PacWest FracDB Capabilities: A Sophisticated Market Analysis Tool

FracDB: The First US Frac Database
A Powerful Tool for Understanding the Market

Houston, Texas
November 14, 2011

TERMS & CONDITIONS
Information furnished in all reports produced by PacWest may be used by Client for internal purposes, as Client deems beneficial, as
long as due care is taken to hold the information confidential within Client’s organization and PacWest is not liable for the information PacWest Consulting Partners
provided. 920 Memorial City Dr, Suite 160
Houston, TX 77024
All rights to the information remain with PacWest. PacWest represents that it will not breach any obligation of confidentiality with
respect to information contained in the study. PacWest will maintain in confidence and not disclose any information related to Client,
without prior written consent of the Client. PacWest will not disclose to any person, including, without limitation, any of the Client’s
competitors or suppliers, the fact that Client has engaged PacWest in this project scope, the scope of the assignment or any other
information relating to Client.

FRACDB CAPABILITIES OVERVIEW

Contents

1. PacWest Snapshot

2. FracDB Capabilities
 FracDB Overview
 Pressure Pumper & Customer Relationships Case Study
 Completions Chemical Market Case Study

3. PacWest Market Intelligence Offerings

Client Confidential © PacWest 2011 | All rights reserved | 2


PacWest is a boutique strategy consultancy and market intelligence
firm that specializes in unconventional oil & gas
Firm Overview & Capabilities

Consulting & Advisory Market Intelligence Products
 Provide strategy consulting and  Offer industry-leading analysis of
advisory services to Oil & Gas unconventional market

 Strength in Oil & Gas supply market  Deep knowledge and strength in the
- Often work with operator supply pressure pumping / frac market
chain groups analyzing
supply/demand, developing  Employ combination of primary
sourcing strategies, building intelligence + secondary research
capabilities, etc.

 Unique in market: apply strategy
 With oilfield suppliers, often work at consulting capabilities to turn
C-Level or business lead research into actionable intelligence

All key staff come from top-tier strategy firms; consulting and market
intelligence capabilities reinforce/inform each other


A sampling of some of PacWest’s recent projects demonstrate our
depth of experience in North American and international shale
Sample of Recent PacWest Consulting Projects

PacWest Project Client Outcome
Analyzed Bakken & Eagle Ford supply/demand; conducted Operator avoided completion
demand planning exercise to develop new pressure pumping delays, avoided significant
sourcing/contract strategy additional costs
Developed Poland unconventional market entry, PE firm focused on high-growth
product/service, and JV strategy for a potential shale service segments only, with the right
company for a private equity client strategic partners
Developed an innovative economic and strategic analysis of Operator understood cost
operator all-in water management costs over 20-year implications, made optimal
timeframe, for Bakken & Eagle Ford assets economic decisions
Conducted a study of frac pump market focused on supplier Equipment manufacturer
strategic plans, manufacturing capabilities, and supply chain developed optimal strategic
capabilities investment plans
Conducted study of evolving service company landscape in Operator made better informed
Poland, including equipment, resources, and expansion plans contract award decision

We have resources in nearly every major unconventional
country/region to support international shale needs


Contents

1. PacWest Snapshot

 FracDB Overview




FracDB is the definitive database of fracs and frac chemicals that can
be used to conduct sophisticated market analyses

Product Overview Data Elements
 Database of US fracs and frac chemicals, built  Frac date
into a rich structured data set  Well number, API number
- The data set already contains nearly 7,000  Operator
fracs conducted in 2011
 TVD
 A sophisticated tool that can be used to run a
 Water volume
variety of analyses:
 Pressure Pumper
- Pressure pumping/frac market share
 Play
- Completion chemicals market share
 Chemical type
- Regional frac design practices
 Chemical ingredient
- And dozens of other analyses…
 Chemical supplier
 Updated quarterly
Contact us for more detail
FracDB is a powerful tool for the sophisticated market analyst –
available late 2011


Contents

1. PacWest Snapshot

 FracDB Overview




PacWest’s FracDB provides unprecedented insights into the completion
chemicals market
Analysis of Pressure Pumper Customer Relationships

■ The PacWest FracDB is a database of US fracs and frac chemicals, built into a rich,
structured data set

- The dataset currently contains detailed data from over nearly 7,000 US fracs
conducted in 2011
- The FracDB provides a granular view of pressure pumper customer relationships
across US plays/basins

■ As an example of the analysis possible with the PacWest FracDB, we have provided a
detailed view of pressure pumper customer relationships for one key shale play and
one of Baker Hughes’ key customers



BHI has a well-established presence in the Barnett but works primarily
with Devon, while HAL and WFT have a broader customer base
Pumper / Customer Relationships in the Barnett (major E&Ps only)

Univer- Frac
Operator Pumpco BHI HAL SLB WFT Superior Trican sal Pioneer Tech C&J
Chesapeake
EOG
Devon
XTO
Pioneer
Williams
ConocoPhillips
Enervest
Titan
Vantage
Range

