#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: