Business Outlook 2018

BUSINESS OUTLOOK 2018

2. Key Performance Indicators

Forecast ‘18 Our outlook explained

‘14 ‘15 ‘16 ‘17

Year-On-Year % Change

Positive - A combination of production efficiency

517 571 598 598 620-640

Total Production (million barrels of oil equivalent)

improvements and new fields are driving production increases after 14 consecutive years of decline.

0% +11% +5% 0% +5%

Positive - All 12 of the new field start-ups in 2017 have a majority oil composition, which

311

352

371

368

395-405

Liquids Production (million barrels of oil equivalent)

is expected to support production growth over the next two years.

-1%

+13%

+5%

-1%

+9%

Positive - The start-up of Cygnus in late 2016 and depletion of cushion gas from the Rough storage facility are helping to maintain flat gas production in 2018.

206 220 228 230 225-235

Net Gas Production (million barrels of oil equivalent)

+1% +7% +4% +1% 0%

Positive - More than £5 billion of new capital projects could be approved this year, providing much needed new business for the supply chain.

8

5

2

2 12-16

New Field Approvals

-20% -38% -60% 0% +600%

Neutral - Fresh investment in 2018 could see capital expenditure increase for the first time in four years, despite the recent completion of a number of major projects and capital efficiency gains. Neutral - After a trend of poor project execution, operators have improved efficiency and are now routinely delivering projects on time and under budget. Neutral - A small increase in operating costs is likely this year as exploration and production companies look to carry out previously deferred activities and maximise opportunities to improve recovery rates. Neutral - Unit operating costs are set to remain flat in sterling terms this year, although a weaker dollar may result in a slight increase in dollar terms.

15 11.7 8.3 5.6

5.5-6.0

Capital Expenditure (£ billion) a

+3% -22% -29% -33% +3%

23.8 15.1 12.6 c

11.8 c

13-15

Unit Development Costs ($/barrel of oil equivalent) a,b

-22% -36% -16% -7% +19%

9.8 8.3

7

7

7-7.5

Operating Expenditure (£ billion) a

+7% -15%

-16%

0% +4%

29.6 21.0 15.2 15.2 15.8- 16.4 -1% +13% -29% -27% +6%

Unit Operating Costs ($/barrel of oil equivalent) a

6