Probabilistic Estimates of Deepwater Offshore Field Abandonment Cost 25-May-16

How to deal with uncertainty? – Probability!!! Why probabilistic? What is known? What is not known? What can change (uncertainty)? How can probabilistic estimates improve?

2014 Estimate 4 pipelines, 3 EHU, 2 drill centers, jumpers 1 subsea well TA, leave wellhead 5 subsea wells to PA leaving wellhead 1 subsea well to PA removing wellhead

2014 Estimate -> Update to 2016 2014 Probabilistic Estimate 4 pipelines, 3 EHU, 2 drill centers, jumpers 1 subsea well TA, leave wellhead 5 subsea wells to PA leaving wellhead 1 subsea well to PA removing wellhead P10 P50 P90 Subsea Field - Duration Variance $ 4,388,667 $ 5,054,011 $ 6,046,677 Well PA - Remove Wellhead - Duration Varied $ 21,108,555 $ 24,355,233 $ 29,186,019 5 Well PA - Leave Wellhead - Duration Varied $ 97,815,183 $ 113,850,544 $ 137,635,157 Well TA to PA - Duration Varied $ 14,143,240 $ 17,749,254 $ 22,954,455 Total $ 137,455,645 $ 161,009,042 $ 195,822,308

Probabilistic – Cumulative Distribution Function Well PA - Remove Wellhead - Duration Varied $ 21,108,555 $ 24,355,233 $ 29,186,019

Start to build the model What is known? Subsea field: 4 pipelines, 3 EHU, 2 drill centers, jumpers 1 subsea well TA, leave wellhead 5 subsea wells to PA leaving wellhead 1 subsea well to PA removing wellhead Define actions Identify steps and durations for each step Refine durations with minimum, most likely, maximum Define requirements & limitations of actions Run rates, trip times, time to surface, tool up, tool down, flush time, cut, etc… Define limitations due to company or vendor requirements

What is not known? Identify unknowns – that have impact Problems with wells – additional steps Potential – re-squeeze, additional plug, additional trip to recover hardware Define chance and impact – add to model Problems with operations – extended duration Extend flushing, additional WOC time Redefine max duration if can Expected issues – required contingencies Back up, stand by eqt Add duration and spread

What can change? Uncertainty Oil price Resource rates Resource availability Weather Additional costs Hope Use distribution of rates Define window of operations – revise above Apply weather percentage Apply % or cont.

Impact of modifying the model to vary rates   Estimate with fixed 2014 Rates - Duration Varied Estimate with Rates & Duration Varied Components P50 Subsea Field $ 5,054,011 $ 4,455,757 Well PA - Remove Wellhead $ 24,355,233 $ 18,639,829 5 Well PA - Leave Wellhead $ 113,850,544 $ 87,216,826 Well TA to PA $ 17,749,254 $ 13,528,814 TOTAL $ 161,009,042 $ 123,841,226

Impact of modifying the model to vary rates

Impact of modifying the model to vary rates Range of rates

Impact of modifying the model to vary rates Range of rates

Impact of modifying the model to vary rates Range of rates

How can probabilistic estimates improve? How to make a better crystal ball… Job data: Field specific data – percentage problem wells, percentage squeeze success, durations of tasks (min/most likely/max) WOC durations - effectiveness Range of rates vs date of operation Impact of previous problems – cost & duration Better information = more accurate estimate More data – larger pool

Can probabilistic estimates determine a methodology? Will use of resins be more cost effective vs risk of a repeat squeeze? Will use of Riserless intervention be more cost effective? Probabilistic analysis can better define the costs for comparison

Probabilistic analysis for the future… Questions?