© 2016 quest offshore resources inc.questoffshore.com/wp-content/uploads/quest bloomberg webinar...


Forward-Looking Statements

Statements in this presentation regarding Quest Offshore Resources or its management's intentions, beliefs or

expectations, or that otherwise speak to future events, are "forward-looking statements.” Future results and

developments discussed in these statements may be affected by numerous factors and risks, such as the

accuracy of the assumptions that underlie the statements, the success of the oil and gas exploration and

production industry, drilling results, uncertainties in interpreting market data, changes in laws and regulations,

the ability to respond to challenges in international markets, including changes in currency exchange rates,

political or economic conditions, trade and regulatory matters, general economic conditions, and other factors

and risks. Actual results and developments may differ materially from those expressed or implied in this

presentation.

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respect can e-mailed to: [email protected].

© 2016 Quest Offshore Resources Inc.

Strategic Data & Market Research

Consultancy Practice

News Publications

Technical Conferences

3


Quest Field Development Report

Quest Deepwater

Shipyard Outlook

Quest FPS Database

Quest Marine Construction

Vessels

Quest Pipeline

PerspectiveQuest Subsea

Production Umbilical Database

Quest Subsea

Wellhead Database

Quest Floating Rig

Commitments (Total Well Demand)

Quest Global

Prospects

QSAT

Quest Subsea

Database

LNGNatural

GasCrude Oil

Quest Vessel Cost Model

Quest Deepwater

Drilling Package

Quest Deepwater

Supply Chain Analysis

Quest Enhanced

Deepwater Database

Quest Offshore Resources: Offshore Market Coverage

4


Macro Market Indicators


Major Project Awards by Oil PriceInflation Adjusted Average Brent Oil Price In Sanction Year

<$20 <$30 <$40 <$50 <$60 <$70

Total Girassol -98

Statoil Snorre B -98

PB Marlim - 99

XOM Hoover Diana -97

CVX Petronious -97

BP Na Kika – 00

BP Atlantis – 01

XOM Kizomba A-C– 01-03

PB Marlim Leste- 2003

CVX Agbami – 04

BP Greater Plutonio - 04

Anadarko Constitution – 04

Murphy Kikeh -04

Maersk Culzean– 15

Shell Appomatox -15

Statoil Johann Sverdrup – 15

ENI OCTP -15

GDF Gjoa– 05

ENI Goliat -09

Total Akpo – 05

CVX Tahiti – 09

BHP Neptune

PB Roncador 3&4, 05&09

Long-term Opportunities:• Increased/stable oil & natural gas price• More efficient development executions

• Growing natural gas demand • Phased projects & shorter cycle times

• IOC’s operating in Brazil

Long-term Challenges:• Larger scale projects

• More complicated projects• Most of the “easy” reserves are found

• Less capacity/people to execute higher project volumes• Low 2013-2016 exploration leading to

reduced inventories of discoveries

Source: Quest Offshore Resources

© 2016 Quest Offshore Resources Inc. Source: Y Charts; Quest Offshore Resources Inc.

Oil Price vs IOC Return on Capital EmployedInflation Adjusted Average Brent Oil Price In Sanction Year

0%

5%

10%

15%

20%

25%

0

20

40

60

80

100

120

2007 2008 2009 2010 2011 2012 2013 2014 2015

Pri

ce p

er

Bar

rel

Year

Avg. Inflation Adjust Brent Price IOC Avg. Return on Capital Employed


Changing Deepwater Project EconomicsDrivers for Step-Change

Capex Allocation

0%

100%

SPS & SURF35%

FAB & FAC25%

DRLG40%

Current Cost Structure

8%

12%24%

The New Net

Potential Net Savings

Step-Change to Reduced Cost, Risk & Inefficiency

35%

30%

60%

Deflation, Replication, Efficiency, Standardization

44%


Deepwater Drilling Market


Floating Rigs Stacking Up

118 floating rigs currently out of work Nearly 50% are >18 years old

Key take-away’ s• Demand for new contracts in 2016 are very limited as a result rigs are being idled weekly. In January alone 18 more rigs went off

