1. Case Study – Reducing Drilling hours by up to 54% in the Barnett Shale Douglas Gust P.Eng., Q’Max Solutions Inc. Scott Marquess, Q’Max Solutions Inc. Lane Dunham, Savanna Drilling USA March 31, 2009

2. 2 Barnett Shale Drilling Optimization Project Introduction Project Scope Achievements Conclusions

3. 3 Project Overview GOAL – Reduce well construction cost - $/ft Scope of Project – Build on what others had done – bits/directional etc. – Optimization of Drilling Fluid “Solids Free Drilling Fluid” – “SFDF” Solids Control Waste Management – Reduction of hole sizes – “New Technology Drilling Rigs” – NTDRs Time Frame – 20 month project 3Q 2006 to 1Q 2008

4. 4 SFDF Solids Free <1% suspended solids Density up to 10.5 ppg in solution – Typically 8.8 – 9.5 ppg – averaged 9.2 ppg on this project Inhibitive – Used Calcium Nitrate or Production Brine Easily converted to Polymer fluid when necessary – Well control – densities > 10.5 ppg Low rheology – Low ECD – Viscosity = 28 to 31 – YP = 1 to 3 100% reusable

5. 5 Solids Control – MudStripper™ Designed for SFDF Remove 99.5% drill solids Footprint = 15’ x 60’ Operates as “Closed Loop” Sludge density range: – 14.5 to 17.5 ppg Shaker Cuttings MudStripper™ Sludge

6. 6 Cuttings Handling Old Style Pit 150’ x 100’ x 6’ 14,000 bbls Sludge Pit 30’ x 12’ x 8’ 500 bbls Auger Tank Solids collection / Dump truck disposal

7. 7 Well Construction Hole size Reduction – Surface hole Reduced from 12 ¼” to 8 ¾” Reduced Casing from 9 5/8” to 7” – Main Hole Reduced from 7 7/8 – 8 ¾” to 6 1/8” Reduced Casing from 7” to 4 ½” Benefits – Reduced cuttings volume – Reduced cement volume – Lower cost casing – Increased casing availability Concerns – ROP – Tool Reliability – Cement quality

8. 8 NTDR NTDR – “New Technology Drilling Rig” Integrated top drive / pipe handling system – Some rigs drill with coil tubing Small footprint Fast moving (12 to 15 loads) Benefits Safety – reduced risk for crews Improved ROP – Drill with Coil No connections – Drill with Range 3 pipe Smaller location sizes Fast Rig up/Tear down Shorter move times

9. 9 Accomplishments 41% reduction in average Drilling Hours – 226 hours/well to 133 hours/well 41% reduction in average Well Days – 20 days/well to 12.5 days/well 83% reduction in average Fluid Volume – 10,000 bbls/well to 1,729 bbls/well 100% reduction in Dilution Volume – Dilution was eliminated 75% reduction in surface area of drilling site – 400 ft x 400 ft to 200 ft x 200 ft

10. 10 Average Drilling Hours Project Start – 226 hours/well Conventional Rig – 44 wells – 155 hours/well NTDR – 96 wells – 123 hours/well Best 2 rigs – 34 wells – 103 hours/well One NTDR w/ & w/o SFDF – 31 wells w/SFDF 131 hours/well – 7 wells w/o SFDF 153 hours/well

11. 11 Average Days / Well Project Start 20 days/well 157 wells 12.5 days/well SFDF – 149 wells 11.9 days/well – 97 wells NTDR 10.5 days/well – 77% of wells < 15 days

12. 12 Average Drilling Performance Average Performance based upon “well days” 670 ft/day SFDF 700 ft/day Best 2 Rigs 848 ft/day NOTE: Op #2 calculated from assumed 10,000 ft well depth and days from Spud to TD

13. 13 Drilling Performance by Bit Diameter Bit Diameter (in) # wells Average Drilling Performance (ft/day) SFDF 6 1 / 8 ” to 6 ¾” 125692719 7 7 / 8 ” to 8 ¾” 32577613 157670700

14. 14 Fluid Volume Reduction SFDF & MudStripper™ is a “Closed Loop” system SFDF is 100% reusable Reduced hole sizes reduces volumes – Seepage loss – Fluid on cuttings

15. 15 Reduced Location Size Location reduced from 400’ x 400’ to 200’ x 200’ – 75% reduction in surface area NTDR – Small footprint MudStripper™ – “Closed Loop” system with small footprint

16. 16 Conclusion KEY Success Factors – Project Integration & Execution – SFDF – NTDR – Hole Size Reduction Significant reduction in $/ft achieved – Some individual costs (product and services) increased – Variable cost – time related decreased – Some costs (casing) decreased

17. 17 Conclusion – Project Milestones 2.3% average suspended solids (<1% typical) 4.6days – Spud to TD on fastest well (8,400 ft) 6 1 / 8 inch bit used to drill main hole (97 wells) 7“one bit” runs from surface casing to TD 8counties in project 11.9days/well average using SFDF (149 wells) 31wells with average footage > 1,000 ft/day 157wells in the dataset 700ft/day average with SFDF 1,729bbls/well average fluid volume 4,240ft – most footage drilled in one 24 hour period