Transformation: Moving to a Singular Focus in the STACK. DUG Midcontinent September 2017

Transcription

1 Transformation: Moving to a Singular Focus in the STACK DUG Midcontinent September 2017

2 Forward-Looking Statements and Risk Factors Statements made in these presentation slides and by representatives of Chaparral Energy ( Chaparral or the company ) during the course of this presentation that are not historical facts are forward-looking statements. These statements are based on certain assumptions and expectations made by the company, which reflect management s experience, estimates and perception of historical trends, current conditions and anticipated future developments. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company, which may cause actual results to differ materially from those implied or anticipated in the forward-looking statements. These include risks relating to financial performance and results, ability to improve our financial results and profitability following emergence from bankruptcy, availability of sufficient cash flow to execute our business plan, continued low or further declining commodity prices and demand for oil, natural gas and natural gas liquids, ability to hedge future production, ability to replace reserves and efficiently develop current reserves and the regulatory environment and other important factors that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. These and other important factors could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Please read risk factors in the company s annual reports on Form 10-K, quarterly reports on Form 10-Q and other public filings. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information or future events. 1

3 The New Chaparral Transforming into a premier pure-play STACK company Approximately 110,000 net acres Capitalize on a strong pipeline of economic opportunities Deliver solid operating margins and returns, even in a volatile commodity price environment Keys to superior performance Strong assets focused STACK player Low-cost structure Operational excellence Prioritizing environmental, health and safety Premier operating team Strong foundation capable of excelling in a $40 - $60 per barrel environment Strong Assets, Low Cost Structure and Experienced Leadership with a Vision for Success 2

4 Recent Achievements Emerged from restructuring with a strong balance sheet Equitized $1.2 billion in debt and reduced annual interest expense by $110 million Enterprise value: Approximately $1.2 billion Debt/Adjusted LTM EBITDA: Approximately 1.4x Recruited new, independent board with extensive industry experience Achieved total net production of 23.9 MBoe/d Q % oil, 16% NGLs and 27% natural gas 17% year-over-year increase in STACK production Maintained industry-leading cost reductions in 2017 LOE/Boe of $3.87/Boe in Q in the STACK Significant G&A cost reductions Currently marketing EOR assets and other minor non-core assets Stock trading on OTCQB market under the symbol CHPE Continued Operational Excellence During Restructuring 3

5 2017 Strategy Transition Chaparral to a Pure-Play STACK Company STACK position provides significant growth potential Pursue strategic alternatives to monetize Enhanced Oil Recovery (EOR) assets Retained CIBC Griffis & Small to market EOR Capital and Financial Discipline Focus on oil-weighted, high-return STACK investments Live within cash flow supplemented by asset sales proceeds Efficient and Effective Operations Safely deliver repeatable results Continue focus on driving down costs Evaluate Portfolio and Growth Opportunities Expand premier STACK position Allocate capital to Garfield County STACK and Merge acreage Evaluate strategic alternatives for other non-stack assets 4

6 2017 Oil & Gas Capital Budget Summary CAPEX (1) Other, 5% EOR, 21% (2) (1) STACK, 74% STACK EOR Other Oil-weighted capital budget of $170 - $190 million Approximately $130 million allocated to STACK Approximately 50% allocated to Kingfisher County and the Merge Approximately 33% allocated to non-operated Approximately 17% allocated to Garfield County Multiple zones to develop/delineate Meramec Osage Woodford Oswego $170 - $190 million Currently running two rigs Plan to drill 26 STACK wells in 2017 Potential to increase D&C budget in late 2017, contingent upon divestiture proceeds and commodity prices (1) Numbers may not add due to rounding (2) Other capital excludes cap interest, PP&E and cap G&A of approximately $13 million 5

7 Production Growth STACK 10,000 8,000 6,000 Boe/d 7,693 7,514 7,289 8,166 9, Guidance High 9.1 Guidance Low Total production raised due to op and non-op activity Expect STACK production to grow ~25% from 2016 to STACK exit rate to increase ~45% from ,000 2,000-10,000 8,000 6,000 4,000 2,000 - Q Q Q Q Q FY 2017E EOR Boe/d 25,407 25,000 5,778 5,412 5,643 5,588 5,725 Q Q Q Q Q FY 2017E 6.0 Guidance High 5.6 Guidance Low Boe/d 30,000 Total Company 23,857 23,945 23,254 22,481 20,000 15,000 10,000 5,000 0 Q Q Q Q Q FY 2017E 23.8 Guidance High 22.7 Guidance Low 6

8 Asset Overview STACK Premier basin with industry-leading returns Large contiguous acreage position with exposure to all current economic reservoir targets Multi-year drilling inventory supporting significant future growth Early stages of play maturity Legacy Generates free cash flow to support STACK drilling program Averaged approximately 6.3 MBoe/d in Q $14.34/Boe gross margin in Q Non-Core Divestitures EOR Self-funding at current pricing levels Highly leveraged to oil price Other Stranded assets Auction process underway Acreage as of June 30,

