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THECORDILLERA
ENERGYPARTNERSIII,
LLCACQUISITION
ARESOURCEPLAYINTHEAPACHE
WAY
JANUARY23,2012
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CordilleraEnergyPartnersIII,LLCmergesintoanApachesubsidiary
Fullstepupintaxbasis
Transactionvalue:$2.85billion
Consideration:
$2.25billionincash
6.273millionsharesofcommonstock(fixed);~$0.6billion
Timing:
EffectiveSeptember1,2011
Estimatedclosingearlysecondquarter2012
SUMMARYOFTERMS
3
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254,000netacresinaprolific
fairway
Liquidsrich
stacked
pays
>60productivehorizons across
5,000+ofsection
>14,000potentiallocations
~50%held
by
production
Opportunitytopurchaseupto
$100MMinadditionalacreage
18,000boe/dnetproduction*
71.5MMboe Proved
Reserves
88MMboe withNGLs
306MMboe 3PResource
390MMboe withNGLs
SUBSTANTIALOPERATIONSWITH
EXCEPTIONALACREAGE
POSITION
4
20mi
APACHE 233,000net
acres
CORDILLERA 254,000netacres
TOTAL 487,000netacres
COMPOSITEFAIRWAY
*Asof12/12/2011.ExcludesNGLs.
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Uniqueboltonopportunity moreofwhatweknowandlike
50+yearsexperienceintheAnadarkoBasin
Drilled>2,500
wells
in
the
area;
including
~500
in
the
Granite
Wash
Existingstaffabletoexecutegrowthplansimmediately
Richinventorywithpremiumeconomics
Horizontaldrilling
brings
step
change
to
play
returns
Multiple,stackedhorizontaltargets
Attractiveeconomicsatcurrentprices:liquidsgenerate80%ofrevenue
Visiblegrowthinlowrisk,repeatableplay
Decadesofrunningroomwith>14,000potentiallocations
Selffundingdevelopmentprogram
Immediatelyaccretivetoallmetrics
MORETHANDOUBLESOURPOSITION
INA
LIQUIDS
RICH
PLAY
5
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MANYWAYSTOWINACROSSVASTACREAGEPRIMARYTARGETEDPLAYS
6
APACHE
CORDILLERA
Plays Evaluated (000sofnetacres) Apache Cordillera CombinedGraniteWash 125 191 316
Tonkawa 90 152 242
Cleveland 89 173 262
Marmaton 82 140 222
20mi
TONKAWA
MARMATON
GRANITEWASH
CLEVELAND
COMPOSITEFAIRWAY
APACHE 233,000netacres
CORDILLERA 254,000netacres
TOTAL487,000netacres
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THEGRANITEWASHANDMORE
7
Estimated recoveryperwell*
Plays EvaluatedEUR
(MBOE)
Gas
(BCF)
Oil
(MBO)
NGLs
(MB) Liquids
GraniteWash
(liquidsrich)
1,117 3.5 134 400 48%
Tonkawa(oil) 268 0.5 130 60 71%
Cleveland(oil) 181 0.3 100 31 72%
Marmaton(oil) 228 0.4 105 64 74%
*Basedonevaluationeconomics
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010,000
20,000
30,000
40,000
50,000
60,000
70,000
Dec.2011 Dec.2011 Dec.2012*
BO
E/D
ApacheCentralRegion Cordillera
ESTIMATEDCENTRALREGION2012GROWTH
8*December2012forecastbasedonacquisitioneconomics
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53%ofproductionisliquids 80%ofrevenuefromliquids
30%
23%
47% OilNGL
Gas
51%
29%
20%
OilNGL*
Gas
CORDILLERA:ALIQUIDSGROWTHPLAY
9*NGLvaluecapturedasgasrevenueundercurrentpercentageofproceedscontracts. Notegasvolumesareshrunk.
Basedonproductionasof12/12/2011 Revenuebasedon2012forecast
6,200BO/D
4,800BNGL/D*
58MMCF/D*
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$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
DryGasWell GWWetGasWell
AddedNGLValue
DryGasValue
$6.95/MCF*
$3.00/MCF
Wetgaspricerealizationis>2xdrygasatcurrentprices
NGLs PROVIDEROBUSTGASREALIZATIONS
10*Typicalprocessinguplift; assumes$3/Mcf,$45/bbl NGLs
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HITTINGTHEGROUNDRUNNING
50+yearsofdrilling,operatingandbusinessknowledge
Personnel,capitalandexpertisetoimplementdevelopment
programimmediately
104operatedhorizontalwellsdrilledwithnodryholes11
Apache wells (2,500)
Apache District office
Apache field office
Cordillera field office
20mi
CurrentStaffing:
Tulsa 109
Field 147
Region 256
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0%
10%
20%
30%
40%
50%
60%70%
80%
90%
100%
1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11 10/11 0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
APACHESGROWTHTHROUGHHORIZONTALDRILLING
PercentLiqu
ids
BOE/D*
CentralRegionBOEproductionup26%in2011
Liquidsproductionincreased133%in2011
Productionfrom
planned
2012
drilling:
50%
liquids
Verticals: 11
Horizontals: 53
Verticals: 13
Horizontals: 44
Verticalproduction:1,571wells
Horizontalproduction:121wells
Operatedwells:
Verticals: 96
Horizontals: 7
20092010 2011
12*Includesnonoperatedwells.2011productionnumbersarepreliminary.Productionnumbersexclude4th quarterdivestitures.
