#OM2015 #OM2015

Technological Developments for Strategic Advantage

#OM2015

• The role of technology in reducing breakeven

levels • Will the US experience accelerate shale

developments in the rest of the world? • Will the industry suffer a skills gap crisis when

growth returns as a result of current layoffs and an aging workforce?

#OM2015

Questions around US Light Tight Oil and Shale?

• How much of the undrilled resource base is economic at lower oil prices? • How will shale oil produce cash returns given the constant need to spend capital to

maintain and grow production • Will lower hedging, lower reserve base lending and an increased risk perception

severely restrict the capital available? • Is the increased efficiency evident this year the result of technology or high

grading drilling prospects? • Does the further resource base contain the same prospectivity as what has already

been drilled and at what cost? • Will the technology or process continue to evolve at the same speed or are we

reaching a point of diminishing returns? • How much further can service costs fall before they rise?

#OM2015

How long can low oil prices last without creating

a new supply shock?

• The longer low oil prices last the less relevant US light tight oil and shale will be to the global supply demand balance.

• Decline rates in conventional NON-OPEC production will accelerate. (North Sea, Mexico, US stripper wells)

• Technology will not evolve fast enough to durably lower the cost of developing complex and deepwater offshore reservoirs before another supply shock.

• OPEC can only support a low oil price for a limited period of time for both financial and technical reasons.