stage presentation v07

Innovating Completion OptimizationOctober 2016

The Trends in Drilling & Completions

Innovation Required

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2010 2011 2012 2013 2014 2015 2016

WTI Prices: 2010 -Present

Drilling and Completion Trends in the Montney

Increased Frac Stages

2010: Average 10 stages

2016: Average 26 Stages

Increased Fluid Pumped

2010: ~2,500 cubic meters

2016: ~15,000 cubic meters

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Source: Raymond James, Jeremy McCrea


Increased Completed Length

2010: ~1,250 meters

2016: >2,000 meters

Increased Total Proppant Placed

2010: ~750 tonnes

2016: ~2,500 tonnes

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Movement to Slickwater

2010: 20% of wells using Slickwater

2016: >70% of wells using Slickwater

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The Drivers Behind the Changing Trends

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The Goal

The Requirements

The Solution

Superior Capital Efficiencies

Higher Productivity and EUR’s

Increased Stimulated Rock Volume

Longer Laterals Tighter SpacingHigher Pump

RatesSlickwater

Pinpoint Fracturing

The Challenges

Water Management and Social Impact

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Water Management Issues

o Slickwater becoming dominate completion

o Water to inflate coil tubing

o Potable water requirement for certain completion styles

o Ability to access adequate water for completion

Social Impact Issues

o Time on surface

o Noise

o Impact to residents in rural / urban corridors

o Traffic

o Pad size

o Perception of completions (high vs. low impact)

Current Systems Not Meeting all Design-Change Demands

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Based on 4.5-in (114.3-mm) Casing Plug & Perf(Clustered Stages)

Sliding Sleeve (Coil Tubing)

Ball-Drop

Unlimited stages Yes Yes No

Reduced pumping friction pressure Yes No No

Can use high fluid rates and sand concentration Yes No No*

Individual frac Isolation No Yes Yes

Wellbore unrestricted by ball seats or coil tubing while fracturing

Yes No No

Reduces pumping time on surface No No Yes

Water and chemicals conservation No No Yes

Re-closable sleeve for re-fracturing or shutoff No Yes No

Extended reach capability Yes No No

Production-ready wellbore No Yes Yes

Constant ID heel to toe Yes Yes No

Open hole or Cased hole application No Yes No

Cemented annulus Yes Yes No

Completed without coiled tubing Yes No Yes

* Restricted at the toe

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Risks and Limitations of Current Systems

Plug and PerfSliding Sleeve with Coil Ball-Drop

Significant time required to place plugs and perforate while frac

equipment is waiting

Controlling frac placement in cluster applications and ensuring all intervals

are stimulated

Perforating gun misfire and associated time to round trip tool string

Plug failures from skidding and pre sets from cast iron slips

Debris and fluids from drilloutscausing damage to the formation

Difficulty drilling plugs in extended reach applications

Additional fluid usage to place plugs and perforating guns

Sanding off with coil in the wellbore (Higher risk of being stuck in the

wellbore with coil)

Extra costs of friction reducers and potential inability to the toe of the

wellbore

Setting tool packer failure (limited number of sets per packer)

Fishing charges if tool becomes stuck or disconnected

Equipment failures such as coil tubing breakdowns

Pump rate limitations due to friction pressure

Limited stage count

Limit on horizontal length due to decreasing ball seat size

Pump rate limitations, particularly at the toe

Decreasing seat sizes restrict flow back

Risk of ball extrusion

Screenouts can potentially lead to partial or complete loss of wellbore

The Innovation

Stage Completions Inc.

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Stage Completions Inc. is a downhole technology company focused on providing innovative completion solutions

90% privately held, 10% to be acquired by Blackbird Energy Inc. (TSX-V: BBI)

Three main product lines that are fully patented:

SC Bowhead II: Collet-activated fracturing sleeve system designed for cased hole and open hole applications

SC Bowhead: Wireline deployed Baffle isolation fracturing system designed for cased and open hole applications

Cemented Ball Drop: ball activated fracturing sleeve designed for multiple frac stages in a well bore

All systems designed from 2 7/8” (71mm) right through to 5 ½” (139.7 mm) casing

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Production and Operational Advantages

