Discover accurate cost projections for all of your E&P projects

How do you currently estimate project costs?

How important is the project lifecycle cost in your development considerations?

How are you currently managing estimation in the dynamic cost market? How do you adapt estimates in the changing cost market?

How extensive is your cost estimation team/resource?

How much time do you spend generating a project cost estimate?

Lack of experience in the workforce and limited pool of resources?

Lets start with a basic question

The IHS family of Costs and Strategic Sourcing

Pricing and Purchasing Generic construction data Consistently forecasted Gov. industry data sources Internal provider of raw data

QUE$TOR Industry estimating tool Data base of regional

itemized cost data Day rates $/t or manhour

Market Survey System Category Management MI Detailed category

demand/supply analysis Supplier assessment/tracking Category cost models

Upstream Capital and Operating Costs Services

Supplier/vendor actual costs Scenario forecasts Foundation of project escalation Project activity model based

Upstream Costs

ServicesMSS

P&PQUE$TOR

making bettersourcing decision

assessing input prices

benchmarking project cost trends

early phase cost estimation

QUE$TOR

QUE$TOR is a project modelling, evaluation and decision support tool for global application in the upstream oil and gas industry.

It provides a quick and consistent methodology to generate current cost estimates based on standard engineering algorithms and up to date cost data.

Allowing users to optimise early phase development plans for oil and gas projects.

QUE$TOR: Cost Estimation Software

QUE$TOR is an upstream early stage cost estimation tool

QUE$TOR enables users to build project schematics to match their requirements

Project Schematics

QUE$TOR is used by cost estimators in at least 52 countries throughout the world

QUE$TOR is used by over 160 parent companies

QUE$TOR is used by 90% of the top 25 largest oil and gas companies

QUE$TOR contains and updated 60,000 cost data items

QUE$TOR: Leading the industry

80% of Global Cost Estimators use QUE$TOR as their industry standard

QUE$TOR provides its users astreamlined process for cost estimationthat is:

Simple, quick and consistent

Reliable and know accuracy

Easy to run scenarios and optimization

Based on current costs

Complex yet simple

QUE$TOR: Reliable Cost Estimation

Bottom-up Estimates for All Field Architecture

Shallow and deepwater offshore field developments

Dry and wet tree based systems

Subsea gathering systems and risers

Fixed and floating structures

Surface processing facilities

Offshore storage and export pipelines

Conventional onshore field developments

Well drilling and completion

Gathering networks

Processing facilities

Storage and export terminals

Infield and export pipelines

Prospect evaluation

Quickly generate lifecycle cost estimates to assist with prospect screening

Concept screening

Compare multiple concepts ensuring a consistent estimate basis

Conceptual engineering

Develop a preliminary design

Project benchmarking

Produce regional cost benchmarks

Asset evaluation

To aid asset acquisition and divestiture

Typical Applications

Targeting Middle of the Road EPC contract cost

Pre-sanction can be optionally added

(FEED study, Environmental studies )

Owners project management can be optionally added

Estimate Scope - CAPEX

Workflow

Cost database regional costs by cost centre Technical database local technical inputs

Select databases

Reservoir properties recoverable reserves, production profiles, well counts Select concept field architecture and export options

Input field data

Change field architecture Add and remove components Adjust individual components Processing options, pipeline diameters

Modify concept

Adjust operating costs - manning, inspection & maintenance, consumables, well work-over, insurance, project costs and tariffs

Calculate OPEX

Total CAPEX to CAPEX forecastSchedule CAPEX

Forecasts production, CAPEX, OPEX, decommissioning Exported and used for economic analysis

Generate investment profile

11

QUE$TOR Cost Summary & Field Development Schematic

12

Automatically calculates all component costs and populates the cost tree using QUE$TOR defaults in seconds

Outputs: Annual Expenditure and Production

14

Component Listing - Offshore

15

Component Listing Offshore

16

Component listing - Onshore

Upstream Capital Costs Index (UCCI)

