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Prediction from last year’s meeting
One year ago we
assumed these
markets would grow
in 2018
0% 5% 10% 15% 20% 25%
Lift
Trees
RigEqpt
SolidsCntr
MudLog
Testing
Packers
Mud
Directional
Tblr Svs
Bits
Chemicals
DH Tools
Land Drlg
CTS
Wireline
WellSvs
Cement
Rental
Frac
FracTrks
We also predicted $60 oil in 2018
We also predicted $60 WTI oil in 2018
Will there be an oil industry in 20 years?
• This is the question we ask on the campus of Stanford University each January as part of an MBA lecture series.
6
Is frac good or bad?• This is the question we ask everywhere and to everybody.
• Will you answer the same way the Stanford MBA students answered?
7
We asked CEOs what are the
greatest threats to continued
oilfield growth?
0% 10% 20% 30% 40% 50% 60% 70% 80%
Environment
Labor
Technology
OPEC
Economy
What are greatest threats to continued growth?
Oil demand grows due to population growth
80
85
90
95
100
105
2012 2013 2014 2015 2016 2017 2018 2019 2020
Mill
ion
bp
d
Global Oil Demand
Threats? Politics & Environment
With $60 oil in 2019, the entire industry
still grows
-20% -10% 0% 10% 20% 30% 40% 50% 60% 70%
Unit Manufacturing
Hydraulic Fracturing
Oil Country Tubular Goods
Downhole Drilling Tools
Rental & Fishing Services
Surface Equipment
Coiled Tubing Services
Completion Equipment & Services
Cementing
Well Servicing
Drill Bits
Inspection & Coating
Artificial Lift
Land Contract Drilling
Solids Control & Waste Management
Contract Compression Services
Wireline Services
Production Testing
Casing & Tubing Services
Directional Drilling Services
Surface Data Logging
Drilling & Completion Fluids
Floating Production Services
Logging-While-Drilling
Specialty Chemicals
Petroleum Aviation
Supply Vessels
Geophysical Equipment & Services
Rig Equipment
Offshore Construction Services
Subsea Equipment
Offshore Contract Drilling
2018 2019
The global oilfield
grows in 2019
-40%
-30%
-20%
-10%
0%
10%
20%
30%
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
20
07
20
09
20
11
20
13
20
15
20
17
20
19
Mill
ion
s
Annual Change TOTAL
The global oilfield
grows in 2019
-40%
-30%
-20%
-10%
0%
10%
20%
30%
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
20
07
20
09
20
11
20
13
20
15
20
17
20
19
Mill
ion
s
Annual Change TOTAL
Permian? Drilling & frac are
decoupled
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
2014 2015 2016 2017 2018 2019 2020
Permian Drilling vs Completion Footage
Permian Horizontal Completions Permian Horizontal Wells
Land Contract Drilling
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Q1 13 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 19
Millions of USD
Directional Market
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
Q1 13 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 19
Millions of USD
Frac Market
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Q1 13 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 19
Millions of USD
Frac Market
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Q1 13 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 19
Millions of USD
Offshore Contract Drilling
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
Q1 13 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 19
Millions of USD
Offshore Contract Drilling
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
Q1 13 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 19
Millions of USD
Subsea Market
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Q1 13 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 19
Millions of USD
How do oil company boards think?Short term.
• Capex discipline assuming $60 oil
• Worries about “peak demand” and climate change
• Offshore exploration takes 8-10 years for first oil
• Technology-based efficiency gains 22
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