Kongsberg Oil & Gas

Technology as a driver to reduce cost and improve profitability

Perth, 27th February 2015

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Solutions from deep sea to outer space

Extreme Performance for Extreme Conditions

03.03.2015

WORLD CLASS - through people, technology and dedication

Page 2

Negative cash flow within Oil companies.

Increasing cost and reduced efficiency are
key drivers.
BUSD, 30 majors/ independents
383
363

CAPEX + dividends

324
294

221

Operating cash flow

374

146
114
85
123

118

2000

2002

355

353

2012

2013

287

275

201

2004

2006

2008

2010

Source:Arkwrite
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WORLD CLASS - through people, technology and dedication

Example 1: NOCS drilling and well cost has

increased more than cost reduction targets
Over the last 10 years Drilling
and Well cost has increased
4 times (fixed units) or 15% per year
3 times (mobile units)
(Source: Petoro)

Average Cost/Well Fixed Drilling Units

Average Cost/Well Mobile Drilling Units
RNB 2010 Predictions Fixed Units
RNB 2010 Predictions Mobile Units
RNB 2013 Predictions Fixed Units
RNB 2013 Predictions Mobile Units

Price increases accounts for

5%-6% per year. Rest is loss of
efficiency
Non Productive Time (NPT)
remains at approx. 25%-30% of
Drilling and Well expenditure
(Source NPD, Rushmore, BP)

Source of data: RNB/Petoro

NBR= Revised National Budget

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WORLD CLASS - through people, technology and dedication

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Example 2: The cost of subsea tiebacks

have increased three times the last 10 years
300

288

280

Subsea
Production
System

Cost inflation index

260

Cost increase
exceeding
industry
average

240
220
200
180
160
Other
categories

140
120
100
80
2003

05

07

09

11

2013

Source of data: NOCS analysis by McKinsey

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WORLD CLASS - through people, technology and dedication

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Example 3: Asset production efficiency is

declining approximately 1% per year
Trend in asset production efficiency, country averages
Per cent of estimated production potential based on monthly production

Source: McKinsey Global Offshore Asset Efficiency Database

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WORLD CLASS - through people, technology and dedication

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Technology is required to make significant

and lasting change to the cost curve
Kongsberg Oil & Gas focus on technologies aiming to:
improve work processes and decision making
increase production efficiency process optimisation
enabling mature asset life extension and cost effective tie-backs

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WORLD CLASS - through people, technology and dedication

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Reduction in drilling cost by improving work

processes and strengthening decision support
Rig

Office

Well Advisor System

Drillers Dashboard

Recommendations

Mud
Logging
MWD

Real-time data

Rig
Systems

High bandwidth
telemetry - Wired
pipes
Distributed
Measurements

New real time

interpretation methods
and processes

Novel measurements
(pressure at/near bit)

Wells
Engineer

Real Time Data

Analysis, Modeling,
Recommended Practices

Build capability to integrate real time

data with predictive tools, processes,
and expertise
Establish practices for remote
collaboration & improved operational
decisions
Initial dashboard has improved Non
Productive Time by 12%
8

Cost effective oil storage solutions solving

infrastructure challenges
Subsea Storage Unit:
New technology for
storage of
hydrocarbons, water
and/or utilities

Real case comparing Floating Storage Unit (FSU) with Subsea Storage:

CAPEX

OPEX

20%

80%
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CO2/NOx

90%

WORLD CLASS - through people, technology and dedication

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Improving production efficiency using state

of the art process simulation tools

Modern multiphase transport tools in combination with process

simulators have significant business value
Demonstrated cased up to 10% improvement in production regularity
Significant reduction in risk and time to hook up new wells to a hub
Replacement of multiphase meters and even some cases used as
fiscal meters
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WORLD CLASS - through people, technology and dedication

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The
market is challenging
Concluding
remarks still
Kongsberg Oil & Gas is well positioned within
niches
We need to make significant and
Falling lasting
oil price, changes
reduced overall
Our
strategic position remain
to address
the
market growth, high focus on
strong within established niches
challenge
of
increasing
costs
and
cost
falling efficiency
Mixed views on E&P spend Strengthen position within
long term indicators remain
robust
Technology is an

engineering
Johanof
Castberg
important part

Shale oil impact oil prices

Engineering for future subsea factory

Underlying indicators still strong

Implementation studies for new

technologies

the solution

Price pressure on high cost

Step-changing technologies
basins
Neware
offerings to the market

+
available. Faster uptake in the in the

Growth in MENA, US and Mexico,

but NOCS (and Brazil) loosing steam

field is required.

Continued demand for

technologies reducing cost

Subsea Storage Unit

SiteCom Well Advisor

New strategic alliances

Focus on Brown Field solutions

KBC

Reduced overall
market growth, high
focus on cost but
our niches remain
strong
Reduced overall
market
growth, high
Our
strategic
focus oniscost - still
position
our nichesbut
remain
improved,
still
strong
fragile
Less aggressive
growth rate than
last year but more
robust within niches

Focus on optimising production and

reducing drilling cost

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WORLD CLASS - through people, technology and dedication

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