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American Geological Institute Academic - Industry Associates Conference Houston, Texas 1999. Petroleum Sector Remarks Dodd DeCamp. Recent Oil Price Cycles Monthly 1987 - 98. 40. Persian Gulf War . 35. Asia Boom 2 Cold Winters Iraq Out Stocks Very Low. 30. Iran-Iraq Quota Battle

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American geological institute academic industry associates conference houston texas 1999 l.jpg

American Geological InstituteAcademic - Industry Associates ConferenceHouston, Texas1999

Petroleum Sector Remarks

Dodd DeCamp


Recent oil price cycles monthly 1987 98 l.jpg
Recent Oil Price CyclesMonthly 1987 - 98

40

Persian

Gulf War

35

Asia Boom

2 Cold Winters

Iraq Out

Stocks Very Low

30

Iran-Iraq

Quota Battle

Following War

$/Barrel Nominal

25

20

Asia Crisis

2 Warm Winters

Big Stock Build

15

Metallgesellschaft

Contracts Sell-off

10

Jan

87

Jan

88

Jan

89

Jan

90

Jan

91

Jan

92

Jan

93

Jan

94

Jan

95

Jan

96

Jan

97

Jan

98


Non opec supply response l.jpg

45

2000

1800

1600

Non-OPEC Oil Prodoction

40

Non-OPEC Rigs

1400

Production

Rigs

1200

35

1000

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

Non-OPEC Supply Response

All-Time Low

Baker Hughes


Petroleum industry cycles l.jpg

Cause Short-term Drivers Effect

Petroleum Industry Cycles

Reduced New Opportunity Set

Lower Quality Opportunity Sets (Long Term)

Increased Economic Hurdles (Risk) in Industry Portfolios

Emphasis on Near-Term Production

Deterioration in Upstream Margins

Bottom of Cycle Cost Structures

Lower Service Sector Rates

Reduced Availability of Investment Capital

Ultimate Decline in Production Capacity

Lower Activity Levels

Modified from A.D. Little


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Through-Cycle Strategic Management is Critical

Petroleum Commodity Cycle - Asymmetric Tendency

“Through-Cycle Strategic Management

Reactive Near-term Focus

E&P “Opportunity Capture”

Below Critical Mass = Crash & Burn

Time 3-5 Years


Slide6 l.jpg

Portfolio Objectives Are Impacted

Prioritize Focus Resources Performance

Exposure to maximum potential value additions and ability to access emerging phase

Maximum rate of value addition

Smaller value increments with high investment efficiency

Cumulative Value

Idea Probe Focus Core Harvest

/ Exit

Effectiveness Efficiency


Petroleum industry upstream focus l.jpg

Gas

Deepwater

Conventional Oil

Petroleum Industry Upstream Focus

NW Europe

Atlantic Margin

Alaska N. Slope

FSU

Caspian

Sea

Gulf of Mexico

N. Africa

Middle East

Asia Gas/LNG

N. Latin

America

W. Africa

Brazil


Slide8 l.jpg

Worldwide Exploration Finding Cost

(3-Year Moving Average)

$/boe

$/boe

Focus on the proven petroleum basins and systematic use of technology are narrowing the field

Industry Average*

Worst Performers

Best Performers

**

Notes:

* Average (unweighted) for following peer companies: Amoco, ARCO, BP, Chevron, Elf, Exxon, Mobil, Phillips, Shell, Texaco and Unocal


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Skills and Capability Needs Are Evolving

Portfolio

Functions

Skills

Extrapolation

  • Petroleum System Focus:

  • Basin analysis

  • Regional synthesis

  • Leads and prospecting

  • Formation evaluation

  • Drilling and seismic operations

  • 2-D & 3-D seismic mapping

  • Seismic attribute analysis

Opportunity Generators /

Play Makers

New

Ventures

Play Makers /

Prospect Generators

“Focus”

New-Field

Increasing Integration

Engineering – Commercial – Financial

Intense Data Density Sparse

Prospect Generators / Reservoir Geoscience

“Core”

Exploration

  • Exploitation / Development Focus:

  • Reservoir scale description, visualization and modeling

  • High res 3-D mapping and attribute analysis

  • Integration of geology, geophysics and engineering

Reservoir Geoscience /

Reservoir

Mgmt

Reservoir

Exploitation

Interpolation



Immersive visualization environment l.jpg
Immersive Visualization Environment

Work Processes Are Evolving . . . .


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AAPG Demographics

AAPG Membership

Mean Age

Year

Year

US

Non-US


Summary what to expect l.jpg

Relentless Change

Industry consolidation

Through-cycle strategic management

International Complexion

Scope

Staffing

Fundamental skills still a priority

Dynamic learning organizations

Increasing intensity of inter-disciplinary teaming and specialization

Summary - What to Expect


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