Agenda

•  Schlumberger at a glance •  Manufacturing – Perception & Problems •  Manufacturing Technology •  Manufacturing Careers •  Policy

Since the early years of the 20th century, Schlumberger has been measuring the sub surface. Intellectual curiosity and commitment to research and technology are in our roots.

Today Schlumberger is the world's leading supplier of technology, project management, and information solutions to the oil and gas industry.

Energy is Our Business

Drilling

•  WesternGeco Land and Marine Seismic •  Wireline Logging •  Testing Services •  Schlumberger Information Solutions •  Data & Consulting Services

•  Smith Bits & Advanced Technologies •  M-I SWACO •  Geoservices •  Drilling & Measurements and Pathfinder •  Drilling Tools & Remedial Services •  Dynamic Pressure Measurement •  Integrated Project Management

•  4 Areas - 27 GeoMarkets

Schlumberger at a Glance

Approximately 110,000 People

Working in more than 80 Countries

Representing 140 Nationalities •  Revenue: $27.4 Billion •  Net Income: $4.2 Billion •  Total 2011 R&E: >$1 Billion

2010 Financial Highlights

Deep Industry Knowledge

Global Culture

Reservoir Characterization

Technology Solutions

Reservoir Production

•  Well Services •  Completions •  Artificial Lift •  Subsea •  Schlumberger Production Management

Technology R&D – REMS

R&D Centers

65 Center Locations 700 Projects 2,500 Products 15,000 Employees (6000 Mfg) >$4B Int. Mfg. Rev.

Dhahran, Saudi Arabia Cambridge, UK Boston, Mass, USA Moscow, Russia Stavanger, Norway

Research

Fuchinobe, Japan Beijing, China

Sugar Land, Texas, USA Rosharon, Texas, USA Houston, Texas, USA Princeton, New Jersey, USA Edmonton, Alberta, Canada Calgary, Alberta, Canada Richmond, California, USA

Oslo, Norway Stonehouse , UK

Clamart, France

Abingdon, UK Stavanger, Norway Novosibirsk, Russia Gatwick, UK Baden, Austria

Engineering

Pune, India

Singapore

Tyumen/Ufa, Russia Singapore

Edmonton, Alberta, Canada Lawrence, Kansas, USA Houston, Texas, USA Bartlesville, Oklahoma, USA Belfast, UK

Aberdeen, UK Abbeville, France Barrow, UK Southampton, UK

Shanghai , China

Curacao, Netherlands Antilles Argentina (Villa regina, Neuquen) Hammond, Louisiana, USA

Manufacturing

Penang , Malaysia

Research, Engineering, Manufacturing, Sustaining

Schlumberger Manufacturing at a Glance

•  Historical base in the US and France •  Significant growth through acquisitions •  Global expansion to support business •  Multiple manufacturing models •  Wide variety of activities

–  Foundry –  Machining –  Assembly and Test –  Sensors –  Nuclear Sources –  Explosives –  Trucks & Pumping Equipment –  Marine Vessels

•  Rapidly evolving needs and technologies •  Mixed perception of manufacturing as a good long term

career choice –  Manufacturing is seen as being easily commoditized and exported

to low cost countries –  Innovation is not clearly connected to manufacturing –  Lack of career defined career path and technical recognition

•  Looking forward –  There are many considerations in manufacturing

strategy –  Where is the oil and gas industry going? –  What are the technology drivers?

Platt’s Model

Costing

Material Costs

•  Raw Materials

•  Purchased components & sub-assemblies

Labor

•  Labor cost / hour

•  OT policies •  Labor

productivity

Burden

•  Opex costs •  Capex costs •  Maintenance

costs •  Start up

costs

Overhead

•  Management structure

•  Re-organization costs

Logistics

•  Shipping costs

•  Storage costs

•  Tariffs

Production Costs v. Acquisition Costs

Manufacturing Technology & Processes

Factors to Consider

•  Manufacturing technology & equipment (standard v. custom) •  Technical support (in-house v. out-sourced) / Co-location of

engineering (New Product Development) •  Manufacturing capacity & global footprint •  Labor skills & availability including Manufacturing Engineering •  Automation and process control •  Quality measures (QA/QC)

R&E Investment and Hydrocarbon Resources Underexplored and underdeveloped areas Unconventional oils and gases

