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How ready are your assets to perform in the digital world?IIOT and the Future of Digital in Oil & Gas

How ready are your assets to perform in the digital world?Page 2

Returns in Oil and Gas are low

10%

90%

100%

0%

80%

70%

60%

50%

40%

30%

20%

Oil & Gas Cableand Satellite

HotelsAutomotivemanufacturing

Tech —Semiconductor

Telecom ServiceAerospaceand defense

Diversified Mining and metals

Companies in Quartiles by Asset Intensity

Source: public data and EY analysis ROA calculated as: Net Income/Total Assets, Asset Intensity calculated as: Operating Assets/Total Sales

1st 2nd 3rd 4th

Average Annual Return on Operational Assets by Industry 2010–2014

Airlines

How ready are your assets to perform in the digital world?Page 3

15%Digital

10%Digital

Lack of digital penetration is one driver of low returns

Rest of NOCs and independents

40% of output

Top NOCs 16 companies

40% of output

IOCs9 companies20% of output

9 to 18 (MM BOE/day)

Digital

Historically, digital in Oil & Gas focused on improved time to first oil and improved effectiveness of hydrocarbon extraction:► Engineering visualization and collaboration centers► Real-time drilling

Total: 93 (MM BOE/day)

20%Digital

► Intelligent wells► Real-time operation centers

Source: EY Research and analysis

How ready are your assets to perform in the digital world?Page 4

Big data goes mainstream

Cloud and managed

services goes mainstream

Myspace and Linkedin launch

BYOD goes mainstream

US cell phone adoption exceeds

50%

IPv6 Major Adoption

Era 2:Focus on Output, technology costs decline

Era 3:

Now is the time to accelerate investment in the Industrial IoTTe

ch C

ost I

ndex

($) W

TI P

rice

WTI Price Source: U.S. Energy Information Administration Independent Statistics & AnalysisTechnology Cost Source: Publicly available data from leading technology researchers, the Federal Reserve Board, and U.S. Bureau of Labor Statistics

Era 1:Efficiency Mattered, technology Cost to High

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20160

20

40

60

80

100

120

140

160

Cushing, OK WTI Spot Price FOB (Dollars per Barrel) Technology Costs

How ready are your assets to perform in the digital world?Page 5

IIOT can integrate the O&G value chain Quickly reducing the cost of operations

Digital inOil and Gas

7.5%Average Return on O&G Operating Assets

2–3%Improvement in production volumesDriven through OEE improvements and overall productive capacity

$5 — $10Cost of Computing Power and BandwidthToday’s cost to make a mechanical and/or electrical device “smart.”

10–20%World’s Oil Fields that are Digitally Enabled

5–10%Variable cost reductions Parking-up over-capitalised fleet and improving labour productivity

45 Average number of outside service providers it takes to run an O&G business

60%% of oil consumed outside the country of origin

15–25%Reduction in primary preventative maintenance costs by driving from calendar to condition-based maintenance

Immediate Benefits

How ready are your assets to perform in the digital world?Page 6

Harnessing the value from the IIoT requires more than adding sensors to machines and assets

By 2020

50

<3%

Billion assets will connect and Send data through the Internet1

?101101010101

0010101010101000110101000101010

Today

Of data Is tagged or used in meaningful way2

Optimized Processes Smart Assets Coordinated Resources

1. IDC report: December 2012 — THE DIGITAL UNIVERSE IN 2020: Big Data, Bigger Digital Shadows, and Biggest Growth in the Far East — https://www.emc. com/collateral/analyst-reports/idc-the-digital-universe-in-2020.pdf 2. Cisco report: The Internet of Things. How the Next Evolution of the Internet Is Changing Everything — http://www.cisco.com/web/about/ac79/docs/innov/ IoT_IBSG_0411FINAL.pdf

Process orchestration & process choreography for

faster, integrated decisions.

Mobility to synchronize internal and external

resources through a single business process.

