The Debrosse Memorial Report 2014 Oil & Gas Activity in Ohio

68th Annual Winter Meeting

Prepared by:Marty Shumway - Shumway Resources, LLCBill Arnholt - Northwood Energy CorporationTim Knobloch - James Knobloch Petroleum Consultants, Inc.

Oil & Gas Production in Ohio

• More than 275,000 oil and gas wells drilled in Ohio since 1860

• More than 50,000 producing wells in 49 of 88 Ohio counties

0

1000

2000

3000

4000

5000

6000

BEREA OHIO SHALE CLINTON TRENTON ROSE RUN CAMBRIAN

NW Ohio Lima-Indiana

Technologic Advance: Hydraulic FracturingClinton/Berea Plays

Morrow County Trempealeau Play

Clinton PlayTight Gas

Sands

Clinton Play

History of Ohio Wells Drilled by Year and Reservoir

Permits & Completions - 2010 - 2014

TYPE 2010 2011 2012 2013 2014▲

(’13 to’14) ▲%

PERMIT 651 690 903 1608 1659 +51 +3%

COMPLETION 427 460 553 580 654 +74 +13%

PLUG 740 571 473 630 629 -1 +0%

TOTAL 1512 1533 1929 2818 2942 +124 +4%

2014

Completions

Permits to Drill

Permits to Plug

2014

Completions

Permits to Drill

Permits to Plug

Permit and Completions By Month

JAN FEB MAR APRIL MAY JUNE JULY AUG SEP OCT NOV DEC

82121

152102 114

228

138 146 142115

141178

59

6942

3547

60

70 46 5656

35

79

43

23 2691

100

72

92

48 47

34 26

30

Permits Completions Plugging Permits

Operators Completing Wells By Year

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

116 127147

162182

143126 121 112 113

89

Wells Completed - Type

Utica and Marcellus

Shale, 401, 61%

Conventional, 253, 39%

654 TOTAL COMPLETIONS

2014

Horizontal Completions By

Formation

LEGEND

COMPLETIONS - TD FORMATION

_̂ MARCELLUS SHALE (5)

_̂ UTICA (391)

_̂ QUEENSTON FORMATION (5)

2014

Vertical Completions By

Formation

LEGEND

COMPLETIONS - TD FORMATION

_̂ BEREA & SHALLOWER (17)

_̂ DEVONIAN SHALE (36)

_̂ BIG LIME, NEWBURG (16)

_̂ CLINTON (82)

_̂ TRENTON-BLACK RIVER (18)

_̂ KNOX UNCONFORMITY (46)

_̂ CONASAUGA FORMATION (2)

_̂ MT SIMON, PRECAMBRIAN (4)

2014

Class II Injection Well Completions By Formation

LEGEND

COMPLETIONS - TD FORMATION

_̂ DEVONIAN SHALE (1)

_̂ BIG LIME, NEWBURG (2)

_̂ CLINTON (1)

_̂ CONASAUGA FORMATION (2)

_̂ MT SIMON, PRECAMBRIAN (4)