Cost inflation has become a significant project risk within the upstream O&G

Inflation levels from 2005 to mid 2008 were running at circ 25% p/a

The UCCI tracks the change in CAPEX for a typical upstream portfolio

Index is based to January 2000 and is updated on a quarterly basis

80

100

120

140

160

180

200

220

240

2000 2002 2004 2006 2008 2010 2012 2014

Up

str

eam

Cap

ital

Co

st

Ind

ex (

2000 =

100)

UCCI vs. Brent Crude Price

Oil price is a key driver for upstream markets

Increasing oil price leads to profits, which pays for E&P investment, which produces demand

A wide range of variables are used to forecast cost inflation scenarios

IHS Global Scenarios form the basis of the forecasts

0

20

40

60

80

100

120

140

160

80

100

120

140

160

180

200

220

240

2000 2002 2004 2006 2008 2010 2012 2014

Av

era

ge m

on

thly

Bre

nt

cru

de p

rice (

$/B

BL

)

Up

str

eam

Cap

ital

Co

st

Ind

ex (

2000 =

100)

Release Process for Cost Data

19

A new version of QUE$TOR is released twice per year, cost database updates are included in every release to reflect current prices

May release Q1 prices

November release Q3 prices

For each release, we provide updates to all of the regional cost databases

17 Offshore regional databases

11 Onshore regional databases

Continuous, year round process

Focus driven by market changes

Data

Collection

Single data-input review

Compare with expectations and market trends

Data Benchmarking

Generation of average unit costs

Update of main exchange rates

Database Updates

24 Benchmark projects are run

Compared against previous release

Project Benchmarking

Cost Data Sourcing for QUE$TOR

QUE$TOR cost analysts collect data year round

Understanding the dynamics of key upstream markets

Improving our regional cost networks

Researching emerging technology costs

20

Leverage IHS expertise

Maximize public domain sources

Subscribe to 3rd party data

Relationships with vendors

Relationships with operators

Understanding Upstream Costs

21

RigPoint: Indonesia rig availability

Our teams are constantly working to keep QUE$TOR updated with the latest cost data. In 2013 additional capabilities included:

HIPPS (High Integrity Pressure Protection System)

Bulk CO2 Membrane separation

Windows 8 support

Hull transportation costs added

Electrical buildings

Included editable weather downtime factors

Ability to set flow line design pressure in subsea

Improved acid gas removal system estimation

QUE$TOR: Developments in 2013

Global Data Collection

Internal Expert Reviews

Developing Latest Models

Our teams are constantly working to keep QUE$TOR updated with the latest cost data. Additions in 2014 will include:

Introducing QUE$TOR technical committees. The first to be organized in February 2014

LNG module

HPHT

Circular FPSO

Copy/Paste duplication

Sulphate removal

Heavy oil enhancements

Metrics reporting

QUE$TOR: Planned developments for 2014

Shell is building worlds largest Offshore floating facility ever made at an estimated cost of $13 Billion*

CERA Cost Forums

IHS CERA Methodology

The IHS CERA Costs Forums are designed to help clients address a dynamic

costing environment against shifts in industry fundamentals and geopolitical shocks.

Identify Fundamental Costs Drivers

Measure Performance

Conduct Root Cause Analysis

Determine Costs Outlooks

27

Cost Drivers Market Indices

Operations

Maintenance

Facilities I&M

Logistics

LogisticsWell Services

Offshore Rigs

Land Rigs

Installation Vessels

Yards & Fabrication

Equipment

Subsea

Bulk Materials

Steel

Construction Labor

Engineering & PM

Labor

Steel

Equipment

Civils

Engineering & PM

Electricals

UOCS UCCS DCCS

28

Measuring Performance

The portfolio index collectively monitors costs for a virtual portfolio around the world and is indexed to the year 2000 (2000 = 100).

The portfolio index collectively monitors costs for a virtual portfolio around the world and is indexed to the year 2000 (2000 = 100).

Portfolio Index

Each of the primary markets related to each cost forum are measured individually and independently and indexed against the year 2000 (2000 = 100). These markets evaluate current and historic trends related to rates and prices and provide the foundation for root cause analysis.

