Texas Tech Introduction to Economic Modeling in PHDWin

I. Importing Production
a. Importing from Data Providers (IHS/Drilling Info/ Lasser)
b. Importing CSV Files from Excel
II. Projecting a PDP Case
a. Inserting Projection Segments
b. Inputting ARPs data
c. Drag and Drop
d. Using Auto-Fits
III. Building a Prospect Case
a. Creating a new case
b. Basic Economic Requirements
i. Entering Prices
ii. Entering Expenses
iii. Entering Ownership Information
iv. Entering Investments
c. Projecting a Prospect
IV. Reporting
a. Running a basic report
b. Sorting Cases to Create Summaries and Totals

Importing From Data Providers

There are many resources that provide historical production data to engineers. Some of
the more popular sources are: IHS Energy, Lasser, and Drilling Info. These three
providers allow users to search for wells, and then download the history for one or more
wells at a time.

Getting that historical data into PHDWin for use in economic calculations and forecasting
is a fairly simple process.

Once the user has downloaded the data from the chosen source, they will need to open
PHDWin, and the database into which they want to import the data. (Often times a new
project file is created for this.) Then follow the steps below:

1. Go to Files -> Import Data Create New Cases.

2. Select the Import option button at the top of this window.
3. Click the [] browse button to open the browse window.
4. Locate the downloaded file on your system. *
5. Click Okay to return to the Import window.
6. Click Finish to begin the import.
*(note from MarshallI have put a drilling Info file on the class folder you can import
it is the phdwin production import example.dri file)
After selecting the file, and before clicking finish to import the file, the user has several
optional fields that allow them to apply basic economic parameters to the case. For
instance, the user can apply an initial working interest and lease net revenue interest, an
economic scenario (a predefined group of prices, expenses, taxes and escalations.), and
even the option to have PHDWin apply a projection curve to the incoming data.

Importing CSV Files From Excel

While importing from data providers is a quick and easy way of getting historical
production, that type of data is not always available to you. There may be occasions in
which you need to import production from another program, such as Microsoft Excel.

It is possible to import directly from Excel, but extreme caution needs to be taken to
ensure that all of the correct data formats are being used to endure that the data is brought
into PHDWin correctly. This is why it is strongly recommended that the user save the
Excel file as a CSV (Comma Separated) file before performing the import. By saving as a
CSV, the file becomes ASCII, or text based, and thus the need for data types is
eliminated.

To save an Excel File as a CSV:

1. Open the file in Excel
2. Go to Files Save As
3. Choose CSV (Comma Sep) from the Save As Type drop down menu located at
the bottom of the save window.
In order to import a CSV file there are a few rules that must be followed in the layout of
the CSV file itself.

Constraints for the layout of the CSV file

1. Row 1 must contain header information (titles).

2. Column A must contain a unique identifier (i.e. API number)
3. The data must be contiguous (no skipped columns or rows)

Once the CSV has been created, open the project in PHDWin in which the data is to be
imported. To import the CSV file:

Selecting the Import File

The beginning of the import process is similar to importing from a data source file.

1. Go to Files | Import Data or Create New Cases.

2. Select the Import radio button at the top of the window.
3. Click the [] button beneath the Import File section to browse for the file to be
imported.
4. You may then fill out the remaining data fields with options such as default
country, Economic Scenario, default working and revenue interests etc.
Remember that these settings will be defaults, and will not affect the data that is
being brought in if there is conflict. In other words, if ownership information
exists, and is mapped from the incoming data file, those will be honored above
anything set here in this wizard.
5. Click the Next button to continue to the Custom Import Window.
Custom Import Window
The Custom Import Window is used to map the data fields from the incoming file into
one of the available fields in PHDWin.

This window has many options and selections, and can seem a bit daunting at first, so lets
go through each section and talk about the features and their purpose.

