The Debrosse Memorial Report 2015 Oil & Gas Activity in Ohio

69th Annual Winter Meeting

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

The Debrosse Memorial Report 2015 Oil & Gas Activity in Ohio - Outline

• General overview of Ohio oil & gas production

• Permits & completion summaries

• Operator activity (footage drilled, number of wells)

• Activity by county (footage drilled, number of wells)

• Change of owners

• IP analysis for horizontal wells

• Production summary

• Utica EUR summary

• Class II injection well summary

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

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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

2015 Permit & Completion Activity

PHOTOGRAPHS COURTESY OF LARRY WICKSTROM

Permits & Completions - 2010 - 2015

TYPE 2010 2011 2012 2013 2014 2015

▲

(’14 to’15) ▲%

PERMIT 651 690 903 1,608 1,659 997 -662 -40%

COMPLETION 427 460 553 580 654 534 -120 +18%

PLUG 740 571 473 630 629 511 -118 -19%

TOTAL 1,512 1,533 1,929 2,818 2,942 2,318 -624 -21%

Permit and Completions By Month

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

84109 97

6785

6788

5688

120

68 68

23

5959

46

5656

55

34

23

24

4158

19

4553

32

44

40

40

5236

59

37

54

Permits Completions Plugging Permits

Permitted Formations

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700692

157

48 45 29 12 4 4 3 3

2015

CompletionsPermits to DrillPermits to Plug

2015

CompletionsPermits to DrillPermits to Plug

Operators Completing Wells By Year

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

116 127147

162182

143126 121 112 113

89 87

Wells Completed – Type534 Total Completions

Horizontal 373, 70%

Vertical 151, 28%

Directional4, 1%

Unknown6, 1%

2015

Horizontal Completions By

Formation

2015

Vertical Completions By

Formation

2015Class II

Injection Well Completions

By TD Formation

Completions By Month

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

21

4435

27

40 40 41

24

14 12

27

482

15

23

19

14 15 13

10

7 11

12

10

Horizontal Wells Vertical Wells

Completions – Top 10 CountiesCOUNTY TOTAL HORIZONTAL VERTICAL*

HARRISON 90 88 2

CARROLL 81 78 3

BELMONT 72 67 5

MONROE 53 44 9

GUERNSEY 49 46 3

NOBLE 42 30 12

COSHOCTON 17 0 17

STARK 16 4 12

KNOX 15 0 15

COLUMBIANA 14 12 2

OTHER COUNTIES 85 4 81

TOTAL 534 373 161

*INCLUDES “DIRECTIONAL” AND “UNKNOWN”

