Transcript PPT

Oil Services Industry
Names of group members omitted on
purpose
Agenda
• Industry Analysis
• Macro Impacts
• Hubbert’s Peak
• Schlumberger Analysis
• Forecast Analysis
• Recommendations
• Q&A - Graduate…S research team
Oil Service Sector
Producers, refiners and marketers of oil, and associated carriers and
service contractors.
There are two major sectors within the oil industry
Upstream
The exploration and production of oil and gas
Downstream
Oil and gas operations after the production phase and
through to the point of sale, whether it be the gas pump or
the home heating oil truck
We are within the Upstream Oil Services sector
OS is broken into two major areas: Drilling and Oilfield Services
Oil Service - Services
Assist the drilling companies in setting up oil and gas wells.
Seismic Testing
Transportation Services
Directional Services
Oil Service - Drilling
Companies that physically drill and pump the oil out of the ground
Types of Rigs
Land Rigs
5,000 feet to upwards of 30,000 feet
Oil Service Industry
Submersible Rigs
used for ocean, lake, swamp drilling
Oil Service Industry
Jack-ups
'jacked-up' allows it to be above
the highest anticipated waves.
Industry facts
“Petroleum is the single largest source of energy used in the United States.“
- Department of Energy
“About 90% of these products are fuels “
Total Industry revenue amounts to $ 231 Billion
“Oil accounts for 40 % of the United States' energy supply and a
comparable percentage of the world’s energy supply”
“Oil is a scarce commodity but is it still cheap?”
… and a little fiction
“There is no such thing as global warming“
“There is plenty of oil to last us for centuries
to come“
Real GDP in Major Oil Consumers
Real GDP
12000.00
Real GDP in Billions
11,135
10000.00
8000.00
United States
Japan
6000.00
5,062
4000.00
China
India
Germany
1,979
1,888
630
2000.00
0.00
1999 2000
2001 2002 2003
Year
2004 2005
Real GDP Growth Rate in Major Consumers
Real Growth Rate
12.00
10.10%
10.00
8.43%
8.00
% Growth
United States
Japan
6.00
China
India
4.00
3.52%
2.62%
2.00
1.16%
0.00
1999
2000
2001
2002
-2.00
Year
2003
2004
2005
Germany
Oil Consumption in Major Consumers
Oil Consumption Summary
25000
20,656
20000
Barrels
United States
15000
Japan
China
10000
India
7,058
5,360
5000
Germany
2,672 India
2,586 Germany
0
2001
2002
2003
Year
2004
2005
Oil Consumption Growth Rate
Oil Consumption Growth Rate
Largest Growth Rates
China = 4.22%
India = 3.85%
20
15
% Change
United States
10
Japan
China
5
India
Germany
0
2002
2003
2004
-5
Year
2005
Shift Caused by Increase in Demand
Oil Industry
6
S1
5
Price ($)
4
3
2
1
D1
D2
0
1
2
3
4
Quantity
5
6
Average Change in Crude Oil Price
Average Crude Oil Price
60.00
50.04
Price per Barrel
50.00
40.00
37.66
27.39
30.00
20.00
27.69
23.00
22.81
16.56
10.00
0.00
1999
2000
2001
2002
Year
2003
2004
2005
Average Crude Oil Price
Cheap Oil is it real?
http://www.rsoftconsulting.com/hubbert.htm
Hubbert’s Peak Theory
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Marion King Hubbert presented paper in 1956 to American Petroleum
Institute
“.. fundamental observation that the amount of oil under the ground is finite”
“Peak oil is peaking of production of a particular area”
Early in the curve (pre-peak), the production rate increases due to the
discovery rate and the addition of infrastructure. Late in the curve (postpeak), production declines due to resource depletion
Schlumberger: Who are we?
Schlumberger is considered the leading oilfield
services provider.
Founded in 1926
We are trusted to deliver superior results and
improved E&P (Exploration and Production), and
performance for oil and gas companies around the
world
Oil Services Industry Breakdown
9%
13%
32%
Products and services
Exploration/Development
Drilling
Efficiency
Seismic Testing
Coil tubing - efficient remediation
Reservoir evaluation
Well Stimulation
Production
Artificial/Directional Lifts
Cementing/Zonal Isolation
Production and cost issues
• $619 Million dollars was invested in Research and Development in 2005.
(3% operating revenue)
• Specialized Training for highly skilled employees (new and existing),
equipment (trucks, rigs, etc)
• Environmental regulatory adherence
Schlumberger Forecasting Approach
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•
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Auto regression to forecast ‘Total revenue’
Used Research & Development
Researched through Bloomberg since 2000
Relevant predictors were R&D (qtr-0) – (qtr-6)
R&D (qtr-1)
R&D (qtr-2)
R&D (qtr-3)
R&D Expenditures
$ 169,482 M
Revenue Forecast
10% MAPE
35% Increase in
R&D
TSTATS
1.1 – 3.3
2007 Total Revenue
Over 18B
Recommendations
• Increase from R&D 3% to 5% of operating
revenue
• Focus R&D on efficiency drilling and
exploration components
• Strategizing on alternative energy such as
hydro and ethanol
Ultimate Task Goal Desired By Oil Services Industry
Oil Industry
6
S2
S1
5
Price ($)
4
3
2
1
D1
D2
0
1
2
3
4
Quantity
5
6
Q&A with Graduate…s
We are truly a partner to the GLOBE