Schlumberger Business Consulting & APO Introduction

Schlumberger Business Consulting&APO Introduction Marty Stetzer – APO Practice Leader 06/17/04

SBC Mission:Dynamic Asset Optimization (DAO) Definition Organization Appendix- Details

Value Delivery Framework Living Business Plan Living Model Smart Prospect Generation Dynamic Operations SMB Mission:Dynamic Asset Optimization (DAO) Defined • DAO is the integration of business strategy, core operational business processes, organizational capabilities, information and oilfield technology to continuously improve the business performance of oil & gas companies.

Schlumberger Business Consulting Industry-Experienced Leadership Team Don Painter Consulting Director, NSA Marty Stetzer Asset Portfolio Optimization (APO) Denver Roopchand Health, Safety and Environmental (HSE) Bob Peterson Dynamic Drilling & Production (DPP) John Pronsky HR Mgmt / Organization Change Mgmt (HRM / OCM) Jan Erik Johannson Asset Lifecycle Mgmt (ALM) Randy Tidd Enterprise Technology Solutions (ETS)

SBC talent from Tier 1 firms

APO Offerings Business Challenge Offerings & Development: - Reserves Management - Portfolio Improvement - Capital planning – Fiscal Modeling - Project Staffing Model - Getting Started

9 Increased Demand – 1.5%/yr 30 Decline in Production – 4.8%/yr 47 High risk investments and multiple options across the complete supply chain Business Challenge The Problem of the DecadeIntegrated industry facing very large capital commitments… World Oil Supply – Demand: A.G. Edwards (MMBOPD) 77 86 2010 2000

86 MMBOPD 9 30 47 2010 Business Challenge Implications for Integrated CompaniesCapital planning will take on new dimensions... Increased Demand More Refineries Decline in Production Importance of LNG Capital Discipline

Set Strategy and Vision APO Offerings Development timeline & current responsibility… Market Dynamics Quantification of External Drivers Piers Tonge Team - Singapore • E&P CEO To manage the business Reserves Mgmt Process Business Planning Process Capital Allocation Process Leader: M Stetzer &Jon Fuller Timing: May – June 2004 Launch: IQPC – September APPEGA - Sep Leader: Brad Youmans &Trevor Hicks Timing: June - July 2004 Launch: Canada Seminar - Royalty trusts Maximize Client Presentations: “Convert Leads to Revenue”

Offering: Reserves Management Recent Regulatory and Industry Events Top of mind issues for CEOs, shareholders and regulators… Announced cuts in the estimated oil and gas reserves at Royal Dutch/Shell, El Paso and other E&P companies have raised questions. How could companies suddenly have far less potential oil and gas than initially reported? The answer is in a mixture of imprecise regulations, geological guesswork and corporate culture that go into the accounting of such reserves. NYTimes 031204

Offering: Portfolio Evaluation Uncertainty Representation is Critically Important • E&P Project Representation • Each potential project is represented as a series of possible outcomes. • This is effectively a decision tree description of the problem You want enough detail to capture the essential character of projects without creating unnecessary work or data burdens.

Portfolio results are never a single data point Analysis result is a distribution of portfolio outcomes and associated probabilities Probability of Losing Money What is the probability of losing money? Are you comfortable with a 12% chance of losing money on your exploration portfolio? Offering: Capital Planning Portfolios AnalysisHigh expected value outcomes can still lose money…

North West Europe (6) North East Europe (2) United Kingdom (1) U.S. Lower 48 (1) North America Frontier (3) Central Asia (4) Southern Europe (4) North Africa (7) Middle East (8) South China Sea (9) West Africa (8) Southern Asia (5) Central Africa (4) South America Atlantic (9) South America Andean (8) Australasia (4) Southern Africa (6) Total: 89 models Offering: Capital Planning Global PerspectiveRemote prospects are the rule for E&P not the exception… • Understanding fiscal & regime modelling is the key to project forward economics