Layout Section

The first thing we see at the top of this window is the Layout section. This section is
used to choose, create, and modify import templates, or layouts. A layout gives the user
the ability to create and store mappings so that future imports from the same, or similar
data sources are easier and faster to perform.

For instance, if you are going to be importing data on a regular basis from a spreadsheet
generated from an accounting system, and that accounting system exports into a
consistent format, there is no need to have to map those data fields every time you do an
import. Map them once, save it as a layout, and select that layout whenever you are
performing an import of that type.

The available layouts that get listed in the drop down will reflect the basic data file type
you are trying to import. For instance, if you choose an Access file (.mdb) then the
layouts available in the drop down will be for ARIES Windows, and any custom Access
import layouts you have stored.

The New button allows you to create a new custom layout from scratch.

Delete deletes the selected layout from the system.

Copy copies the selected import layout and saves it under a new name. This is useful for
small variations in import files so you do not have to completely recreate a mapping
layout.

Once a new layout has been created and named, you must then define the type of file that
is being imported. In this case, you would select the CSV option. Once this is done the
Master Table and Data Fields buttons will become active.

There is no need to hit the Master Table button for a CSV import, so the next step is to
click the Data Fields button to create the import Map.

Mapping Data Fields

Mapping data fields is the process by which you tell PHDWin where to put the data that
comes in from the CSV File. Each field in the CSV must be Mapped or assigned a field
in the PHDWin database.

The left side of this window is a look into the CSV File. The right side contains all of the
available data fields in PHDWin. The PHDWin data fields are filtered by category (found
in the drop down at the top right corner of the window).

To map the fields, the user locates the desired PHDWin data field, and drags it to the
matching field in the CSV file. Once all the fields are mapped, click OK to return to the
custom import window.

Now that the data fields are mapped, the user may click Finish to begin the import.
Projecting a PDP Case
Graphs can be displayed for the current case by selecting Graphs Display from the
toolbar as shown below.

There are 7 different graphs available within PHDWin , all are customizable there are
4 rate-time graphs and 3 rate-cum graphs (shown as 7 different tabs).

Graph Projections Window

Forecast Mode - Enter Forecast mode by clicking the toggle at the right end of the
graphic toolbar. A different forecast toolbar appears over the graphic
toolbar that performs the functions of the forecast mode.

Edit Production Decline Curves

To edit decline curves:

1) Select Graphs | Display from the PHDWin main menu and click
on a tab to select a graph format. This will open the graphical
display of the case.

2) Select the forecast button on the the toolbar to enter the graphical
forecast mode.

The Graphical presentation will change to allow direct adjustment of

decline curves. Decline curves can be edited in one of two ways.
Direct entry of decline values is supported on the ARPS Projection
window seen above.

Drag and drop decline adjustment is supported directly on the graph in Forecast mode.

Edit Decline Curves - Direct Entry - How to

Decline parameters can be directly entered for up to 10 curve segments for each product.
New values can be entered directly into the Projection window. After each value is
entered click the Tab key to move to the next field. Fields can also be selected by left
clicking on the field of interest. Data entered in a field will not be posted to the program
until after the Tab key has been depressed or another field has been selected with a left
mouse click. Press Enter or the Accept Changes button to prompt PHDWin to
calculate the remainder of the values including reserves.
Delete Curve Segment Button
The use of this button will delete the curve segment that is selected. The selected curve
segment is that active curve segment presented in the graph window in forecast mode that
has its three handles presented. A curve's handles are presented as three solid boxes along
the curve segment. The first handle will be at the start date on the curve. The last handle
is presented on the curve at the end date of that segment. The middle handle is
positioned at the midpoint.

Edit Decline Curves - Drag and Drop Adjustment

Figure 1: Graph Projection Handles

Projection forecast editing may be done directly on the graph itself. While in the forecast
mode, the active (editable) product's forecast is shown with three small pivot handles, one
on each end and one in the middle. Drag and drop these pivot handles to change start
rate, ending rate and decline.