Major customer
Minor customer
Note: Analysis includes data from 637 fracs in the Barnett executed between January 2011 and September 2011 from the PacWest FracDB


Baker is Devon’s frac provider of choice, but Devon still uses other
pumpers in its other assets
Frac Provider’s Used by Devon in 2011 (Jan-Sep)

Devon’s Frac Providers Comments
■ Although Baker Hughes has provided
Play BHI HAL WFT the vast majority of Devon’s fracs in
2011 (92%), Devon has also worked
Arkoma Woodford with Halliburton and Weatherford
Barnett
■ Baker Hughes is creating an
Eagle Ford opportunity for its competitors to
Green River gain a foothold with one of its major
Haynesville customers
Permian

Major customer
Minor customer

Is Baker Hughes leaving value on the table by opening the door for other pumpers to
work with Devon?
Note: Analysis includes data from 274 fracs executed for Devon between January 2011 and September 2011from the PacWest FracDB


Contents

1. PacWest Snapshot

 FracDB Overview




PacWest’s FracDB provides unprecedented insights into the completion
chemicals market
Completion Chemicals Market Analysis

■ The PacWest FracDB is a database of US fracs and frac chemicals, built into a rich
structured data set

- The dataset currently contains detailed data from over nearly 7,000 US fracs
conducted in 2011
- The FracDB provides extremely detailed data on types and volumes of chemicals
used in the hydraulic fracturing process

■ As an example of the granular detail provided by the PacWest FracDB, we have
conducted an initial analysis of the market for biocides used during stimulation in the
DJ Basin



BHI is the dominant supplier (75%) of biocide in the DJ basin, although it
only runs 27% of frac jobs
Frac and Biocide Market Share in the DJ Basin

Fracs vs. Biocide in the DJ Basin (Jan-Sep 2011) Comments
80% ■ HAL is the largest frac provider in the
75%
Share of Frac Jobs (total = 612) DJ Basin, with 28% of the market by
70% Share of Fluid Pumped (total = 6.9M barrels) number of frac jobs, and 36% of the
Share of Biocide (total = 336K pounds) market by total fluid pumped
60%
■ However, BHI is the dominant
supplier of biocide in the DJ Basin,
50%
Market Share

with 75% of the market by weight
40% 36% ■ Baker supplied 56% of biocide used in
it’s competitors’ frac jobs (i.e. frac
30% 28%
27% jobs not executed by Baker)
23%22% 22%
19% 20%
20%
13%
10%
10%

0% 1% 1% 1% 1% 0% 0%
0%
Baker Hughes Halliburton Superior Calfrac Unknown Maverick

Note: Analysis includes data from 612 fracs in the DJ Basin executed between January 2011 and September 2011 from the PacWest FracDB


Although there are eight different biocides used in the DJ Basin, Baker’s
DBNPA product is by far the most common
Biocide Market Share in the DJ Basin
Biocide Consumption in the DJ Basin (Jan-Sep 2011) Comments
300,000 ■ Baker is the dominant biocide
supplier in the DJ Basin, with 75% of
253,532 market share
250,000 Total = MBNPA
336,342 pounds Propietary ■ Baker sells two biocide products in
Bronopol the DJ: DBNPA (94%) and THPS (6%)
200,000
■ Calfrac is the 2nd largest supplier, with
Pounds Biocide

NaOH
THPS 13% share (44,182 pounds), followed
150,000
NaClO by Halliburton with 10% share
(44,182 pounds)
PEG
100,000 DBNPA Short-Hand Biocide Full Name
Bronopol 2-Bromo-2-Nitro-1,3-Propanediol
DBNPA 2,2-Dibromo-3-Nitrilopropionamide
50,000 44,182
34,768 MBNPA 2-Monobromo-3-itrilopropionamide
NaClO Sodium Hypochlorite
3,859
NaOH Sodium Hydroxide
0
PEG Polyethylene Glycol
Baker Hughes Calfrac Halliburton Unknown
Proprietary Unknown Proprietary
THPS Tetrakis (Hydroxymethyl) Phosphonium Sulfate

Note: Analysis includes data from 612 fracs in the DJ Basin executed between January 2011 and September 2011 from the PacWest FracDB


Contents

1. PacWest Snapshot

 FracDB Overview




PacWest currently offers multiple unconventional market intelligence
product offerings to support subscriber decision-making
Market Intelligence Offerings

Breakdown of pressure pumping fleets/capacity by basin
and supplier with strategic analysis of latest regional
supply market trends

Interactive database of 100+ critical unconventional
suppliers

Cost escalation forecast for major D&C categories

Detailed breakdown of frac activity by basin, operator,
pumper

Database of fracs including basin, operator, pumper,
chemicals, chemical suppliers



PumpingIQ provides the only granular breakdown of regional
fleets/capacity by pressure pumper and analysis of market trends

