Statoil unconventional gas

Statoil Unconventional Gas Press Briefing August 25, 2010 1- Stavanger, Norway

Agenda • What is unconventional gas? • How is shale gas produced? • Where is unconventional gas located? • Why did Statoil invest in North American shale gas? • Current status: Statoil’s JV with Chesapeake • Next steps in Statoil’s unconventional gas journey • Q&A 2-

What is unconventional gas? • Many different types of unconventional resources • Low permeability and porosity - difficult for gas and liquids to flow through it Shale outcrop, Marcellus, New York 3-

How is shale gas produced? • To reach the deep target gas, a normal well is drilled • The bore is extended laterally to create a horizontal well • The well is hydraulically fractured, allowing gas to flow • At the surface gas enters pipelines that take it to market • The well produces for 40 years Source Chesapeake Energy 4-

How is shale gas produced? A producing well pad 5-

How is shale gas produced? A Frac Site 6-

Where is unconventional gas located? Europe Europe Resource: 145 tcf Resource: 145 tcf Production: 0.0 Production: 0.0 bcfd bcfd North America North America Resource: 1,348 Resource: 1,348 tcf tcf Production: 28.3 Production: 28.3 bcfd bcfd Asia Asia Resource: 203 tcf Resource: 203 tcf Africa Africa Production: 1.32 Production: 1.32 Resource: 83 tcf Resource: 83 tcf bcfd bcfd 100% Shale Increasing Attracts Investment Dollars Production: 0.0 Production: 0.0 90% bcfd bcfd 80% Percent of L48 CAPEX 70% 60% All Other Plays 50% Shale Plays 40% 30% Australia Australia 20% 10% Resource: 78 tcf Resource: 78 tcf 0% Latin America Latin America Middle East Middle East Production: 0.64 Production: 0.64 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Resource: 13 tcf Resource: 13 tcf Resource: 25 tcf Resource: 25 tcf bcfd bcfd Production: 0.04 Production: 0.04 Production: 0.0 Production: 0.0 bcfd bcfd bcfd bcfd Source: WoodMac 7-

Where is unconventional gas located? U.S. Shale Gas Basins Source: U.S. Department of Energy 8-

Why did Statoil invest in North American shale gas? Marcellus – low $ per MMBtu break evens $12.00 $10.26 $10.00 $8.87 $8.05 $8.00 $6.78 $6.86 $6.47 $6.48 $6.00 $5.30 $5.04 $5.16 $4.59 $3.68 $3.74 $3.79 $3.89 $4.00 $3.38 $3.43 $3.63 $3.08 $2.00 $0.00 e) X) n in e ll e ) d . rd ta . ce a t.) s en e ) re iz iz ro ag or n. m as l in nd or .T Fo n vi er or an or Co kk Hu xt df ho Ui er t ic (C tte rB Sa (V H H (E Ba oo .E ce e t( Av kla An ye gl s lle ve h s Pi y lle et W W l lu as ll u Ea ll e Fa .O S. vi Ri rn le vi t( ce W es ce Va U. es da Ba et W er ar ar yn te ne yn rn wd n M M ni Ha tto Ba Ha Pi Po ra Co G Source: Barcap 9-

Why did Statoil invest in North American shale gas? US Gas Production by Type 90 80 70 60 bcfd 50 40 30 20 10 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Source: Wood Mackenzie Conventional Shale Tight CBM Transforming the world’s biggest energy market: •Energy independence •More viable energy mix •Job and wealth creation for thousands of Americans Source: WoodMac 10-

Why did Statoil invest in North American shale gas? Strategically positioned Pipeline to Canada • US unconventional industry is established − Liquid market Marcellus Area − Existing industrial infrastructure Cove Point • Marcellus - world class shale play Re-gas terminal − 7420 bcm of recoverable New York resources (US DoE) − Attractive break evens Gulf of Mexico − Close to market and pipeline capacity 11-

Current status: Statoil’s JV with Chesapeake • JV with Chesapeake • Organisation in place • 50,000 boe/d in 2012 • Now 300,000 mcfd (44,000 boepd) • 26 rigs in operation • 118 wells 12-

The central importance of HSE • Chesapeake proven track record • Standards above and beyond • Aligned on regulation, water management, testing and the disclosure of additives 13-

Next steps in Statoil’s unconventional gas journey • Early entrant • Learn and prepare • Build infrastructure and competence • Become a professional unconventional operator 14-

Thank you Statoil Unconventional Gas John Knight Senior Vice President, Global Unconventional Gas www.statoil.com 15-

Statoil unconventional gas

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