Increased recovery from producing fields Harsh and hostile environments

Industry Drivers •  Pace of technology development – Is it fast enough? •  Harsh environments (Temp., Press., Flow, Corrosion,

Abrasion, Erosion) •  Operational timescales - one day to 20+ years •  Reliability •  Ease of use & maintainability •  Operational and energy efficiency •  Environmental concerns (emissions, hydraulic

fracturing, waste materials) •  Governmental regulation

Manufacturing Technology Drivers •  Advanced Materials – New materials and processing

techniques. •  Alternative Materials – Scarcity or control of traditional

and/or strategic materials •  Managing the environment - Robust design and

packaging •  Miniaturization – MEMS, nano-X •  Sensing – Embedded sensors, condition monitoring •  System integration & testing •  Automation & precision manufacturing •  Green manufacturing – Emissions, RoHS •  Flexible manufacturing – adaptable facilities, lot size,

DfM •  Increased reliance on suppliers

Industry Drivers & Manufacturing Technology

Opportunities & Challenges for US Manufacturing

•  Opportunities –  R&E investment areas are well aligned with US

natural resources plays –  US academic institutions are leaders in R&D of

technologies that benefit the energy industry –  Manufacturing benefits from co-location with

engineering (concurrent engineering) –  There is significant technology overlap with other

industries •  Challenges

–  Deterioration of US as a manufacturing leader –  Industrialization of new technologies –  The “big” crew change and development of

manufacturing talent and expertise –  Government policy

Education & Hiring Challenges

•  Motivation - Career expectations and opportunities –  Manufacturing Careers –  Technical Careers

•  Change Management –  Fast pace of technology change - Strain

on internal expertise in the company –  Availability of expertise – Fresh Out vs.

Experienced Professional Hire –  Hiring a specialist vs. a generalist

•  Knowledge Management –  Knowledge capture –  Aggregation and organization of

knowledge –  Dissemination of knowledge across the

organization

•  Developing talent –  Recognition at the university level of

manufacturing as a discipline –  A mixture of skills and degree levels is

needed •  Theoretical and applied skills •  BS, MS and PhD

–  Graduate level education is vital due to the level of advanced technology

–  Internal training and development programs demonstrate commitment to people development

–  External continuing education is vital due to the pace of technology change •  Academia •  Professional Societies

Manufacturing Careers

•  Clearly defined job descriptions and requirements •  Career paths in multiple domains •  Ability to select top job preferences for career planning •  Competency management + Training & Development

SETC Goals •  Recognition •  Motivation •  Retention

SETC Pillars •  Parallel technical and management ladders •  Decoupling of SETC status from job/position •  Objective technical evaluation open to all

Schlumberger Eureka Technical Careers (SETC)

Eureka members

Senior Principal Advisor Schlumberger Fellow

Leading locally:

Geomarket/ REMS center

Leading widely: Area/

Service Segment/ REMS

Leading in SLB/Industry

Leading at project level: Contributing

independently

Policy

•  Encourage global partnerships at the governmental, industrial and academic levels.

•  Foster meaningful government /industry partnerships (a Singapore example) –  RISC – Research Incentive Scheme for Companies (targeted at Research and

Technology activities) –  IDS – Innovation Development Scheme (targeted at Development activities) –  DEI – Development and Expansion Incentive (targeted at Mfg activities) –  SDI – Supplier Development Incentive (targeted at Supply Chain activities)

•  Keep the regulatory environment as simple as possible –  Partnership and dialogue for sensible regulations –  Need for stability as a means of fostering investment –  Partnership in supporting and promoting “green” manufacturing

Conclusions

•  The US is the leader in developing Oilfield Services technologies … but it is a global business

•  The US is the leader in innovation … but other countries are aggressive and catching up

•  Industrialization is very important … making the leap from the research to the shop floor. The US must maintain skill and leadership in this area.

•  Manufacturing will locate where the best combination of people, technology, supply base, logistics and cost converge

•  Leveraging technology overlap between industries can give the US a significant advantage due to size and diversity of its manufacturing base

•  The development of manufacturing talent is imperative to the growth and stability of US manufacturing

•  Government policies are important and influential in business decisions on where to locate R&D and manufacturing operations