Excellence in Deepwater through Innovation Paul H. Hillegeist President & COO Quest Offshore Resources, Inc. Paul.Hillegeist@questoffshore.com Image courtesy of: EMAS AMC 1
Table of Contents A Few Examples of Innovations Driving Our Success Oil & Gas Drivers What Is the Macro Economic Landscape? Leading Indicators & What s Ahead-- Quest Deepwater Market Forecast Image courtesy of: EMAS AMC 2
Innovations Driving Success Leveraging Technology through Technical Excellence New Applications of Existing Technologies New Approaches to Increase Efficiency Superior Reliability through Applied Technology Technology Transfer Commercial Partnerships Statoil Has Coined Innovation as Invention plus Commercialization
Innovations Driving Success New Applications of Existing Technologies Move Surface Applications to the Seabed Advanced Laser Applications for Oil & Gas 4
Number of Units Floating LNG (FLNG) Game Changing Technology Who s Time has Come 14 Benefits 12 1 8 6 4 2 Under Construction Engineering Possible Status 5
Innovations Driving Success New Approaches to Increase Efficiency Statoil s IOR--Increased Oil Recovery Subsea Separation Boosting-Pumping Compression Image courtesy of: Statoil 6
Increasing Corrosiveness, Temperature, Pressure Innovations Driving Success Superior Reliability through Applied Technology Increased Use of Advanced Materials such as CRA s in our Subsea & Pipeline Architecture Drivers: Safety Titanium Long-term Reliability Robust Performance Ni Alloys 28Cr (Alloy 28) Super-duplex Duplex Images courtesy of: Aker Solutions, SMI 3 series austenitic 13Cr, martensitic Alloy Steel Carbon Steel 7
Innovations Driving Success Technology Transfer From Aerospace & Defense to Oil & Gas Navy Introduced GPS to the World Specialized Insulation Techniques (Subsea Connectors) Advanced Seismic Imaging & Interpretation, Enables More Focused Drilling & Field Development Optimization Case Study--AUVs enabled High Res. surveys off Mozambique enabling Anadarko to save cost by right sizing Field Architecture to avoid deep sea canyons Image courtesy of: Oceaneering Image courtesy of: Anadarko 8
Innovations Driving Success Commercial Partnerships & Integrations Innovative collaborations bringing together strengths to increase product & service offerings. One Subsea Schlumberger Cameron Subsea & Framo The Technip Heerema Alliance Solutions for Subsea Ultra-Deepwater Market FMC Technologies Schilling Sultzer Pumps MPM Siemens & Tronic Subsea Power Grids 9
Where is Offshore Oil & Gas Headed? Macro Economic Drivers 1
1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 Brent Oil Price # Subsea Tree Awards/Barclay's Spending (US$MM) Global Oil & Natural Gas Price Trend 12 7 1 6 8 6 4 5 4 3 2 2 1 Year Source: EIA, Quest Offshore, Barclay s Brent Oil Prices Subsea Tree Awards Barclays' Spending
Macro Economic Drivers Global Consumption of Liquids & Natural Gas (Million Tonnes of Oil Equivalent) Million Tonnes of Oil Equivalent 4,8 4,3 3,8 3,3 2,8 2,3 1,8 1,3 8 3 BRIC Builder.The real driver of global GDP BRIC fueling growth..china creates another Spain ea. year By 215, aggregate GDP for BRIC may equal USA 199 1995 2 25 21 215 22 225 23 Year By 23, Oil, Gas & Coal to deliver 8% of supply needs Total Liquids Consumption Ex. Biofuels Natural Gas Source: EIA, BP, Economist Jim O Neill Source: BP
World s Economic Centers of Gravity Eastward Shift Image Courtesy of: NASA Source: Professor Danny Quah, London School of Economics
# Acquisitions/Mergers Average Nominal Oil Price (US$/Bbl) Oil and Gas Merger and Acquisition Activity Segment Numbers of Deals vs. Inflation Adjusted Oil Price 18 16 14 12 1 8 6 4 2 1999-2 21-22 23-24 25-26 27-28 29-21 211-212 Announcement Year 12 1 8 6 4 2 Drilling E&P EPC IRM MarCon OEM OSC Other Shipyards/Const. Brent Oil Price (US$/Bbl) Source: Quest M&A Database
# of Vessels # of Vessels Super Contractors Movement towards fewer Larger Contractors 12 1 8 PAST Pre-21 3 4 Saipem 18 Heerema Allseas 1 9 8 7 Saipem 22 PRESENT Since 21 by Delivery Year 44 MarCon Vessels 6 Technip 2 6 5 Technip 27 Global Industries 14 4 4 Subsea 7 21 3 Subsea 7 Other 2 Acergy 22 2 1 4 42 "Rest of competitive fleet" includes: Allseas, EMAS AMC, Heerema, Helix, McDermott,Sea Trucks Group Source: Quest Marine Contracting
Global Discoveries and Floating Rigs Going Deeper! 25 2 15 1 5 Source: Quest Offshore Resources, Inc Image Courtesy of: Transocean 24 25 26 27 28 29 21 211 212 / Delivery Year Discovery Year Discoveries <4,fsw Floating Rig Supply <4,fsw Discoveries >4,+fsw Floating Rig Supply >4,+fsw
Meters Sea Water Drillbit Proved Exploration Success of Frontier Top-5 subsea projects by discovery 3 1995-212 - Reserves 25 2 SAM 4% AFM 28% 15 ASP 15% Nsea 4% NAM 13% AFM ASP NAM Nsea SAM 1 5 1965 197 1975 198 1985 199 1995 2 25 21 215 22 Source: Quest Offshore Resources, Inc Discovery Year Frontier Conventional
Deepwater CAPEX Subsea Award CAPEX Deeper Waters + Harsher Conditions = More Investments Deepwater & Subsea Award CAPEX (US$MM) $18, $15, $1, $9, $8, $12, $9, $6, $3, $7, $6, $5, $4, $3, $2, $1, $ 28 29 21 211 212 213 214 215 216 217 Year $ Africa, Medditeranean North Sea South America Asia Pacific North America Global Subsea Award CAPEX Source: Quest Offshore Resources, Inc.
Growing Lead-times & Burgeoning Back-logs Tier 1 Fabrication Shipyard Backlog Source: Quest Offshore Resources, Inc
Market Segment Major Deepwater Market Segment Movement 213-214 vs 211-212 Activity Floating Rigs Contracted Projects Executed Total Wells Drilled Tree Awards PL & SPU Installs % 1% 2% 3% 4% 5% 6% % Change from 213-214 vs 211-212 Source: Quest Offshore Resources, Inc
Well Demand Global Floating Rig Supply and Forecast Subsea Well Demand 29a-216e 125 Contracted Supply Gap 214-216: ~8 rigs needed to meet demand 4 1 4 new rigs being built still await contracts 3 75 5 25 2 1 Floating Rig Supply 29a 21a 211a 212a 213e 214e 215e 216e Spud Year Africa Asia Pacific North America North Sea South America Rigs Contracted Rigs Needed Source: Quest Offshore Resources, Inc.
No. Wells Africa Evolution of Exploration vs. Development Drilling 25 213 Rig Allocation by Well Type 42% 58% e&a dev 213-217 Development Project Forecast (5+ Projects) Bidding 32% FEED 21% P/C 2% Forecast 21% Conceptual 24% 2 15 1 5 212a 213e 214e 215e 216e Spud Year Source: Quest Offshore Resources, Inc. Image Courtesy of: Statoil e&a well demand dev well demand