Copyright © 2017 by The Rapid Response Institute LLC and Pangea Global, LLC All rights reserved.

The Rapid Response InstituteMake Oil & Gas Great Again:

A Series About < $60 Oil

Does You Company Return Its Cost of Capital?January 2017

Discussion Points• About Us• Today’s Major Challenges• Return on Your Cost of Capital

Issues• Enabling Operational Excellence• Enabling Your Success

Jeffrey J. Brown, MBA• Over 30 years oil and gas experience

• Executive Leadership• Coaching and Consulting

• Project Developer• Gas Fired Power Plants• Gas Pipelines

• Contributing Author: Shale Gas Revolution a Lawyer’s Guide, ABA• Economist and Financial Analyst

• Over 30 years technical and senior executive management experience primarily in the energy sector.

• Total direct sales of over $ 1 billion during career • Author of six books and has written extensively about the field of

operations management and decision support. • Managing Director of The Rapid Response Institute, a firm that focuses

on providing its customers with solutions enabling operations excellence and regulatory compliance management and the CEO of OARS360, Inc.

• A serial entrepreneur he has also served on Halliburton Energy Services Leadership Team, VP of Energy at Oracle and an early proponent of the Digital Oilfield and real time process systems.

• He hold a BS in Physics, MBA and Doctor of Business Administration• Follow him on LinkedIn and Twitter and read our Governing Energy blog

Dr. Scott M. Shemwell

Today’s Major Critical Issues• Significant Crude Price Decline

• Severe Financial Crisis• Large Reduction in Force

• Operational Excellence is a Focus• Pressure on Management and Technical Staff• Layoff Results in loss of Key Industry Knowledge• Capital Markets

• No Relief from Regulators or Public• Culture of Safety is Mandatory• All Economic Participants ~4,500 companies

Cost of Capital

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%North American E&P Sector

Excess Return to Capital 2004-14

StarsContendersVulnerableStrugglingTroubled

-1000%

-800%

-600%

-400%

-200%

0%

200%Market Premium to Fair Value, % of Market Cap

End of FY 14

Premium ValueMedium ValueModest ValueDiscounted Value

-6000%

-5000%

-4000%

-3000%

-2000%

-1000%

0%

1000%Market Premium over Fair Value, % of Market Cap

End of FY 15

Premium ValueMedium ValueModest ValueDiscounted Value

Strategy

Processes People

Loyal Stake Holders

Alignment

"Would you tell me, please, which way I ought to go from here?""That depends a good deal on where you want to get to," said the Cat.

Lewis Carroll, Alice in Wonderland

"Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat."― Sun Tzu, The Art of War

“Great vision without great people is irrelevant.” -Jim Collins, Good to Great

Operational Excellence

“Operational Excellence is a methodology helping organizations grow and sustain

operational standards in today's environment of government regulation and consumers',

communities', and NGOs' expectations.”

- Society of Petroleum Engineers

Operational Excellence Criteria

• Commodity Trading Range

• All that’s Left!!• Asset Sale• Stack Equipment• RIF• M & A• Restructure• Cost of Capital

Value from OE• World-class operational execution can add up to 30 percent of value

to the production asset base.• Up to 80 percent of costs are upstream project time issues, e.g.,

optimizing equipment, material and facilities, and delivery times.• 50 - 75 percent are engineering productivity constraints, such as

frequent and last minute project change orders, and “weak-performance cultures and broken leaning curves.”

- McKinsey

Next Steps

Action Plan• One Page Form

• Sent After Webinar• Your Current Challenges

• Cost of Capital• Operational Excellence

• One Hour of Online Consultation

• No Charge

Review• Today’s Major Challenges

• Return on Your Cost of Capital Issues

• Enabling Operational Excellence

• Enabling Your Success

Video of this Webinar & Additional Informationhttps://youtu.be/hOjVd0m12lc

www.theRRInstitute.com

www.Pangea-Global.com