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SLB — Schlumberger — Trinidad and Tobago Energy Conference 2015

17 slides from SLB's conference presentation, January 2015

  1. Slide 1: Mexican Energy Reform: a unique opportunity in the E&P space

    Schlumberger Public Mexican Energy Reform: a unique opportunity in the E&P space Trinidad and Tobago- Energy Conference January 2015 1 © 2015 Schlumberger Business Consulting. All Rights Reserved.

  2. Slide 2: Content

    Content Schlumberger Public  The case for action: no return for Mexico  The opportunities  The challenges 2 © 2015 Schlumberger Business Consulting. All Rights Reserved.

  3. Slide 3: Production has declined over the last decade…

    Production has declined over the last decade… PEMEX OIL PRODUCTION Historic production (2002-2013) and forecast (2014-2027), in million bpd 4,000 Deepwater Historic ← → Forecast 3,000 Exploration Chicontepec 2,000 Ku Maloob-Zaap Schlumberger Public Exploitation 1,000 Cantarell 0 2002 2004 2006 2008

  4. Slide 4: …in a country with vast resources

    …in a country with vast resources PEMEX RESERVES VOLUME AND PROSPECTIVE RESOURCES BY REGION BN BOE 119 218 220 200 Schlumberger Public 180  Increasing frustration of 160 Mexican government of 140 decreasing revenues in spite of resource 120 55 availability 100  Pemex is competent but 80 it is cons

  5. Slide 5: Most of Mexico's prospective resources are in technically challenging geologies

    Most of Mexico’s prospective resources are located in technically challenging geologies requiring significant capital investment and knowledge RESOURCE VOLUMES BN BOE 2P Reserves Prospective / New discoveries Schlumberger Public  Technical challenges for prospective production are new for Pemex and

  6. Slide 6: The single largest E&P market disruption in over a decade

    The single largest E&P market disruption in over a decade: Mexico ranks 6th amongst markets with open high quality regulatory system WORLD’S MOST ATTRACTIVE O&G MARKETS3 According to 2P1 O&G reserves, market regulation and regulatory quality2 Open market, medium-to-high regulatory quality Canada Nor

  7. Slide 7: Mexico needs incremental investment in E&P to at least double

    Mexico needs incremental investment in E&P to at least double ESTIMATE MINIMUM ADDITIONAL INVESTMENT REQUIRED FOR INCREMENTAL PRODUCTION BN USD / YEAR PEMEX today: ~ 20 to 22 BN USD / year 21.7 Schlumberger Public 19.9 17.9 16.0 14.1 10.3 7.9 4.9 2.6 2015 2016 2017 2018 2019 2020 2021 2022 2023 Note

  8. Slide 8: Content

    Content Schlumberger Public  The case for action: no return for Mexico  The opportunity  The challenges 8 © 2015 Schlumberger Business Consulting. All Rights Reserved.

  9. Slide 9: Transition of hydrocarbon administration from Pemex to the regulators

    The main change is the transition of hydrocarbon administration from Pemex to the regulators with possible participation for private players NEW INDUSTRY STRUCTURE KEY CHANGES SENER Mexican  SENER and CNH as hydrocarbon resource CNH Petroleum Government Fund owners and administrators Entities Natio

  10. Slide 10: There is significant space for third parties to participate

    There is significant space for third parties to participate Description Opportunities  SENER/ CNH resource  Allocation of 120 E&P areas: assignment to Pemex  Target base production of 2.5 mmbpd for 20.5 years Round Zero Schlumberger Public  Migration of current service  Migration of 11 existing

  11. Slide 11: Five asset classes will be tendered in Round One

    Five asset classes will be tendered in Round One Areas to be tendered Total tendered volumes 1. Aguas Profundas Área Perdido 2. Aguas Profundas Sur 2P 3,782 MMbcoe 3. Chicontepec & Unconventionals Prospective Resource 14,606 Mmbcoe 4. Onshore, Shallow Water and Extra-Heavy Oil 5. Unconventionals Tot

  12. Slide 12: The train is moving- shallow water tendering process started in December

    The train is moving- shallow water tendering process started in December 2014 2015 Activity Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Feedback of Round One’s announced areas Establishment of Data Rooms Opening of Data Rooms Shallow water CNH1 Extra-heavy oil Publication of

  13. Slide 13: Blocks will be tendered with contracts based on international standards

    Blocks will be tendered with contracts designed based on known international standards differentiated by asset class 1 2 Service Contracts Profit-Sharing Contracts Per Barrel fee; costs reimbursement % of profits; costs reimbursement E&P E&P Government Government Company Company Schlumberger Public

  14. Slide 14: The split of resources between state and operators will be market driven

    The split of resources between state and operators will be market driven: companies can expect competitive returns State Operator Before reform and New Contracts Pemex round zero Schlumberger Public Income Tax Cost deductions Net Benefit Net Income (15-30%) Ordinary rights Profit oil- market (70-85%

  15. Slide 15: Contract design for shallow water allows for good profitability

    Contract design for shallow water allows for good profitability under the right conditions Hypothetical shallow water block under Round One rules - 100 MMBOE ROUGH ESTIMATE BASED ON GENERIC INFORMATION- NOT FOR VALUATION PURPOSES 0 NPV NPV 70 >2x NPV Schlumberger Public IRR < MMUSD IRR 12% IRR 18% >

  16. Slide 16: Content

    Content Schlumberger Public  The case for action: no return for Mexico  The opportunity  The challenges 16 © 2015 Schlumberger Business Consulting. All Rights Reserved.

  17. Slide 17: Execution requirements seem feasible under current legal framework

    While execution requirements differ for each opportunity, most of them seem feasible under current legal framework and Mexican situation Elements impacting feasibility  Low national content requirements (~15% exploration, initial 25% for exploitation raising to 35% over 10 years- 0% initially for D

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