Introduction

We are excited to share with you some of our experiences in Benchmarking & Best Practices, gained from working with 100 oil & gas companies in 4 continents. We would also be pleased to also provide you with a copy of our International NL, discussing benchmarking and South American gas issues.

Because of the wide range of public and private oil & gas companies represented at the WPC, and the even broader range of your assets, we have selected examples from oil & gas fields, both onshore and offshore, including Shelf and Deepwater. While the data includes results from many clients, all is presented on a blinded, confidential basis.

I would like to recognize the contribution our colleague Adrian Goodisman, head of our E&P Services, who recently spoke in many countries as a Distinguished Lecturer for the SPE, and Gordon Clarke, Senior Associate.

Discussion Topics Our concept is to discuss business issues across the Life Cycle of oil and gas fields - rather than just one moment in time. Our aim is to show how Benchmarking and Best Practices can lead to specific actions to enhance performance.

The topics we will cover are:

  • Production/OpEx

  • Finding & Development Cost, including Drilling Cost

  • People Effectiveness.

Main Drivers of When you are looking into optimizing the economics of new discoveries and existing production, E&P Economics one needs to look at the variables that drive those economics.

Certain drivers are controllable, other drivers are not, e.g. oil companies can't control prices.

Reserves booked and exploration success are only partly controllable.

One of the main controllable items is the resources that you employ for capital development, and operations.

Some of the economic drivers that you can impact are: · Finding & Development Cost · Drilling & Completion Efficiency · Production Rate BLOCK 1 - - REVIEW AND FORECAST PAPERS 141

USING BENCHMARKING & ‘BEST PRACTICES’ TO OPTIMZE ECONOMICS FOR NEW DISCOVERIES & EXISTING PRODUCTION

  • People Efficiency.

Our talk addresses these controllable drivers, and some results of our Benchmarking work.

Typical Phases In benchmarking it is important to recognize the nature of the projects or assets being compared.

This chart presents the typical phases in the life of an oil or gas field. The vertical scale is the production rate; the horizontal scale is years. Below the chart are the strategic drivers for each phase:

  • Phase 1: Discovery and Early Development: your incentive is to develop the resource efficiently (re capital), and to do it quickly to start the recovery of capital spent.

  • Phase 2: The field is young and still in development; the incentive is to grow production rapidly to achieve the peak rate.

  • Phase 3: Mid-life: the field has been fully developed and the incentive for opera

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