The left handle (Red box) will adjust that curve segments Initial Flow Rate (Qi) and that
segments Start Date. The End Date and End Flow Rate (Qf) will remain unchanged
while all other values including decline rate will be adjusted.

The right handle (Red box) will adjust that curve segments Final Flow Rate (Qf) and that
segments End Date. The curve segments Start Date and Initial Flow Rate (Qi) will
remain unchanged while all other values including decline rate are adjusted.
The center handle (Red box) will adjust that curve segments Initial Flow Rate (Qi), End
Flow Rate (Qf), Start Date, and End Date. The curve duration, decline rate, and b-factor
will remain constant.

All values are real time. As you move the curves, all values are updated on the fly.

Change between products in forecast mode by clicking on that products values on the y-
axis (your cursor turns into a hand symbol) OR by selecting it from the drop down list on
the toolbar as seen below:

To add segments to a projection, simply click the add segment button and choose to add
the segment before or after the previous segment. Each product can have up to ten curve
segments. Only products on the graph are available for presentation. If you need to
adjust a projection for a curve not listed, simply add that product to the graph.

All oil and gas decline projections are defined by Arps equations by default.

Auto-Fitting Projections
Auto-Fitting production history is a great way to start a projection. There are three types
of auto-fits found in PHDWin:

Blind Auto Fit (Ctrl + A) Auto Fit projects a decline curve for the current product
using ARPs Projection techniques. This option allows PHDWin to determine what
historical data to use to project the curve. The user has little control over the results of the
auto-fit.

Cull Data for Auto Fit - Draw a polygon around the historical data points that the
curve projection will be fitted to by clicking to form the corners of the polygon.
PHDWin will cull the data outside the polygon, and fit what's inside. Right click to
execute the fit after creating the polygon.

This option gives the user more control than the Blind Auto-Fit, because they have
control over what historical data points are being used to create the curve.

Multi-point Fit Fits the curve projection for specified data points. Right click
executes the fit. This option does not use historical data points, but rather uses the exact
points that the user clicks. This gives the user the most control over the curve that is
created, however, can be used to get very inaccurate results if used incorrectly.

Once the auto-fit has been performed, the resulting curve may be manipulated by drag
and drop, or data entry to get the final desired result.
Building a Prospect Case
Lets discuss the process of building a new prospective case from scratch. Whenever a
case is built from scratch, there will be a few requirements that must be in place before an
economic report may be run on the case.

The minimum requirements for any case to run economics are:

1. A production curve (projection)
2. Prices
3. Expenses (required to calculate an Economic Limit)
4. Ownership (required to calculate Net volumes and economics)

The first step is to create the case itself. To create a new case:
1. Go to Files Import Data Create Cases
2. Select the Single Case option in the top left corner.
3. Select the Standard case option
4. Fill in the Case Name and other header information.
5. Click Next.
6. The default ownership may be entered here.
7. Click Next.
8. Projections may be entered here if the numeric data is known.
9. Click Finish.

The new case will now be accessible through the Case List (ctrl + L), and will be set as
the active case, allowing you to edit the other options.

While some of the required elements may be entered during the creation of the case, it is
useful to know how to edit all of those items after the case has been created.

To edit Prices:
1. Go to Editor Cases
2. Select the Prices Tab
3. Expand the Base Prices node
4. Select the product you wish you edit the price for, and double click that product.
5. Fill in the price to be used, and the duration for that price segment (used for
pricing strips that change over time.)
a. Note: if the price will be changing over time, click the Insert button at the
bottom to create the next pricing segment for the selected product. The last
price segment should always last until ECL.
6. Repeat the process for all products.

