Horizontal Development of the San Andres Formation, Platang Field, Yoakum County, by John Worrall and Mike Hanagan, Manzano Energy Partners.
Acknowledgements: Manzano LLC, Energy Trust Partners, Walsh Petroleum, Evercore Partners, Tamaroa Development, PetroVen.
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Manzano, LLC
Statistics and Development Timeline Horizontal Development of the Platang San Andres Field
Acquired 6500 Acres in 2012 with No existing Production.
Drilled Two Pilot Holes in 2013. Installed an SWD system. Acquired 10,454 more acres.
Late 2014 Began a One Rig Development Program and drilled 33 wells back to back. Released the rig in early 2016. Drilled one more in mid 2016 for a total of 36. Generally started a frac job or spudded a well every Monday for 15 months.
EUR is 315 MBOE for One Mile laterals and 490 MBOE for 1.5 Mile Laterals
August (8/22-8/28 week) 2016 Production: 4853 BOPD + 5890 MCFGPD + 25,880 BWPD (16% Oil Cut) (5245 BOEPD at a 15:1 conversion)
Project has 42.4 MMBOE Recoverable Reserves. 101 Locations. (Has Already Produced > 2 MMBO)
Avg. Lifting Costs for June-August 2016 was $7.69 per gross barrel
Total All In D/C plus Operating Costs are $14/gross barrel and $18.5 per net barrel
Sold Effective August 1, 2016 to Steward Energy for $225 Million.
16,954 Contiguous Net Acres. 36 Wells, 5245 Gross Producing BOEPD , 3680 Net BOEPD to Sale Interest
$61,140 per net producing barrel, or
PDP PV10 of $132.2 MM + $12 MM for infrastructure + $4613 per net acre.
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TALK OUTLINE
INTRODUCTION
Pre-Drilling Information
– 10 Former Vertical Wells on the Lease Block
– Adjacent Analog Field, the West Brahaney Unit
Pilot Log Information Gathered
Mapping of the San Andres Reservoir
– Structure Mapping
– Isopach Mapping
Horizontal Development
– Drilling & Completion (Methods, Costs and Optimizations)
– Production Data (Type Curves and EURS)
CONCLUSIONS
NORTH YOAKUM UPDATE (Time Permitting)
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Geology and Engineering
Manzano’s Platang field is located on the north end of the Central Basin Platform
The San Andres dolomite is just one of many Platform candidates for horizontal technology.
Geological Overview
8
Key San Andres Fields
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Geologic Overview
4
Wolfcamp Field
Devonian Field
San Andres Field
Drilled Wolfcamp Well
Drilled Devonian Well
Drilled San Andres Well
King Devonian Field
Gladiola Devonian Field
Denton Devonian Field
Bronco Devonian Field
Sable San Andres Field
Brahaney San
Andres Field
Janice San Andres
Field
Geologic Field Study
Approx. 45 miles wide by 30 miles tall
(>1,300 square miles)
in Yoakum County, TX /
Lea County, NM area
Manzano
Bronco
Project
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Pre-Drilling (2013) Observations:
1) 10 Vertical Tests of Oil in San Andres on the
Lease Block (1950s-1980s)
2) Avg IP: 22 BOPD, 58 BWPD (10 wells, 28% Oil
Cut)
4) Actual=18.3 MBO, 190 MBW, 5 wells (9% OC)
4) No current SA production on the block
Opportunity:
Apply Modern Horizontal Drilling & Completion
Technology to Profitably Extract Reserves
Cumulative Gas
Vol in Red
Cumulative Oil
Vol in Green
Cumulative
Water Vol in Blue
Geologic Target Area : Pre-Drilling Observations
5
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KEY POINTS
Pi Marker at 5129
Top A Zone 5190
Top Porosity 5299 (70’ in) – equivalent to
the Slaughter or Chambliss zone in Tx (P-
1 zone NM)
Bottom log 5325 still in the zone with
18% porosity. Total of 84 ft>4% porosity.
Calculates ProductiveSw = 11 to 32% across porosities ranging
up to 18%, with mudlog shows
throughout.
Vertical Wells not at all economic, even with a 41,000# frac job.
Decisions: Drill thru the Lower
Brahaney (5500’). Must drill horizontally
and must complete with significant frac
jobs. Will produce lots of water and must
prepare to deal with it.