9 STACK Overview Asset Overview Approximately 110,000 acres 9.1 MBoe/d in Q operated producing wells as of Q WOODWARD WOODS MAJOR ALFAFA GARFIELD Attributes/Characteristics Chaparral acreage is primarily located in the black oil, normal pressure window Lower well costs Lower GOR Excellent rates of return (1) : 29-69% Significant experience and exposure to all targeted reservoirs within the play Meramec, Osage, Oswego and Woodford Ability to accelerate development with short cycle times and low drilling costs (1) Based on $50 per barrel of oil and $3.00 per MMBTU flat price deck (2) Percent operated calculated as the sum of net acres in operated sections divided by the total net acres in the county CUSTER DEWEY WASHITA STACK CADDO KINGFISHER CANADIAN County Acreage HBP %OP (2) OP WI Average Chaparral Acreage STACK NONOP WI Average Kingfisher ~25,000 ~90% 64% 64% 13% Canadian ~23,000 ~99% 71% 61% 8% Garfield ~40,000 ~23% 74% 60% 16% Major ~7,000 ~67% 59% 52% 10% Other ~15,000 ~99% 56% 50% 7% 8

10 STACK Kingfisher Overview Kingfisher Overview ~25,500 surface acres ~5.7 MBoe/d in Q operated producing wells Attributes Productive reservoir for the Meramec, Osage and Oswego Potential of multiple target intervals per reservoir Large blocked up position of operated, HBP d acreage County Unrisked Drilling Locations, Gross Total OP Non-OP Kingfisher 2, ,348 Meramec Osage Oswego 9

11 STACK Canadian Overview Canadian Overview Approximately 25,000 acres 2.2 MBoe/d in Q Five operated producing wells Attributes Also know by the MERGE, it is bounded by the CANA Woodford play to the west and the SCOOP to the south Productive reservoir for the Meramec, Osage and Woodford Highly HBP d acreage in the core of Canadian County One of Chaparral s major areas of future growth County Unrisked Drilling Locations, Gross Total OP Non-OP Meramec Osage Canadian 2, ,596 Woodford 10

12 One Petroleum System STACK Attributes Stacked reservoirs proximal to the world-class Woodford source rock Efficient hydrocarbon stratigraphic trap creates a continuous petroleum system Areas where a thick Woodford is adjacent to the horizontal targets enhances hydrocarbon charge Economic success realized throughout hydrocarbon column MERGE represents intersection of historical SCOOP/STACK play outlines Play attributes are identical only rock thickness and GOR vary 180 N REGIONAL STACK CROSS SECTION 60 MILES STACK GARFIELD COUNTY KINGFISHER COUNTY CANADIAN COUNTY OSWEGO Datum Break S MERGE GRADY COUNTY 110 N 700 MERAMEC STACK OSAGE 350 MERGE S WOODFORD SOURCE 11

13 Why We Like Garfield County Woodford Source Rock Proximity to source increases likelihood of successful wells. Woodford Isopach Maturity is in the oil window. Combined with migration from Woodford deeper in the basin increase chances of successful wells. *Woodford thickness shaded greater than 50 = CHPE STACK Outline

14 Why We Like Garfield County Woodford Source Rock Proximity to source increases likelihood of successful wells Maturity is in the oil window Combined with migration from Woodford deeper in the basin increase chances of successful wells Vertical Well Density Proven Vertical Production Hundreds of vertical wells in the Sooner Trend field Shows the presence of hydrocarbons Potential for horizontal wells to unlock additional resource = CHPE STACK Outline

15 Why We Like Garfield County Woodford Source Rock Proximity to source increases likelihood of successful wells Maturity is in the oil window Combined with migration from Woodford deeper in the basin increase chances of successful wells Meramec Isopach Proven Vertical Production Hundreds of vertical wells in the Sooner Trend field Shows the presence of hydrocarbons Potential for horizontal wells to unlock additional resource Regional Geology Thick Meramec interval of Miss High porosity in the Osage Nemaha Ridge system inhibits eastern migration *Meramec thickness shaded greater than 50 = CHPE STACK Outline

