Post on 02-Jan-2021
1
DUG Permian PresentationThe Southern Midland Basin: A Hydrocarbon Menu
September 2020
2
DisclaimerCAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTSThis Presentation and the oral statements made in connection with it, may include “forward-looking statements.” All statements, other than
statements of historical facts, concerning, among other things, planned capital expenditures, increases in oil and gas production, the number of
anticipated wells to be drilled or completed after the date of this Presentation, future cash flows and borrowings, pursuit of potential acquisition
opportunities and our financial position, business strategy and other plans and objectives of management are forward-looking statements. These
forward-looking statements may be identified by their use of terms and phrases such as “may,” “expect,” “estimate,” “project,” “plan,” “believe,”
“intend,” “achievable,” “anticipate,” “will,” “continue,” “potential,” “should,” “could,” and similar terms and phrases. Forward-looking statements are
subject to risks and uncertainties, and are not guarantees of future performance. Actual results or developments may differ materially from the
projections in the forward-looking statements. These forward-looking statements are based on management’s current expectations and assumptions
about future events and are based on currently available information as to the outcome and timing of future events. We do not undertake any
obligation to release the result of any revisions to these forward-looking statements to reflect events or circumstances after the date of this
Presentation to reflect the occurrence of unanticipated events. All forward-looking statements attributable to us or persons acting on our behalf are
expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any
subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as required by applicable law, we do
not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, changes
in expectations or otherwise.
3
2020+ Focusü High Rate of Return
ü Positive Cashflow
ü Grow Production
ü Pay down Debt
Mariner
Sequitur
• 200 Bcfe, 29% Proved Developed (“PD”) Reserves
• Highly Levered• Primary assets in GoM Shelf and
Deepwater• Operated within cashflow• Acquired by PE firms
ACON/Riverstone
2001 - 2004• PE firms exited in 144A Offering• NYSE listed through Reverse
Morris Trust with Forest Oil• Expanded position in core of
Permian Basin to 150,000 net acres through acquisition and leasing
2005 - 2009• >$4B merger with Apache• 1.2 Tcfe, 70% PD and 50% oil• Primary assets in Permian Basin,
GoM Shelf and Deepwater
2010
• Formed Sequitur • Purchased East Texas asset.
Initiated multi-rig development program
• Continued looking for stacked pay growth opportunities
2011 - 2015• Acquired Southern Midland
Basin (“SMB”) assets from EOG• Increased SMB footprint and
production through acquisition and drilling
• Acquired Callon’s SMB position
2016 - 2019
Sequitur Formed by Mariner Executive Management Team
4
Large Contiguous, Operated Position
§ Current Production ~ 30,000 Boepd 30% oil, 65% liquids
§ ~90,000 net acres with ~60,000 net acres on University Lands
§ 100% operated with average 89% WI and > 8,500 average lateral length
§ YE19 PDP Reserves: 105 MMBoe
§ YE 19 Proved Reserves: 212 MMBoe
Large Inventory of De-Risked Locations
§ ~800 locations at 880’ spacing, excluding upside locations
§ IRR’s of 30-50% in current commodity price environment
§ Consistent and proven results with ~380 horizontal producing wells
§ 3D seismic coverage on > 90% of acreage
Infrastructure in Place to
Accommodate Growth
§ ~65 miles of gas gathering lines connected to 3 separate gas processing companies
§ 32 frac ponds totaling ~12MM bbls capacity, and ~150 source water wells
§ ~90 miles of water lines connected to 10 saltwater disposal wells
§ 1 produced water pond with recycling facility in Barnhart
§ Texon wells deliver oil via pipeline
Sequitur Overview
5
Primary Targets Upside Targets
SER AcreageBarnhart Area
Texon Area
Shallower, Gassier,
Lower Opex& Capex
Deeper, Oilier, Higher Opex & Capex
LS
WC A
WC B
WC C
WC C2
WC D
3,50
0’ o
f Sta
cked
Pay
Sequitur’s Acreage Position is in the Thickest Part of WC
6
SMB Operators’ Acreage Positions
7
$3.08 $3.15 $3.45
$4.58 $5.26
$5.68 $5.85 $5.92 $6.09
$6.93
Average: $5.00
Peer 4 SER Peer 3 Peer 1 Peer 9 Peer 8 Peer 6 Peer 5 Peer 7 Peer 2
$1.05
$1.57 $1.64 $1.78 $1.90 $1.99
$2.46 $2.57
$3.87 $4.19
Average: $2.30
818
81 34
346
76
331
41 141
13 88
Peer 1 Peer 4 SER Peer 2 Peer 9 Peer 5 Peer 7 Peer 3 Peer 6 Peer 8
2019 Avg. Production (MBoe/d)
Comparison to West Texas Peers
(1) Cash G&A excludes stock-based comp, transaction costs and other non-cash expenses; SER excludes monitoring fees, acquisition and divestiture expenses related to the Cavalier acquisition and East Texas saleNote: Peers include CDEV, CPE, CXO, EOG, ESTE, LPI, PE, PXD, QEPSource: Public company filings
2019 Cash G&A / Boe (1)
2019 West Texas LOE / Boe
8
CONFIDENTIAL
Key Points
§ Continue to see improvements in completion efficiencies
- Largely driven by self-sourced sand, fuel and chemicals
- Negotiated favorable frac contract
§ Large inventory of long lateral locations also expected to drive improved efficiencies
§ Continue to evaluate new completion techniques to cost effectively enhance well performance
Decreasing D&C Cost/ft even with high Frac Intensity
$776 $766
$711
$637
$516
2,263
2,525
2,524 2,520 2,500
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
2017 2018 2019 Est. 2020YTD
Bank 2Q20PUDs
Sand
(lb/
ft)
Cos
t/L
ater
al ft
Cost/Lateral Ft Sand (lb/ft)
2020 Est. 2H2020201920182017
West Texas Capex Progression
9
Texon - 863 WellsBarnhart - 1,442 Wells
Data from IHS
Texon & Barnhart Type Curve Analog Map
10
Data from IHS
Texon Well Performance by Frac Generation
11
231,691
286,109
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Cum
ulat
ive
BO
E (N
orm
aliz
ed to
7,5
00')
Month
GEN_I (Less SER) GEN_II (Less SER) GEN_III (Less SER) GEN_IV (Less SER) Gen_IV (SER Only)
1,442 wells by 14 operators
Data from IHS
Barnhart Well Performance by Frac Generation
12
2020 New Wells versus Type Curve