CHAMBLISS
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Manzano, LLC
Analog Production:
Waterflood – Walsh Petroleum West Brahaney Unit
West Brahaney Unit
Source: HPDI and West Brahaney Field Report (Texas Tech Library)
Secondary Oil: 10.6 MMBO Primary Oil: 5.5 MMBO Total Oil thru March 2015: 16.1 MMBO Secondary to Primary Ratio: 1.9 to 1 Recovery Per Acre: 2.7 MBO/acre Recovery Per Section: 1,717 MBO/section
10
100
1,000
10,000
100,000
1950 1960 1970 1980 1990 2000 2010 2020
Mo
nth
ly P
rod
uct
ion
(MB
O)
YearOil Primary Oil Forecast
29
Primary Oil Decline estimated at 16%
West Brahaney Unit
First drilled in 1954, began injection in 1965
Historical estimates and data available in the unitization report
WF
Primary
Walsh 20 acre
Spacing (WF)
Fina
CO2
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Type Log
Type Log
Type Log
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Fina West Brahaney Unit (WBU) #211 Sec. 541. Type Log Section.
Core Data 5110-5130, Avg K=.02md, Avg Porosity=1.45%, Avg So=0%, Avg Sw=84% (8 cores)
Base Pi Marker
Chambliss
Brahaney
Brahaney “C”
Lower Brahaney
Nodular Anhydrite, Bedded Anhydritic Dolomite
Probable Supratidal Environment, Ramp Setting
N.A.
B.
A.
D.
5110
5130
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Fina WBU #211 Sec. 541. Upper Chambliss “A” Dolomite
5189-5209, Avg K=.87md, Avg. Porosity=6.6%, Avg So=23.8%, Avg Sw=21.8% (20 cores).
Base Pi Marker
Chambliss
Brahaney
Brahaney “C”
Lower Brahaney
N.A.
B.
A.
D.
Massive Tan Dolomite with anhydrite cement and
nodules, some anhydrite cemented burrows.
Intertidal.
5189
5209
B
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Fina WBU #211 Sec. 541. Chambliss “A” Dolomite. Main Pay. Walsh Lateral Target.
Avg K = 17.98md, Avg Porosity= 15.0%, Avg So = 21.5%, Avg Sw = 44.3 (17 cores). This interval had been waterflooded for 28 years when these cores were taken. In 1960, adjacent wells produced 80% oil cut.
Base Pi Marker
Chambliss
Brahaney
Brahaney “C”
Lower Brahaney
N.A.
B.
A.
D.
5189
Main Interval is massive tan dolomite with anhydrite
cement and replacement. This is the main waterflood
interval at the West Brahaney Unit.
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Fina WBU #211 Sec. 541. Brahaney C Zone. Manzano Lateral Target.
Avg K = 5.2 md, Avg Porosity = 15.4%, Avg So = 26%, Avg Sw = 29.4%. (20 cores)
Base Pi Marker
Chambliss
Brahaney
Brahaney “C”
Lower Brahaney
N.A.
B.
A.
D.
5189
5209
Massive Tan Dolomite with anhydrite cement and nodules. This is
equivalent to the zone in which Manzano drills its laterals.
5307
5327
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Geology and Engineering
West Brahaney Unit, 5 spot pattern downspaced by Walsh Petroleum to 20 acre spacing beginning in 1998. Still produces 15,000 BOPM.
– Walsh’ Flood primarily produces from the 100 ft thick Chambliss (orange) and the upper portion 20 feet of the Brahaney B. In the Cored well, the avg K of the Chambliss was =18 md.
– Chambliss section in the Platang field (Manzano) is present and on strike with the Walsh acreage. It is the same section but it gets tighter to the west, 1.5 md in the Whatamelon #1 and .04 md in the Broken Spoke on the westernmost side.
– But Manzano found a thicker overall pay section: 191 ft pay’ in logs and cores, above transitional OWC (Dark Blue).
Manzano Acreage to West Brahaney Unit
Manzano Acreage to West Brahaney Unit
9
W E
EW
Brahaney D
Brahaney B/C
Chambliss
Manzano Acreage
Structural Cross Section.
Pi
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Pre-Drilling Production Map (2013)
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Manzano, LLC15
Manzano WhataMelon 519#1 (1st Pilot
Log)Sec.519, Block D, 200 Fsl & Fel, TD
5500 March, 2013 Yoakum County, Tx
218 FT Gross pay column, 191’ Pay >4%
FMI shows N80W induced fracture dir.
