© 2010 Weatherford. All rights reserved.
World National Oil Companies Congress, June 22, 2010
The Role of Oil Field Servic...
© 2010 Weatherford. All rights reserved.
Oil & Gas Strategic Backdrop
© 2010 Weatherford. All rights reserved. 3
Inelasticity of New Oil Production
Source: DOE, EIA, IEA, Deutsche Bank, *inclu...
© 2010 Weatherford. All rights reserved. 4
Inelasticity (Relative) of New Gas Production (North America)
Source: Deutsche ...
© 2010 Weatherford. All rights reserved. 5
Oil Production Spare Capacity
Source: Deutsche Bank
87
92.5
99.9
94.5
0
10
20
3...
© 2010 Weatherford. All rights reserved. 6
0
20,000
40,000
60,000
80,000
100,000
120,000
kbbl/d
Base production DB demand ...
© 2010 Weatherford. All rights reserved. 7
Oil Reserves Steep Cost Curve: Too Steep ?
Source: IEA, Deutsche Bank
0
20
40
6...
© 2010 Weatherford. All rights reserved. 8
Cost Curve is a Consequence of an Aging Phenomenon
Formation damage
Lost circul...
© 2010 Weatherford. All rights reserved.
Oil Field Services Context and Relevance:
Passenger or Conductor ?
© 2010 Weatherford. All rights reserved. 10
Relevant Attributes of OFS
1. OFS to E&P: Squirrel to Elephant
2. Poor Return ...
© 2010 Weatherford. All rights reserved. 11
Oil Field Services and Operating Companies – Scale
The four major
Oil Field Se...
© 2010 Weatherford. All rights reserved. 12
0 100 200 300 400 500
Chevron
ExxonMobil
Shell
Four major OFS
companies
2009 P...
© 2010 Weatherford. All rights reserved. 13
R&D Spend as % of Revenues
The four major
Oil Field Services
Companies
One com...
© 2010 Weatherford. All rights reserved.
Passenger or Conductor ?
© 2010 Weatherford. All rights reserved. 15
Pursue technology
imperative
Comprehensive
Accelerate adoption
Drive for effic...
© 2010 Weatherford. All rights reserved. 16
Drilling Rigs
Wireline
Drill bits
Directional Drilling
Subsea equipment
Top dr...
© 2010 Weatherford. All rights reserved. 17
Drive for Efficiency
Source: Barclays Capital
$0 $100,000 $200,000 $300,000 $4...
© 2010 Weatherford. All rights reserved. 18
Example: Methods of delivery
Land Rigs
+
Directional Drilling
+
Secure Drillin...
© 2010 Weatherford. All rights reserved. 19
Change Industry Structure and Attitude
Consolidation
• Baker Hughes + BJ Servi...
© 2010 Weatherford. All rights reserved. 20
Synthesis: Operator Needs to
Pursue technology
imperative
• Use OFS technology...
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Bernard duroc danner's presentation slides from the 2010 World National Oil Companies Congress

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Bernard duroc danner's presentation slides from the 2010 World National Oil Companies Congress that took place in June in London.

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Bernard duroc danner's presentation slides from the 2010 World National Oil Companies Congress