16 STACK Garfield Overview Garfield Overview Approximately 40,000 acres 0.8 MBoe/d in Q operated producing wells Attributes Woodford Source Rock Proven Vertical Production Regional Geology with productive reservoir and seal LEE 1MH-1 (Chaparral) Spud Date: 12/31/13 Peak IP-30: 883 Boe/d Oil: 35% Lateral Length: 4,242 WHITE OAK 1UMH-36 (Chaparral) Spud Date: 5/7/17 Peak IP-30: 665 Boe/d Oil: 14% Lateral Length: 4,743 HEDGES 7-21N-5W (White Star) Spud Date: 10/4/14 Peak IP-30: 512 Boe/d Oil: 50% Lateral Length: 4,404 REDWOOD MH-3 (Chaparral) Spud Date: 11/18/15 Peak IP-30: 850 Boe/d Oil: 69% Lateral Length: 4,388 HEDGES W 1MH (White Star) Spud Date: 9/15/14 Peak IP-30: 347 Boe/d Oil: 46% Lateral Length: 4,595 County Unrisked Drilling Locations, Gross Total OP Non-OP Garfield 3,070 1,410 1,660 DIETERICH 2MH-10 (Chaparral) Spud Date: 9/13/13 Peak IP-30: 402 Boe/d Oil: 58% Lateral Length: 4,239 DIETERICH 1MH-10 (Chaparral) Spud Date: 4/26/13 Peak IP-30: 685 Boe/d Oil: 55% Lateral Length: 4,262 FARBER 1MH-6 (Chaparral) Spud Date: 12/12/15 Peak IP-30: 760 Boe/d Oil: 66% Lateral Length: 4,177 MCGEE 29-1H (Gastar) Spud Date: 6/20/16 Peak IP-30: 345 Boe/d Oil: 79% Lateral Length: 4,801 BUGABAGO 2006 (Alta Mesa) Spud Date: 3/5/17 Peak IP-30: 345 Boe/d Oil: 99% Lateral Length: 5,054 BETTY 29#MH (Alta Mesa) Spud Date: 9/11/15 Peak IP-30: 312 Boe/d Oil: 77% Lateral Length: 4,804 Meramec Osage (1) Economics based on STACK Meramec single well economics calculated at a flat price deck of $50 per barrel of oil and $3 per MMBTU and includes oil and gas differentials Note: Garfield County Meramec has not been de-risked at this time 15

17 Currently Identified Drilling Inventory by Play Extensive operated drilling inventory 174-rig years Kingfisher County Osage, Meramec and Oswego essentially de-risked 33-rig years Exciting upside exists in Garfield County and Merge Legend/Definitions/Assumptions Spacing assumptions, gross horizontal wells per section Oswego: 3 Osage: 6-12 Meramec: 6-12 Woodford: 3-6 STACK Operated Drilling Inventory 4,000 3,500 3,000 2,500 2,000 1,500 1, STACK Operated Drilling Inventory by Type 1.5 rigs 3 rigs 4 rigs 5 rigs 6 rigs ,458 3,398 3,318 3,218 3,098 12/31/ /31/ /31/ /31/ /31/2021 Remaining Inventory Cumulative Drilled Operated assumptions For Kingfisher County: >45% working interest in section All other counties >30% working interest in section Note: Assumes drilling 20 wells/rig/year County Net Acres Working Interest Unrisked Drilling Locations, Gross Net 3P Reserves STACK OP Non-OP Total OP Non-OP Unrisked Total (MMBoe) Kingfisher ~25,000 64% 14% 2, , Canadian ~23,000 61% 7.5% 2, , Garfield ~40,000 60% 16% 3,070 1,410 1, Other ~22,000 52% 8.2% 1, , Total STACK ~110,000 60% 11% 9,334 3,477 5,857 1,132 Multi-Year Inventory Across Multiple Horizons 16

18 Chaparral Well Performance in STACK Enhanced Completion Tests in the STACK Initiated enhanced completion program in Q to test increased proppant loading in the normal pressured oil window of the STACK Currently 15 wells on production with increased proppant loading Demonstrated Performance Over Last 12 Months Increased proppant loading continues to support current type curve First operated Meramec test in Canadian County (MERGE) exceeding type curve by approximately 40% 3, Wells 80 STACK Meramec Cumulative Oil Production Enhanced Completions MBO EUR (Oil Component of 578 MBOE Type Cuve) 2,500 Well Count 12 Proppant / Ft 2,000 1,500 1, MBO Well Count Spud Year Days 0 17

19 Operational Excellence Drilling and Completions Strong, Effective Focus on Cost Reduction/Control Demonstrated D&C cost improvements Average D&C cost of ~$3.5 million from Q to Q average Meramec D&C cost of ~$3.7 million, despite service cost inflation $6,000 Gross D&C Cost Quarterly Average Avg D&C Cost $MM 7.0 Average D&C Cost by Operator STACK Meramec One-Mile Laterals $5, D&C Cost (M$) $4,000 $3,000 $2,000 $1, $0 Q1 '13 Q1 '14 Q1 '15 Q1 '16 Q2 ' Chaparral Peers Strong and Effective D&C Cost Focus 18

20 Why Chaparral? Peer Leading Balance Sheet Strong Management Team with Excellent Track Record Execution-focused STACK Player Deep Inventory of High-return Drilling Prospects 19

21 ENERGIZING America s Heartland