Chambliss Zone 5198 - 5298 (100 ft
thick)Sw Calc= 29-37%. Good Shows, 8
SW cores avg 1.5md, 10% por., So=27%,
Sw=30.6% (Total Fluid=47%oil)
Brahaney Zone 5298-5380 (C top @ 5346)
Sw Calc=34-52%, Good Shows, 5 B cores avg
.9md, 10.6%Por.,So21.8, Sw=25.4 (46% of TF)4
C cores avg 10.1 md, 14.6% Por., So=35.8%,
So=32.1%, (53% of total fluid)
Lower Brahaney 5380 top, transitions to more
water at 5418. From53805418, Sw=40-45%, Below
O/W transition Sw=52-73% Core Data: 1 above
= .4md, So= 35.6, Sw=36, 4 cores below transition
avg 2.99md, 9.3% por. So=22.4
Sw=77%(TF=23% Oil).
No Shows
In core or
mudlog
High Perm C Zone Identified
Best Perm = Best SO also
Frac 3/4/2014 with 1.0 MM# sand (267#/ft). 1st Oil 3/23/2014.
Pk Oil 422 BOPD.. 136 BOPD at 180 days. EUR 303 MBO
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New Mexico Type Log, 5 mile to the west.
Frac 3/4/2014 with 1.259 MM# sand (294#/ft).
1st Oil 4/14/2014
Pk Oil 389 Bopd. 266 BOPD at 180 days. Current 100 Bopd.
EUR 304 MBO
Chambliss is tight but the High Perm C zone is still present.
New Mexico Type Log – Broken Spoke 2 State 1H
12
Ch
amb
lissB
rahan
ey B, C
, D
38’ > 4% PorosityAvg K = 0.04 md, So = 19%
43.3’ > 4% PorosityB: Avg K = 0.5 md, So = 53%C: Avg K = 6.7 md, So = 50%
30’ > 4% PorosityAvg K = 0.4 md, So = 31%
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Brahaney C Zone Isopach. Target of Manzano Laterals.
Feet Porosity>6%. 5 ft Contour Intervals. Manzano expanded its lease position where the C zone was present.
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Geology and Engineering
Map of the top of the high perm Brahaney C zone. Overall Brahaney structure dips to the southwest.
Manzano drilled 34 laterals landing them generally 5 to 10 feet into the C zone. Then they followed the structure (usually .5 degrees) up or down.
– Average permeability of 6.7 md and high of 22 md from 11 sidewall cores from 3 wells
– Thin sections show the C zone is fine crystalline dolomite with pervasive moldic and intercrystalline porosity
– Oil saturation is 50% - 53% from two type logs
Lowest known oil is -1,640’ SSTVD established in the Dog Bar #2H
Some of Manzano’s best wells were in the NW corner (red contours) of Manzano’s acreage where the Lower Brahaney became more filled with oil as we moved up the Bronco field structure.
Brahaney C Structure. We landed 34 laterals into the top of the C zone using a GR log to KOP.
13
Structure – Top of Brahaney C
Depth (Ft.)
1,7801,7201,6601,6001,5401,4801,4201,400
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Brahaney B/C Net Isopach (ft > 4% porosity)
Brahaney B/C thickness is typically 80’
Manzano Platang field acreage contains 35’ to 77’ of Brahaney pay >4% porosity.
14
Net Isopach – Brahaney B / C
Net Thickness (Ft.)
80706050403020100
Brahaney C High Perm Thin Section
Smashed Nickle thin section sample with 15.7% porosity and 12.2 md k
Indicates moldic and intercrystalline porosity
Smashed Nickel 3H
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329,000 Barrels Oil Estimated
Ultimate Reserves
320 Million Cubic Feet Gas
Estimated Ultimate Reserves
Type Curve based on 9 wells with at least
11 months of production history
Peak Daily Oil Production
276 BO on Day 81
Current Type Curve – 1.0 mile lateral
20
Net to Working Interest Owners
(after 25% royalty)
Average Historical MBOE per well 315
x 4 wells per section 1,260
Average D&C Cost per well ($MMs) $2.0
x 4 wells per section ($MMs) $8.0
D&C Cost per BO $8.47
+ Avg Lifting Cost -- last 3 mos $10.10
Total "All-In" Cost per BO $18.57
< --- # Months --- >
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483,000 Barrels Oil Estimated
Ultimate Reserves
509 Million Cubic Feet Gas
Estimated Ultimate Reserves
Type Curve based on 10 wells
with at least 9 months of
production history
Peak Daily Oil Production
297 BO on Day 56
Current Type Curve – 1.5 mile lateral
21
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Geology and Engineering
NuTech frac modeling and production history matching show fracs are not growing above the Brahaney B zone, with the most concentrated portions of the frac centered in the Brahaney C and Lower Brahaney
Frac Height Modeling Leads to Optimization
Smashed Nickel
Well: WAM#1 Spoke #2H Sm. Nickel 3H Average
Propped Total Frac Height, feet 73 92 71 78.7
Propped Frac Up, feet 37 30.5 37 34.8
Propped Frac Down, feet 36 61.5 34 43.8
Drainage, Acres 107 158.5 233.6 166.4
What A Melon
Logs hung on Brahaney B Top
Brahaney C Top
Brahaney D Top
Chambliss Zone Unstimulated
Proppant Concentration
Broken Spoke
23
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Chambliss Net Pay Isopach Map (Ft.4%) and Optimization
The Chambliss zone is the 100 ftthick zone above the 80 ft thick Brahaney zone.
