Parsley Energy Overview

Transcription

1 INVESTOR PRESENTATION December 216

2 Parsley Energy Overview Poised to Outperform post-opec Faster production ramp Parsley Energy Leasehold Premier Acreage Position (1) Ongoing resource expansion Advantaged takeaway arrangements Strong financial profile Favorable cost positioning Market Snapshot NYSE Symbol: PE Market Cap: $7,573 MM (2) Net Debt: $749 MM (1,3) Enterprise Value: $8,322 MM Share Count: 28 MM (4) Midland Basin Net Leasehold Acreage: 93, (1) Delaware Basin Net Leasehold Acreage: 43, (1) 3Q16 Production: 43. MBoe/d (1) As of end 3Q16 pro forma for closing of Glasscock County acquisition on 1/4/216; (2) Based on 12/6/216 closing price; (3) Net debt calculated as $95 MM total debt less $21 MM cash and cash equivalents; (4) As of end 3Q16 2

3 Sustained Production Momentum Production Momentum 3Q16 production up 2% versus 2Q In November, raised FY16 guidance for third time this year, from to MBoe/d Rig Count Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q Net Production (MBoe/d) 3Q15-3Q16 Production Growth 17% compound quarterly production growth rate over ten quarters as a public company (1) Strong production contribution per dollar 1% 8% 6% 4% 2% % N/M Capital Efficient Production Growth (2) N/M Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 PE Boe/d Added per $MM of Capex Vertical Rigs Horizontal Rigs Quarterly Net Production (MBoe/d) 3Q15-3Q16 (1) Parsley completed its initial public offering on May 29, 214; (2) Peers include CPE, CXO, EGN, FANG, LPI, PXD and RSPP. Calculations for peers based on reported production for prior periods and Thomson Reuters consensus production estimates as of 1/31/216 for 3Q16. Parsley data based on actuals for all periods. Production from reported acquisitions excluded from calculations based on estimated monthly decline of 3% 3

4 Ongoing Cost Compression LOE per Boe down for the 6 th consecutive quarter Peer-leading operating costs driven by continuous focus on infrastructure optimization and buildout Favorable D&C trend despite rising completion intensity $1. $9. $8. $7. $6. $5. $4. LOE vs. Peers ($/Boe) (1) $4.15 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Peers PE Midland Basin Drilling & Completion Costs ($MM) (2) $7. $6.5 $6. $5.5 $5.2 $4.8 $4.7 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 (1) Peers include CPE, CXO, EGN, FANG, LPI, PXD, and RSPP. Source: company SEC filings; (2) Normalized to 7, stimulated lateral 4

5 Differentiated Wolfcamp Thickness Supports Resource Expansion Added 55 gross / 45 net drilling locations in second (upper) Wolfcamp B interval Wolfcamp A&B Gross Thickness <5 5-7 >7 Estimated NPV of $3-5 MM per location (1) A 1 MARTIN HOWARD Additional target interval enabled by high-quality Wolfcamp, which thickens significantly in and through Parsley acreage in Upton and Reagan Counties 2 3 Glasscock Nose 8-9 Wolfcamp A/B complex is thickest in deep portion of the basin MIDLAND GLASSCOCK Midland Basin Wolfcamp B Inventory UPTON 7 8 A 1,4 1,2 +85% Central Basin Platform Big Lake Fault REAGAN Parsley Leasehold Gross Horizontal Locations 1, WC B Target Zone (Prior) 2 WC B Target Zones (Current) A N Wolfcamp A Wolfcamp B 9 8% of WC A&B Inventory A (1) Estimated present value is pre-tax and unhedged; NPV range based on productivity range of 8 MBoe to 1 MMBoe EUR for 7, stimulated lateral scaled proportionately to average stimulated lateral length of 6,4 ; Further assumes D&C cost: $4.4 million; Oil price: $5 per barrel; Natural gas price: $3 per mcf; NGL price: $2 per barrel; working interest: 82%; net revenue interest: 62%; LOE: $7,5 per month fixed, $2. per barrel of oil variable; discount rate: 1% 5