Completions By County

8878

67

44 4630

0 4 012

4

2

3

5

9 3

12

17 12 15 2

81

HORIZONTAL VERTICAL

Top 12 Most Active Operators – By Wells

OPERATOR% TOTWELLS

2015 WELLS

▲%2014

CHESAPEAKE EXPLORATION LLC 27% 144 -33%

GULFPORT ENERGY CORPORATION 13% 71 92%

ANTERO RESOURCES CORPORATION 9% 49 172%

HESS OHIO DEVELOPMENTS LLC 5% 27 125%

ASCENT RESOURCES UTICA LLC 4% 22 N/A

RICE DRILLING D LLC 4% 19 1800%

ECLIPSE RESOURCES I LP 3% 18 13%

NORTHWOOD ENERGY CORP 2% 13 86%

ENERVEST OPERATING LLC 2% 10 -57%

ARTEX OIL COMPANY 2% 9 -10%

R E GAS DEVELOPMENT LLC 2% 9 -31%

MOUNTAINEER STATE OPER LLC 1% 7 N/A

TOP 12 OPERATORS DRILLED APPROXIMATELY 75% OF

TOTAL WELLS IN 2015

Hess Ohio – CNXGUE10N7W #H-8

PHOTOGRAPH COURTESY OF LARRY WICKSTROM

Top 12 Most Active Operators – By Footage

OPERATOR% TOTALFOOTAGE

2015FOOTAGE

▲%2014

CHESAPEAKE EXPLORATION LLC 34% 2,260,537 -25%

GULFPORT ENERGY CORPORATION 18% 1,155,182 94%

ANTERO RESOURCES CORPORATION 12% 817,867 184%

HESS OHIO DEVELOPMENTS LLC 7% 465,549 N/A

ASCENT RESOURCES UTICA LLC 5% 332,505 N/A

ECLIPSE RESOURCES I LP 4% 280,029 18%

RICE DRILLING D LLC 4% 272,759 12,730%

R E GAS DEVELOPMENT LLC 2% 122,452 -27%

XTO ENERGY INC. 2% 100,681 237%

PDC ENERGY INC 1% 81,905 25%

ENERVEST OPERATING LLC 1% 67,045 -39%

CARRIZO (UTICA) LLC 1% 54,324 N/A

TOP 12 OPERATORS DRILLED APPROXIMATELY 91% OF

TOTAL FOOTAGE DRILLED IN 2015

Top 12 Most Active Counties – By Wells

COUNTY% TOTWELLS

2015WELLS

▲%2014

HARRISON 19% 90 53%

CARROLL 17% 81 -51%

BELMONT 15% 72 148%

MONROE 11% 53 89%

GUERNSEY 10% 49 53%

NOBLE 9% 42 24%

COSHOCTON 4% 17 31%

STARK 3% 16 -47%

KNOX 3% 15 -12%

COLUMBIANA 3% 14 -50%

WASHINGTON 3% 12 140%

LICKING 2% 10 -33%

OPERATORS REPORTED COMPLETIONS IN 34 OF 89 COUNTIES IN 2015 VERSUS 38 IN 2014. TOP 12 COUNTIES – 88% TOTAL WELLS

Top 12 Most Active Counties – By Footage

COUNTY% TOT

FOOTAGE2015

FOOTAGE▲%2014

HARRISON 23% 1,453,425 71%

CARROLL 20% 1,259,238 -46%

BELMONT 18% 1,128,899 154%

MONROE 12% 764,084 134%

GUERNSEY 11% 701,273 114%

NOBLE 9% 560,308 73%

COLUMBIANA 3% 206,727 -40%

STARK 2% 102,382 -27%

WASHINGTON 1% 71,792 69%

COSHOCTON 1% 48,509 2%

KNOX 1% 39,790 -24%

TUSCARAWAS 0% 30,316 145%

TOP 12 COUNTIES ACCOUNTED FOR 97% OF TOTAL FOOTAGE DRILLED IN 2015

Drilling Footage and Wells – By Year

YEARTOTAL

FOOTAGE WELLSFOOTAGEPER WELL

AVG IP GAS

AVG IP OIL

2015 6,587,714 534 12,336 5,432 279

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

2014 TO 2015 AVG IP-GAS UP 101%; AVG IP-OIL UP 129%2014 TO 2015 FOOTAGE PER WELL UP 19%

Change of Owner – Wells By Year

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7000

8000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

39563379

3568

4411

2412

7438

3054

2274

5908

4758

11341696

31423603

YEAR 2015 LARGEST CHANGE OF WELL OWNER WAS BROAD STREET ENERGY CO & BROAD STREET SERV LLC TO M&R INVESTMENTS OHIO LLC

Rice Energy “Razin Kane” and “Krazy Train”

PHOTOGRAPH COURTESY OF LARRY WICKSTROM

Top 12 Counties – By Average IP (MCFE)

COUNTY WELLSAVG IP GAS

(MCF)AVG IP OIL

(BBLS)AVG IP (MCFE)

BELMONT 64 10,150 239 13,735

MONROE 45 12,549 33 13,044

HARRISON 82 5,915 404 11,975

GUERNSEY 43 2,778 577 11,433

CARROLL 77 3,877 373 9,472

NOBLE 39 4,180 275 8,305

COLUMBIANA 13 5,961 140 8,061

WASHINGTON 7 1,216 80 2,416

STARK 15 31 15 256

KNOX 9 40 8 160

GEAUGA 4 23 3 68

COSHOCTON 12 14 2 44

COUNTIES WITH LESS THAN 4 WELLS ARE NOT INCLUDEDMCFE CALCULATED USING OIL GAS RATIO OF 15:1

Top 12 Operators – By Average IP (MCFE)

OPERATOR WELLS

AVG IP GAS

(MCF)

AVG IP OIL

(BBLS)AVG IP (MCFE)

