Current and Emerging Trends in the Gulf of Mexico Andrew Slaughter, Vice-President, Energy Insight 2013 UK Trade and Investment Breakfast at Offshore Technology Conference 6 May 2013 Houston, Texas CONFIDENTIAL © 2013, All rights reserved, Cambridge Energy Research Associates, Inc., 55 Cambridge Parkway, Cambridge, Massachusetts No portion of this presentation may be reproduced, reused or otherwise distributed in any form without prior written consent.

Copyright © 2013HS Inc. All Rights Reserved. 1 Today’s Themes Gulf of Mexico production trends Key activity indicators The critical role of technology Cost and service sector trends

Copyright © 2013HS Inc. All Rights Reserved. 2 Production trends confirm the GOM shift from focus on natural gas to crude oil Thousand b/d oil equivalent

Copyright © 2013HS Inc. All Rights Reserved. 3 GOM share of US Production GOM is still a significant segment of US production

Copyright © 2013HS Inc. All Rights Reserved. Drilling resumes in the DW GOM post Macondo, but discoveries have slowed

Copyright © 2013HS Inc. All Rights Reserved. Move to deeper targets and deeper waters limits overall exploration activity 1500 m increase in average TVD 300 m increase in average WD Hotter colors indicates higher amounts of drilling activity while cooler colors indicates lower amounts of drilling activity

Copyright © 2013HS Inc. All Rights Reserved. Lower risk profile and attractive economics have pulled investment towards onshore plays

Copyright © 2013HS Inc. All Rights Reserved. Continuing advances in technology and integration expand GOM opportunity set Facilities and topsides innovation Sub-sea completions and processing Advanced seismic imaging FPSO deployment Safety and risk management systems

Copyright © 2013HS Inc. All Rights Reserved. 8 North America Supply & Demand History for Floating Rigs – GoM Focus Pre-Macondo: strong demand, strong supply and high utilization rates Post-Macondo (event occurred April 2010): large dip in demand and utilization especially in deep water segment Current utilization and rig counts now exceed pre-Macondo levels

Copyright © 2013HS Inc. All Rights Reserved. 9 North America Demand Forecast for Floating Rigs – GoM Focus Deepwater rigs being moved back into GoM Demand continues to increase as more projects are sanctioned

Copyright © 2013HS Inc. All Rights Reserved. 10 North America Day Rate Forecast for Floater Rigs – GoM Focus Three years after Macondo, activity is back above pre-event levels -- day rates for drilling rigs matching or exceeding peak levels five years ago GoM is the pioneer for deep water and is considered “cutting edge” globally Newer more efficient and powerful rigs able to command the highest day rates globally Other factors: improved permitting times and operators spending more money than they have in decades on acquiring deep water acreage

Copyright © 2013HS Inc. All Rights Reserved. 11 2) Following the disaster all available vessels pulled into action on recovery and cleanup work Operator Demand, and Utilization Was Erratic Immediately After Macondo 1) Utilization of construction vessels usually operates on a cycle 3) By the first quarter of 2011, no demand for heavy lift vessels recorded 4) In the heavy lift market, utilization has been picking up over the past year, in part due to increased demand 5) But the seasonal trough was evident again in Q1 2013

Copyright © 2013HS Inc. All Rights Reserved. In conclusion… The Gulf of Mexico remains a critical segment of US oil and gas supply Technology continues to open new prospects here and allows new technologies to migrate to other deepwater basins globally Activity has resumed strongly post-Macondo New projects will continue to fuel GOM activity for years to come