Patrick Schorn Executive Vice President, New Ventures Cowen & Company 7 th Annual Energy & Natural Resources Conference New York, December 4, 2017
This presentation contains forward-looking statements within the meaning of the federal securities laws that is, statements about the future, not about past events. Such statements often contain words such as expect, may, believe, plan, estimate, intend, anticipate, should, could, will, see, likely, and other similar words. Forward-looking statements address matters that are, to varying degrees, uncertain, such as statements about our financial and performance targets and other forecasts or expectations regarding business outlook; growth for Schlumberger as a whole and for each of its segments (and for specified products or geographic areas within each segment); oil and natural gas demand and production growth; oil and natural gas prices; improvements in operating procedures and technology, including our transformation program; capital expenditures by Schlumberger and the oil and gas industry; the business strategies of Schlumberger s customers; the success of Schlumberger s SPM projects, joint ventures and alliances; future global economic conditions; and future results of operations. These statements are subject to risks and uncertainties, including, but not limited to, global economic conditions; changes in exploration and production spending by Schlumberger s customers and changes in the level of oil and natural gas exploration and development; general economic, political and business conditions in key regions of the world; foreign currency risk; pricing pressure; weather and seasonal factors; operational modifications, delays or cancellations; production declines; changes in government regulations and regulatory requirements, including those related to offshore oil and gas exploration, radioactive sources, explosives, chemicals, hydraulic fracturing services and climate-related initiatives; the inability of technology to meet new challenges in exploration; the inability to retain key employees; and other risks and uncertainties detailed in our most recent Forms 10-K, 10-Q, and 8-K filed with or furnished to the U.S. Securities and Exchange Commission. If one or more of these or other risks or uncertainties materialize (or the consequences of such a development changes), or should underlying assumptions prove incorrect, actual outcomes may vary materially from those reflected in our forward-looking statements. The forward-looking statements speak only as of the date of this presentation, and Schlumberger disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.
MMbbl/d Market Fundamentals Upstream Capex versus Oil Production 100 95 90 85 80 75 70 700 600 500 400 300 200 100 0 $ billion Global production not yet fully reflecting drop in E&P investment Demand for oil remains strong with upward growth revisions Light tight oil has revolutionized supply, but limitations emerging 2003 2005 2007 2009 2011 2013 2015 2017E Global Oil Production Global E&P Upstream Capex Sources: IHS, EIA
Light Tight Oil Revolutionized Supply But Limits Emerge 2008-2017 Global E&P Capex ($ trillion) $4.2T $1.1T Land unconventional All other E&P Forecast rates of production growth slowing in the medium term Pursuit of growth now balanced by stronger focus on financial performance 2017 Estimated Oil Supply (MMbbl/d) Investment in light tight oil has reached one-fifth of total E&P investment 5 93 MMbbl/d US tight oil All other oil supply Well spacing and completion volumes may be reaching technology limit Sources: IHS, EIA ; * Nov 2017 EIA
Investment Maintained in OPEC Gulf, Russia and US Russia 12% global supply OPEC and Russia production cuts have helped rebalance markets US tight oil 5% global supply OPEC Gulf 25% global supply Rest of World has seen only limited investment since market bottom FIDs for conventional land and offshore projects increasing Sources: IEA, Schlumberger analysis
