HOUSTON, July 27, 2016 /PRNewswire/ -- Flotek
Industries, Inc. (NYSE:FTK) ("Flotek" or the "Company") today
announced the release of studies regarding the effectiveness of the
Company's suite of Complex nano-Fluid® completion
chemistries ("CnF®") in the Permian Basin in
West Texas and the Eagle Ford
Shale play in the South Texas
Basin. MHA was retained by the Special Technical Committee (the
"Technical Committee") established to review the efficacy of
CnF® and the Company's data analysis software.
The studies can be found by selecting the "MHA CnF®
STUDY" tab at the top right of Flotek's homepage at
www.flotekind.com.
Evaluation Scope and Methodology
Upon being retained by the Technical Committee, MHA defined the
scope of its evaluation of CnF® performance in three
core operating basins: the D-J Basin of Colorado, the Permian Basin and the
South Texas Basin (inclusive of
the Eagle Ford shale), both in Texas. As noted earlier this year, MHA's
analysis began with the D-J Basin in Colorado, and MHA's study for that basin was
released on January 27, 2016.
Since that time, MHA has focused its efforts on analysis of the
efficacy of CnF® in the Permian and South Texas Basins. A
complete description of MHA's methodology can be found in the
reports available on Flotek's website.
The analytical process used in Texas is different from the approach taken by
MHA in its analysis of the D-J Basin because operators in
Texas are only required to report
production on a lease-basis, instead of on a well-by-well
basis.
Because individual leases may contain multiple wells, MHA chose
to include only those leases in our analysis which were either (a)
single-well leases, where the production allocation will be correct
by default, or (b) in multiple-well leases where all wells were
completed using CnF, or all wells were completed without using the
CnF additive. With that imposed restriction on the multiple-well
leases, an accurate total lease forecast could be prepared to
estimate the EUR of the entire lease, with that resulting EUR
subsequently averaged to an individual well basis by using the
number of contributing wells. In all cases evaluated by MHA, leases
containing only horizontal wells were considered. The above
approach yielded an analysis which was less susceptible to
inaccurate results caused by flawed lease production allocations.
This same challenge does not hold in the Permian Basin of
New Mexico, where production is
reported on a well basis."
Highlights of the study protocols include:
- The Permian study reviewed 19 focus areas which involved the
analysis of 116 and 159 non- horizontal wells. The results are
presented using two well productivity/injectivity parameters.
- The Eagle Ford study reviewed 16 focus areas which involved the
analysis of 71 and 127 non- horizontal wells. The results in the
table are presented using two well productivity/injectivity
parameters.
The first step of the MHA investigation was to identify and map
the horizontal well locations completed within the study area which
used the CnF additive. This was done using the "Full Data
Download" database from FracFocus. FracFocus is a third-party
website available in the public domain. These wells were used as
anchor points to identify groupings, or focus areas, of wells which
had sufficient data available to complete the analysis to determine
the effectiveness of CnF.
The FracFocus database does not contain well production data,
nor all of the completion information utilized in the MHA
evaluation. As such, MHA integrated well production and completion
data for the wells accessed from the FracFocus database from other
available sources. The Texas Railroad Commission Online Data tools
were used to download completion information, and to acquire lease
production data for leases containing multiple wells. A commercial
third-party well information database, DrillingInfo, was used for
well identification information, as well as production data for
single-well leases. All of the collected data were then
imported into analysis applications used by MHA in our evaluation.
The applications included Excel spreadsheets and the Aries decline
curve analysis software tool available from Landmark Solutions, a
company owned by Halliburton.
MHA assessed the productivity performance of the wells (both CnF
and non-CnF wells) using an estimated ultimate recovery over the
life of the well. Leases were forecast using a hyperbolic decline
profile ("b-value"), and applying a limiting terminal exponential
decline rate of 6% per year. In estimating the EUR volumes, MHA
chose to use barrels of oil equivalent ("BOE") because of the high
amounts of gas produced in this field, and due to the wide range of
gas-oil ratios seen in the wells. MHA used a conversion factor of 6
Mcf to 1 bbl to calculate the BOE. A description of MHA's
methodology for calculating EUR can be found in the report
available on Flotek's website.
The reports found on Flotek's website provide additional
methodological details as well as limitations, qualifications and
assumptions related to the analysis provided in the report.
