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OIL AND GAS SERVICE

OIL AND GAS SERVICE. Isaac Nelson Andrie Lesmana Greg Alexander Wilson Xiao. Overview. Precision Drilling Trust Transocean Inc. Major Drilling Group. Oilfield Services. Provide 45% of the industry revenue Prepare wells for production Maintain and enhance output Exploration.

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OIL AND GAS SERVICE

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  1. OIL AND GAS SERVICE Isaac Nelson AndrieLesmana Greg Alexander Wilson Xiao

  2. Overview • Precision Drilling Trust • Transocean Inc. • Major Drilling Group

  3. Oilfield Services • Provide 45% of the industry revenue • Prepare wells for production • Maintain and enhance output • Exploration Contract Drilling • Provide 35% of the industry revenue • Among the first on the scene • Get contracts from big oil companies • Specialize in drilling • Employ trained staff

  4. Value Chain Oil & Gas Industry Downstream: Refining Distribution Marketing Upstream: Exploration Production

  5. Overview

  6. Terminology Directional Drilling

  7. Onshore Drilling

  8. Deep Water Drilling

  9. Deepwater Semisubmersible Jackups Midwater Semisubmersible Drillship Floaters Fleet

  10. Jack Ups • Mobile self-elevating drilling • platforms. • Equipped with legs that are • lowered to the ocean floor for • foundation. • Jacked up above highest waves. • Suited for water depths of 400 ft and less.

  11. Drillships • Self-propelled and extremely mobile. • Dynamically positioned (High-spec only), does not require anchors. • Great load capacity, ideal for remote locations. • Limited to calmer water conditions. • Dual-activity technology (on recent models). • Midwater, Deepwater, Ultra-deepwater

  12. Semisubmersibles • Floating vessels that can be submerged by water ballast system so that lower hulls are under water during drilling operations. • Maintain position through anchors or computer controlled dynamic positioning thrusters. • Moved by propellers or tugging. • Suited for rough water conditions. • Midwater, Deepwater, Ultra-deepwater.

  13. Contract Drillers • Transocean Ltd. • Deepwater drilling • Precision Drilling Trust • Onshore drilling • Directional drilling • Major Drilling Corp. • Onshore drilling • Directional drilling

  14. Competitive Landscape • Capital-intensive, Highly Skilled, Highly Regulated Bounded by federal, provinces, state, foreign and local laws. OPEC - Control 75% of the world’s proven reserves and account for 33.3% of the oil production

  15. Proven Oil Reserves www.bp.com

  16. Proven Crude Oil Reserves

  17. Proven Natural Gas Reserves

  18. Proven Natural Gas Reserves

  19. Oil Production By Country

  20. Competitive Landscape • Biofuel • Unconventional fossil fuel Oil shale and oil sand • Crude oil and natural gas relationship Canada Oil sands • Estimated to be 1.57 trillion barrels • How to get all that oil out? • Oil sands are a mixture of bitumen, carbon-rich sludge, sand, water, and clay. • The majority of oil still will come from conventional extraction methods in the foreseeable future.

  21. Canada Oil sands

  22. Crude Oil and Natural Gas

  23. Oil and Gas Price Volatility

  24. Rotary Rig Count The rotary rig count is the average number of drilling rigs actively exploring for oil and gas. Rig count is one of the primary measures of the health of the exploration segment. It is a measure of the oil & gas industry’s confidence in its own future.

  25. Precision Drilling Trust

  26. Stock Price Snap Shot • Traded on NYSE under ticker PDS • Mkt cap: 2.05B • # of units: 275.52M • Full-time employees: 7,200 • Number of trust units outstanding: 275.64M

  27. 5-yr Stock Price Snap Shot

  28. 5-yr Stock vs. S&P/TSX Capped Energy Trust Index

  29. 5-yr vs. S&P/TSX Index

  30. 1-yr Stock Price Snap Shot

  31. 1-yr Stock vs. S&P/TSX Capped Energy Trust Index

  32. 1-yr vs. S&P/TSX Index

  33. Company Info

  34. History • Founded as a private land drilling contractor in Canada in 1951. • Entered a period of high-growth in the 1980s. • Diversification era of 1990s. • Conversion into an open-ended income trust in 2005 • Changed focus towards organic growth and global expansion.

  35. Business • Onshore contract driller - one of the largest onshore drilling rig fleets in the world. Second largest contract driller in North America. • Holds about 26% of the onshore drilling rig market in Canada, 7% in the US and about 20% of the Canadian service rig market. • Precision’s fleet can drill virtually all typesof onshore conventional and unconventional oil and natural gas wells in North America.

  36. Business

  37. Business • Vision: Precision will be recognized as the high performance, high value provider of services for global energy explorationand development • Precision delivers high performance through passionate people supported by superior systems and equipment designed to maximize and reduce risks; and • Precision creates high value by lowering customer costs, operating safely, developing people, generating financial growth and attracting investment. • Precision provides contract drilling, well servicing and strategic support services to customers.  Precision supplies on-the-ground expertise - people, equipment and knowledge - to provide value to our customers on a daily basis.

  38. Business units

  39. Business units On average, the contract drilling segment generates 70% of the revenue, and the completion and production segment generates the remaining 30%.

  40. Management • Doug StrongChief Financial Officer • Background: • Bachelor of Commerce degree from University of Calgary. • Chartered Accountant. • Previous positions: • Spent 6 years in public accounting after earning his degree before joining a contract drilling company as International Controller. • Joined Cactus Drilling as Controller in 1994, which was later acquired by Precision. • Became Chief Financial Officer on November 7, 2005.

  41. Management • Robert L. Phillips • Chairman of the Board • Previous positions: • President and Chief Executive Officer of Dreco Energy Services Ltd. (1994 – 1998). • President and Chief Executive Officer of PTI Group Inc. (1998 – 1999). • Executive Vice President at MacMillan Bloedel Limited (1999 – 2001). • President and Chief Executive Officer of BCR Group of Companies (2001 to 2004). • Appointed as a Director of Precision in May 2004. • Appointed as Chairman of the Board of Directors in August 2007.

  42. External risks • Seasonality Activity level is highly seasonal and dependent upon the severity and duration of winter months. Typically, Q1 has the highest activity level and therefore the most prosperous as winter ground conditions are suitable for moving equipments to otherwise inaccessible drilling sites.

  43. Muskeg Summer: Winter:

  44. External risks • Energy prices • Typically when energy prices are high, demand for Precision’s services increases. • Markets for oil and NG are becoming more separate.

  45. External risks • Weak overall demand for oilfield services in North America due to: • Uncertain capital markets • Uncertainty regarding future natural gas prices • Weak USD

  46. Performance - Contract Drilling 24.5% 24.9% 23.5 23.3 24.9 21.3 24.5% 24.9% 23.0 24.3 24.7 26.6 5.93% 1.21%

  47. Performance • Precision currently has 213 rigs out of 352 operating (60.5%) – 133 in Canada, 78 in US, 2 in Mexico. • Improvement over Q3: 106 rigs active out of 390 (27.2%) • Expects to have 75 rigs active in North America under term contract in Q1 2010, and 71 in Q2. • For 2010, Precision expects 34 rigs in Canada under term contract, 31 in US, and 1 in Mexico. • For 2011, Precision expects 19 rigs in Canada under existing term contracts, and 17 in US.

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