Texas Oil and Gas. The Biggest Prize of All. Allen Gilmer TIPRO Annual Convention, February 2017

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1 Texas Oil and Gas. The Biggest Prize of All Allen Gilmer TIPRO Annual Convention, February 2017

2 BOPD Oil Reserves (BO) 12,000, ,000,000,000 10,000, ,000,000,000 8,000,000 6,000,000 4,000,000 2,000, ,000,000, ,000,000, ,000,000, ,000,000,000 50,000,000, Reserve Life Years Reserve Life Years Saudi Arabia Russia US Iraq Canada Iran Venezuela 2

3 120 Billion Barrels of Oil Produced 3

4 4

5 Daily Rig Count By Basin 5

6 Daily Rig Count By Basin 6

7 Rig Count 100% By Operator Shell Sandridge Pioneer Occidental Newfield ExxonMobil EOG Devon Continental ConocoPhillips Concho Chevron Chesapeake Apache Anadarko Top 10 Operators Drill Only 18% of Wells 7

8 US Unconventionals: World Class Economic Returns 8 Arkoma - Fayetteville-1 Haynesville-1 Marcellus-PA-North-1 Marcellus-PA-West-1 Marcellus-WV-1 Utica-Dry Gas-1 Utica-Dry Gas-2 Utica-Lean Condensate-1 Arkoma - Woodford-1 Delaware Basin - Bone Spring-1 Delaware Basin - Wolfcamp-1 Williston-Antelope-1 Eagle Ford-De Witt-1 Eagle Ford-Hawkville-1 Midland Basin - Spraberry-1 Eagle Ford-Gates Ranch-1 Midland Basin - Wolfcamp-1 Ft. Worth-Barnett Dry-1 Delaware Basin - Spraberry-1 Anadarko-Stack-1 Eagle Ford-Eagleville-1 Williston-Threshold-1 Delaware Basin - Other-1 Eagle Ford-Sugarkane-1 DJ - Wattenberg-1 Anadarko-Scoop-1 Eagle Ford-De Witt-2 Northwest Shelf - Bone Spring-1 Delaware Basin - Bone Spring-2 Williston-Nesson-1 Delaware Basin - Wolfcamp-2 Williston-Parshall-1 Anadarko-Granite Wash-1 Williston-Sanish-1 Gulf Coast-Texas Gulf Coast Gaps-1 Williston-Antelope-2 Eagle Ford-Briscoe Ranch-1 Williston-West Nesson-1 DJ - Wattenberg Extension-1 Powder River-Turner-1 Anadarko-Mississippi Lime-1 Eagle Ford-EF Dry-1 Eagle Ford-Gates Ranch-2 Eagle Ford-Sugarkane-2 Williston-Threshold-2 Powder River-Frontier-1 Midland Basin - Spraberry-2 Williston-Bailey-1 Delaware Basin - Spraberry-2 Midland Basin - Other-1 Marcellus-WV-2 Williston-Ambrose-1 Williston-Rose Area-1 Anadarko-Cleveland/Tonkawa-1 Anadarko-Stack-2 Midland Basin - Wolfcamp-2 Utica-Rich Condensate-1 Williston-Parshall-2 Powder River-Sussex-1 Williston-Antelope-3 Powder River-Parkman-1 Eagle Ford-Giddings-1 Eagle Ford-Hawkville-2 DJ - Wattenberg-2 Williston-Sanish-2 Williston-West Nesson-2 Marcellus-PA-West-2 Williston-Nesson-2 $70 $60 $50 $40 $30 $20 $10 WTI Breakeven 20% MARR & $3.50 HH $0

9 Delaware Basin Play Assessment Structure Map of Wolfcamp Formation 9

10 Midland Basin Play Assessment Martin Co. Howard Co. Glasscock Co. Midland Co. Structure Map of Wolfcamp A 1 0

11 Midland Basin Play Assessment C Regional Southwest to Northeast Cross Section Flattened on the top of Lower Spraberry C 1 1

12 50% Better? 12

13 Quantifying Drilling (Wellbore Geometry, Proximity and In-Zone Sensitivity) and Completion (Stimulation Details) to Production 13

14 Midland Basin Play Assessment Project Inventory 1 4

15 Look For Correlations, Then Solve for Engineering/Drill Parameters to Geology 15

16 1 St Bone Springs Predicted Oil (left) and Gas (right) Producibility w/ Optimized Engineering 16

17 Oil and Gas 20:1 US LOWER 48 Horizontal Oil 56% 60% Oil and Gas 6:1 Gas 50% 47% 17

18 Oil and Gas 20:1 US Permian Horizontal Oil 91% 107% Oil and Gas 6:1 Gas 88% 68% 18

19 Unbelievable Resources in Texas/NM EAGLE FORD- 20,000 sq miles; avg. 250 thick USGS: 5.1 BBOE Economically Recoverable Reserves UT BEG: 10 BBOE Economically Recoverable Reserves Texas A&M: 21 BBOE Economically Recoverable Reserves Drillinginfo: 18 BBOE (Standard)- 25BBOE (w/ Known Operations Improvements) 12-17% Developed Sanity Check: 4-11 MMBOE/Sq. Mile (RockEval Studies); 8%-23% Recovery (Standard); 11% to 31% Recovery (Optimized) PERMIAN BASIN-75,000 sq. miles; avg thick Volume: 16x thicker source, 3.5x larger surface area (56 multiplier) than Eagle Ford RockEval: MMBOE/Sq. Mile (RockEval Studies); 4.5 to 45 x richer per sq. mile than Eagle Ford. 8%-16%-23% (Standard), 11%-22%-31% (Optimized) Recovery Factor 50 MMBOE/Sq Mile = BBOE (Standard), ,162 BBOE (Optimized) 90 MMBOE/Sq Mile = 540-1,080-1,550 BBOE (Standard), 742-1,480-2,160 BBOE (Optimized) 180 MMBOE/Sq Mile = TBOE (Standard), TBOE (Optimized) SAUDI ARABIA- 268 BBOE VENEZUELA- 297 BBOE 19

20 $50-$100 Trillion Prize. What does that mean? 20

21 How MUCH Is That? 3 to 6 times current US Gross Domestic Product (GDP). $ , per every Man, Woman, and Child in the US. 2.5 to 5 times current US Debt. 5 to 10 times Chinese GDP. 25 to 50 times Indian GDP to 1.3 times Global GDP. ¼ to ½ times Total Accounted Wealth of the USA (Z.1 Report, Federal Reserve) 21

22 I Humbly Suggest That s Worth Saving. 22

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