It is the main pay interval of the offset West Brahaney Field operated by Walsh Petroleum.
Manzano did not run a microseismic survey but through data sharing heard other operators were seeing 200 ftheight growth. This fit Manzano’sfrac modeling.
In 2016, Manzano placed two wells with thick Chambliss in the Lowermost Chambliss to attempt to frac through the entire section.
Net Isopach – Chambliss With Chambliss Drilling Locations
10
110
70
50
60
40
20
80
90
100
30
Net Thickness (Ft.)
24
Walsh Chambliss
Laterals
Chambliss Thin Section
Smashed Nickel sample with 11.5% porosity and 5.3 md
Smashed Nickel 3H
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San Andres Isopach Map Ft Porosity>4% (20 ft contours, 1st yellow=60 ft, 1st red=140 ft, max=200+ ft).
24
Whiteport
WhataMelon#4
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Manzano, LLC
1
10
100
1,000
0 30 60 90 120 150 180 210 240 270 300 330 360 390
Oil
-B
arr
els
/da
y
Days from start of Electronic Submersible Pump (ESP, artificial lift)
MANZANO 1-Mile Type Curve MANZANO 1-Mile PUD
White Port #2H
45’ Chambliss section > 25’ thick
Frac Size – 765 lbs of sand per foot
EUR = 518 MBO
What A Melon #4H
55’ Chambliss section > 25’ thick
Frac Size – 515 lbs of sand per foot
EUR = 515 MBO
1.0-mile Lateral Type Curve
(Brahaney section)
Frac Size - 375 lbs of sand per foot
EUR = 328 MBO
by Frac’ing wells with thicker ( > 25’ ) Chambliss Section….
with ~2X sand volume per lateral foot,
we have added ~5,000 BO per foot of Net Chambliss Pay > 25' Thick
at an incremental cost of < $150,000 (<$0.75 per/incremental BO)
Continuing Optimization
25
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Manzano, LLC
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
0
10
20
30
40
50
60
70
80
90
100
Jan
-13
Feb
-13
Mar
-13
Ap
r-1
3
May
-13
Jun
-13
Jul-
13
Au
g-1
3
Sep
-13
Oct
-13
No
v-1
3
De
c-1
3
Jan
-14
Feb
-14
Mar
-14
Ap
r-1
4
May
-14
Jun
-14
Jul-
14
Au
g-1
4
Sep
-14
Oct
-14
No
v-1
4
De
c-1
4
Jan
-15
Feb
-15
Mar
-15
Ap
r-1
5
May
-15
Jun
-15
Jul-
15
Au
g-1
5
Sep
-15
Oct
-15
No
v-1
5
De
c-1
5
Jan
-16
Feb
-16
Mar
-16
Ap
r-1
6
May
-16
Jun
-16
Jul-
16
Au
g-1
6
D&
C In
ve
stm
en
t ($M
M)
Ave
rag
e I
nd
ivid
ua
l 1
-Mil
e W
ell
Pro
jec
ted
IR
R &
Oil
Pri
ce
($/B
O)
D&C Investment IRR Nymex Oil 60-mth Avg
Note that because longer laterals weren't drilled until later in the Manzano project; only 1-mile laterals are described above to show maximum history; profitability of 1.5 mile laterals is higher
Drilling & Completion Cost – Reductions and Efficiencies
26
Historical / Projected Profitability of
Proved Undeveloped Locations
Drilling & Completion Costs ($ millions)
1-mile Horizontal
Drill / Complete Cement Frac Tangible Total
Avg 2014 1.67 0.15 1.11 0.85 3.78
Avg 2015 1.15 0.07 0.53 0.42 2.17
Last 2 0.92 0.06 0.55 0.30 1.83
Change -45% -60% -50% -65% -52%
1.5-mile Horizontal
Drill / Complete Cement Frac Tangible Total
Avg 2014 1.89 0.15 1.45 1.05 4.54
Avg 2015 1.51 0.08 0.79 0.51 2.89
Last 3 1.22 0.07 0.76 0.36 2.41
Change -35% -53% -48% -66% -47%
1Q 2013
145 MBOE/well
$3.25MM D&C
36% IRR
YE 2013
187 MBOE/well
$3.25MM D&C
45% IRR
YE 2014
292 MBOE/well
$2.64MM D&C
69% IRR
YE 2015
285 MBOE/well
$1.85MM D&C
40% IRR
3Q 2016
315 MBOE/well
$1.9MM D&C
67% IRR
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Facilities Overview. Manzano invested $12 MM in infrastructure.