6 Two Strong Wolfcamp B Targets Across Acreage Cumulative Production (MBoe) (1) Standalone Upper Wolfcamp B locations have outperformed the 1 MMBoe type curve by 9% at 36-day mark Outperformance is 17% when excluding wells drilled prior to June 1, 215 Aerially-broad dataset indicates breadth of Upper B quality across acreage Days of Production Lower WC B Upper WC B Parsley Leasehold PE Upper WC B Wells (2) PE Lower WC B Wells (1) Normalized to 7, stimulated lateral and for downtime; (2) Two Upper WC B wells in southeast Reagan County not shown on map 6

7 Promising Results from First 3-Well Stacked Pad Strong results from first set of simultaneously completed, stacked wells in the Wolfcamp A, Upper Wolfcamp B, and Lower Wolfcamp B intervals Upper WC B Well Records 2 nd Highest Company 24-Hr IP 3, Upper WC B lateral registered company s second highest peak 24-hour IP at 2,42 Boe/d 3-well average tracking ahead of 1 MMBoe type curve 1.5-mile laterals completed with standard frac design Located in the middle of Upton and Reagan acreage positions Peak 24-Hr IP (Boe/d) (1) 2,5 2, 1,5 1, 5 Bast H (Lower WCB) Grace H (Upper WCB) Robbie H (Lower WCB) Atkins H (Wolfcamp A) Dallas Keuchel 431H (Upper WCB) Grace 3-Well Stack Pad Tracking 1 MMBoe Type Curve 4 Cumulative Production (MBoe) (1) MMBoe Type Curve Days of Production Parsley Leasehold Grace 3-well Pad (1) Normalized to 7, stimulated lateral and for downtime 7

8 Significant Resource Expansion Potential 8-9 gross thickness in Wolfcamp A&B affords 6-7 between top and bottom targets, each with 2-25 vertical separation Wolfcamp A may support a second landing zone given thickness across acreage, amounting to four total potential landing zones in Wolfcamp A&B Tests in 217 will assess multiple Wolfcamp A targets on a standalone and combined basis Lateral spacing tests on schedule for 217 Up to 6 potential Wolfcamp A and B locations per section with fourth target and downspacing 1-Mile Gun Barrel Current Inventory per Section Potential Inventory per Section Approx. 6-7 ft Current Inventory Spacing 66 Downspaced 33 Current Inventory Inventory Upside Grace A-UB-LB Stack Test (Online) A-UB-LB Stack & Stagger Test (4Q16) UA-LA Stagger Test (217) UB-LB Stack & Downspace Test (217) Note: Spacing tests will be on different leases Upper Wolfcamp A Lower Wolfcamp A Upper Wolfcamp B Lower Wolfcamp B Total

9 Positioned for Leading Growth Sufficient inventory depth, acreage footprint, and operational capacity to increase rig count Robust return profile across commodity price spectrum Rising capital efficiency through longer laterals Steeper growth and enhanced returns through high average working interest and net revenue interest Scalable takeaway arrangements Inventory upside through multi-zone expansion and downspacing Projected Wolfcamp Returns (1) Avg. Stimulated Lateral Length (Ft.) Increasing Stimulated Lateral Lengths ~8, ~7, 6, Actual 216 Guidance 217 Target Projected Wolfcamp NPV (1) 12% $16 Rate of Return (%) 1% 8% 6% 4% 2% % Strip Prices $4 $45 $5 $55 $6 Oil Price NPV ($MM) $14 $12 $1 $8 $6 $4 $2 $ $4 $45 $5 $55 $6 Oil Price (1) NYMEX WTI and Henry Hub strip prices as of 12/2/216; NGL price: 4% of WTI; $3/Mcf gas for flat pricing scenarios; Midland Basin: based on 1 MMBoe EUR type curve for 7, stimulated lateral; $4.7MM D&C; 1% WI, 75% NRI; $7,5/month fixed LOE; $2./BO variable LOE; Southern Delaware: based on NSAI ~88 MBoe EUR type curve for 7, stimulated lateral; $6.1MM D&C; 1% WI; $7,5/month fixed LOE; $2./BO variable LOE; Estimated ROR and NPV are pre-tax and unhedged Strip Prices 9

