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New Horizons for Australia Gas:
A contractor's perspective
Brett Howard
Wednesday, 13 March 2019
2
DisclaimerForward-looking statements
We would like to caution you with respect to any “forward-looking statements” made in this presentation as defined in Section 27A of
the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as
amended. The words such as "believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “may,” “estimate,”
“outlook” and similar expressions are intended to identify forward-looking statements, which are generally not historical in nature.
Such forward-looking statements involve significant risks, uncertainties and assumptions that could cause actual results to differ
materially from our historical experience and our present expectations or projections, including the following known material factors:
risks related to review of our accounting for foreign currency effects and any resulting financial restatements, pro forma corrections,
filing delay, regulatory non-compliance or litigation; the risk that additional information may arise during our review of our accounting for
foreign currency effects that would require us to make additional adjustments or identify additional material weaknesses; competitive
factors in our industry; risks related to our information technology infrastructure and intellectual property; risks related to our business
operations and products; risks related to third parties with whom we do business; our ability to hire and retain key personnel; risks
related to legislation or governmental regulations affecting us; international, national or local economic, social or political conditions;
risks associated with being a public listed company; conditions in the credit markets; risks associated with litigation or investigations;
risks associated with accounting estimates, currency fluctuations and foreign exchange controls; risks related to integration; tax-related
risks; and such other risk factors as set forth in our filings with the United States Securities and Exchange Commission.
We caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We undertake
no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new
information, future events or otherwise, except to the extent required by law.
3
SUBSEA
ONSHORE/OFFSHORE
SURFACE
▪ Products and systems used in deepwater exploration and production
of crude oil and natural gas
▪ Systems used to control the flow of crude oil and natural gas from the
reservoir to a host processing facility
▪ Integrated design, engineering, manufacturing and installation
services for infrastructure and subsea pipe systems
▪ Onshore facilities related to the production, treatment and
transportation of crude oil and natural gas, as well as transformation
of petrochemicals such as ethylene, polymers and fertilizers
▪ Combines engineering, procurement, construction and project
management within the entire range of fixed and floating offshore
crude oil and natural gas facilities
▪ Products and systems used in offshore exploration and
production of crude oil and natural gas
▪ Wellhead systems and high pressure valves and pumps
used in stimulation activities for oilfield service companies
▪ Full range of drilling, completion and production wellhead
systems
Broadest portfolio of solutions for the oil & gas industry
4
In the beginning
1940 1950 1960 1970 1980 1990 2000
5
Offshore soon became an emerging industry
1940 1950 1960 1970 1980 1990 2000
Subsea completions
Shallow Water
1960sFire Safe Valves Under Platform
1968
6
Early subsea technology explored many options
1979
Petrobras Enchova
Diver Assist Tree
1979
Shell Expro Cormorant
Underwater Manifold Center
1975
Petrobras Garoupa
One-atmosphere Tree
1979
Flexservice 1
First Flexible Reelbarge
1940 1950 1960 1970 1980 1990 2000
7
Further development was slowed by a cycle turn in the 1980s
1940 1950 1960 1970 1980 1990 2000
Statoil Gullfaks
Norway 1986
Statoil Heidrun
Norway 1985Buchan Alpha
UK 1974
Source: Bloomberg LLP
Oil price Jun 1983 – Sep 1986 (Brent, USD/bbl)
Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep
10
15
20
25
30
32.25
198619851984198308/01/83
8
Back on track, subsea goes mainstream
1940 1950 1960 1970 1980 1990 2000
Shell Mensa Manifold
Gulf of Mexico 1997
Statoil HOST System
North Sea 1995
0
100
200
300
400
19
60
19
62
19
64
19
66
19
68
19
70
19
72
19
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19
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80