Fleet/Capacity Breakdown & Trends Focus Markets
 On-going monitoring of pressure pumping  Bakken
fleets and capacity in major US onshore frac  Eagle Ford
markets
 Permian
 Granular regional breakdowns of
 DJ Basin
fleets/capacity by pumper
 Anadarko
 Key customers by pumper
 Marcellus
 Detailed discussion of major trends and
strategic insights for each region and US  Uinta/Piceance/Green River
market in aggregate  Haynesville
 Fayetteville
 Barnett

PumpingIQ is the only granular fleet breakdown available in the
market


SupplierIQ is an interactive database of 100+ suppliers that are
critical players in shale supply markets

Supplier Analysis Profile Contents
 Interactive database of 100+ companies that  PacWest Supplier Classification
supply critical D&C products/services for  Company Overview & Analysis
shale production
 Service Offerings
 Database is updated quarterly with new
 Geographic Footprint
suppliers; updates made to existing suppliers
bi-annually  Financials
 Subscribers can request supplier additions  Customers
 Offer two forms of subscription to database:  Organizational Footprint
full SupplierIQ access or a subset of suppliers,  Detailed discussion of Service
customized to subscriber needs Offerings: 15 product/services
that are critical for shale
production

SupplierIQ provides insightful snapshots of your key suppliers and
competitors


CostIQ provides a forecast of cost increases for key drilling and
completion cost drivers

Forecast Analysis Cost Segments
 3-year forecast of D&C cost escalation,  Drilling
segmented into major categories - Land rigs
 Includes strategic discussion of trends driving - OCTG
increases and/or decreases
- Drilling fluids
 Updated bi-annually (every 6 months)
- Cementing services
 PacWest utilizes three quantitative methods
 Completion
to forecast prices changes for each market
segment: - Pressure pumping services
- Multi-variable regression - Proppant
- Demand/supply models - Frac chemicals
- Macroeconomic models - Completion hardware
- Completion rigs
CostIQ provides 3-year cost forecasts for each key US region


FracIQ is the source of frac activity data by operator and pressure
pumper, with data broken down US-wide and regionally

Product Overview Contents
 The definitive subscription publication on  Aggregate US fracs:
frac activity across the US - By operator
 Summary of fracs by region, operator, - By pressure pumper
pressure pumper
 Regional breakdown of fracs:
 Market share by pumper and operator across
- By operator
multiple metrics
- By pressure pumper
 Strategic analysis of frac trends and market
dynamics, including implications for - By frac type
operators, pressure pumpers, and other  Operator and pumper
stakeholders relationships
 Updated quarterly  Frac practices, including
chemicals usage

Your “Land Rig Newsletter” for the frac market – available late 2011


FracDB is the definitive database of fracs and frac chemicals that can
be used to conduct sophisticated market analyses

Product Overview Data Elements
 Database of US fracs and frac chemicals, built  Frac date
into a rich structured data set  Well number, API number
- The data set already contains nearly 7,000  Operator
fracs conducted in 2011
 TVD
 A sophisticated tool that can be used to run a
 Water volume
variety of analyses:
 Pressure Pumper
- Pressure pumping/frac market share
 Play
- Completion chemicals market share
 Chemical type
- Regional frac design practices
 Chemical ingredient
- And dozens of other analyses…
 Chemical supplier
 Updated quarterly
Contact us for more detail
FracDB is a powerful tool for the sophisticated market analyst –
available late 2011


The ShaleIQ bundled product provides access to 3 useful products at a
reduced price point

Bundle Includes

Breakdown of pressure Interactive database of Cost escalation forecast
pumping fleets/capacity 100+ critical for major D&C categories
by basin and supplier with unconventional suppliers
strategic analysis of latest
regional supply market
trends

The ShaleIQ bundle is a valuable resource to add to your decision -
making toolkit


PacWest delivers actionable intelligence that is designed to provide
strategic recommendations to key decision-makers
Actionable Intelligence

 Transforms volumes of disparate market data, insider industry activity and expert
input into strategic and actionable recommendations for decision-makers

 Aggregates, organizes and distills a wide range of data and intelligence to provide
information to our clients that is comprehensive, focused and strategic

 Analyzes this information to assess its strategic implications and provide a clear path
of action for each stakeholder
Decision-Makers



PacWest employs a comprehensive methodology that relies on
primary intelligence and rigorous research and analysis
Methodology
 PacWest uses a multi-pronged approach to develop its market intelligence offerings;
the team:
1) Gathers and reviews all information available publicly and via proprietary
databases
2) Engages its diverse network of industry contacts to gather real-time intelligence
3) Processes and synthesizes raw information into actionable intelligence

Primary Intelligence Gathering Secondary Research
Insights are based on: These sources are regularly consulted:
 Constant conversations with our source  Market research and reports
network of field experts on-the-ground  Company annual reports, 10-Ks, 10-Qs
 Surveys from operators and suppliers  Speeches and presentations by company
 In-depth interviews and conversations with leadership and other industry experts
operators and suppliers  Analyst reports from leading banks
 Industry-leading experts and technical  Government data
specialists
 PacWest internal databases

PacWest FracDB Capabilities: A Sophisticated Market Analysis Tool

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