Download Berkley Petroleum

Chalker Energy Partners, LP
2007 IPAA Private Capital
Conference
Houston, Texas
January 2007
Background on Chalker?
 Chalker I Formed in December 2003
 Built an East Texas Focused Company
 Exceptional Operational & Geological Team
 Total Equity Commitment of $25MM from QEP II
 Sold to Forest Oil for $225MM, Closed 3/31/06
 Chalker II Up and Running
The Chalker I Team
Alan Smith
President & CEO
Tom Campbell
EVP & COO
Gary Hall
VP – Geoscience
Larry Tolleson
VP – Operations
Janie Isbell
Sr. Engineering Tech
Gayla Massey
Sr. Executive Assistant
Chalker I Strategy
 Initially an Acquire/Exploit Approach in Tight Gas
Sand Basins
 Evolved into Drilling Strategy in East Texas
 Focus in Cotton Valley Sands
 Utilize Relationships & Local Knowledge to Access
Opportunities
 Leverage Engineering, Operational & Geological
Strengths
 Creative Deal Structures
Why Tight Gas Basins & Multiple Pays?
 Longer Life Assets with Predictable Reserves
 Higher Margin Assets – Lower Operating Costs
 Few Dry Holes Drilled – Basin Centered Gas, Stacked Pays
 East Texas Stratigraphy
- Rodessa
- Cotton Valley A-D Sands
- Pettet
- Bossier
- Travis Peak
- Cotton Valley Lime
 Technology has Enhanced Reserve Recoveries
Focus Areas
Panhandle
4 County
Drilling Area
East Texas
South Texas
Chalker I Results
 Made 17 Producing Property Acquisitions - $17MM
 Acquired 16,000 Net Acres in Cotton Valley - $6MM
 Gained Access to Three Drilling Rigs
 Drilled 42 Wells, 30 Operated, All Successful
 Spent $46MM Through the Drill Bit, Avg F&D $1.40/Mcfe
Lease Position
East Texas
Production – Base + Uplift
Actual Results
16
14
12
3 Rigs
(Mmcfed)
1 Rig
10
8
6
4
2
Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar05
05
05
05
05
05
05
05
05
05
05
05
06
06
06
Base
Uplift
Reserves & Production Summary
Production
Proved Reserves
14.4
10.0
2004 YE
15.7 Bcfe, 58% Gas
PUD
24%
PNP
5%
6.4
4.4
3.9
3.4
3.8
4.4
PDP
71%
5.5
2005 YE
112.8 Bcfe, 90% Gas
1Q
2A
3Q
2004
4Q
1Q
2Q
3Q
2005
4Q
PDP
24%
1QE
2006
PUD
63%
PNP
13%
Chalker I Sale
 Proved Up Acreage Thru the Drill Bit
 Excellent Market Fundamentals
 Simmons & Griffis Ran a Formal Process
 Forest Preempted with Signed PSA on 2/9/06
 Sales Price - $225MM

Reserve Cost - $2.32/Mcfe (Announced)

Production Multiple - $19,900/Mcfed (Announced)
 Outstanding Results

ROI – 7.4X

IRR – 331%
Lessons Learned
 We can Make Money in Up or Down Cycle – Must Adjust
Acquisitions & Drilling Allocations
 In Drilling Mode, Land Function Highly Critical
 Deal Creativity is Very Important
 Geographically Focused Asset Base Adds Significant
Premium at Exit
 Equity Partner Can & Did Add Value in Managing
Leverage, Risk Management, Exit Deal Structure & As a
Technical Sounding Board
Chalker II Formation & Strategy
 Smith is Chairman of Chalker II, Full-Time at Quantum
 Doug Krenek Joined Chalker Team, April 1, 2006 as
President & CEO
 Equity Commitment of $50MM from QEP III, $7MM from
Management and Other Investors
 Continued Focus in East Texas & Other Tight Gas Basins in
Texas
 Leverage Off of Technical Knowledge in Focus Areas
 Be Opportunistic!
The Chalker II Team
Alan Smith
Chairman
Doug Krenek
President & CEO
Gary Hall
VP – Geoscience
Larry Tolleson
VP – Operations
Bill Dukes
VP - Land
Janie Isbell
Sr. Engineering Technician
Chalker II Update
 Closed Two Acquisitions - $50MM
•
$45MM Acquisition in Rusk County
•
$5MM Acquisition in North Texas
 Total Net Acerage – 35,000 Acres
•
East Texas – 13,000 Acres
•
Houston County – 14,000 Acres
•
North Texas – 8,000 Acres
 Current Production – 4.5 Mmcfed
 Four Rigs Running in East Texas
 2007 Drilling Capex - $60MM