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90
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92
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94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
Subsea well completions
Source: Wood Mackenzie
9
Technical development continues apace
Subsea Processing
Pazflor gas/liquid separator
Riserless Light Well Intervention HP/HT 15K Subsea Tree
Shell Princess
Enhanced Vertical Deepwater Tree
Deep Water
Self-Standing
and Catenary
Risers
Heated Flowlines
Integrated Production
Bundle
10
With innovation came highly complex, customised solutions
1940 1950 1960 1970 1980 1990 2000
0%
50%
100%
150%
200%
20
40
60
80
100
120
2003 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 SP
S C
ost In
cre
ase (
%)
Bre
nt, U
SD
/bbl
Brent, USD/bbl SPS Cost Increase since 2003 (%)
Source: Wood Mackenzie, Equinor
10%
15%
20%
25%
2008 2009 2010 2011 2012 2013RO
CE
(3 y
ear
roll)
Diminishing operator returns (ROCE)
Average
Source: Bloomberg LLP; average ROCE (return on capital employed)
Includes APC, BP, CVX, COP, XOM, RDS, EQNR, TOT
Subsea production equipment cost vs Brent
40% decline in ROCE
11
It was time to think differently…
12
2.0™
2.0™Compact tree
2.0™ Compact manifold
Lean, simple, and standardised solutions
13
Integrated approach redefining subsea project economics
Traditional approach
Subsea 2.0™ an enabler to iEPCI™
14
Integration to deliver value
(1) Genesis Oil & Gas Consultants TechnipFMC
Maximised
reliability
and uptime
Increased
aftermarket
capabilities
Improved
performance
over the life of
field
Project ExecutionLife-of-Field
and Maintenance
Joint SPS+SURF R&D
for improved technology
application and
combination
Shortened time to first
oil and offshore
installation through
better planning
Reduced project
interfaces and
contingencies
Strengthen leverage
on procurement
Unique asset
and
technological
capabilities
Best possible
line-up to
undertake
client
challenges
Rationalised subsea
architecture
and design
Optimised technology
applications
Improved field
performance
Conceptual Design
& FEED (1)
Engineering Procurement Equipment
supplyConstruction Installation
iFEED™ is an enabler iEPCI™ is a differentiator iLoF™ is a growth engine
15
Subsea 2.0™
iEPCI™6 monthschedulereduction
Break-even price
<$30/bblShell Kaikias
Making subsea short-cycle with Subsea 2.0™ + iEPCI™
16
And what’s beyond?
17
So, how does this fit in the market today?
18
Offshore remains critical to the future…
60
70
80
90
100
110
2016 2025
Current sources of production Conventional and other
Deepwater Shale
Deepwater Opportunity
~8.5
0
2
4
6
8
10
12
2015 Decline Incremental 2025E
Source: Rystad Energy Supply Study; October 2016 Source: Rystad Energy Supply Study, TechnipFMC; October 2016
MMb/d MMb/d
~36 million barrels / day of incremental production
required by 2025e……with a large portion to come
from deepwater
19
Outlook for increased demand; global LNG market re-energised after 3-year lull
Growth in LNG
Onshore/Offshore: Delivering projects from concept to start-up
20
Australian LNG
21
(1) All projects have reserves of 50 mmboe or above. Source: Wood Mackenzie, July 2018.
(2) Source: Shell interpretation of IHS market, Wood Mackenzie, FGE, BNEF and Poten & Partners Q4 2017 data.
(3) North America includes United States and Canada. Source: Rystad Energy.
(4) Mtpa = Million metric tons per annum.
Subsea LNG
0
20
40
60
80
100
120
0
5
10
15
20
25
30
# of FIDs Oil Price ($/b Brent)
Offshore Final Investment Decisions(1)
> Growth in Final Investment Decisions (FIDs)
for offshore projects; subsea recovering
> Project FIDs (reserves > 50mm barrels)
returned to levels last seen above $100 oil
> Market rebalancing due to strengthening
demand; market to tighten as early as 2020
> Timely sanctioning of liquefaction/regasification
projects needed to meet medium-term demand
Emerging LNG supply-demand gap(2)
Unconventional
> Reduced completions activity likely proves
transitory
> Growth in drilled but uncompleted wells
(DUCs) continues
North America onshore capex(3)
0
50
100
150
200
250
Capex (In $ billions)
Mtpa(4)
Outlook supportive of our key growth markets
22
Summary
➢Australia is in a unique position in the global gas market
➢Market has inflected but cannot support a return to the old ways
➢Sustainable future requires
➢Early engagement to identify and deliver value
➢Standardised components configured to order
➢Fully vertically integrated execution
➢Focus on total cost of ownership
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