Arkansas Natural Gas History 1881 Ark Geological Survey est. 1887 First well in Scott County by Harry Kelly 1901 Mansfield Field 1927 Dr. Croneis published 1939 Ark Oil and Gas Commission est.

Arkansas Conventional Fairway Current Avg rate 47 Mcfpd 700 MMcf avg reserves Historically supplied 1% of US gas needs 5855 Inactive/plugged wells 4059 active wells

Max 0.5 Bcf/d 0.2 Bcfpd

Fayetteville Shale Development began in 2004 In top 10 largest gas fields in US Economic impact in first 10 years ~ $18 Billion Currently 5598 active wells / 218 inactive

Fayetteville Shale Current Avg rate 259 Mcfpd/well Total current prod ~ 1.5 Bcf/day Supplies 2% of US Nat Gas needs SWN and BHP are selling

Max 3 Bcfpd 1.5 Bcf/d

Cumulative Fayetteville

Fayetteville Shale 2014 study Texas Bureau of Economic Geology 80 Tcf in place 38 Tcf Technically recoverable, 47% ~ 18 Tcf Economically recoverable Est. 10,000 wells by 2030 Avg well reserves ~ 1.8 Bcf

Get with the curve

Overhead case study $3/mcf Nymex, $.25/mcf differential, 80% NRI 4% severance, $.30/mcf compression, 6% fuel $400/month fixed – pumping, soap, EFM $1000/month overhead Cut Overhead to $0 at 500 mcf/month 10% annual production decline

Hanna’s Overhead Low Volume Discount Wells between 500 – 1000 mcf/month will be 50% of normal overhead charges. Wells less than 500 mcf/month will be 0% of normal overhead charges.

Thanks! Zeroing out Overhead at 500 mcf per month: Adds 7 more years of production totaling 27 MMcf Adds $20k to cumulative net income