Summary Results of Permian Basin Evaluation
The comprehensive results of MHA's analysis can be found in the
report available on Flotek's website. When analyzing performance of
CnF® in the Permian Basin MHA reached the following
conclusions:
- "Improvement in average estimated ultimate recovery ("EUR")
per foot of gross perforated interval: The EUR was
calculated for each well and the improvement (or decline if
negative) in the average EUR per foot of gross perforated interval
was determined. 12 of the 19 focus areas evaluated showed an
improvement in the normalized EUR productivity parameter for wells
that used the CnF additive versus wells that did not. It is
the opinion of MHA that with almost two-thirds of the focus areas
showing a productivity improvement, this represents a demonstrated
positive result supporting the use of the CnF additive."
- "Improvement in average first 12-month production volume per
foot of gross perforated interval: As a check on the
above conclusion, the improvement (or decline) in the average
12-month actual cumulative production per foot of gross perforated
interval was calculated for comparison to the result using the
predicted EURs. Not all focus areas could be evaluated using
this parameter because some of the areas did not have wells with a
full 12 months of production history. However, in those cases
where it was possible to make the calculation, only one focus area
(G-5) showed a result where the two parameters conflicted, with the
EUR parameter showing a slight improvement (11%) and the 12-month
parameter showing a slight decline (-7%). It is the opinion
of MHA that this favorable comparison supports the validity of the
analysis made using the predicted EUR volumes."
In addition, MHA reached two additional conclusions:
- "The six focus areas showing a negative result in the EUR
productivity parameter are clustered in a relatively local region
including Lea County, New Mexico,
and immediately south of that in Culberson, Reeves and Loving Counties, Texas. Further study is
required to determine if there is an underlying reason (e.g.
geologic) to explain this trend."
- "The average gas-oil ratio ("GOR") for the six focus areas
showing a negative result in the EUR productivity parameter is
almost twice (4500 vs 2400) the average value of the 13 focus areas
with a positive result. This observation is consistent with
that reached by MHA in a prior investigation of the DJ Basin in
Colorado where it was observed
that the CnF additive was more effective in areas with lower
average GOR values."
The complete findings, including additional data details and
tables can be found in MHA's complete report on Flotek's
website.
Summary Results of Eagle Ford Shale Play Evaluation
The comprehensive results of MHA's analysis can be found in the
report available on Flotek's website. When analyzing performance of
CnF® in the Eagle Ford Shale Play, MHA reached the following
conclusions:
- Improvement in average estimated ultimate recovery ("EUR")
per foot of gross perforated interval: The EUR was
calculated for each well and the improvement (or decline if
negative) in the average EUR per foot of gross perforated interval
was determined. 7 of the 16 focus areas evaluated showed an
improvement in the normalized EUR productivity parameter for wells
that used the CnF additive versus wells that did not. These
focus areas are highlighted in green in Table 1, and they are shown
with a black dot surrounded by a green circle in Figure 2. The
remaining 9 focus areas showed a decline in the normalized EUR
productivity parameter. These areas are highlighted in red in Table
1, and they are shown with a black dot surrounded by a red circle
in Figure 2. Further, almost half (7 out of 16) of the focus areas
evaluated, showed less than +/-5% difference in average EUR per
foot of gross perforated interval between wells that used the CnF
additive and wells that did not. Based on these results, it is the
opinion of MHA that these results are inconclusive. There
does not appear to be a conclusive benefit or detriment to well
production performance associated with the use of the CnF
additive."
- Improvement in average first 12-month production volume per
foot of gross perforated interval: As a check on the
above conclusion, the improvement (or decline) in the average
12-month actual cumulative production per foot of gross perforated
interval was calculated for comparison to the result using the
predicted EURs. Not all focus areas could be evaluated using
this parameter because some of the areas did not have wells with a
full 12 months of production history. However, in those cases
where it was possible to make the calculation, the results were
also inconclusive, similar to those discussed above with the EUR
parameter. Six focus areas showed improvement in the normalized
12-month production performance parameter, eight focus areas showed
a decline, one showed no difference and one area did not have
sufficient production history to evaluate. Consistent with the
prior analysis using the EUR parameter, it is the opinion of MHA
that these results are inconclusive. There does not appear to be a
conclusive benefit or detriment to well production performance
associated with the use of the CnF additive.