  1. 1. © 2010 Weatherford. All rights reserved. World National Oil Companies Congress, June 22, 2010 The Role of Oil Field Services in the Energy Dynamic Bernard J. Duroc-Danner Chairman, President & Chief Executive Officer Weatherford International Ltd
  2. 2. © 2010 Weatherford. All rights reserved. Oil & Gas Strategic Backdrop
  3. 3. © 2010 Weatherford. All rights reserved. 3 Inelasticity of New Oil Production Source: DOE, EIA, IEA, Deutsche Bank, *includes OPEC state companies 0 50 100 150 200 250 300 350 400 450 500 0 50,000 100,000 150,000 200,000 250,000 300,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 $bn kbbl/d Production Upstream Capex 12% CAGR 2.8% CAGR (2009 Real)
  4. 4. © 2010 Weatherford. All rights reserved. 4 Inelasticity (Relative) of New Gas Production (North America) Source: Deutsche Bank 13% CAGR 19% CAGR 0 10 20 30 40 50 60 0 5,000 10,000 15,000 20,000 25,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 $bn mmcfd US E&P natgas production (RHS) US E&P Capex spend (2009 Real)
  5. 5. © 2010 Weatherford. All rights reserved. 5 Oil Production Spare Capacity Source: Deutsche Bank 87 92.5 99.9 94.5 0 10 20 30 40 50 60 70 80 90 1983 1990 2000 2009 Production(mbd) 80 85 90 95 100 105 Productionas%ofCapacity Production (mbd) Production as % of Capacity Spare Capacity has not increased over the last 20 years in spite of increased spending % % % %
  6. 6. © 2010 Weatherford. All rights reserved. 6 0 20,000 40,000 60,000 80,000 100,000 120,000 kbbl/d Base production DB demand forecast XOM demand est. IEAdemand est. Reserves Required for Production to 2030 Total Production Gap 2009 – 2030 ~ 380bn bbl Source: EIA, IEA, Deutsche Bank, ExxonMobil
  7. 7. © 2010 Weatherford. All rights reserved. 7 Oil Reserves Steep Cost Curve: Too Steep ? Source: IEA, Deutsche Bank 0 20 40 60 80 100 120 140 160 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 Saudi Arabia UAE Kuwait West Africa (Jubilee) Iraq Brazil Pre-Salt US Lower Tertiary (Tiber) Canadian Oil Sands Iran Venezuela EOR Bitumen Costwithfiscal$/bbl Reserves (bn bbl) Required oil development 380bn bbls $45/bbl
  8. 8. © 2010 Weatherford. All rights reserved. 8 Cost Curve is a Consequence of an Aging Phenomenon Formation damage Lost circulation Differential sticking Production decline Poor oil recovery Corrosion Treatment Sand production Lifting problems Bypassed oil Hot Deep Remote Complex Viscous Depleting pressure Encroaching water Less attractive reservoirs
  9. 9. © 2010 Weatherford. All rights reserved. Oil Field Services Context and Relevance: Passenger or Conductor ?
  10. 10. © 2010 Weatherford. All rights reserved. 10 Relevant Attributes of OFS 1. OFS to E&P: Squirrel to Elephant 2. Poor Return Economics 3. OFS has a heavy burden: • Job shop • Operation shop • Technology shop 10
  11. 11. © 2010 Weatherford. All rights reserved. 11 Oil Field Services and Operating Companies – Scale The four major Oil Field Services Companies One company: ExxonMobil Total Market Capitalization $122bn* $282bn Total Return on Capital 7.5% 14.4% Total Employees 250,700+ 120,000+ *Total OSX Market Capitalization: $180 bn
  12. 12. © 2010 Weatherford. All rights reserved. 12 0 100 200 300 400 500 Chevron ExxonMobil Shell Four major OFS companies 2009 Patents Issued Oil Field Services Technology Strength Source : Issued US Patents Int'l Class. E21b from USPTO Website
  13. 13. © 2010 Weatherford. All rights reserved. 13 R&D Spend as % of Revenues The four major Oil Field Services Companies One company: ExxonMobil 2009 2.82% 0.34% 2008 2.37% 0.18% 2007 2.49% 0.20%
  14. 14. © 2010 Weatherford. All rights reserved. Passenger or Conductor ?
  15. 15. © 2010 Weatherford. All rights reserved. 15 Pursue technology imperative Comprehensive Accelerate adoption Drive for efficiency Within ourselves Within life cycle Methods of delivery Change industry structure Consolidation Division of Labour - Joint Operations - Divestments OFS Must Lower the Cost Curve = Productivity Require Effective Partnership
  16. 16. © 2010 Weatherford. All rights reserved. 16 Drilling Rigs Wireline Drill bits Directional Drilling Subsea equipment Top drives Logging while drilling Reservoir simulation 3D Seismic Technology Incremental Evolutionary Step Change Partnership Roles → Define Need → Steer Design → Assist with Testing → Use in early form for Value Historical Timing All Types Too Long
  17. 17. © 2010 Weatherford. All rights reserved. 17 Drive for Efficiency Source: Barclays Capital $0 $100,000 $200,000 $300,000 $400,000 $500,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 US Canada Rest of World Within Ourselves Overhead Supply Chain Cultural Change Within Lifecycle Manage Volatility Global E&P spend: Shifts to the East US $ millions Peak Trough Delta Peak Trough Delta WFT Revenue 1,180 571 (52%) 1,457 1,447 (1%) Margin 26.5% (1.0%) (275 bps) 23.3% 10% (133 bps) SLB Revenue 1,556 819 (47%) 4,801 4,010 (16%) Margin 22.2% 9.5% (130 bps) 29% 22% (70 bps) HAL Revenue 2,246 1,285 (43%) 2,668 2,057 (23%) Margin 25.3% 2.9% (224 bps) 24.3% 13.5% (108 bps) InternationalNAM
  18. 18. © 2010 Weatherford. All rights reserved. 18 Example: Methods of delivery Land Rigs + Directional Drilling + Secure Drilling™ Services + Well Construction Equipment & Services + Completion + Production Systems Planning Optimize Design & Engineering Streamline Logistics Executing Coordination Reduce NPT Reduce Redundancies Single Point Accountability Improve Safety Sustaining Lower Execution Cost Curve Free-up Scarce Talent ProductivityIntegration
  19. 19. © 2010 Weatherford. All rights reserved. 19 Change Industry Structure and Attitude Consolidation • Baker Hughes + BJ Services • Schlumberger + Smith • Schlumberger + Geoservices Division of Labour Joint Operations • Sonatrach ENTP – Weatherford • Sonatrach Enerfor - Schlumberger • QPC – Weatherford Divestments • BP-TNK OFS – Weatherford • Gazpromneft OFS – TBD • Slavneft OFS - TBD Supply Chain Overhead Infrastructure R&D Cost of Capital All down Supply Chain Overhead Infrastructure R&D Cost of Capital All down Resource Allocation Dedication Planning Resource Allocation Dedication Planning
  20. 20. © 2010 Weatherford. All rights reserved. 20 Synthesis: Operator Needs to Pursue technology imperative • Use OFS technology early for maximum value • Collaborate in technology development Drive for efficiency • Use different forms of integration • Supply chain has no borders • Plan through the cycle • Collaborate through the cycle – master/slave not productive Adapt market infrastructure • Don’t fight consolidation • Encourage opportunities for division of labour

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