1. Significant New “Learings” From An Integrated Study Of An Old Field, Foster/South Cowden Field (Grayburg & San Andres), Ector County, Texas DE-FC22-93BC14982 Robert C. Trentham, DGS Center for Energy and Economic Diversification University of Texas of the Permian Basin

2. Project Results 290,000 BO Incremental Production 1996 to present >650,000 BO Incremental Reserves 3 Re-entries 4 New Drills >12 Workovers Economic life of field extended from 9 to 16 years Sold to Oxy for well above decline curve price.

3. Sec 36 Production 1977 to 1993

4. Bottom Line

5. “Learnings” Came in All Areas Reservoir Characterization Well Testing Recompletions Production

6. Type Log Queen Upper Grayburg – Main Pay Lower Grayburg – Minor Pay San Andres – Large OOIP

7. FOSTER FIELD

8. INTEGATED STUDY GEOLOGICAL MODEL 3D SEISMIC / INVERSION MODELING FLOW MODELING HISTORY MATCH SIMULATION TESTING, WELL WORK, MONITORING OLD WATERFLOOD CROSS FLOW BETWEEN ZONES NO FRACTURE STIMULATIONS BHP DISCREPANCIES LOW PERMEABILLLTY WHERE DID THE WATER GO? OPEN HOLES / CASED HOLES Problems Solutions

9. Discovered 1939 40 Acre spacing Nitro Open Holes Waterflood 1962 20 Acres 1979 Laguna 1992 DOE 1994 Oxy 2002

11. Reservoir Characterization San Andres Reservoir – Over Estimates and Under Achievement Barriers to vertical flow Inversion Modeling to porosity maps Seismic Velocity related to Neutron Density Porosity

12. Porosity vs. Permeability

13. Seismic Inversion Modeling

14. Porosity - Inversion vs. log Seismic InversionWell Log

15. Well Testing Water Chemistry –Inefficient sweep –Backup for well testing & workover results Bottom Hole Pressure Test results –Complex layering of reservoir –Cross flow –Low permeability = Longer test duration Production tests –3 day minimum

16. HC03S04CLCAMGNATDS UPPER GRAYBURG 1702990135001530450 775026390 LOWER GRAYBURG 3862632202951889664 1124537332 SAN ANDRES9803881338462507762 1985561831 INJECTION WATER 7933100320002646947 1775757244 CANYON3291104765325880692 42193126693 ELLENBURGER4391459639173840972 36064106691

17. Wells in the same ¼ section 544 # 1534 # 2124 # 955 #

18. Dual Zone Test

19. After CIBP

20. Same Well After Re-frac

21. Recompletions/Workovers 1955 to 1982 Fracture Stimulation are closed, healed or scaled over Acid Stimulations unsuccessful in contacting reservoir Success rate can be estimated and candidates ranked by Bottom Hole Pressure, Water Chemistry and Production Tests

22. Brock Lease Workover Results WellWorkDate$$BOPDMCFPDBWPD BR #5 Re-Frac8/98 58.5616 Post-Frac 7210200 6/02 13371 BR#6 Re-Frac8/98 68.6319 Post-Frac 3810220 6/02 9262 BR#7 Re-Frac8/98 77.2625 Post-Frac 446242 6/02 155178

23. Production Outcome of fracture stimulation is proportional to bottom hole pressure and Oil/Water production rates prior to treatment Flowing water recoveries do not condemn a well. Some wells produce many times load and have to have fluid level drop below 1000’ from surface before producing OIL!

24. Bottom Line

25. $ucce$$ful Project? PRODUCTION BEFORE WELL WORK (UPPER GRAYBURG ONLY) 37 BO, 9 MCF, 181 BW INITIAL PRODUCTION AFTER WORK 467 BO, 145 MCF, 3167 BW CURRENT PRODUCTION RATE 280 BO, 65 MCF, 2323 BW

26. Acknowledgements Dick Weinbrandt Bill Robinson DOE Tulsa office The Staff of Laguna Petroleum Baker-Hughes (previously Scientific Software Intercorp) Paul Laverty Jim Reeves and Hoxie Smith who conceived and managed the project thru phase I