"One additional observation can be made from the data. . . In
two prior investigations conducted by MHA in the DJ Basin of
Colorado and the Permian Basin of
Texas, it was observed that the
CnF additive was more effective in showing a positive increase on
well production in those areas that were more oil prone, or in
those areas with lower producing gas-oil ratios ("GOR"). The
results generated from this review of the Eagle Ford play area
support this conclusion as well based on the following
observations":
- "All focus areas studied within the EIA published oil window
showed a positive increase in the EUR per foot of gross perforated
interval for wells treated with CnF versus those which were
not. This is illustrated by the three black dots with green
circles located northwest of the wet gas and gas condensate window
region shown in Figure 2 (found on page 3)."
- "The entire data set shows a negative trend of decreasing
performance gain when using CnF versus increasing GOR. This
is illustrated in Figure 3 (found on page 4)."
Additionally, the MHA report noted that, while the data
challenges in the Eagle Ford were more significant, further
limiting their conclusions, the report acknowledges the correlation
between CnF® use and improved production performance in the oil
window of the Eagle Ford play:
"[T]here are inconsistencies in
the reporting of production data in Texas. As a result, MHA limited our analysis
to a subset of Eagle Ford wells. Given the limitations of the
public data used in our study, one would need to obtain robust data
from operators before being able to draw conclusions about the
effectiveness of CnF more broadly within the Eagle Ford play.
It is the opinion of MHA that the overall results of our analysis
within the study area of the Eagle Ford are inconclusive. However,
it is noted that within our study area, there does appear to be a
trend of improved production performance associated with the use of
CnF within the oil window of the Eagle Ford play as compared to the
gas window."
The complete findings, including additional data details and
tables can be found in MHA's complete report on Flotek's
website.
Conclusions and Limitations
Both studies – the Permian Basin and the Eagle Ford Shale Play
evaluations – conclude with the same summary:
"Throughout this process,
MHA has identified multiple discrepancies within the available
data. These discrepancies varied depending on the source from
which the data were acquired. While MHA has attempted to correct
for these discrepancies, and to remove any wells which did not meet
the stated guidelines, it should be noted that the quality and
completeness of the data available from the Permian Basin [and
Eagle Ford Shale play] is substantially inferior to the data
available from the DJ Basin of Colorado. That being said, it is the opinion
of MHA that the conclusions reached in this evaluation are robust
and defensible due to the restrictions placed on the wells and
leases included in the analyses. It should be noted that the
results presented in this report are considered initial results
specific to the areas studied within the Permian Basin [Eagle Ford
Shale play]. . ."
The complete MHA reports on both the Permian Basin and the Eagle
Ford Shale play in the South Texas
Basin can be found on Flotek's website.
About Flotek Industries, Inc.
Flotek is a global developer and distributor of a portfolio of
innovative oilfield technologies, including specialty chemicals and
down-hole drilling and production equipment. It serves major and
independent companies in the domestic and international oilfield
service industry. The Company also serves commercial and industrial
markets with a portfolio of diverse chemical technologies. Flotek
Industries, Inc. is a publicly traded company headquartered in
Houston, Texas, and its common
shares are traded on the New York Stock Exchange under the ticker
symbol "FTK."
For additional information, please visit Flotek's web site at
www.flotekind.com.
Forward-Looking Statements
Certain statements set forth in this Press Release constitute
forward-looking statements (within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934) regarding Flotek Industries, Inc.'s business,
financial condition, results of operations and prospects. Words
such as expects, anticipates, intends, plans, believes, seeks,
estimates and similar expressions or variations of such words are
intended to identify forward-looking statements, but are not the
exclusive means of identifying forward-looking statements in this
Press Release.
Although forward-looking statements in this Press Release
reflect the good faith judgment of management, such statements can
only be based on facts and factors currently known to management.
Consequently, forward-looking statements are inherently subject to
risks and uncertainties, and actual results and outcomes may differ
materially from the results and outcomes discussed in the
forward-looking statements. Factors that could cause or contribute
to such differences in results and outcomes include, but are not
limited to, demand for oil and natural gas drilling services in the
areas and markets in which the Company operates, competition,
obsolescence of products and services, the Company's ability to
obtain financing to support its operations, environmental and other
casualty risks, and the impact of government regulation.
Further information about the risks and uncertainties that may
impact the Company are set forth in the Company's most recent
filing on Form 10-K (including without limitation in the "Risk
Factors" Section), and in the Company's other SEC filings and
publicly available documents. Readers are urged not to place undue
reliance on these forward-looking statements, which speak only as
of the date of this Press Release. The Company undertakes no
obligation to revise or update any forward-looking statements in
order to reflect any event or circumstance that may arise after the
date of this Press Release.
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SOURCE Flotek Industries, Inc.