CEO Deependable Subsea LLC November 29, 2018 | 8:40 – 9:30 Smart Competition, Smart Value Creation Trey Mebane CEO Deependable Subsea LLC

DOWNSTREAM MIDSTREAM UPSTREAM Segmentation Oil and gas is segmented into 3 primary investment areas: downstream (consumers which include each of us, petro chemical companies, energy companies, etc…), midstream (businesses focused on moving oil and gas to various places for processing) and upstream (groups focused on exploration and sourcing of hydrocarbons). Each of these groups have benefited dramatically from advances in Information Technologies, as well as derivative advancements in material sciences, chemistry, sensing and more. Digital transformation examples include: Blockchain software for efficiencies in logistics, equipment maintenance and more Drone technology for more accurate inspections of structures and infrastructures (SPE recently created a technical section on unmanned systems) Automating processes for repeatability, with continuous improvement in mind Same for both Onshore and Offshore operations. Digital Transformation is now!

Where is value created? Net Present Value UPSTREAM OIL COMPANIES NPV = LONGER & STRONGER FLOW TIME COST x DRILLING CONTRACTORS COST (EFFICIENCY) SERVICE COMPANIES LONGER & STRONGER FLOW Simply put, oil companies are investment bankers. Any investment is ruled by financial terms. Net Present Value for oil companies is to have costs lowered in all operations, and have production stay strong for the longest amount of time. This equals profits! So where do businesses choose to create value? Drilling Contractors aim to drill wells more efficiently than any others – competing on cost. Service companies want to ensure longer and stronger flow over time – both models work! These business models trickle down their respective supply chains; meaning, your customer’s bottom line is your bottom line. Again, same for both Onshore and Offshore operations.

Healthy Competition? Another Demographic Offshore Vs. Onshore Shelf to Deepwater (land can’t meet demand) Deepwater suffers, must get more efficient to compete Fracking arrives, onshore begins meeting demand But wait, water issues and midstream constraints A sign of a healthy industry is competition. It can easily be said Oil and Gas is highly competitive. If you look at how offshore started, in each case there was a simple situation of land markets not meeting demand; e.g. supply and demand. As land failed to meet demand, we began drilling near shore. Land caught up. As land failed to meet demand, we began drilling further on the continental shelf. Land caught up. As land failed to meet demand, we began drilling in deepwater. And yes, land caught up. Now, fracking promises to sustain land for sometime to come. How will this impact Deepwater? But wait, land is struggling with bottlenecks and water issues… Let’s not forget international vs. domestic!

What’s driving innovation? Where is our focus? Offshore Vs. Onshore Discussion / town hall As we look at the next 5-10 years, what competitive pressures will drive Offshore and Onshore value creation? How much further will Digital take us? What is the future of fracking? Can we export this approach to work in difficult shale plays? Where will these innovation come from; meaning, is innovation global or regional? Where are we focused in terms of innovation investments?

QUESTIONS? THANK YOU Trey Mebane CEO Deependable Subsea LLC

SESSION LEARNING OBJECTIVES Industry competition driving value creation Pace of innovation agility between Onshore and Offshore is a critical competitive variable between two demographics Onshore is benefiting from smarter logistics management in terms of drilling and water management – creating next version of frac technologies. Offshore is focusing on getting competitive on costs and mitigating risk.