1) US crude oil production has increased significantly from 2012-2015 as supply reactions to lower prices become evident. 2) The annual oil production replacement challenge is driven more by production declines than demand growth, and cuts to E&P investment are impacting total replacement capacity. 3) Technological innovations in areas like drilling, completions, and reservoir mapping can help reduce costs and increase recovery from fields to address the replacement challenge.

1. #OM2015#OM2015
Technological Development for a
Strategic Advantage
Ashok Belani

2. #OM2015
Supply reaction becoming evident
US Crude Production (MMbpd)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0.21
Kuwait
Saudi ArabiaQatar
UAE
Angola
Others
2012
Core OPEC Spare Production Capacity (MMbpd) 2011 – 2015
Libya
crisis
2013 2014 2015
9.8
9.3
9.7
9.6
9.5
9.4
9.2
0.0
Sep-15Jul-15May-15Mar-15Jan-15
New estimatesOriginal EIA estimates Projections based on DPR

3. #OM2015
We have a Production Replacement Challenge
• Annual replacement challenge driven more by production decline than by demand growth
• E&P investment cuts impacting total production replacement capacity
MMbpd
Time
Demand
Growth
8-10 MM bpd
Annual
Replacement
Challenge

4. #OM2015
Production & E&P Capex spend growth divergence
99
321
0
50
100
150
200
250
300
350
8
6
4
2
0
12
10
201320112010
+33%
2009200820072006
Capex $B
2005
7.0
223%
2012
9.3
201920182017201620152014
NAM ProductionNAM Capex
40.1
0
5
10
15
20
25
30
35
40
45
6
7
5
3
4
2
0
1
20112010200920082007 2016201520062005
6.9
14.4
2019
-37%
201820172013
178%
Capex $B
2012 2014
4.3
Europe ProductionEurope Capex
Production
MMBOEpd
Production
MMBOEpd
NAM Production vs. E&P Capex spend Europe Production vs. E&P Capex spend
Source: IHS

5. #OM2015
All Barrels are not created equal
Oil Production and Capex

6. #OM2015
Deepwater development
-200
-100
0
100
200
300
400
500
600
700
800
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Thousandboe/d
2004–09: Average ~469,000
boe/d new production
2010–15: Average ~54,000
boe/d new production
2016–21: Average ~444,000
boe/d new production
Source: IHS

7. #OM2015
Eagle Ford
2009 4,432
5,411
22%
2014 22
12
83%
2014
2009
Lateral Length
1,120
148%
2014
2009 451
1,020
17%
2014
2009 870
Stages
Proppant (lbs/ft) Fluid (gals/ft)
100
4,000
0
3,500
3,000
2,500
2,000
1,500
500
0
1,000
700
600
500
400
300
200
560
2010
564
2009
565
2008
465
B3 BOE, BOE/d
2012
562
2015 (May)
645
2014
617
2013
562
Well Count
2011
B3 BOE (BOE/d)Well count
5.35.55.76.16.2
7.2
Target
-24%
1Q 20152015 plan201420132012
Completed well cost ($million)

8. #OM2015
Cost deflation expectation
0 10 20 30
Subsea
Facilitites (Deepwater)
G&A
Facilities (Shelf)
Pipeline
Facilities (Onshore)
Deepwater Wells
Ultra-deepwater Wells
Shallow water Wells
Completion (Unconventional)
Onshore Wells (Unconventional)
Industry’s initial expectations of development costs deflation by category - Deflation in $ (2015 vs 2014)
Source: Wood Mackenzie, based on a survey of E&P companies in Jan 2015

9. #OM2015
Effort to contribute towards costs
reductions
• Supply chain
– over capacity/competition
– lower prices/margins
• Labour being cut
• Offshore rig rates have been
decreased substantially
Areas to address for improvement
 Improved efficiencies
 Project optimization
 Technology
 New engineered solutions
 Integration
 Standardization
 Automation
 Improved Project planning
Looking for a structural solution
Integration, Collaboration, Partnerships

10. #OM2015
Expanding from Subsurface to Surface

11. #OM2015
Rig of the Future – The New Land Drilling System
Design
• Proprietary features based on years of R&E
• Augmented by the recent T&T acquisition
Manufacturing
• JV with Bauer closing in Q4 2015
• First rig to be delivered in Q1 2016
Rig Equipment
• Surface components provided by Cameron
• Closely integrated with Drilling Group BHA
Software
• Developed on the Petrel platform
• Optimization of planning and wellsite execution

12. #OM2015
GeoSphere – Reservoir Mapping-While-Drilling
• Increase potential production and recovery rates
• Unlock access to new or marginal reserves
• Minimize water production
• Avoid drilling hazards
• Estimate reserves with greater accuracy
• Reduce number of pilot holes
• Eliminate geological sidetracks

13. #OM2015
Broadband Sequence – Fracturing Service
• Maximize wellbore coverage and reservoir contact
through the engineered stimulation of zones with
optimal completion efficiency
• Design smarter completions using an engineered
composite pill and composite fluid with modelling
and measurements data
• Integrated service results in additional stimulated
clusters

14. #OM2015
Final Thoughts
• Supply reaction is imminent
• E&P activity will have to increase if demand remains on forecast
• Capital will be uncertain and expensive
• Supply chain cost reductions will help
• Deepwater and unconventional resource development requires both
technical and business innovation