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Schlumberger Business Consulting BIG OIL Proposal May 22, 2004

Schlumberger Business Consulting BIG OIL Proposal May 22, 2004. Brad Youmans, Principal. BIG OIL Summary of Engagement. Changes from Jan 20 Proposal. No software sold to pilot projects (minus $250K) Added scope of pilot projects for Midstream (add $250K). Organizational Enablement.

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Schlumberger Business Consulting BIG OIL Proposal May 22, 2004

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  1. Schlumberger Business Consulting BIG OIL Proposal May 22, 2004 Brad Youmans, Principal

  2. BIG OIL Summary of Engagement

  3. Changes from Jan 20 Proposal • No software sold to pilot projects (minus $250K) • Added scope of pilot projects for Midstream (add $250K)

  4. Organizational Enablement Operational Process Enablement Technology Enablement Asset Portfolio Optimization Practice Defined… APO • “Our staff is not trained to do formal risk analysis / portfolio management” • “Process is inconsistent, labor intensive and time-consuming” • “I have no easy way to update my analysis when price changes” • “ We need one consolidate view of all our integrated capital projects” • “Our plans always forecast tremendous growth, but we regularly fall short of our projections” • “Can’t compare upstream and downstream investments meaningful way” • By the time we allocate capital, our assumptions are out of date” Asset Portfolio Optimization

  5. SBC Client What to do?The standard SBC workflow for Assess & Plan engagements… Assess Plan & Develop Validate Present Initialize Align Strategies List Strategies Executive Review ‘As-Is’ Processes ‘To-Be’ Processes “Target” Solution Mobilize ‘As-Is’ People & Org* ‘To-Be’ People & Org* Analyze Solution Gaps Business Case ‘As-Is’ Applications ‘To-Be’ Applications Fill / Resolve Solution Gaps How to do it? Specific APO Methodology Solution Architecture ‘As-Is’ Technologies ‘To-Be’ Technologies Architecture Capabilities Capability Assessment Plan Best Practices Gap Analysis Plan Implementation

  6. SBC’s Uses Consulting Led Approach to Transforming your core planning function • A staged investment approach • Clearly defined milestones and deliverables • Builds momentum as business benefits are delivered • Joint membership on project teams (BIG OIL + Schlumberger) • Must be executive sponsored (CEO and board)

  7. Engagement Critical Elements • The context in every engagement is set by stated corporate Performance Goals and a Defined Business Objectives that can only come from the board of directors • All of the following elements are essential to any successful engagement • Strategy – Defined Top Down • Process – Enterprise wide (Upstream and Downstream) • Organization – Roles, Functions and Governance • Technology and Data – Hardware, Software and Information Architecture

  8. Engagement Stages 2005-6 2004 Stage 6+ Stage 4 Enterprise Implementation Stage 3 Program Management Pilot Projects Stage 1-2 Quality Management Assess & Plan Cost & Schedule Management Alignment Contractor Management Process Mapping Benefits realization Management Upstream Tech Refresher Capability Assessment Solution Design Industry Standards: CMMI, ISO, PMI, WITSML Solution Development and Implementation Executive WS Solution Architecture Business Process Optimization Implementation Plan Organizational Change Stage 5 Mid stream Technical Enablement Business Process Operations Applications Support Infrastructure Support Start SBC Contract Business Consulting Consulting SIS Delivery Partners Operational Resources Enterprise Implementation Contract Jan 20 Proposal

  9. Alignment of Stakeholders (Stage 1 and Stage 2) • Technology and Process Training (Stage 1) • Critical skills assessment and intro to project CSF’s • Executive Alignment Workshop (Stage 2) Corporate Executive Management Midstream Management Corporate Planning Group Alignment Workshop Upstream Management Regional Operations Management

  10. Assess & Plan – (Stage 3) • Planned Stage 3 objectives: • Understand your portfolio strategy, drivers goals and objectives • Assess your current business processes, people skills and organization, applications and technology • Build the business case for change • Prepare implementation plans to deliver business benefits for selcted upstream and midstream projects

  11. Upstream and Midstream Pilots (Stage 4) • Detailed scope and selection of upstream pilots by week 8 • Detailed scope and selection of midstream pilots by week 8 • Merak software licenses will be supplied in the pilot phase (stage 4) at no additional cost • Sale of licenses will be negotiated in stage 6

  12. Workplan Milestones (Stage 3) Assumed Start Date Sept 2004 Project Step W1 W2 W3 W4 W5 W6 W7 W8 W9 W10 W11 W12++ Mobilization and Preparation Technology Refresher Training Stage 1 Technology Alignment Stage 2 Executive Alignment Workshops Strategy “As Is”Process Analysis Stage 3 Upstream Process Midstream Organization Organization Readiness Assessment IT Architecture and Hardware Technology Future State Workshop Gap Analysis Roadmap – Implementation Plan Stage 4 X -Upstream Pilot Projects Pilot Projects Y -Midstream Pilot Projects Project Mgt & Communications Steering committee meeting Workshop

  13. Deliverables • Stage 1 • 24 BIG OIL employees trained in concepts critical to new Corporate planning solution • Stage 2 • Program mission document agreed by all executive stakeholders • Agree launch plan and focus areas for Stage 3 • Stage 3 • “As Is” Corporate Planning Process Map (roles, data, tasks) • BIG OIL’s “To Be” Corporate Planning Solution Design • Solution Roadmap to define scope for implementation projects (eg Persian Calendar) • Stage 4 • X Upstream projects and Y midstream pilot projects in one capital planning portfolio

  14. How Do We Organize? Executive SponsorBIG OIL: Mohammad Reza Moghadamm SteeringCommittee Project Management BIG OIL - Name Schlumberger Business Consulting (SBC) Upstream Process TeamBIG OIL TBN SBC TBN People-Skills Team BIG OIL H/R SBC TBN Midstream Process TeamBIG OIL TBN SBC TBN IT and Data-Skills Team BIG OIL – IT Architect SBC TBN To be Nominated: SBC Global Subject Matter ExpertsUpstream & Downstream Planning, Portfolio Tools, Risk & Uncertainty

  15. Key Assumptions in Workplan Estimate • All project correspondence and deliverables in English (no translation) • 25 - Number of key participants that are need to be engaged • 2 locations, Tehran and Ahwaz • Complexity of business scope 1 centralized corporate planning function 5 upstream oil and gas operating units with X projects for Pilot stage 4 1 midstream operating unit is for gas only from well head through liquefaction (LNG) with Y projects • SLB consultants will lead projects with assigned BIG OIL team members • 6 - steering committee meetings • 10 - facilitaited workshops • Dedicated office and suitable workshop space at BIG OIL offices • One fulltime BIG OIL and project logistics coordinator assigned by steering committee • Access to decision makers in less than 3 days turn-around on project critical items

  16. Commercial Summary • Total cost stages 1 through 4 is $980K USD • 50% payable upon start of work • 15% after stage 1 • 15% after stage 2 • 10% after stage 3 • 10% after stage 4 • All deliverables • 345 man days of consulting • 6 full time consultants (4-5 expats) • Up to maximum 40 man days allocated to Pilot Projects in Phase 4 • Up to 305 man days for phase 1 through 3

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