10 Strong Productivity Across Asset Base New and existing wells continue to outperform 1 MMBoe type curve in Midland and Southern Delaware Basins Strengthening early rates on Midland Basin wells: Q16: 176 Boe/d (3-day IP per 1, ) 2Q16: 171 Boe/d (3-day IP per 1, ) 3Q16 Well Summary Midland Delaware Wells (1) 24 2 Average Lateral Length 6,644 7,8 3-day IP (Boe/d) 1,159 1,517 3-day IP per 1 (Boe/d) % Oil 73% 75% Cumulative Production (MBoe) (2) Parsley Energy Leasehold Parsley Producing Wolfcamp Wells Days of Production Midland Basin S. Delaware (1) Number of wells achieving a 3-day IP in 3Q16; (2) Normalized to 7, stimulated lateral and for downtime 1

11 Design Modifications Boosting Midland Basin Well Results Dusek H: 2-Mile Lower Spraberry Producing 8+ Bo/d after ~9 days with a flat production profile Outperforming initial 1-mile Spraberry well on absolute and length-normalized basis Daily rate nearly four times higher at the 9-day mark Larger frac size and casing diameter enabling productivity uplift Daily Production (Boe/d) (1) Positive Trend for 2-mile Spraberry Lateral 1,25 1, Days of Production Dusek H (2-mile) Skaggs 8-288H (1-mile) High-Proppant Well Exceeding Analogues (2) Kathryn H: High Proppant-Loading Frac Cumulative Production (MBoe) (1) Outperforming analogue wells by 8% on average after 9 days Employed 4% higher sand loading and fluid volumes than standard frac design Days of Production Kathryn H Analogue Set (1) 3-stream normalized for downtime; (2) Analogue set includes 2-mile wells within 3-mile radius completed in correlative Wolfcamp interval since April 1,

12 Impressive New Wells in Southern Delaware Basin Evolving drilling and completion design boosting productivity relative to strong initial wells West: First Parsley-drilled lateral in Reeves County, Lincoln H, geosteered in preferred target zone East: First pad wells pumped 6% more sand; still flowing at impressive rates WEST Parsley Energy Leasehold New Parsley Wells Prior Parsley Wells EAST West: First Parsley-Drilled Lateral Eclipsed 2, Boe/d East: First 2-well Pad Benefiting from Larger Frac Daily Rate (Boe/d) (1) 2,5 2, 1,5 1, 5 Length: 6,89 Peak 3-day IP: N/A Oil Cut: 65% Daily Rate (Boe/d) (1) 2, 1,5 1, 5 Put on ESP Avg. Length: 7,8 Avg. Peak 3-day IP: 1,517 Boe/d Avg. Oil Cut: 75% Days on Production Lincoln H 1st Well: Ranger C H Days on Production Trees State H Trees State H 1st Well: Trees State 16-1H (1) Normalized for downtime 12

13 Strong Financial Position (1) Entered new revolving credit agreement that increases borrowing base from $475 MM to $9 MM, with elected commitment of $6 MM Liquidity Summary ($MM) First lien credit facility $6 Cash on hand $21 Total liquidity $81 $81 MM of liquidity Favorable maturity schedule, with earliest notes maturity in 222 Borrowing Base Increase Favorable Debt Maturity Schedule 1, 89% Increase $9 1, $9 8 Full Amount 8 ($MM) 6 4 $475 $6 Committed Amount ($MM) 6 4 $55 $4 2 2 Prior Borrowing Base Current Borrowing Base Senior Notes (1) All data as of end 3Q16 pro forma for closing of Glasscock County acquisition on October 4, 216 and lender commitments under the Company s new credit facility 13