contract and seven contracted rigs were idled. Over 75% rigs have been stacked in past 12 months.• Drilling contractors absorbing much higher costs keeping rigs warm stacked ($40,000-$100,000+/day based on rig type)• Based on age alone almost 60 floating rigs could be retired today (48%) accounts for ~1.3BN annual costs • 60% of those older units are warm stacked and 40% are owned by Diamond and Transocean • Among rigs 9-18 years old (4th & 5th gen), half are still warm stacked and should be cold stacked • Among rigs <9 years old (6th & 7th gen) the majority are warm stacked – rigs most likely to re-enter market but also the most

expensive to keep warm. Estimate total spend just under $1BN annual (and growing).

32%

20%

48%

<9 yrs old 9-18 yrs old >18 yrs old

28%

72%

Warm Stacked

Cold Stacked

0

20

40

60

80

100

120

140

2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 J A N - 1 6

Cu

mu

lati

ve F

loat

ing

Rig

Co

un

t

Year Stacked

>75% idled in past 12 months


Total Well Demand

0

100

200

300

400

500

600

700

2010 2011 2012 2013 2014 2015e 2016e 2017e 2018e 2019e

Spu

d C

ou

nt

Spud Year

Exploration Development

52%48%

43%57%

2010-2014

2015-2019

30% decline in total well demand over five year forecast period

Key take-away’ s• Quest is currently forecasting just over 2200 new wells to be drilled from 2015-2019 (just under 20% drilled in 2015). Just over

3,060 wells were drilled 2010-2014 as comparison. • Exploration drilling hardest hit with double-digit declines in every region except U.S. Gulf which experienced a drilling moratorium

in 2010-2011. Exploration activity now expected to account for ~40% of all drilling versus over 50% in previous period.• From 2010-2014 new well counts ranged from 560-660 spuds per year• Based on oil price benchmarks below $50/bbl. average for 2016, our view is that the ramp-up in drilling will be much more gradual

than the decline and it is highly unlikely that well counts will exceed 500 before 2019.


Development Overview


Global discoveries trending down since 2012

Discoveries by Year Announced 2004-2015 (1908)

0

50

100

150

200

250

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Nu

mb

er

of

Dis

cove

rie

s

Discovery Year

Africa Med Asia Pacific North America North Sea South America

18%

22%

49%


Global Deepwater Project Executions - GreenfieldLong-term Opportunities:

• Increase/stable oil & natural gas price• More efficient development executions

• Permanent cost reductions• Shorter cycle times (more phased

developments)• IOC operating in Brazil

Long-term Challenges:• Lower for longer oil price• Larger scale projects

• More complicated projects• Most of the “easy” reserves are found

• Less capacity/people to execute higher volume of complicated projects

0

10

20

30

40

50

60

70

80

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Gre

en

fie

ld P

roje

ct C

t

Execution Year

Africa/Medit. (Mean Case) Asia Pacific/Middle East (Mean Case)

North America (Mean Case) North Sea (Mean Case)

South America (Mean Case) Global (High Case)

Global (Base Case)


Subsea Tree Demand Outlook


Near-Term Impact on Global Subsea Market (Mean Case)

0

100

200

300

400

500

600

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Nu

mb

er

of

Sub

sea

Tre

e A

war

ds

Award Year

0-1000fsw (Mean Case Nov 2015) 1001-5000fsw (Mean Case Nov 2015)

5001+fsw (Mean Case Nov 2015) High Case (Prelim Feb 2016)

Mean Case (Prelim Feb 2016) Base Case (Prelim Feb 2016)


Top 10 Operators – Subsea Tree Demand2015-2019e Forecast Awards (Mean Case)