Internet of Things to make devices & assets smart and

connected.

How ready are your assets to perform in the digital world?Page 7

Digital Oil & Gas Company of FutureIIOT enables integration and intelligent enterprise

Gas Production Processing

Oil Storage and handling

Production

Contractors

The cloud integration layer can coordinate all these entities through a single business process to optimize the end-to-end value chain to drive a specific financial result

Access Control

Finance & Accounting

Human Resources

Engineering

Purchasing

Project Management

CRM

Data Services

Functions of ERP

Cloud Integration & Process ChoreographyConnected Assets & Resources IT Environment

Capital planning

Order to cash

Business strategy

Sourcing

Invoicing

Portfolio planning

Logistics

Maintenance

Scenario planning

TransportationGateway

8

35,000 engines monitored via Predix

Fidelity 30% Detection 25%Accuracy 12 pts

100MM flight records per year

How ready are your assets to perform in the digital world?Page 9

Logistics is a material

expense and continues to

escalate

Turn cost center into a profit center

Vertical integration can transform the

customer experience

Supplier

Production DistributionSupplier

Supplier

Customer

Customer

Customer

“Enable Delivery to a customers doorstep in 60 minutes or less” Amazon Integrated Value Chain

Global delivery network that controls the flow of goods from factories in China and India to customer doorsteps in Atlanta, New York and London.

High Growth Revenue

22% CAGR

Amazon WebServices (AWS)

31% Market Share

63% Year-on-Year Growth

Amazon’s latest digital transformation Integrated Value Chain

http://www.businessfinancenews.com/27258-amazon-plans-for-a-vertical-integration-to-take-on-rivals/http://www.nurun.com/en/our-thinking/future-of-retail/moving-into-the-3rd-dimension-of-vertical-integration/

How ready are your assets to perform in the digital world?Page 10

Tesla Motors – Art of the Possible Synchronized supply chain through digital

Tesla Motor’s Inc.

Best Selling US Luxury Sedan,

2015

+50% Increase in Year-on-Year Sales to Date

Achieved Highest NHTSA Safety

Rating Recorded

Tesla’s successful entry into a highly competitive car market has been enabled by a technology driven flexible platform.

Connected Car 50% reduction in 1st year repair costs by Integrating sensors to reduce maintenance and downtime.

Scalable Orders and Purchasing

Capacity to handle 500k/year through online ordering process connecting to a real-time supply chain.

Vertical Integration of Strategic Assets

+30% cost reduction in first full year of production by building scalable “Gigabit” battery factory.

How ready are your assets to perform in the digital world?Page 11

Digital Oil & Gas Company Of the FutureRoadmap to a Digitally Enabled Integrated Value Chain & Higher ROCE

% of Integrated Value Chain that is DigitalToday | 20% O&G is Digitized

Set up the operating

platform for IIoT

Connect critical assets and add cyber security

coverage

Expand IIoTenablement across

assets in an operational platform

Enable Process Automation |

Orchestration & Field Mobility

Extend IIoT to transportation,

terminal | depots, warehouse assets

Add External Market Data &

external resource networks

Connect assets across an

portfolio | enterprise

Industrial Internet of Things

Connected Assets

ConnectedOperations

ConnectedValue Chain

ConnectedResources

ConnectedEnterprise

Port

folio

Per

form

ance

ROA | ROCE

Today 7.5% Average Return on Operating Assets

How ready are your assets to perform in the digital world?Page 12

Organizations can take the first step on the IIoT journey by organizing around three activities

Get connectedStart by connecting critical assets and machines. Connecting operational data to each other and the people who need it are crucial to begin your journey.

Get insightsUse intuitive methods to analyze data to determine true root cause and opportunities to improve or resolve. You have enhanced ability to quickly evaluate anomalies and take the correct action.

Get optimizedLeverage digital to optimize the total lifetime performance of your assets to increase availability, minimize costs, and reduce operational risks.

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