William Kim Clare Lei John Prpic Jerry Zhang - PowerPoint PPT Presentation

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William Kim Clare Lei John Prpic Jerry Zhang

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  1. William Kim Clare Lei John Prpic Jerry Zhang

  2. Oil & Gas Service • Industry Overview • Companies: • Transocean Inc. • Precision Drilling Trust • Trinidad Ltd. Agenda

  3. 1. Introduction2. Industry Composition3. Competitive Landscape4. Future Outlook Industry overview: outline

  4. Introduction

  5. Large & Vital to many other industries • Industry Structure • Upstream • Downstream introduction

  6. Industry composition

  7. Revenue Contribution Industry Composition $ 85 billion

  8. Oilfield services • Contract drilling • land drilling rigs (3) • deepwater drilling rigs (3) • Equipment Manufacture Industry composition

  9. Prepare wells for production • Repair and Maintain • Specifically: • Seismic Testing • Transportation Services • Directional Services Oilfield Services

  10. Physically drill and pump oil out of the ground • Get contract from big oil companies • Specialize in drilling • Own the rigs and highly-skilled employees • Two types of drilling rigs • Land drilling rigs • Deepwater drilling rigs Contract drilling

  11. Conventional onshore drilling Land drilling rigs

  12. Directional drilling (slant drilling, horizontal) • The practice of drilling non-vertical wells Land Drilling rigs

  13. Snubbing • A type of heavy well intervention performed on oil and gas wells Land drilling rigs

  14. Drilling further out into the sea and deep under ocean floor Depths could be greater than 10,000 feet Expensive Deepwater drilling

  15. Drillship • Self-propelled and extremely mobile • Ideal for remote locations • Limitations Deepwater drilling rigs

  16. Semi-submersible rigs • Floating vessels Deepwater drilling rigs

  17. “Jack-up” rigs • Platforms • Legs Deepwater drilling rigs

  18. Transocean Ltd. • Deepwater drilling • Precision Drilling Trust • Directional drilling • Onshore drilling • Trinidad Drilling Ltd. • Directional drilling • Onshore drilling Contract drillers

  19. Competitive Landscapes

  20. Oil & gas price volatility Oil & gas reserves, supply and demand Oil & gas alternatives Oil & gas services industry characteristics Competitive landscape

  21. Oil & gas price volatility

  22. Rotary Rig Count Oil & gas price volatility

  23. OPEC • Control 75% of the world’s proven reserves • Account for 33.3% of the oil production • Political constraints • Environmental issues Oil & gas reserves, supply & demand

  24. Global Oil Reserves Oil & gas reserves, supply & demand

  25. Global Oil Production • Global oil production fell by 2 million b/d in 2009, or 2.6% • the largest decline since 1982 Oil & gas reserves, supply & demand

  26. Global Oil Consumption Oil & gas reserves, supply & demand

  27. Global Natural Gas Reserves Oil & gas reserves, supply & demand

  28. Global Natural Gas Production • Global natural gas production fell by 2.1% in 2009, • the first decline on record Oil & gas reserves, supply & demand

  29. Global Natural Gas Consumption Oil & gas reserves, supply & demand

  30. Biofuel Unconventional fossil fuel Crude Oil and Natural Gas Relationship Oil & Gas alternatives

  31. Biofuel • Greenhouse gas emissions • Energy security • Various sources • Growing Oil & Gas alternatives

  32. Unconventional fossil fuel • Oil shale • Oil sands Oil & Gas alternatives

  33. Unconventional fossil fuel • Less efficent • Larger environmental impact • Technology Oil & Gas alternatives

  34. Oil sands in Canada (1.7-2.5 TRILLION barrels!) Oil & Gas alternatives

  35. Crude oil and natural gas relationship Oil & Gas alternatives

  36. Capital-intensive Highly Skilled Highly Regulated Highly Competitive Price dependent Essential Research and Development Others Oil & Gas Industry Characteristic

  37. Capital-intensive • Drilling equipments their installation, operation and maintenance is very expensive to buy and maintain • Average annual revenue per employee is about $410,000 • Barrier to entry – High fixed cost Oil & Gas Industry Characteristic

  38. Highly Skilled • Highly skilled and labor intensive • People with skills and expertise to operate drilling equipment • minimum requirement on the number of inexperienced personnel Oil & Gas Industry Characteristic

  39. Highly Regulated • Highly regulated with regards to environment and health and safety concerns • Affect the operations of all the drilling companies Oil & Gas Industry Characteristic

  40. Highly Competitive • Numerous industry participants • Intense price competition Oil & Gas Industry Characteristic

  41. Price Dependent • Oil services • Drilling companies • Rigs Oil & Gas Industry Characteristic

  42. Essential Technology Development • Directional drilling • Challenging geological locations • Less damageable to the environment Oil & Gas Industry Characteristic

  43. Other Key Factors: • Industry Cycle • Natural calamities • Location • Types of Contract • Length of Contract Oil & Gas Industry Characteristic

  44. Future Outlook

  45. Long-term market growth Emerging Asia-Pacific economies (China & India) Decline (next 20-30 years) Switching to more environmentally friendly, cheaper and renewable alternative sources Future outlook

  46. Overview

  47. 10 Year RIG Price vs Crude Oil

  48. 1 Year RIG Price