14 Substantial Hedge Position Well-hedged for next several quarters Structure of oil hedges retains full upside exposure to higher oil prices Extended position into 2Q Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 OIL: Put Spreads (MBbls/d) (1) Put Price ($/Bbl) $45.3 $45.88 $45.88 $52.79 $53.11 $53.21 $52.5 Short Put Price ($/Bbl) $32.78 $34.14 $34.14 $41.21 $41.4 $41.43 $42.5 Premium Realization ($ M M ) (2) $5.6 ($4.9) ($4.9) ($14.2) ($17.8) ($9.5) ($2.3) Mid-Cush Basis Swaps (MBbls/d) Swap Price ($/Bbl) ($.87) ($1.) ($1.) ($1.5) ($1.5) NATURAL GAS: Three Way Collars (M M Btu/d) (3) Call Price ($/MMBtu) - $4.2 $4.2 $4.2 $4.2 Put Price ($/MMBtu) - $2.75 $2.75 $2.75 $2.75 Short Put Price ($/MMBtu) - $2.36 $2.36 $2.36 $ $75 4 $6 MBbls/d 3 2 $45 $3 WTI ($/Bbl) 1 $15 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 $ MBbls/d Hedged Weighted Average Long Put Price Hedge position as of 12/6/216; (1) When NYMEX price is above put price, Parsley receives the NYMEX price. When NYMEX price is between the put price and the short put price, Parsley receives the put price. When NYMEX price is below the short put price, Parsley receives the NYMEX price plus the difference between the short put price and the put price; (2) Premium realizations represent net premiums collected (from restructured positions) or paid (including deferred premiums), which are recognized as income or loss in the period of settlement; (3) Functions similarly to put spreads except that when index price is at or above the call price, Parsley receives the call price 14

15 216 Guidance Production Production (MBoe/d) Previous Updated 11/2/ In November, raised FY16 production guidance to MBoe/d % Oil 65 7% 65 7% Capital Program Drilling & Completion ($MM) $395 - $435 $395 - $435 Lowered FY16 LOE per Boe guidance to $4.25-$4.75 Infrastructure & Other ($MM) $65 - $75 $65 - $75 Total Development Expenditures ($MM) $46 - $51 $46 - $51 Activity Gross Horizontal Completions Midland Basin Delaware Basin Ongoing increase in oil as a percent of total production supports margin expansion Oil as % of Total Production Average Lateral Length Gross Vertical Completions ~7, 3 6 ~7, % 63% 65% 66% 67% 65% - 7% Average Working Interest 85 95% 85 95% Unit Costs LOE ($/Boe) $4.5 - $5.25 $ $4.75 Cash G&A ($/Boe) $4.5 - $5. $5. - $5.5 Production & Ad Valorem Taxes (% of Revenue) 6.5% - 7.5% 6.5% - 7.5% 3Q15 4Q15 1Q16 2Q16 3Q16 FY16E 15

16 Investment Highlights Leading Growth Profile Expect 72% year-over-year production growth based on midpoint of updated 216 guidance 17% compound quarterly production growth rate over ten quarters as a public company World-class Returns Wolfcamp wells generate ROR of ~65%-9% and NPV of ~$7 MM-$12 MM at strip prices (1) Growing horizontal production base drives higher oil percentage and lower operating costs per Boe Strategic Acquirer Acquired ~42, net leasehold acres for ~$17, per acre (2) year to date Acquired mineral rights in S. Delaware Basin boost Parsley s average NRI to 92.5% on affected acreage Strong Financial Position $81 MM of liquidity (3) Substantial hedge position in place Abundant Upside Potential for up to 6 Wolfcamp A and Wolfcamp B locations per section on portions of Midland Basin acreage Scratching the surface of significant resource potential in the Southern Delaware Basin (1) See slide 9 for associated assumptions; (2) Adjusted for estimated PDP value but not for acquired wells in various stages of drilling and completion; (3) As of end 3Q16 pro forma for closing of Glasscock County acquisition on October 4, 216 and lender commitments under the Company s new credit facility 16

