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Presentation

IHS

Breaking Through Barriers6 February 2015

Jerry Eumont, Managing Director

ENERGY

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IHS has built a significant global presence to enable continued growth and market penetration

AACC Breaking Through Barriers February 2015

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Requirements to remain competitive:

• Fiscal Terms

• Geology

• Willing and Active Operators

• Capable Service Sector

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Fiscal Terms that create success in Unconventionals

• Contract periods sufficient for operators to find the “sweet spots”, or at least crack the code and create economically successful development plans

• Efficiency of regulatory processes

• Fiscal regimes that directly benefit impacted landowners and state/local governments

• Fiscal terms that are adjusted to the cost structure of shale gas development

• Supply chain development and industrial policy

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Reasons for US Unconventional Success

• Globally, many countries yearn for the shale success the US has seen. However, geology was only one cause for such dramatic production growth; a multitude of external factors incentivized and accelerated activity

Critical Ingredients of the System N. Amer

Geo-tech

Macro Enabler

Pace Governor

Rock characteristics/ resource base quality X

Resource base quantity X

Responsiveness to frack X

Well control X

Land Tenure/Parcel Size X

Local advocates and beneficiaries X

Lease structure forcing establishment of production X

High number of operators/dispersion X

Company ability /willingness to spend significant $ quickly X

High company risk appetite for trial and error X

Service sector availability X

Rapid transmission of learnings via leaky service sector and external company orientation

X

Pipes, Gathering to allow processing/delivery X

Water and other essential frac materials X

Skilled oil and gas labor pool X

Favorable prices and available markets X

Cooperative governments and incentives X

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Fayetteville Shale shows limited improvement over time

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Marcellus NE Pennsylvania shows 50% improvement over the last 4 years

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Lateral lengths average around 5000’ for both playsFayetteville has 3 major operatorsMarcellus NE Penn has 11 major operators

Fayetteville Marcellus NE Pennsylvania

Fayetteville and Marcellus Lateral Lengths Increase on a Similar Trend

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Fayetteville and Marcellus Proppant/ Lateral-Foot stabilize and stay relatively constant

Fayetteville Marcellus

Proppant/Lateral-Foot has increased in the Marcellus and is current 50% higher than the Fayetteville

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End 2013 (9000 wells)

End 2008 (12 wells)

End 2011 (2400 wells)End 2010 (660 wells)

End 2012 (5600 wells)

End 2009 (224 wells)

Eagle Ford Evolution 2008 to 2014

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$33/bbl

$53/bbl

$67/bbl

$90/bbl

$+120/bbl

Eagle Ford Well Performance Evolution

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Sub-Saharan Africa holds more than 50% of the total offshore deepwater area leased, however average block size is large

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500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

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100,000

200,000

300,000

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500,000

600,000

700,000

800,000

Aver

age

Bloc

k Si

ze (

SqKm

)

Tota

l Lea

sed

Area

( Sq

Km)

Deep Water Areas leased vs. Average Block size

Total Deep Water Area leased Average Block Size Sqkm

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Areas with the largest block sizes tend to have a lower number of discoveries meeting our criteria. These areas will mature more slowly

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0

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500

1,000

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3,500

4,000

Num

ber o

f Dis

cove

ries

Ave

rage

blo

ck s

ize

( SqK

m)

Deep Water Areas leased vs. Number of Discoveries made after 2000 in water depths greater than 500 ft and with TD greater than 15,000 ft

Average Block Size Sqkm Count of Disc Well name

IHS Customer Care:• Americas: +1 800 IHS CARE (+1 800 447 2273); CustomerCare@ihs.com • Europe, Middle East, and Africa: +44 (0) 1344 328 300; Customer.Support@ihs.com • Asia and the Pacific Rim: +604 291 3600; SupportAPAC@ihs.com

© 2014 IHS. No portion of this report may be reproduced, reused, or otherwise distributed in any form without prior written consent, with the exception of any internal client distribution as may be permitted in the license agreement between client and IHS. Content reproduced or redistributed with IHS permission must display IHS legal notices and attributions of authorship. The information contained herein is from sources considered reliable but its accuracy and completeness are not warranted, nor are the opinions and analyses which are based upon it, and to the extent permitted by law, IHS shall not be liable for any errors or omissions or any loss, damage, or expense incurred by reliance on information or any statement contained herein. For more information, please contact IHS Customer Care (see phone numbers and email addresses listed above). All products, company names, or other marks appearing in this publication are the trademarks and property of IHS or their respective owners.

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AACC Breaking Through Barriers February 2015

Thank You!