To Edit Expenses:
1. Go to Editor Cases
2. Select the Expenses Tab
3. Expand the Base Costs node
4. Double click the expense category you wish you edit the value of.
 5. Fill in the expense to be used, and the duration for that expense segment (used for
expense strips that change over time.)
a. Note: if the expenses will be changing over time, click the Insert button at
the bottom to create the next expense segment for the selected category.
The last expense segment should always last until ECL.
6. Repeat the process for all categories as necessary.

Note: well cost will be multiplied by the cases well count. $/month/well. Fixed cost does
not. $/month.

To Edit Ownership:
1. Go to Editor Cases
2. Select the Ownership Tab
3. Double click the ownership line to edit the values.

There are three numbers that are tracked in association with ownership in PHDWin.

- Working Interest is the owners share of the expenses on the case.

- Revenue Interest is the owners share of the revenues on the case.
- Lease NRI is the revenue interest at 100% working interest. In other words, this
number usually represents the sum of all revenue interests on the case, minus the
land owner. This number is used to calculate the economic limit on the case, but
does not affect the net numbers reported.

By definition the following should be true (assuming no overrides):

RI = WI x LNRI

The calculator icons on the side of the edit ownership window are used to calculate
values based on the equation shown above. In other words, if the user changes the WI to .
675 and the Lease NRI is .75, then clicking the calculator next to RI would change its
value to .50625 to balance the equation.

Reporting
Once the data has been entered on the case, and a projection has been made, a report can
be run to see the results.

To Run a Report:
1. Go to Reports Select and Run
2. Highlight the report format to be run in the top section.
3. Select the case(s) the report is to be run on in the bottom section.
4. Click run.

Case Selection
There are two basic ways to select which case(s) are to be run. First, the user has two
predefined options found in the drop down menu located about half way down the Select
and Run window. The options are All Cases, or Current Case.

The other option is to select a custom group of cases. To do this, click Select at the
bottom of this window. This will open the Case List. The user may then select the cases
to be run by dragging them from the Case List into the Select and Run window.

Sorts, Summaries and Totals

By default PHDWin will always produce a Grand Total page in the report whenever more
than one case is run. However, often times the user desires a more comprehensive
breakdown of the information. They may want summaries to be generated by reserve
class and category, or field, or operator or any number of other options.

Summary report pages are controlled by the sort options in the Case List.

Use the Case List to Sort Cases

Click the button on PHDWin Navigator portion of the toolbar to activate the Case
List window.

Select the button from the case list window. When creating a new sort order, begin
by typing a Sort Order Name into the top field. Read the steps below for defining the
Sort.
 Figure 2: Sort Window

Sorting is defined by dragging the selected criteria from the Available Fields column to
the first available line underneath Sort Fields. PHDWin can sort by up to ten different
criteria.

The Sort column defines if the cases are sorted in an ascending or descending order.
Double click the field to get a drop down box that will allow changing the selection.

The Group column will specify if that sort criterion will create a break in the case list. A
green check mark designates this being turned on for that sort field.

A green check mark underneath the Sum column specifies that a Summary will be
generated for that sort field/break, and the location is defined as the Top or Bottom
underneath the Place column.

A large Sigma symbol inside the list, , designates that a summary will be
generated at that break. Once again, Top specifies that the Summary will be
located before the individual case reports, and bottom specifies that the Summary
will be located after the individual case reports.

A Subtotal can be setup to be generated within each sort group. A subtoal will generate a
summary page in the report, but will not affect the order that the cases are reported. This
allows you, for instance, to generate summary pages for each operator while sorted by
Reserve Class and Category.

A small Sigma symbol, , designates a Subtotal will be generated at that break.

Subtotals can be created for each sort criteria, by highlighting that particular line,
the drag and drop the selected subtotal criteria to the lower portion of the window.

When the Sorting has been defined, click the Save button to save as the Sort Order Name.
Inside the Save window, the user can store this sort order to a template in the Scheme.tps
file. If saved as a template, the sort criteria will be able to be used in other databases.
After the sort order is saved, click OK back inside the Sort Order window to activate the
list with the order.