17 Investment Highlights APPENDIX 17

18 Growing, High-quality Drilling Inventory Added 55 Wolfcamp B locations in the Midland Basin Ample running room with nearly 1,8 Midland Basin Wolfcamp A and Wolfcamp B drilling locations Horizontal Drilling Inventory (1) Gross Net Wells per Section Midland Basin Middle Spraberry Inventory upside from substantial downspacing potential in the Midland Basin relative to current spacing assumptions More than 5 Wolfcamp locations in the Southern Delaware Basin with a low royalty burden of 16% on average High average working interest across horizontal inventory supports rapid growth potential +24 Lower Spraberry Wolfcamp A Wolfcamp B 1, (per target zone) Wolfcamp C Cline Atoka Delaware Basin 2 nd Bone Spring rd Bone Spring Wolfcamp (per target zone) Horizontal Total 5,12 4,24 -- (1) As of end 3Q16 pro forma for closing of Glasscock County acquisition on October 4, 216. Well counts rounded to the nearest ten 18

19 Strategic Glasscock County Acquisition ~$39 MM acquisition closed on October 4, 216 includes: ~9, mostly contiguous net leasehold acres in Glasscock County accommodating long-lateral development Midland Basin 3 gross horizontal drilling locations in primary target intervals (Lower Spraberry, Wolfcamp A, and Wolfcamp B) Mineral and overriding royalty interests translating to ~5% average increase in net revenue interest ( NRI ) Estimated net production of 27 Boe/d at acquisition announcement on August 15, saltwater disposal wells Acquisition Acreage Parsley Energy Leasehold 19

20 Favorable Reservoir Attributes Parsley acreage in Wolfcamp sweet spot: - Ample thickness, with differentiated multitarget potential in Upton and Reagan Counties - Sufficient depth to drive strong, pressurefueled recovery rates - Favorable thermal maturity for high oil content Midland Basin MARTIN MIDLAND Overlapping Sweet Spot HOWARD GLASSCOCK Geothermal Gradient Temperature Sweet Spot Degrees Fahrenheit per 1, Depth Wolfcamp Drill Depth Wolfcamp Thickness UPTON Degrees Fahrenheit per 1 Depth Drill Depth Sweet Spot REAGAN Big Lake Fault Thickness Sweet Spot 2

21 Prepared for Southern Delaware Rig Ramp Marketing Ample options for immediate gas and oil takeaway with nearby Waha Gas Hub and high-capacity oil transmission lines 6 MMcf/d Gas Plant 2 MMcf/d Gas Plant 15 MBo/d Oil Transfer Line Infrastructure Initial water supply and disposal in place with buildout ongoing Existing processing and transmission infrastructure provides electricity hubs from which to build out power grid Surface Ownership Estimate at least $2 M per-well savings on water sourcing and disposal Additional savings on pads, batteries, roads, rights-of-way, and other surface damages 6 MMcf/d Gas Plant (expected by YE16) 12 MMcf/d Gas Plant (Waha Hub) 16 MBo/d Oil Transfer Line 21

22 Selected Operating Data 3Q16 Parsley Energy, Inc. and Subsidiaries Selected Operating Data (Unaudited) Three Months Ended September 3, June 3, September 3, Net production volumes: Oil (MBbls) 2,669 2,157 1,153 Natural gas (MMcf) 3,553 3,154 2,628 Natural gas liquids (MBoe) Total (MBoe) 3,956 3,249 1,984 Average net daily production (Boe/d) 43, 35,73 21,565 Average sales prices (1) : Oil, without realized derivatives (per Bbl) $ $ $ Oil, with realized derivatives (per Bbl) $ $ $ Natural gas, without realized derivatives (per Mcf) $ 2.38 $ 1.85 $ 2.69 Natural gas, with realized derivatives (per Mcf) $ 2.38 $ 1.85 $ 2.86 NGLs (per Bbl) $ 15.5 $ $ 14.1 Total, without realized derivatives (per Boe) $ $ $ Total, with realized derivatives (per Boe) $ 36.3 $ 36.2 $ Average costs (per Boe): Lease operating expenses $ 4.15 $ 4.37 $ 7.63 Production and ad valorem taxes $ 2.12 $ 1.97 $ 1.75 Depreciation, depletion and amortization $ $ $ General and administrative expenses (including stock-based compensation) $ 6.24 $ 5.33 $ 7.92 General and administrative expenses (cash based) $ 5.4 $ 4.28 $ 6.86 (1) Average prices shown in the table include transportation and gathering costs and reflect prices both before and after the effects of the Company s realized commodity hedging transactions. The Company s calculation of such effects includes both realized gains and losses on cash settlements for commodity derivative transactions and premiums paid or received on options that settled during the period 22