Completions By Month

JAN FEB MAR APRIL MAY JUNE JULY AUG SEP OCT NOV DEC

23

38

1911

3340

53

35 3142

18

58

36

31

23

24

14

20

17

1125

14

17

21

Horizontal Wells Vertical Wells

Completions – Top 10 Counties

COUNTY COMPLETIONSPERCENT

HORIZONTAL

CARROLL 182 97%

HARRISON 64 95%

COLUMBIANA 53 79%

GUERNSEY 36 67%

NOBLE 34 50%

STARK 34 15%

BELMONT 29 97%

MONROE 28 61%

KNOX 17 0%

MUSKINGUM 15 0%

Top 12 Most Active Operators – By Wells

OPERATOR% TOTWELLS

2014WELLS

▲%2013

CHESAPEAKE EXPLORATION LLC 44% 285 77%

GULFPORT ENERGY CORPORATION 6% 37 48%

ENERVEST OPERATING 3% 24 -8%

ECLIPSE RESOURCES-OHIO LLC 2% 21 -22%

KNOX ENERGY INC 2% 19 -10%

ANTERO RESOURCES CORPORATION 2% 18 125%

ECLIPSE RESOURCES I LP 1% 16 433%

J D DRILLING CO 4% 14 1300%

R E GAS DEVELOPMENT LLC 1% 13 44%

HESS OHIO DEVELOPMENTS LLC 3% 12 -8%

ARTEX OIL COMPANY 1% 10 400%

AMERICAN ENERGY UTICA LLC 1% 9 800%

TOP 12 OPERATORS DRILLED APPROXIMATELY 69% OF TOTAL WELLS IN 2014

Top 12 Most Active Operators – By Footage

OPERATOR% TOTALFOOTAGE

2014FOOTAGE

▲%2013

CHESAPEAKE EXPLORATION LLC 51% 3,020,918 75%

GULFPORT ENERGY CORPORATION 10% 596,894 89%

ANTERO RESOURCES CORPORATION 5% 288,056 151%

ECLIPSE RESOURCES I LP 4% 237,403 698%

HESS OHIO DEVELOPMENTS LLC 3% 182,974 36%

R E GAS DEVELOPMENT LLC 3% 168,169 68%

AMERICAN ENERGY UTICA LLC 2% 132,809 1617%

ENERVEST OPERATING L 2% 109,647 -29%

TRIAD HUNTER LLC 2% 92,716 n/a

ECLIPSE RESOURCES-OHIO LLC 1% 78,696 -17%

HILCORP ENERGY COMPANY 1% 74,259 192%

PDC ENERGY INC 1% 65,776 -11%

TOP 12 OPERATORS DRILLED APPROXIMATELY 86% OF TOTAL FOOTAGE DRILLED IN 2014

Top 12 Most Active Counties – By Wells

COUNTY% TOTWELLS

2014WELLS

▲%2013

CARROLL 28% 182 61%

HARRISON 10% 64 60%

COLUMBIANA 8% 53 279%

GUERNSEY 6% 36 44%

STARK 5% 34 -13%

NOBLE 5% 34 3%

BELMONT 4% 29 81%

MONROE 4% 28 40%

KNOX 3% 17 -54%

MUSKINGUM 2% 15 67%

LICKING 2% 15 -35%

MEIGS 2% 14 -7%

OPERATORS REPORTED COMPLETIONS IN 38 OF 89 OHIO COUNTIES IN 2014 VERSUS 46 IN 2013

Top 12 Most Active Counties – By Footage

COUNTY% TOT

FOOTAGE2014

FOOTAGE▲%2013

CARROLL 40% 2,327,672 56%

HARRISON 15% 851,150 79%

BELMONT 8% 444,935 159%

COLUMBIANA 6% 342,670 229%

GUERNSEY 6% 327,682 102%

MONROE 6% 326,227 113%

NOBLE 6% 323,669 54%

STARK 2% 139,933 -33%

TRUMBULL 2% 99,652 14%

MAHONING 2% 88,131 41%

MUSKINGUM 1% 73,170 182%

MORGAN 1% 68,240 162%

OPERATORS REPORTED COMPLETIONS IN 38 OF 89 OHIO COUNTIES IN 2014 VERSUS 46 IN 2013

Drilling Footage and Wells – By Year

YEARTOTAL

FOOTAGE WELLSFOOTAGEPER WELL

AVG IP GAS

AVG IP OIL

2014 5,854,693 654 10,398 2,703 122

2013 3,898,408 569 7,570 1,361 97

2012 2,580,821 511 5,388 481 34

2011 1,832,121 454 4,192 136 7

2010 2,224,761 633 3,883 50 3

2009 3,036,431 927 3,767 223 2

2008 4,249,247 1149 3,750 54 3

2007 4,030,319 1094 3,928 70 3

2006 3,601,375 945 3,927 79 4

2005 2,718,759 673 4,095 123 4

2004 2,324,308 589 4,107 133 4

2003 2,419,254 561 4,359 88 5

2002 2,780,935 643 4,507 91 4

2001 3,332,804 766 4,374 152 3

2000 2,329,580 611 4,094 142 3

Permitted Formations

0

200

400

600

800

1000

12001055

259

12163 61 49 23 8 8 7 5

Producing Wells – By Year

0

10000

20000

30000

40000

50000

60000

1984 1989 1994 1999 2004 2009 2014

CO

UN

T O

F W

ELLS

YEAR

Well Count

YEAR 2014 WELL COUNT IS ESTIMATED

Production Summary – Oil By Year8

.1

7.3

7.1

7.1

7.0

6.6 6.8

6.7

5.9

5.4 5.7 6.3

5.6

5.2

5.0

5.0

5.0 5.0 5.1

4.4 4.8

4.6

4.5

4.3

4.3

0.6

3.7

11

.0

0

2

4

6

8

10

12

14

16

181

99

0

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Mill

ion

Bar

rels

of

Oil

Conventional Oil Horizontal Oil

YEAR 2014 CONVENTIONAL PRODUCTION IS ESTIMATED

Production Summary – Gas By Year1

21

10

4

11

3

11

8

11

5

10

6

11

1

10

6

10

8

90 92

89

88

85

83

77 79

76 82

76 80

80

73

66

66

13 10

0

45

2

0

100

200

300

400

500

6001

99

0

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

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05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Bill

