Lawrence Chou GeoMarket Manager, Schlumberger China

2014 International Oil & Gas Executive Forum

Beijing, China, 18th December 2013

Schlumberger at a Glance

Drilling

Wireline

Testing Services

WesternGeco

PetroTechnical Services

Schlumberger Information Solutions

Drilling & Measurements

Geoservices

Bits & Advanced Technologies

Drilling Tools & Remedial

M-I SWACO

41 GeoMarkets in 8 Areas

125 Research, Engineering & Manufacturing Centers in over 13 countries

Approximately 120,000 People

Working in more than 85 Countries

Representing 140 Nationalities

Revenue: $41.73 billion Net Income: $ 5.36 billion R&E: $ 1.17 billion

2012 Financials

Deep Industry Knowledge Global Culture

Characterization

Technology Solutions

Production

Well Services

Completions

Artificial Lift

Well Intervention

Energy Demand Growth

Primary energy demand, 2035 (Mtoe)

China is the main driver of increasing energy demand in the current decade

India will join China in the 2020s as a key driver of energy demand growth

4%

65%

10%

8%

8%5%

OECD

Non-OECD Asia

Middle East

Africa

Latin America

Eurasia

480

Brazil1 540

India

1 000Southeast

Asia

4 060

China

1 030

Africa

2 240

United States

440Japan

1 710

Europe1 370

Eurasia

1 050Middle East

Source: World Energy Outlook 2013

% of growth (2012-2035)

Increasing Drilling Intensity and Complexity

4

Rapid growth of rig count since 2000: >100% on land, >50% offshore

Drilling industry faces increasing technical challenges

Creating a step change in drilling performance holds enormous potential

5,000

10,000

15,000

20,000

25,000

30,000

35,000

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000

up to 1975

up to 1980

up to 1985

up to 1990

up to 1995

up to 2000

up to 2005

up to 2010

35,000

Source: Industry database—Maintained by BP

Tru

e V

ertic

al D

epth

(ft)

0

Drilling System Complexity

5

Surface system operating envelope

Drillstring

interaction with

drilling fluid

Drilling tool dynamics

Drilling bit dynamics and rock

interaction

Directional tool control and

performance

Drillstring dynamic and elastic behavior

Drilling fluid properties and behavior

Drillstring interaction

with wellbore

Creating a Step Change in Drilling Performance

6

Individual Drilling Technologies Integrated Drilling Workflows

System Modeling and Prediction Drilling Automation

Shale Interest

Shale Tests

Emerging Unconventional Plays

7

Technical Challenges in Unconventional Plays

8

Areal Evaluation

Well Placement

Surface Efficiency

Well Performance

Large geographical expanse

• High-grading acreage

• Risk analysis & decision making

Variety of Scenarios

• Staying in the best pay

• Reduce trips, increase ROP

Service intensity per well

• Supply chain

• Water management

Wide range of variability

• Improving economics

• Efficient workflows

Best Practices in Unconventional Plays

Shared earth model

Effective reservoir contact

Horizontal wells

Multistage fracturing

Optimized rate of penetration

and well placement 9

Resource Savings through HiWAY Technology

10

Paradigm shift in hydraulic fracturing technology

> 20,000 treatments in 19 counties

Significant impact on production

Average increase in excess of 20%

Significant reduction in logistics, safety risks and environmental footprint

Water and proppant per job reduced 25% and 42% respectively

> 16 million barrels of water and 2.7 billion pounds of proppant saved so far

> 110,000 proppant and water hauling road journeys avoided

> 26 million pounds of CO2 emissions prevented

Integrated Workflow for Unconventional Plays

11

Structure

Lithology

Discrete

Fracture

Network

Geomechanical

Model

Optimization

Reserves

-1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0

Faults

Width

Contacts

Structure

Distribution

Azimuth

del STOIP (M m3)

Mean = 10.9 m3 106

Hydraulic Fracturing

Simulator

Seismic-to-simulation modeling workflow

Unconventional completion design optimization

Reservoir alteration due to hydraulic fracturing

Evaluation of post-stimulation impact on reservoir

Microseismic Monitoring Reservoir

Simulation

Operational Integration and Collaboration

12

Scope Commitment

Increased Engagement

Dedicated Support

Project Management

Engineering

Workflow Design

Customized Technology

Performance-Based

Traditional

Services

Integrated

Services

Integrated Project

Management (IPM)

Example of IPM Benefits

13

2007 2008 2009 2010

Drilling Time

2007 2008 2009 2010

F&D Cost

2007 2008 2009 2010

Production

2007 2008 2009 2010

Reserves

IPM Scope

Project coordination

Turn-key well construction

Production intervention

Production incentive contracts

Since 1995…

60 million feet drilled

8,000 wells drilled and completed

In 2013…

> 65 active projects involving 130 rigs worldwide

150 kboepd co-managed production

14

Growth of IPM Business Model

Lawrence Chou GeoMarket Manager, Schlumberger China

2014 International Oil & Gas Executive Forum

Beijing, China, 18th December 2013