0

20

40

60

80

100

120

140

160

180

200

# Su

bse

a Tr

ee

Aw

ard

s

Operator

Forecast Awarded


Top 10 Operators – Preferred Supplier RelationshipsTop Ops Forecast Awards 2015-2019e – Preferred Supplier Analysis 2010-2014 Demand

0

100

200

300

400

500

600

# Su

bse

a Tr

ee

Aw

ard

s

Operator

Aker FTI GEOG 1SS


Subsea Tree Install BaseAftermarket Services


Global Subsea Trees by DecadeAverage Water Depth

0

500

1000

1500

2000

2500

3000

3500

0

1000

2000

3000

4000

5000

6000

7000

8000

1960's 1970's 1980's 1990's 2000's 2010's

Ave

rage

Wat

er

De

pth

(Fe

et)

# Su

bse

a Tr

ee

s (M

ean

Cas

e)

Startup Decade

Number of New Subsea Wells Average Water Depth (Feet)

Proxy for Deepwater Drilling & Development Activity

Subsea & Related Hardware Components

Production Umbilicals

ROV Services & MarCon (URF Install)

Subsea Workover & Intervention Opportunities


Top Operator Subsea Tree Startup Comparison2009-2014 Vs. 2015-2020e

0

50

100

150

200

250

300

350

400

450

# Su

bse

a Tr

ee

Sta

rtu

ps

(Me

an C

ase

)

Operator

2009-2014 2015-2020e

Subsea Tree Startups forecast to be ~5% down in 2015-2020 compared to previous six years. Despite strong order levels driving demand, low oil

price and delayed projects are limiting installation, completion and commissioning executions in the short-term. Projects are not cancelled so

the back-log of subsea trees for future startups remain an opportunity when market conditions improve.


Quest Consulting

• Quest is a leading source for valuable, client-directed consulting

products and expertise that enables companies to make well-

informed decisions across the offshore oil & gas industry. Quest

Offshore’s Consultancy Practice has grown considerably as an

extension of our comprehensive market analysis, accurate

forecasting and industry expertise honed through our leading

database subscription products.

• Quest has completed over 100 consulting projects focusing on

areas such as due diligence, strategic advisory to new and existing

supply chain companies, regulatory and economic impact studies,

supply chain studies for operators, reorganization, and the provision

of industry experts.

Who are Some Examples?

• Analyzing the equipment and service pricing outlook for operators

developing deepwater projects

• Analyzing existing production asset purchases for independent oil

companies

• Providing market due diligence for debt financings, private equity

purchase and initial public offerings of marine contractors

• Analyzing the economic impacts of government regulations and

policies and providing testimony to the Congress, Senate and

various regulators

Who is Quest Offshore?

• Quest is a boutique strategic advisory and consulting firm to the Oil

& Gas industry worldwide.

• Quest provides market expertise, strategic analysis, marketing

communication and consultancy services focused primarily on

deepwater oil & gas specifically technology-led solutions for

exploration, development and exploitation activities.

• Quest possesses a dedicated team of sector specialists that focus

on qualitative and quantitative data to identify global market

opportunities for deepwater technologies.

• Quest covers worldwide deepwater basins and follows projects from

exploration through project decommissioning.

Who are Quest’s Clients?

• Over 20 major, independent and national oil companies

• Over 50 major supply chain companies

• Numerous smaller suppliers to the offshore oil & gas business

• Over 120 financial clients including investment banks covering

oilfield services from buy and sell sides, institutional investors,

private equity firms and more

• Industry organizations like the American Petroleum Institute and the

National Ocean Industries Association


Thank you!Paul Hillegeist, President & COO

[email protected]

Caitlin Shaw, Sr. Director Research, Data Division

[email protected]

77 Sugar Creek Center Blvd, Suite 500

Sugar Land, TX 77478

USA

[email protected]

[email protected] Contact us!

Sean Shafer, Consulting Manager

[email protected]

Leslie Cook, Sr. Research Consultant

[email protected]

mailto:[email protected]

mailto:[email protected]

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