ion

Cu

bic

Fe

et o

f G

as

Conventional Gas Horizontal Gas

YEAR 2014 CONVENTIONAL PRODUCTION IS ESTIMATED

Change of Owner

0

1000

2000

3000

4000

5000

6000

7000

8000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

39563379

3568

4411

2412

7438

3054

2274

5908

4758

11341696

3142

Ohio’s Aging Wells

0

1000

2000

3000

4000

1

10

100

1000

10000

100000

0 5 10 15 20 25 30 35 40 45 50

CO

UN

T O

F W

ELL

OIL

(B

BLS

) /

GA

S (M

CF)

WELL AGE - YEARS

Average Annual Oil Average Annual Gas Count of Wells

54% OF PRODUCING WELLS ARE BETWEEN

25 & 38 YEARS OLD

UTICA

OPERATORS

Through

12/31/2014

UTICA

PRODUCING WELLS BY

OPERATOR

Through

12/31/2014

Utica – Gas Production By Quarter

8,296,25615,065,106

33,511,114

43,060,43967,276,882

88,624,722

131,975,230

164,776,396

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

1st Qtr2013

2nd Qtr2013

3rd Qtr2013

4th Qtr2013

1st Qtr2014

2nd Qtr2014

3rd Qtr2014

4th Qtr2014

Gas

in M

cf

Gas in Mcf'sMcf25 %

Increase

49 %Increase

32 %Increase

56 %Increase

Utica – Oil Production By Quarter

328,349

574,758

1,314,0841,429,005

1,941,367

2,459,874

3,007,834

3,552,661

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

1st Qtr2013

2nd Qtr2013

3rd Qtr2013

4th Qtr2013

1st Qtr2014

2nd Qtr2014

3rd Qtr2014

4th Qtr2014

Oil

in B

bls

Oil in Bbls

18 %Increase

22 %Increase

27 %Increase

36 %Increase

Utica – Wells Online By Quarter

92

152

243

349

417

503

673

778

0

100

200

300

400

500

600

700

800

900

1st Qtr2013

2nd Qtr2013

3rd Qtr2013

4th Qtr2013

1st Qtr2014

2nd Qtr2014

3rd Qtr2014

4th Qtr2014

We

lls O

nlin

e

Wells Online16 %

Increase

34 %Increase

21 %Increase19 %

Increase

Utica EUR Estimation

• Used operator reported production to ODNR through 3rd Qtr 2014

• Calculated EUR values for each well

• Adjusted EUR to barrels of oil equivalent (BOE)• used GAS/OIL ratio of 15:1 (based on current market prices)

• Used composite type curve from several shale plays

UTICA

NUMBER OF WELLS PER TOWNSHIP

WITH ESTIMATED

EUR

UTICA

ESTIMATED EUR PER

TWP USING GAS:OIL

RATIO OF 15:1

Top 10 Class II Injection Wells – By VolumeCOUNTY & TWP API # OPERATOR LEASE NAME 2014

COSHOCTON - KEENE 7177 BUCKEYE BRINE LLC ADAMS #1 1,723,719

COSHOCTON - KEENE 7178 BUCKEYE BRINE LLC ADAMS #2 1,709,506

ATHENS - TROY 3821 K & H PARTNERS LLC K&H PARTNERS LLC #1 1,233,821

ATHENS - TROY 3823 K & H PARTNERS LLC K&H PARTNERS LLC #2 1,105,732

MUSKINGUM - PERRY 8780 ROBERT W. ORR, JR. KEMBLE #1-D 809,629

MUSKINGUM - UNION 8776 HECKMAN WATER RES GOFF SWD #1 775,763

MEIGS - LEBANON 3619 ROSCOE MILLS ROSCOE MILLS #1 747,022

NOBLE - JACKSON 4086 HUNTER DISPOSAL, LLC TRAVIS UNIT # 200405 733,470

NOBLE - JACKSON 3995 HUNTER DISPOSAL, LLC WARREN DRILLING #1 647,958

WASHINGTON - NEWPORT 9658 OOGC DISPOSAL CO LONG RUN DISP #1 540,165

Top 10 Counties -Water Injection

County Volume (BBls)

COSHOCTON 3,490,092

ATHENS 2,887,456

TRUMBULL 2,759,733

PORTAGE 1,909,759

WASHINGTON 1,635,134

NOBLE 1,391,998

MEIGS 1,290,409

MUSKINGUM 1,021,643

ASHTABULA 998,154

GUERNSEY 514,744

Annual Injection Volume - Statewide

1 2 3 4

Water Volume 12,759,681 14,630,076 17,420,798 21,700,838

12,759,681

14,630,076

17,420,798

21,700,838

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

Wat

er

Vo

lum

e In

ject

ed

(B

bls

)

2014

2013

2012

2011

16 % Increase

13% Increase

25% Increase

2014 – 2015 Activity• Gulfport Energy

• plans to spend an estimated $523 to $571 million, a 12% decrease from 2014.

