Global Service Sector Trends Jerry Logan Vice President Strategy & Portfolio Energy Services Group Halliburton Presentation to the Energy Summit 2005 LSU Center for Energy Studies October 19-20, 2005
Today s Outline 2 Overview of Halliburton Product service lines Worldwide locations and importance of Louisiana General Oilfield Service Trends and Their Implications for the State of Louisiana What are the fastest growing segments? Where is the growth expected to take place, geographically? What types of resources will be developed? What types of wells will be drilled in the future? What are the new technologies and who will be developing them? Who (people) will be doing all of this? Conclusions
Halliburton Business Units 3 Halliburton Company Energy Services Group KBR Production Optimization Fluid Systems Government & Infrastructure Energy & Chemicals Drilling & Formation Evaluation Digital & Consulting Solutions
Halliburton s Geographic Coverage 4 ESG KBR ~ 100 Countries ~ 100,000 Employees 2004 Revenue: $20.5 Billion
Louisiana and the GOM Remain Key to Halliburton Major Facility Locations 5 Bossier City Shreveport Halliburton Employees ESG 2,400 KBR 1,800 Lafayette (3) Westlake Cameron (2) IntraCoastal City (2) Broussard (4) New Orleans (2) New Iberia (2) Berwick Morgan City Fourchon (5) Houma (3) Grand Isle Venice (3)
25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 6 Unit Manufacturing Land Contract Drilling Casing & Cementation Products Offshore Services Slowest Growth Rates Oilfield Service Market CAGRs (1999-2005) Spears & Associates Offshore O&M Services Offshore Construction Services Supply Vessels Geophysical Equipment & Services Petroleum Aviation Offshore Contract Drilling Well Servicing Wireline Logging Drilling & Completion Fluids Floating Production Services Logging-While-Drilling Subsea Equipment Completion Equipment & Services Drill Bits Artificial Lift Directional Drilling Services Oil Country Tubular Goods Pressure Pumping Services
Drilling and Completion Spend (US Millions) - 2005 Spears & Associates Drilling and Production Outlook Sept 2005 7 $18,680 $8,572 $12,000 $59,887 $8,020 $18,519 $7,970 US Offshore $16,871 2002-37% 2005-22%
Expect Spend to Shift Gradually to the Eastern Hemisphere Oil and Gas Production Indexed to 1970 - Spears Sept 2005 Drilling and Production Outlook 8 6.0 5.0 4.0 3.0 2.0 1.0 0.0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Western Hemis - Oil Eastern Hemis - Oil Western Hemis - Gas Eastern Hemis - Gas
Well Count Expected to Increase in the Eastern Hemisphere Spears Sept 2005 Drilling and Production Outlook 9 Wells Drilled (Land - Left Axis) (Offshore - Right Axis) 90,000 3,000 80,000 70,000 2,500 60,000 2,000 50,000 40,000 1,500 30,000 1,000 20,000 10,000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 West - Land East - Land West - Off East - Off 0
US Drilling and Completion Spending Spears Sept 2005 Drilling and Production Outlook 10 $60.0 $50.0 D&C Spend ($ Billions) $40.0 $30.0 $20.0 $10.0 $0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Oil Gas
R&D Investment Continues to Shift to Oilfield Services 11 1,400 1,200 R&D Investment ($, millions) 1,000 800 600 400 E&P Firms* Oilfield Service Firms** 200 Seismic Service Firms*** Research Center Closing 0 1977 1982 1987 1992 1997 2002 * US E&P firms and the US R&D investments of international E&P firms; source Department of Energy, EIA, CERA analysis. ** Traditional Oil Field Service companies (Baker Hughes, Halliburton, Schlumberger, Smith, Weatherford) annual reports, CERA analysis. *** Seismic Service Companies (CGG, Input/Output, OYO Geospace, PGS, Veritas) annual reports, CERA analysis. Source: Cambridge Energy Research Associates.
Upstream Patent Awards Top 3 Super Majors vs. Service Companies 12 500 450 400 450 Major Service Companies 300 250 200 150 100 50 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002* Selected Super Majors Source: Derwent WPI, Global patent search on Upstream code H01 published patents (1991-2001)
Well Complexity Trending Up 13 % of wells drilled 90% 80% 70% 60% 50% 40% 30% 20% Complex Wells - GOM Complexity parameters: >15,000 ft, and/or >300 ft water depth, and/or >45 deg avg deviation None One 2 or more 3 or more 10% 0% 1975 1980 1985 1990 1995 2000 2005 Source: MMS
Technology Trends and Challenges 14 Geoscience Interpretation and Reservoir Modeling Advanced Drilling Methods Advanced Completion Techniques HT-HP Applications for Ultra-Deep Shelf Real-Time Drilling and Production Applications Ultra-Deep Water Applications Increasing distance for Remote Tie-backs High Performance Environmentally Advanced Fluids Advanced Testing Applications for Reserve Assurance Development of Unconventional Resources Mature Field Exploitation Advancements
Majority of SPE Member are Over 40: Many Opportunities for Younger Engineers 15 Members Under 40 Age: Source: SPE 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65+ SPE membership includes petroleum engineers and other E&P industry professionals.
SPE Non-US Membership Continues to Grow 16 100% 80% 60% 40% 20% 0% 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 U.S. Members Non-U.S. Members Source: SPE SPE membership includes petroleum engineers and other E&P industry professionals.
Halliburton Employee Profile by Region 17 50 Industry Average Age Age/Service by Region 12 45 10 40 35 8 6 4 30 2 25 Africa Asia Pacific Canada Eurasia Latin America Middle East United States Western Europe 0 Age Years of Service
Questions for the Eastern Gulf of Mexico 18 Will the Eastern Gulf be opened for access? Where will the operations be staged from? Source: MMS
Conclusions 19 Louisiana will be. An important oil and gas production area for the US but on a declining basis on land An important geographic area for Halliburton A staging ground for new technology worldwide especially for offshore operations A vital source of personnel and offshore expertise