37th Oil & Money Conference www.oilandmoney.com For more information news@oilandmoney.net Keynote by Andrew Gould, Board Member, Saudi Aramco

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Technology to the Rescue in a
World of Low Oil and Gas Prices
Speaker Andrew Gould – Board Member, Saudi Aramco
Moderator Herman Franssen – Executive Director, Energy Intelligence
and Conference Chairman
Costs are coming down fast but this is cyclical
NON-OPEC SUPPLY EX-US (6/7)
Current crude prices are below cash costs in most of the world. Currency, over-capacity in the service market and a focus on propping up
near-term production has played a large role in reducing operating costs across 2015 and 2016.
Global cost curve
$ per barrel
Source: Company data, Energy Aspects analysis

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Process & Efficiency Improvements US Shale and
Tight oil plays
Increasing Costs Decreasing Costs
Play margin delineation Derisked geology
Drilling/completion/
stimulation surprises
More efficient drilling/
completion/stimulation
Competition for leases Consolidation of leases
Supply chain bottlenecks Supply chain optimization
Infrastructure bottlenecks Infrastructure buildout
Service cost increases
o Equipment shortages
o Personnel shortages
Service cost discounts
o Amortization of CAPEX
o Service efficiencies
o Increased competition
Early in development cycle
Late in development cycle
Downturn-Driven Efficiencies US Shale and Tight Oil Plays
Asset High Grading
 No more exploratory drilling
 Ultra sweet spotting
 Completing DUCs
 Only the best rigs and crews
Intelligent
Downsizing
Technical Innovations
Pad Drilling
 Site construction efficiencies
 Well construction efficiencies
 Creeping rigs
 Supply chain simplification
Factory Mode
Super Fracks
 Longer laterals
 Tighter fracture initiation points
 More water
 More proppant
Even More
Brute Force

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Process and Efficiency Improvements are
“Every Day Innovations” that Continue Through Business Cycles
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https://www.eia.gov/petroleum/weekly/archive/2016/160602/includes/analysis_print.cfm
U.S. Shale Gas & Tight Oil Plays
Year
WellCost($millions)
0
200
400
600
800
1000
1200
1400
1600
1800
2000
1950 1960 1970 1980 1990 2000 2010
Average water depth - offshore discoveries outside US (m)
5-year average In the year
Source: Rystad Energy

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-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
1950 1960 1970 1980 1990 2000 2010
Cost per boe discovered - outside US (real 2015 $/boe)
Source: Rystad Energy
Learning integration from other industries

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Johan Castberg
Source: Company data, Goldman Sachs Investment Research
Mad Dog II
Source: Company data, Goldman Sachs Investment Research

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When Oil & Gas Prices are Falling or Low
 Academic & government O&G research winds downs
 Industry R&D shrinks
o Hiring is cut
o Less emphasis on novel techniques
o Efficiency improvements prioritized
o Some innovations are lost
 Technology development outsourced
o Downsizing of risk
o IOCs  Service Cos  Start Ups
 Technology leaders of the next up-cycle shrink the least
o Industry-changing innovations develop over 10 - 20 years
o Technology true believers carry on through thick and thin
Innovation & the Business Cycle
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