ASCENT RESOURCES UTICA LLC 20 5,349 909 18,984

HESS OHIO DEVELOPMENTS LLC 26 12,669 335 17,694

ANTERO RESOURCES CORPORATION 45 8,691 272 12,771

R E GAS DEVELOPMENT LLC 9 4,277 534 12,287

GULFPORT ENERGY CORPORATION 71 8,816 175 11,441

CHESAPEAKE EXPLORATION LLC 135 4,209 375 9,834

ECLIPSE RESOURCES I LP 15 3,610 302 8,140

XTO ENERGY INC. 6 8,123 0 8,123

RICE DRILLING D LLC 13 6,099 0 6,099

PDC ENERGY INC 6 700 308 5,320

ENERVEST OPERATING LLC 9 37 24 397

NORTHWOOD ENERGY CORP 13 158 2 188

OPERATORS WITH LESS THAN 4 WELLS ARE NOT INCLUDED. MCFE CALCULATED USING OIL GAS RATIO OF 15:1

Top 12 Operators – By Average IP (MCFE)

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IP (

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OPERATORS WITH LESS THAN 4 WELLS ARE NOT INCLUDED. MCFE CALCULATED USING OIL GAS RATIO OF 15:1

2015Top 10 Operators – By

Average IP (MCFE)Well Locations

IP-OIL Versus Production

42 WELL DATA SET, 2015 PRODUCTION & IP DATA

R² = 0.8215

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OPERATOR REPORTED IP – OIL (BBLS/day)

IP-GAS Versus Production

68 WELL DATA SET, 2015 PRODUCTION & IP DATA

R² = 0.5825

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OPERATOR REPORTED IP – GAS (MCF/day)

Ohio Oil & Gas Production

PHOTOGRAPH COURTESY OF LARRY WICKSTROM

Producing Wells – By Year

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50000

60000

1984 1989 1994 1999 2004 2009 2014

CO

UN

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F W

ELLS

YEAR

Producing Wells (ODNR) Reported Production

YEAR 2015 WELL COUNT IS ESTIMATED

Production Summary – Oil By Year8

.1

7.3

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7.1

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6.6 6.8

6.7

5.9

5.4 5.7 6.3

5.6

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90

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Mill

ion

Bar

rels

of

Oil

Conventional Oil Horizontal Oil

YEAR 2015 CONVENTIONAL PRODUCTION IS ESTIMATED BY USING AVERAGE ANNUAL PERCENT DECLINE FOR YEAR 2012-2014.

2015 PRODUCTION IS APPROXIMATELY

5.6 TIMES 2011 PRODUCTION

2015 OIL PRODUCTION REPORTED BY1,074 HORIZONTAL WELLS

23,900 VERTICAL WELLS (EST)

Production Summary – Gas By Year1

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11

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1

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8

90 92

89

88

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76 82

76 80

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66

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Conventional Gas Horizontal Gas

YEAR 2015 CONVENTIONAL PRODUCTION IS ESTIMATED BY USING AVERAGE ANNUAL PERCENT DECLINE YEAR 2012-2014.

2015 PRODUCTION IS APPROXIMATELY

12.6 TIMES 2011 PRODUCTION

2015 GAS PRODUCTION REPORTED BY1240 HORIZONTAL WELLS

37,000 VERTICAL WELLS (EST)

Ohio Oil Production 1886-2015

HISTORICAL DATA COURTESY OF WICKSTROM GEOSCIENCE, LLC

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5

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30

1881 1891 1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 2011

MIL

LIO

NS

OF

BA

RR

ELS

OF

OIL

YEAR

189623.9 MMBLS

TRENTON

19453.0 MMBLS

EOR

196415.9 MMBLS

TREMPEALEAU

198415.3 MMBLS

CLINTON

20104.7 MMBLS

2015

25.6 MMBLS

UTICA

1952HYDRAULIC

FRACTURING

Ohio’s Aging Wells

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1

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0 5 10 15 20 25 30 35 40 45 50

CO

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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 ~53,000

PRODUCING WELLS ARE BETWEEN

25 & 39 YEARS OLD

UTICA

PRODUCING WELLS BY

OPERATOR

Through

12/31/2015

Utica – Gas Production By Quarter

1st Qtr2013

2nd Qtr2013

3rd Qtr2013

4th Qtr2013

1st Qtr2014

2nd Qtr2014

3rd Qtr2014

4th Qtr2014

1st Qtr2015

2nd Qtr2015

3rd Qtr2015

4th Qtr2015

Gas 8.30 15.07 33.51 43.06 67.28 88.62 131.98 164.78 183.59 221.86 245.83 301.96

8 1534

43

67

89

132

165

184

222

246

302

0

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150

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250

300

350

Gas

in B

CF

25%

48%

33%

56%

12%

21%

11%

23%

SHARP QUARTERLY

INCREASE IN GAS PRODUCTION BEGINNING

4TH QTR 2015(INCREASED

ACTIVITY IN DRY GAS REGION)