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UNLOCKINGGRANITEWASHVALUETHROUGH
HORIZONTALDRILLING
VERTICAL HORIZONTAL
Well Cost: $4.3MM $8.5MM
InitialRate: 1.3MMCF/D
150BNGL/D
50BC/D
6MMCF/D
710BNGL/D
225BC/D
417BOE/D 1,935BOE/D
GROSS EUR: 320MBOE 853
MBOE
(48%
liquids)
BFITPV10($90/$3): $0.453MM $5.1MM
BFITROR($90/$3): 14% 42%
TypicalStilesRanchhorizontalGraniteWashwellwith5,000
lateraland
20
stage
frac
can
cost
2X
avertical
but
may
recover
3Xthereservesat5Xtheinitialrate13
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UNLOCKINGVALUETHROUGHHORIZONTALDRILLING
GRANITEWASH*
Well Cost: $8.5MM
InitialRate: 6MMCF/D
710BNGL/D
225BC/D
1,935BOE/D
GROSS EUR: 853MBOE
BFITPV10($90/$3): $5.1MM
ROR($90/$3): 42%
14
TONKAWA*
Well Cost: $5.0MM
InitialRate: 260BO/D
610MCF/D
78BNGL/D
440BOE/D
GROSS EUR: 268MBOE
BFITPV10($90/$3): $2.4MM
ROR($90/$3): 32%
CLEVELAND*
Well Cost: $4.1MM
InitialRate: 250BO/D
375 MCF/D
50BNGL/D
362BOE/D
GROSS EUR: 181MBOE
BFITPV10($90/$3): $1.2MM
ROR($90/$3): 26%
MARMATON*
Well Cost: $4.4MM
InitialRate: 240BO/D
350MCF/D
61BNGL/D
359BOE/D
GROSS EUR: 228MBOE
BFITPV10($90/$3): $1.1MM
ROR($90/$3): 25%
Horizontal
wells
with
multi
stage
completions
are
ideally
suited
forthelowpermeability,clastic reservoirsoftheAnadarkoBasin
*Basedonevaluationeconomics.GraniteWashvaluesbasedontypicalStilesRanchwell.
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APACHES2011HZWASHHIGHLIGHTS
15
20mi
Stiles1116H
7.6MMCFD,185BOPD
Weatherly41H
7.1MMCFD,720BOPD
Brown859H
11.3MMCFD,
675
BOPD
Tyler455H
9.0MMCFD,430BOPD
Thetford423H
4.2MMCFD,1,564BOPD
Smith117H
10.6MMCFD,1,064BOPD
Smith116H
9.1MMCFD,966BOPD
McGarraugh 138#7H
674BOPD,825MCFD
Jines 100#2H
449BOPD,403MCFD
Adams138#2H
398
BOPD,
486
MCFD
Wheat6783H
248BOPD,574MCFD
APACHE
CORDILLERA
APAGW
APACLV
APAMAR
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9,500
10,000
10,500
11,000
11,500
12,000
12,500
13,000
13,500
14,000
14,500
MORETHANONEMILEOFSTACKEDPAYS
SkinnerWash
GraniteWashCaldwell
GraniteWash
A
GraniteWashC
GraniteWashB
Tonkawa
Hogshooter
Checkerboard
Cleveland
Apache Elk City #1-23
AtokaWash
Shawnee
CottageGrove
Marmaton
Oil
Condensate
Gas16Industryhasdrilled~3,000HZwellstotheseformations,
ofwhich,ApacheandCordillera havedrilled~200
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$
$250,000
$500,000
$750,000
$1,000,000
2012 2013 2014 2015 2016 2017
LeaseLevelIncome,M$ Capex,M$
SELFFUNDINGDEVELOPMENTPROGRAM*
17
Selffundingfrom2013forward
*ProgramforCordilleraassetsonly.ProjectionsasofJanuary2012.
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0
10
20
30
40
50
60
2012 2013 2014 2015 2016 2017 2018 2019
N
ETPRODUCT
ION(MBOE/
D)
VISIBLEGROWTHPROFILEONACQUIREDACREAGE
18
DrillingProgram
PDP
Acquisitioneconomicsonlyinclude~2,000ofthe
potential14,000+identifiedlocations
Est.Wells
Drilled:
159
194
243
234
220
325
263
176
*Basedoncurrentproductionof18,000BOE/D
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Uniqueboltonopportunity moreofwhatweknowandlike
Richinventorywithpremiumeconomics
Visiblegrowthinlowrisk,repeatableplay
Immediatelyaccretivetoallmetrics
AclassicApachetransaction:Negotiated.
Conservatively
financed.
Returnsfocused.Accretive.
SUMMARY
19
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QUESTIONS