• plans to drill and complete 32-38 Utica wells in 2015. • reports production totaling 87.7 Bcfe for 2014 up 255% from 2013.

• Magnum Hunter• Capex budget for 2015 is $100 million, 75% reduction from $400 million

in 2014. • 70% of 2015 budget is allocated to Appalachian Basin.

• Antero Resources Corporation • 2015 plans to operate an average of 14 drilling rigs between the

Marcellus and Utica Shale plays in 2015, down from 21 at year-end 2014.• Plan to complete 130 horizontal Marcellus and Utica wells in 2015, down

from 179 in 2014. • Drilling and completion budget for 2015 is $1.6 billion, a 33% reduction

from the 2014 capital budget of $2.4 billion.

2014 – 2015 Activity• Eclipse Resources

• Estimated capex budget is $640 million for 2015, a reduction of 20% from 2014.

• Carrizo Oil & Gas • no plans to drill in 2015 in the Utica Shale.

• Rex Energy• drilled 6 net wells in the Warrior North Prospect in Carroll County

and 4.6 net wells in Warrior South Prospect in Guernsey County in 2014.

• Rex plans to allocate about $ 41 to $52 million to Ohio Utica development.

2014 – 2015 Activity• Chesapeake Energy

• Estimate 25% of capex budget to the Utica - about $1 billion to $1.125 billion in 2015 which is an approximately 35 % decrease from 2014.

• Hess Corporation• plans 290 million in capex in 2015 for Utica drilling in Belmont,

Guernsey and Harrison Counties

• PDC Energy• plans to reduce its 2015 capex to $35 million from $152 million in

2014 a 77% reduction.

• CNX Gas • Turned in line 21 Utica wells in 2014• plans to drill 4 Utica wells and 1 Marcellus well on a pad in Monroe

County.

Miscellaneous Transactions

Date Buyer Seller

Deal Value($MM)

$/Acre(Adv. Est.)

2/26/2014 Gulfport Energy Corp Rhino Resource Partners LP $ 185 $ 17,043

11/5/2014 Antero Resources Corp Undisclosed Seller $ 185 $ 15,417

5/7/2014 Antero Resources Corp Muskingum Watershed Conservancy District $ 95 $ 14,930

1/29/2014 American Energy Partners LP Hess $ 1,075 $ 13,961

7/25/2014 Magnum Hunter Resources Corp Ormet Corp; Undisclosed Seller $ 23 $ 13,353

8/9/2013 American Energy Partners LP EnerVest Management Partners $ 284 $ 12,616

10/31/2013 Carrizo Avista Capital Partners $ 73 $ 12,407

12/31/2013 Undisclosed Buyer Rice Energy Inc $ 22 $ 10,129

2/11/2013 Gulfport Energy Corp Windsor Ohio LLC $ 220 $ 10,000

1/15/2013 Carrizo Avista Capital Partners $ 63 $ 6,058

6/9/2014 American Energy Partners LP East Resources Inc; Undisclosed Seller $ 475 $ 5,494

INFORMATION PROVIDED BY RIVINGTON HOLDINGS, LLC

8/31/2012 EnerVest Management Partners Chesapeake $ 358 $ 4,972

8/12/2013 Magnum Hunter Resources Corp MNW Energy LLC $ 142 $ 4,441

6/30/2012 Gulfport Energy Corp Undisclosed Seller $ 19 $ 4,244

3/26/2012 BP Individual Seller $ 328 $ 3,900

3/31/2012 Gulfport Energy Corp Undisclosed Seller $ 119 $ 2,996

2/17/2012 Magnum Hunter Resources Corp Undisclosed Seller $ 25 $ 2,035

THANK YOU!Marty Shumway

(614) 846-1391

marty@shumwayresources.com

Special Thanks To:

Ohio Oil and Gas Association

Bill Arnholt, Northwood Energy

Tim Knobloch, James Knobloch Petroleum Consultants, Inc.

Larry Wickstrom, Wickstrom Geosciences