19%

Utica – Oil Production By Quarter

1st Qtr2013

2nd Qtr2013

3rd Qtr2013

4th Qtr2013

1st Qtr2014

2nd Qtr2014

3rd Qtr2014

4th Qtr2014

1st Qtr2015

2nd Qtr2015

3rd Qtr2015

4th Qtr2015

Oil 0.33 0.57 1.31 1.43 1.94 2.46 3.01 3.55 4.43 5.58 5.71 6.22

0.330.57

1.31 1.43

1.94

2.46

3.01

3.55

4.43

5.585.71

6.22

0

1

2

3

4

5

6

7

Oil

in M

illio

ns

of

Bb

ls

18%

22%

27%

36%

25%

26%

2%9%

FLATTENING QUARTERLY

INCREASE IN OIL PRODUCTION

BEGINNING IN 2ND

QTR 2015

9%

Utica – Wells Online By Quarter

1st Qtr2013

2nd Qtr2013

3rd Qtr2013

4th Qtr2013

1st Qtr2014

2nd Qtr2014

3rd Qtr2014

4th Qtr2014

1st Qtr2015

2nd Qtr2015

3rd Qtr2015

4th Qtr2015

Wells 92 152 243 349 417 503 673 778 877 978 1093 1221

92152

243

349

417

503

673

778

877

978

1093

1221

0

200

400

600

800

1000

1200

1400

We

lls O

nlin

e

16%

34%

21%

19%

13%

12%

12%

12%

INCREASE IN WELLS ONLINE

CONSISTENT BEGINNING IN 1ST

QTR 2015

Utica EUR Estimation

• Used operator reported production to ODNR through 3rd Qtr 2015

• Calculated EUR values for each well

• Adjusted EUR to gas equivalents (BCFE)• used GAS/OIL ratio of 15:1 (based on current market prices)

• Determined treated length (stimulated interval) and then calculated EUR per 1000’ of lateral

UTICAESTIMATED

AVERAGE EUR PER 1000’ BY TOWNSHIP

USING GAS:OIL RATIO

OF 15:1(Count of data

points per township posted)

Class II Injection Wells

PHOTOGRAPH COURTESY OF LARRY WICKSTROM

1 2 3 4 5

Bbls of Water 12,759,681 14,630,076 17,420,798 21,700,838 23,411,745

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

Wat

er

Vo

lum

eIn

ject

ed

(B

bls

)

2014

2013

2012

2011

16 % Increase

13% Increase

25% Increase

2015

8% Increase

141 WELLS REPORTED INJECTION VOLUMES

IN 2015

Annual Injection Volume - Statewide

Top 10 Class II Injection Wells – By Volume COUNTY & TWP OPERATOR LEASE NAME 2015

TUSCARAWAS - OXFORD ELKHEAD GAS & OIL CO. MOZENA #1 2,151,488

COSHOCTON - KEENE BUCKEYE BRINE LLC ADAMS #3 1,940,139

MUSKINGUM - UNION HECKMAN WATER RES GOFF SWD #1 1,403,135

COSHOCTON - KEENE BUCKEYE BRINE LLC ADAMS #2 1,332,557

ATHENS - TROY K & H PARTNERS LLC K & H PARTNERS #2 1,327,271

ATHENS - TROY K & H PARTNERS LLC K & H PARTNERS #1 1,292,670

MUSKINGUM - PERRY ROBERT W. ORR, JR. KEMBLE #1-D 965,518

ATHENS - ROME D.T. ATHA, INC. M. FROST #1 586,602

ASHTABULA - NEW LYME SHALELOGIX RHOA #3 469,468

COSHOCTON - KEENE BUCKEYE BRINE LLC ADAMS #1 462,344

TOTALS 11,931,192

THE TOP 10 WELLS, OUT OF 141 TOTAL WELLS

ACCOUNTED FOR 51% OF TOTAL WATER INJECTED

2015Top 10 Counties -Water Injection

As of 3-8-2016

County Volume (BBls)

ATHENS 3,831,788

COSHOCTON 3,772,344

MUSKINGUM 2,778,806

TUSCARAWAS 2,405,611

PORTAGE 1,995,995

TRUMBULL 1,686,367

WASHINGTON 1,589,079

ASHTABULA 1,146,171

GUERNSEY 585,942

PICKAWAY 492,947

TOTAL 20,285,050

TOP 10 COUNTIES ACCOUNT FOR 87% OF TOTAL WATER INJECTED

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 Geoscience, LLC