DTK Decision & Risk Analysis Cap Plan Volts PEEP Reserves Management Rules, Goals, Optimization for Portfolio Analysis Project Economics MMRA Decline Alliance Partner • Probabilistic reserves estimation • Production forecasting ResBro – Results Broker Standardized Result Calculations Offering: Citations Our Domain Perspective is Invaluable AssetLeveraging Merak solution set and citations… 1 2 3 Manage the E&P business Capital Allocation Process Reserves Mgmt Process Business Planning Process Fiscal Modeling Current Merak application architecture Economic reserves

We Have… Projects Need… Domain Merak Experience Level 3&4 Total: 21 Calgary 5 MEA 6 Consulting Modeling or Configuration ECA 3 NSA 7 Determining the right mix? Offering: Staffing Model APO – A Different type of ProjectSuggested team components and skills available…

Capability Assessment Business Case Solution Architecture Implementation Plan Offering: A&P Assess & Plan (A&P) EngagementFramework below identifies the key solution drivers for reserves… Reserves Management Solution Components A&P Solution Outputs Improved Business Results Process External business drivers Internal business strategy Reserves & Portfolio Strategy $ Risk Organization • Regime economics • Political risk • Compliance • Technology advances • Risk reduction goals • Long term R/P ratio • Acquisition • Divesture • Align business unit direction to overall strategy Technology • Global in scope • Meet compliance • Inc. third parties • Reduce risk • Improve credibility • Improve transparency Offering: Conduct an Assess & Plan Engagement to help clients define where to start in getting get a consistent and repeatable management process in place across the reserves management value chain…. With a focus on business results. Typical SBC Led Assess & Plan Engagement: Six weeks, Fees = $150-200K+

SLB – SBC Reference DocumentsSoon to be on the APO Hub – taxonomy underway… A. Market Offering Credentials for all SBC Offerings B. The APO Business Case for Change (SPE Presentation) C. APO Introduction to SLB Teams (London Presentation) D. Integrated Business Process Model (IBPM) E. APO Methodology Version 2 F. Reserves Management Initiative (RMI) Sales Deck • WE WILL BE INVESTIGATING: CPAR – Center for Petroleum Asset Risk Assessment • The link to The Center for Petroleum Asset Risk Assessment prospectus http://www.cpge.utexas.edu/cparm/prospectus.html

Marty Stetzer: 001-713-419-6912 Brad Youmans: 001-403-606-7420 Trevor Hicks: 001-281-235-7433 Jon Fuller: 001-713-513-1516 Thank You

Appendix SBC Perspective Offering Portfolio Details

SBC Perspective SBC Offerings – Client Focus Delivering value throughout the Oil & Gas asset lifecycle Asset Lifecycle Portfolio Management& Capital Planning Exploration & Appraisal Facilities & Reservoir Engineering Construction & Development Commissioning& Startup Production &Maintenance Divestiture & Retirement

SBC Perspective Where to FocusSome of this is easy, some hard work… • Expected return (for a $10B company) • Asset Portfolio Optimization- 10% on capital allocation – $100M • HSE- 30% on HSE related costs – $45M • HR (Technical Skills) Management and Change Management- $100M per year • Rationalize Enterprise IT Operations - 30% of IT Budget – $45M per year • Protect Corporate Assets thru lifecycle - $20M to $100M 6. Dynamic Drilling/Production; DDP/ALM CERA est. – $50M to $300M Benefit potential 1 6 2 5 3 4 Implementation Effort

SBC Perspective Cross-functional Integration is Essential to Unlocking Client Added Value Performance Management 1 Asset Portfolio Optimization Project Management 5 Asset Lifecycle Management Process People and Technology Reliability Management 2 Drilling Optimization 4 HSE Management 6 Production Optimization 3 HR (Workforce) Management

Offering Portfolio ConsultingOffering Descriptions(Cont’d)

Schlumberger Business Consulting & APO Introduction