Rate of Pentration (ft/hr) Market Drives New Technology Development in West Texas Pad Drilling Increasing Lateral Lengths Extending Evolution of Speed and Length 100% 20% 300 2014 2017 80% 60% 40% 20% 15% 10% 5% 200 100 0% 2012 2013 2014 2015 2016 2017 0% 2014 2015 2016 2017 0 0 5,000 10,000 15,000 % Wells from Multiwell Pads Share of Laterals > 10,000 ft Lateral Length (ft) Pad drilling boosts efficiency Longer laterals increase reservoir contact Faster speeds reduce drilling times Notes: Lateral examples are from the Midland Wolfcamp, pad drilling mix data from Rystad NAS WellCube; 2017 data through October 31
Tools/Job Hrs/Failure Transformation Improves Internal Efficiency in US Land Cost of Ownership Decreasing Tool Reliability Increasing 100-32% 2,500 +17% 80 % 60 40 1,500 20 500 0 TelePacer xbolt 0 TelePacer xbolt 8 Asset Utilization Improving -49% 40 Remote Operations Expanding +149% 6 30 4 2 % 20 10 0 2015 2016 2017 0 2014 2015 2016 2017 Note: Cost of ownership includes compensation, maintenance and capex per job; 2017 data through October 31
Measured Depth (ft) PowerDrive RSS Technology Drives Performance in US Land 7-Well Campaign for Eclipse Resources in Ohio 80-Well Campaign for Parsley Energy in West Texas 5,000 10,000 15,000 +9% -17% -30% 20,000 First well 10 days 25,000 30,000 Seventh well 5 days 0 2 4 6 8 10 12 Drilling Time (days) Average Lateral Footage Per Well Average Days Per Well Cost Per Lateral 2016 2015 Drill time halved between first and seventh wells Two record-breaking laterals >20k feet drilled in October All seven wells drilled fully in geological window Drilling cost per lateral reduced by 30% Total lateral footage drilled per well extended by 9% 7,128-ft lateral drilled in 1.7 days Note: Cost of ownership includes compensation, maintenance and capex per job
Transforming Completions and Production OneStim
Improving Asset Utilization and Reducing Unit Cost OneStim Operations Planning Sand volume doubled since 2014 Asset utilization increased by 30% Global Traceability Unit cost reduced by 56%
Improving Reliability and Efficiency OneStim Reliability Centered Maintenance Mean time between failures decreased by 55% Workforce productivity increased by 35% Prognostic Health Tools Transformation gains have enabled capacity equivalent to 3 hydraulic fracturing fleets
New Generation Hydraulic Fracturing Equipment OneStim Activity since introduction in 2017 Stages completed: 3,732 Wells completed: 128 Operating time: 26,143 hours
Connecting E&P Workflows with Digital Enablement
DELFI Built on 25 Years of Software Technology Leadership 1990s 2000s 2010s Now Geoquest Systems IES Holditch Reservoir Tech CONSULTING Baker Jardine PIPESIM Technoguide PETREL GeonKnowledge GeoX Finder Graphics Systems FINDER Merak PEEP, Capital Planning Inside Reality Decision Team DECIDE! RDR Guru DELFI Intera Tech Corp. ECLIPSE VoxelVision Techsia TECHLOG SPT OLGA, MEPO, DrillBench
Digitally Enabled Well Construction Integrated Well Planning Drilling Technology Selection Monitoring and Analysis Drilling Operations
Fourth-Quarter Sequential Outlook Reservoir Characterization Group Lower Northern hemisphere seasonal reductions across several product lines and muted year-end multiclient and software sales Drilling Group Flat Higher drilling in North America land offset by seasonal decline in the Northern Hemisphere following Q3 strong summer drilling campaigns Production Group Higher Continued growth in North America land with full quarter benefit from capacity redeployment although moderated by seasonality Cameron Group Modestly Higher Surface and V&M higher on robust North America activity partially offset by slowing decline in OneSubsea and Drilling Systems NAM land growth continues moderated by holiday season and rig count flattening Modest growth in Latin America and Middle East, Europe/Africa/Central Asia lower on winter seasonality Year-end product sales muted
Summary The narrowing gap between oil supply and demand is leading commodity prices higher. We are increasingly positive on the outlook for our global business We continue to invest in our business, and our technology leadership coupled with increasing digital enablement provides a foundation to leverage market recovery Our multiyear transformation program continues to contribute to performance while innovative technology development meets evolving market needs We are confident that our financial strength, geographical footprint and technology portfolio position us as the oilfield services leader as the market moves to recovery