Pinpoint fracturing

Longer Laterals and Increased

Stages

Higher Rates and Tonnages

Asset in the Wellbore

o 216 stages currently available (>700 available in near term)o Pump down collet (elimination of coil tubing) allows for industry leading lateral

lengtho Only system that can frac beyond current coil / wireline lengths

o Constant ID allows for higher pump rate and higher sand concentrations, particularly at the toe

o Elimination of coil and ball seats leads to reduced friction

o Optimize every fracture treatment / Accurately place every fracture treatmento Maximize stimulated reservoir volume

o Constant ID allows for maximum flowback recovery without interventiono Collets are retrievable and sleeves can be open / closed throughout life of

wellboreo Refrac available with re-pump down of existing collets and balls

Stage’s Advantages

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Reduced Risk

o Large bore access allows clean outs from heel to toe with no restrictions in coil or tubing size

o Collets can be removed at any point in time allowing full drift of liner

o Without retrieval, Stage system has largest flowback ID

o Ability to close specific sleeves for production challenges

o Elimination of ball extrusion

o Reduced risk of breached casing

o Sleeve and collet rated for 15k pressure limits

Reduced Cost

o Increased speed of completions – 20 -40 min vs. 1 hr 40 min or higher reduced direct and indirect costs (continuous pumping operations)

o Reduced fluids into formation and the associated cost

o No milling and drilling out of balls and seats

o Elimination of Coil Tubing

o Dissolvable ball allows for full wellbore access during flow back and production operations

o Reduction in pressure pumping and associated costs

Discussing Costs and Savings

The Cost and Savings Discussion

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Compared to Ball Drop

o Costs comparable to ball drop but with significant operational advantages

Compared to Plug and Perf

o No coil tubing unit to drill out plugs, no drill bits and accessories

o Reduction in treating and stimulation

o No stand by on frac equipment while having to set bridge plugs / perforate

o Fluid hauling is drastically reduced (reduction in fluid volume for pumping down wireline to set bridge plugs / perf)

Compared to Sliding Sleeve with Coil

o No coil tubing unit to open and fracture each sleeve

o No coil tubing packer and accessories

o Elimination of fresh water circulating costs to maintain coil integrity

o Fresh water disposal

o Reduction in treating and stimulation

Stage’s Deployment

Quality Assurance

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Ability to land collets at between 1 m3/min and 5 m3/min

Continuous completion

Over 100 surface tests

Varied pressures, temperatures and rates

100% success

Two wells successfully completed using Stage

Third well installed – testing in next two weeks

Blackbird 06-14-70-7W6M Pump Down

Innovation Being DeployedLargest Sliding Sleeve Completion in Elmworth /Pipestone Corridor

Blackbird’s 02/2-20 Montney Well

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Blackbird is implementing the largest sliding sleeve completion in the Elmworth / Pipestone Corridor

71-76 Stage sleeves

4,000 tonnes of proppant (~2.0 tonnes per linear meter)

~2,150 meter lateral

Slickwater

Pumpers: Step Energy Services

Estimated completion: November 8, 2016

Roll Out Achievement

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The Eagle Ford

The Cardium

The Uinta

The Bakken

The Montney

The Permian

China Successfully Being Deployed in Cased and Open Hole Applications

The Stage Advantage

Stage Checks All The Boxes

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Based on 4.5-in (114.3-mm) Casing

SC Bowhead II Plug & Perf (five clusters/stage)

Sliding Sleeve (Coil Tubing)

Ball-Drop

Unlimited stages Yes Yes Yes No

Reduced pumping friction pressure Yes Yes No No

Can use high fluid rates and sand concentration

Yes Yes No No*

Individual frac Isolation Yes No Yes Yes

Wellbore unrestricted by ball seats or coil tubing while fracturing

Yes Yes No No

Reduces pumping time on surface Yes No No Yes

Water and chemicals conservation Yes No No Yes

Re-closable sleeve for re-fracturing or shutoff

Yes No Yes No

Extended reach capability Yes Yes No No

Production-ready wellbore Yes No Yes Yes

Constant ID heel to toe Yes Yes Yes No

Open hole or Cased hole application Yes No Yes No

Cemented annulus Yes Yes Yes No

Completed without coiled tubing Yes No No Yes

* Restricted at the toe

Disruptive Completions Technology

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Higher Tonnages

Higher Rates

Longer laterals

More Stages

Stage’s Bowhead II Increased EUR’s

High Utility of Capital

Improved Water Management

stage presentation v07

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