Wireline - Summer 2017

Outlook – Challenges during 2016, down 48% from the peak of $29.70/boe in 2014

since 2014, following over a decade of conƟnual decline

Deirdre Michie | Q&A

more than in any year since 2008

in 2016

Total capital investment in the basin is forecast to fall further over the next two years Progress in 2016 of fresh capital was commiƩed in 2016, with only two new fields approved £500 Unit operaƟng costs fell to during 2016, down 48% fro the peak of $29.70/boe in 2014

if fresh capital in the basin is not urgently secured 2020 post The average share price of supply chain companies acƟve on the UKCS increased marginally by 3% in 2016 The UK will face a potenƟal significant producƟon decline Investment fell from a peak of almost £15 billion in 2014 to £8.3 billion in 2016

If new projects do not proceed to sancƟon on Ɵme 2016 – Challenges Around 360 illion boe of oil and gas was discovered in 2016 ExploraƟon and appraisal acƟvity remained depressed, just

Drilling acƟvity must increase to conƟnually replenish the pipeline of opportuniƟes

Fiscal policy must conƟnue to adjust with the basin’s maturity to help drive compeƟƟveness

Development drilling is at its lowest since the 1970s

Supply chain revenue fell from £41.3 billion in 2014 to around £28 billion in 2016

the supply chain will come under further pressure more than in any year since 2008 22 wells drilled in 2016

The industry’s naƟonal contribuƟon

2016 – Challenges

“

There are Outlook – PotenƟal information to help keep efficiency at the top of the industry agenda. Supply chain r venue fell from £41.3 billion A motivated and engaged workforce is critical for delivering the efficiency agenda and therefore we are looking to see where we can support companies with their workforce Around one third of total UKCS producƟon in 2018 in 2014 to around £28 billion in 2016 The UKCS delivers more than half the UK’s oil and gas

The UK supply chain is a world leader

The UK oil and gas industry sƟll supports

will be found that will unblock asset deals and support MER, ensure security of supply in the future and provide a wider economic benefit. ExploraƟon and producƟon companies are expected to return to a posiƟon of free cash-flow in 2017 Exp oraƟon and appr isal acƟvity remained depressed, just d Q: Is there a particular area of Oil & Gas UK’s work that excites you? A: It has to be the drive for greater efficiency and competitiveness. Our Efficiency Task Force (ETF) is making good progress in providing support to companies to compete in the lower oil price world. It’s exploring how companies can work together to share resources and good practice. It’s developing and encouraging simplified approaches and standard solutions to help tackle costs, and it’s holding roadshows, within companies, as part of that exchange of Total capital investment in the basin is forecast to fall further over the next two years Around one third of total UKCS producƟon in 2018 is expected to come from recent st rt-ups 22 well drilled in 2016

2017 has already seen almost twice as much money invested through mergers and acquisiƟons ($4 billion) Development drilling is at its lowest since the 1970s

with unrivalled experience in Companies can work together to share resources and good practice. maximising recovery from a mature basin Up to 14 new developments are being considered for approval over the next two years

Exports are expected to account for 43% (£11.8 billion) of supply chain turnover this year

”

barrels of oil and gas sƟll to recover

oilandgasuk /businessoutlook engagement. We know of companies that are taking positive action on this front, but our members have also told us that they would welcome suppor as well as the opportunity to exchange ideas with their peers. is expected to come from recent start-ups Outlo k – Challenges Our role here is to provide information about industry, as well as providing guidance and a mechanism, via the development of a workforce engagement hub on our website, to share good practice. We also have a workforce engagement group. If new projects do not proceed to sancƟon on Ɵme Exports are expected to account for 43% (£11.8 billion) of supply chain turnover this year

than across all of last year

@oilandgasuk #ogOutlook

Outl ok – PotenƟal

if fresh capital in the basin is not urgently secured 2020 post The UK will face a potenƟal significant producƟon decline Up to 14 new developments are being considered for approval over the next two years

Oil & Gas UK has made supply chain resilience one of its key priorities and is doing all it can to support the companies that have established the UK’s world class supply chain with industry expertise. Tools and good practice materials the ETF has developed in areas such as tendering, inventory management and logistics, are helping companies make their operations more efficient and lowering costs. We are also monitoring performance using the Supply Chain Code of Practice and Industry Behaviours Charter, which help govern supply chain relationships between our operator and contractor members, as well as building good working relations between purchaser and supplier. Drilling acƟvity must increase to conƟnually replenish the pipeline of opportuniƟes The UK supply chain is a world leader with unrivalled experience in maximising recovery fr m a mature basin

Fiscal policy must conƟnue to adjust with the basin’s maturity to help drive compeƟƟveness

)

the supply chain will come under further pressure

Outlook – Challenges

The industry’s naƟonal contribuƟon

If new projects do not proceed to sancƟon on Ɵme

Drilling acƟvity must increase to conƟnually replenish the pipeline of opportuniƟes

Fiscal policy must conƟnue to adjust with the basin’s maturity to help drive compeƟƟveness

There are

The UKCS delivers more than half the UK’s oil and gas

The UK oil and gas industry sƟll supports

in

the supply chain will come under further pressure

barrels of oil and gas sƟll to recover

industry’s naƟonal contribuƟon

oilandgasuk /businessoutlook The UK supply chain is a world leader

@oilandgasuk #ogOutlook

There are

he UKCS delivers more than half e UK’s oil and gas

www.oilandgasuk.co.uk/efficiency

with unrivalled experience in

barrels of oil and gas sƟll to recover

maximising recovery from a mature basin

ndgasuk /businessoutlook

@oilandgasuk #ogOutlook

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| W I R E L I N E | SUMMER 2017