% Far West et. Als. 19% 19% 19% Newfield, et al** 66% 66% 66% Total WI 100% 100% 100% Costs Acreage IDCs Equipment Total 100% WI $1,500,000 $6,745,000 $900,000 $9,145,000 10% WI $150,000 $674,750 $90,000 $914,500 Working Interest (WI) Net Revenue Interest-77% NRI BPO NRI APO % 6.93% 6.16%

25 Oil Rate, Bbls/YR Cumulative Oil, Bbls. Thousands 160,000 Well Type Curve Projection: 30 YEARS 1, ,000 Well IP 600 BOEPD Decline Curve Projection CUM BO 1,190,158 1, ,000 Cumulative Oil, bbls 1, ,000 80,000 60, , , Time, Years

26 Safe Harbor Statement and Disclaimer This Far West Prospect includes "forward looking statements" within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Act of A statement identified by the words "expects", "projects", plans", and certain of the other foregoing statements may be deemed forward-looking statements. Although Far West believes that the expectations reflected in such forward-looking statements are reasonable, these statements involve risks and uncertainties that may cause actual future activities and results to be materially different from those suggested or described in this Far West Prospect. These include risks inherent in the drilling of natural gas and oil wells, including risks of fire, explosion, blowouts, pipe failure, casing collapse, unusual or unexpected formation pressures, environmental hazards, and other operating and production risks inherent in the natural gas and oil drilling and production activities, which may temporarily or permanently reduce production or cause initial production or test results to not be indicative of future well performance or delay the timing of sales or completion of drilling operations, risks with respect to natural gas and oil prices, a material decline in which could cause the Far West to delay or suspend planned drilling operations or reduce production levels, and risks relating to the availability of capital to fund drilling operations that can be adversely affected by adverse drilling results, production declines and declines in natural gas and oil prices and other risk factors.