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#OM2015#OM2015
2014 aftermath – widespread challenges, long term uncertainty
 $150 billion upstream projects delayed : Rystad Energy
 46 projects totaling $200 billion shelved : Wood Mackenzie
 $ 59 Billion in Canadian projects deferred : Financial Post, Canada
 $ 60 B impairments exceed $48.5 B peak of 2008 : IHS Herold Inc.
 30 % of semis and deep water drill ships idled : Bloomberg
 US oil rigs down from 1600 to 652 (- 60%) : Baker Hughes Int’l
 176,000 oilfield layoffs as of mid-2015 : Swift Worldwide Resources
#OM2015
 Accelerating growth in demand : 1.5 + Mbd/year
 Increasing requirement for decline replacement : 4 + Mbd/year
 Limited sustainable spare capacity : 2 Mbd
 2013/2014 MSDW & BCG full cycle cost for 75 traded companies :
• Full cycle cash cost: $ 48.5/barrel
• Cost of capital: $ 14.4/barrel
• Average total cost: $ 62.9/barrel
Reality check - is the “new normal” sustainable ?
#OM2015
 How deeply have low oil prices transformed the landscape?
 Will dramatic cost cutting affect operational flexibility and reliability?
 Are there sufficient investments to meet growing demand?
 What is the economic outlook for frontier development costs?
 How will the write down of reserves affect the industry?
 Can the industry retain its key talent and professionals?
2016 - seeking profitability from leadership perspective:

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Maximizing Upstream Value in a Low Price Environment

  • 1. #OM2015#OM2015 2014 aftermath – widespread challenges, long term uncertainty  $150 billion upstream projects delayed : Rystad Energy  46 projects totaling $200 billion shelved : Wood Mackenzie  $ 59 Billion in Canadian projects deferred : Financial Post, Canada  $ 60 B impairments exceed $48.5 B peak of 2008 : IHS Herold Inc.  30 % of semis and deep water drill ships idled : Bloomberg  US oil rigs down from 1600 to 652 (- 60%) : Baker Hughes Int’l  176,000 oilfield layoffs as of mid-2015 : Swift Worldwide Resources
  • 2. #OM2015  Accelerating growth in demand : 1.5 + Mbd/year  Increasing requirement for decline replacement : 4 + Mbd/year  Limited sustainable spare capacity : 2 Mbd  2013/2014 MSDW & BCG full cycle cost for 75 traded companies : • Full cycle cash cost: $ 48.5/barrel • Cost of capital: $ 14.4/barrel • Average total cost: $ 62.9/barrel Reality check - is the “new normal” sustainable ?
  • 3. #OM2015  How deeply have low oil prices transformed the landscape?  Will dramatic cost cutting affect operational flexibility and reliability?  Are there sufficient investments to meet growing demand?  What is the economic outlook for frontier development costs?  How will the write down of reserves affect the industry?  Can the industry retain its key talent and professionals? 2016 - seeking profitability from leadership perspective: