Eagle Ford Shale Update

Transcription

1 INTERSTATE PIPELINES EXPLORATION & PRODUCTION TIPRO Conference Eagle Ford Shale Update John Kelly El Paso Exploration & Production Company Vice President, Gulf Coast August 13, 2010

2 Cautionary Statement Regarding Forward-Looking Statements This presentation includes certain forward-looking statements and projections. The company has made every reasonable effort to ensure that the information and assumptions on which these statements and projections are based are current, reasonable, and complete. However, a variety of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this presentation, including, without limitation, our ability to achieve the targeted costs savings from the reorganization announced in November 2009; change management risk associated with the previously announced reorganization; our ability to implement and achieve objectives in our 2010 plan and updated guidance; our ability to meet production volume targets in our Exploration and Production (E&P) segment; our ability to obtain necessary governmental approvals for proposed E&P projects and our ability to successfully construct and operate such projects on time within budget; changes in commodity prices and basis differentials for oil, natural gas, and power; general economic and weather conditions in geographic regions or markets served by the company and its affiliates, or where operations of the company and its affiliates are located, including the risk of a global recession and negative impact on natural gas demand; the uncertainties associated with governmental regulation; competition; and other factors described in the company's (and its affiliates') Securities and Exchange Commission (SEC) filings. While the company makes these statements and projections in good faith, neither the company nor its management can guarantee that anticipated future results will be achieved. Reference must be made to those filings for additional important factors that may affect actual results. The company assumes no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made by the company, whether as a result of new information, future events, or otherwise. Certain of the production information in this presentation include the production attributable to El Paso s 49 percent interest in Four Star Oil & Gas Company ( Four Star ). El Paso s Supplemental Oil and Gas disclosures, which are included in its Annual Report on Form 10-K, reflect its proportionate share of the proved reserves of Four Star separate from its consolidated proved reserves. In addition, the proved reserves attributable to its proportionate share of Four Star represent estimates prepared by El Paso and not those of Four Star. 2

3 U.S. Shales Cody Mowry Bakken Hilliard Baxter Gammon Excello Mulky New Albany Antrim Utica Mancos Niobrara Marcellus Hermosa Devonian Chattanooga Conasauga Lewis Floyd Neal Bend Pierre Barnett & Woodford Woodford Pearsall Eagle Ford Fayetteville Haynesville/ Bossier Woodford/ Barnett Caney 3

4 Texas Shales Bend Woodford Barnett & Woodford Barnett Pearsall Haynesville/ Bossier Eagle Ford 4

5 Eagle Ford Shale: Extent of Play East Texas Basin Sabine Uplift TX Mexico 40 miles 5

6 Maverick Basin Stratigraphic Column CRETACEOUS Campanian Maastrichtian Sant. Con. Albian Ceno. Turon. ANACACHO Formation name ESCONDIDO OLMOS SAN MIGUEL UPSON AUSTIN CHALK EAGLE FORD EDWARDS BUDA DEL RIO GEORGETOWN STUART CITY GLEN ROSE PEARSALL SLIGO 6

7 Regional Structural Trend 7,000' MAVERICK ZAVALA FRIO ATASCOSA 9,000' DIMMIT LA SALLE MC MULLEN 10,000' 12,000' 15,000' MEXICO WEBB DUVAL Laredo 7

8 Regional Product Trend 7,000' MAVERICK ZAVALA Liquids Rich Area FRIO ATASCOSA 9,000' DIMMIT LA SALLE MC MULLEN 10,000' 12,000' 15,000' MEXICO Dry Gas Area WEBB DUVAL Laredo 8

9 Early ,000' lateral lengths 12 stage fracs Focus within the reefs (gas) High initial production rates to prove up play Active leasing efforts Play Evolution Early ,000' lateral lengths 18 stage fracs Focus north and east of reefs (liquids) Optimizing production rates and EUR (downspacing/rate restriction) Active M&A transactions 9

10 Typical Stimulation and Completion Plan 10 3,500 MD 5 x 5 ½ Production Casing to TD Total measured depth: 15,000' True vertical depth: 9,800' Lateral Length: 5,000' 18 stage completion Fracture treatment: t t 330, lbs per stage Total Sand pumped: 6,000,000 lbs Avg. treating rate: 80 bpm Avg. treating pressure: 10,000 psi 9,100 10

11 Eagle Ford Type Wells Dry-Gas Area Depth: 9,000' 14,000' Capital costs: $7.0 $12.0 MM Initial prod: MMcfe/d EUR: Bcfe Liquids Rich Area Depth: 4,000' 11,000' Capital costs: $5.0 $9.0 MM Initial prod: 300 1,500 Boe/d EUR: Mboe Type Curve Type Curve MMcfe/d Boe/d Month Month 11

12 Eagle Ford Returns IRR R % OIL NORTH GAS SOUTH 12

13 Industry Activity MAVERICK ZAVALA FRIO ATASCOSA Liquids Rich Area +70 rigs drilling DIMMIT LA SALLE MC MULLEN Current production MMcf/d 8 10 MBOE/d Dry Gas Area MEXICO WEBB DUVAL Industry Eagle Ford Activity Industry Eagle Ford Activity 13

14 Industry Acreage Positions MAVERICK ZAVALA FRIO ATASCOSA APC/SM DIMMIT SM LA SALLE EOG MC MULLEN MEXICO WEBB DUVAL 14

15 El Paso Acreage Position MAVERICK ZAVALA FRIO ATASCOSA Liquids Rich Area DIMMIT MC MULLEN LA SALLE MEXICO Dry Gas Area WEBB DUVAL EP Leasehold EP Completed Wells Completing Wells Industry Eagle Ford Activity Drilling Wells 15

16 Overview of El Paso Corporation Colorado Interstate Gas Mojave Pipeline El Paso Natural Gas Wyoming Interstate Cheyenne Plains Pipeline Tennessee Gas Pipeline Southern Natural Gas Elba Express Pipeline Elba Island LNG Florida Gas Transmission (50%) Premier Pipeline Franchise 1 19% of total U.S. interstate pipeline mileage 26 Bcf/d capacity (12% of total U.S.) 18 Bcf/d throughput (28% of gas delivered to U.S. consumers) Top 10 independent E&P 2.75 Tcfe proved reserves 2 Top 10 independent domestic gas producer Successful transition to onshore, repeatable programs 1 Source: El Paso Corporation 2009 data 2 As of 12/31/09; includes proportionate share of Four Star equity volumes Note: Includes El Paso Corporation and El Paso Pipeline Partners, L.P. 16

17 Deep Inventory of Unconventional Opportunities Altamont New Albany Raton/Niobrara Arkoma Black Warrior Shale Coal Seam Tight Sand Tight Oil Eagle Ford S TX Legacy Haynesville Cotton Valley 17

18 El Paso s Experience History of large scale developments Raton CBM (Turner Ranch) Black Warrior Basin CBM Leading shale gas expertise Haynesville Eagle Ford South Texas legacy position +1,000 wells operated 18

19 Challenges Ahead Take away capacity Quality and availability of service companies Macro economic and supply/demand factors Water use/sourcing issues 19

20 INTERSTATE PIPELINES EXPLORATION & PRODUCTION TIPRO Conference Eagle Ford Shale Update John Kelly El Paso Exploration & Production Company Vice President, Gulf Coast August 13, 2010