Bernard duroc danner’s presentation slides from the 2010 World National Oil Companies Congress

The Role of Oil Field Services in the Energy DynamicWorld National Oil Companies Congress, June 22, 2010Bernard J. Duroc-DannerChairman, President & Chief Executive OfficerWeatherford International Ltd© 2010 Weatherford. All rights reserved.Oil & Gas Strategic Backdrop© 2010 Weatherford. All rights reserved.Inelasticity of New Oil Production300,000500450250,000400350200,00012% CAGR300n/d150,000250$bk bbl200100,0002.8% CAGR15010050,000500020002001200220032004200520062007200820092010ProductionUpstream Capex (2009 Real)Source: DOE, EIA, IEA, Deutsche Bank, *includes OPEC state companies© 2010 Weatherford. All rights reserved.3Inelasticity (Relative) of New Gas Production (North America)25,0006013% CAGR5020,0004015,000ncfd19% CAGR30$bmm10,000205,000100020002001200220032004200520062007200820092010US E&P natgas production (RHS)US E&P Capex spend (2009 Real)Source: Deutsche Bank© 2010 Weatherford. All rights reserved.4Oil Production Spare CapacitySpare Capacity has not increased over the last 20 years in spite of 90105increased spending8099.910070%60ityca)pd95ab94.5% Cm 50 ( ofn92.5 %tio%suc a40rodtionP90uc30rodP87%2085100801983199020002009Production (mbd)Production as % of CapacitySource: Deutsche Bank© 2010 Weatherford. All rights reserved.5Reserves Required for Production to 2030120,000100,00080,000Total Production/dbl60,000Gap 2009 – 2030kb~ 380bn bbl40,00020,0000Base productionDB demand forecastXOM demand est.IEA demand est.Source: EIA, IEA, Deutsche Bank, ExxonMobil© 2010 Weatherford. All rights reserved.6Oil Reserves Steep Cost Curve: Too Steep ?160CanadianUS LowerOil SandsTertiary (Tiber)Bitumen140IranVenezuelaEORBrazil 120Pre-SaltSaudi Arabia100West AfricaKuwait(Jubilee)80UAECost with fiscal $/bblIraq60$45/bbl4020002004006008001,0001,2001,4001,6001,8002,000Required oil development 380bn bbls Reserves (bn bbl)Source: IEA, Deutsche Bank© 2010 Weatherford. All rights reserved.7Cost Curve is a Consequence of an Aging PhenomenonDepleting pressureEncroaching waterLess attractive reservoirsFormation damageCorrosionHotLost circulationTreatmentDeepDifferential stickingSand productionRemoteProduction declineLifting problemsComplexPoor oil recoveryBypassed oilViscous© 2010 Weatherford. All rights reserved.8Oil Field Services Context and Relevance:Passenger or Conductor ?© 2010 Weatherford. All rights reserved.Relevant Attributes of OFS1. OFS to E&P: Squirrel to Elephant2. Poor Return Economics3. OFS has a heavy burden:• Job shop• Operation shop• Technology shop© 2010 Weatherford. All rights reserved.10