33
Operations
Infrastructure Overview
15 tank batteries
10 frac ponds (no problems sourcing fracwater from the Ogallala Aquifer, purchase from surface owners)
31.5 miles of water disposal piping
Avg Disposal Cost = $.18/BW
Facilities Map
8” Water Line In Place
6” Water Line In Place
Battery
SWD Well
Future Battery
Future Frac Pond
Future 6” Water Line
Legend
July Average Projected
Injection Capacity
Well Name Formation Injecting Rate (Bbls/d) (Bbls/d)
Blackwater SWD Lower San Andres Injecting 5,174 7,000
Cleveland #3 SWD Wolfcamp Injecting 5,402 15,000
Cochise SWD #1 Devonian Injecting 10,075 20,000
Van #1 SWD Multiple Injecting 30 40
Ernestine SWD Lower San Andres Completed -- 3,000
McSwain #1 SWD Devonian Completing -- 20,000
Total Capacity by August 2015 20,680 65,040
Cleveland #1 Vertical Devonian
/ SWD Candidate
T/A -- 20,000
McGinty #2 EP Vertical Devonian
/ SWD Candidate
T/A -- 20,000
Estimated Ultimate Capacity 105,040
Current Frac Pond
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CONCLUSIONS
The San Andres is historically the most prolific reservoir in the Permian Basin. The San Andres formationis a good low cost, shallow, conventional candidate for horizontal development. For Manzano, the all inproduction costs averaged around $18/BO.
But Detailed mapping of the reservoirs is critical to determine reservoir thickness, potential reserves,and locate the presence of water. “It is not all good everywhere”.
Horizontal Drilling and Completion technology allowed Manzano to extend the western limits of theWest Brahaney field beyond where vertical completions were formerly economic. Platang field isstructurally on strike or updip to the adjacent West Brahaney field. Development is stratigraphicallycontrolled by the limits of the porous dolomite facies to the west and north.
Core, Mudlog and Water Saturation data should generally match up. In general, here and elsewhere,within the pay column, the best core perms retain the best So, whereas the tighter the dolomite, thelower the saturation of So/ higher the saturation of Sw.
At Platang field, the actual average total field oil cut of 16% was not a lot different than pre-drillingmarginal vertical wells (9% actual, 28% on IPs), it was just a lot more prolific (422 BOPD peak oil rate inthe 1st Pilot well versus offset show well average production of 2 BOPD).
While former vertical wells produced oil from the start, the horizontal wells do not. Large volumes ofwater and gel are used in fracing these wells. Using subpumps to move 3000 BFPD, We typically recoverall of our load, and draw the pump intake pressure down to 1200 psi or more, before seeing oil cut startcoming in (often 20-30 days). Usually the well’s oil production peaks 30 to 45 days after first oil.
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Arrowhead Offset Activity
Element Full Core
Currently Drilling
Lateral
HenrySusie 3704NH
StewardArrowhead 717H
Recently POP
Nemo Development
Program
E RGoogins 249 1H
ManzanoDevelopment
Program
ApacheRecent Wells
Element 6 new permits
WalshDevelopment
Program
Key Point: The San Andres dolomite facies can change rapidly. So results will vary.
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Manzano, LLC
Henry Pet. Susie 3704 Digital Logs & Landing Depths graciously provided by Henry Petroleum(All Red annotations are Manzano’s)
Susie 3704
Base of
ZoneRSWC
Oil Saturation
%
Apache
Thunderstruck
Apache
Pearl
Top of Zone
9/2016 DI Prod.
Susie 53 Bopd
(Now 80-90)
Thunder 42
Bopd
Pearl 21 Bopd
(Now TA)
All make>95%
Water
5200 BASE ML SHOW
Landed 245’ below the Pi
Mkr. in the Lwr Brahaney
equivalent (180 ft of
Chambliss and Brahaney
are tight).
ATTIC
OIL
WATER