23 Forward Looking Statements and Cautionary Statements Forward-Looking Statements The information in this presentation includes forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of All statements, other than statements of historical fact included in this presentation, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this presentation, the words could, believe, anticipate, intend, estimate, expect, project and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on Parsley Energy, Inc. s ( Parsley Energy, Parsley, or the Company ) current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the exploration for and development, production, gathering and sale of oil and natural gas. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating reserves and in projecting future rates of production, the production potential of our undeveloped acreage, cash flow and access to capital, the timing of development expenditures and the risk factors discussed in or referenced in our filings with the United States Securities and Exchange Commission ( SEC ), including our Annual Report on Form 1-K and our subsequent Quarterly Reports on Form 1-Q and Current Reports on Form 8-K. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this presentation. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this presentation. Our production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or cost increases. Reconciliation of Non-GAAP Financial Measures Adjusted EBITDAX and adjusted net income or loss are financial measures that are not presented in accordance with generally accepted accounting principles in the United States ( GAAP ). Reconciliations of these non-gaap financial measures can be found in our Quarterly Report on Form 1-Q and in the appendix to this presentation. Industry and Market Data This presentation has been prepared by Parsley and includes market data and other statistical information from third-party sources, including independent industry publications, government publications or other published independent sources. Although Parsley believes these third-party sources are reliable as of their respective dates, Parsley has not independently verified the accuracy or completeness of this information. Some data are also based on the Parsley s good faith estimates, which are derived from its review of internal sources as well as the third-party sources described above. Oil & Gas Reserves Parsley s proved reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions (using unweighted average 12-month first day of the month prices), operating methods, and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. Proved reserves attributable to Parsley as of 12/31/15 are estimated utilizing SEC reserve recognition standards and pricing assumptions based on SEC pricing of $46.79 / Bbl crude, $2.51 / MMBtu gas, and adjusted realized pricing of $46.54 / Bbl crude, $16.42 / Bbl NGL, and $2.531 / Mcf residue gas. References to our estimated proved reserves as of 12/31/15 are derived from our proved reserve report prepared by Netherland, Sewell & Associates, Inc. ( NSAI ). We may use the term expected ultimate recoveries ( EURs ) or other descriptions of volumes of reserves, which terms include quantities of oil and gas that may not meet the SEC s definitions of proved, probable and possible reserves, and which the SEC's guidelines strictly prohibit Parsley from including in filings with the SEC. Unless otherwise stated in this presentation, such estimates have been prepared internally by our engineers and management without review by independent engineers. These estimates are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being actually realized, particularly in areas or zones where there has been limited or no drilling history. We include these estimates to demonstrate what we believe to be the potential for future drilling and production by the Company. Actual locations drilled and quantities that may be ultimately recovered from our properties will differ substantially. In addition, we have made no commitment to drill all of the drilling locations. Ultimate recoveries will be dependent upon numerous factors including actual encountered geological conditions, the impact of future oil and gas pricing, exploration and development costs, and our future drilling decisions and budgets based upon our future evaluation of risk, returns and the availability of capital and, in many areas, the outcome of negotiation of drilling arrangements with holders of adjacent or fractional interest leases. Our estimates may change significantly as development of our properties provides additional data and therefore actual quantities that may ultimately be recovered will likely differ from these estimates. Our related expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells, the undertaking and outcome of future drilling activity and activity that may be affected by significant commodity price declines or drilling cost increases. Unless otherwise noted, Net Present Value ( NPV ) estimates are before taxes and assume the Company generated EUR and decline curve estimates based on Company drilling and completion cost estimates that do not include facilities, land, seismic, general and administrative ( G&A ) or other corporate level costs.