Each of the primary markets related to each cost forum are measured individually and independently and indexed against the year 2000 (2000 = 100). These markets evaluate current and historic trends related to rates and prices and provide the foundation for root cause analysis.

Market Indices

OPEX Markets

Upstream CAPEX Markets

Downstream CAPEX Markets

UOCI

UCCI

DCCI

Performance

29

Example Upstream Portfolio

Canada OffshoreUS Onshore GasAlaska Onshore OilGOM Deepwater (2)

Trinidad & Tobago Onshore GasColumbia Onshore OilBrazil Onshore GasBrazil Deepwater (2)

North Sea ShallowNorth Sea Deepwater (2)

Nigeria Onshore OilNigeria DeepwaterAngola OffshoreAngola DeepwaterSouth Africa Onshore Gas

Libya Onshore GasSaudi Arabia Onshore OilOman Onshore Gas

Russia DeepwaterRussia Onshore GasKazakhstan Onshore OilAzerbaijan Shallow Water (2)

China Onshore OilMalaysia Onshore GasIndonesia DeepwaterAustralia Shallow WaterIndia Onshore Gas

Root Cause

Conduct Root Cause Analysis

IHS CERA Cost

ForumOil $

Natural Gas $

Supply/Demand

GDP

FX

31

Outlook

Outlooks

Time Period: 1 to 20 years

What: Portfolio Index and Market Indices

Approach: Outlooks leverage the materials, frameworks, and processes developed by the IHS CERA Global Scenario Study. In this study, three separate scenarios (Base, High, and Low) help navigate the assumptions necessary to support the long-term outlooks. Key inputs are oil price, natural gas price, GDP, oil supply, oil demand, gas supply, and gas demand as well as supporting story lines that paint the energy picture.

Determine Costs Outlooks

IHS Global Scenarios

EXPANSION OF GLOBALIZATION Growing global trade and investment Tension related to greenhouse gas (GHG) policy and nuclear

weapons proliferation Global institutions adapt to crisis and new balance of power Evolutionary changes in energy demand and supply

PAIN AND FEAR Pain and fear drive innovation and environmental policy Revolutionary increase in electrification of vehicle fleet Growth in global greenhouse gas (GHG) emissions slows

dramaticallyMeta

ECONOMIC VOLATILITY Second Great Recession Protectionism leads to a Long Slowdown Little change in energy demand, supply, and technologyVortex

Global Redesign

32

33

Henry Hub Price outlookBrent Price Outlook

Source: IHS CERA.

Long-Term Oil and Gas Price Outlook

IHS Upstream Capital Costs Index UCCI

Data in this table is for Global Redesign only

Source: IHS CERA.

Year Index YOY % Chg.

2012 240 (Q4) Up 5% (Q1-Q4)

2013 261 Up 8%

2014 279 Up 7%

2015 293 Up 5%

Up 3.3%

IndexQ4 2011220Q1 2012227

34

Notes: 1. Historical indices include escalation, inflation and currency exchange (USD)2. Forecasts include escalation and inflation but no FX movements

Example deliverable: UCCSPortfolio Index

Steel Products IndexCost Changes

Global steel costs were relatively flat in the 1Q 2012

Buying has resumed in Asia after the Chinese New Year holiday

US prices were flat. Import prices from Asia increased, but remained lower than domestic US pricing, keeping prices in check

European prices increased by 0.2% in the quarter in US$ terms (2.6% in )

OCTG costs increased globally by 0.5%, with pricing flat in the US but increasing slightly in Europe and Asia, driven by drilling activity and imports to the North America

Alloy seamless casing OCTG prices increased globally, while tubing decreased

Linepipe costs decreased by 1.3%, with overcapacity and more mills coming onstream in the next few years

Offshore

Rigs

Land

Rigs Installation

VesselsYards &

FabricationEquipment

Subsea Equipment

Steel Products

Bulk

MaterialsConstruction

LaborEngineering

& PM

Down 0.1%

35

Market Overview Q4 2011 to Q1 2012

IndexQ4 2011 292Q1 2012 291

Notes: 1. Historical indices include escalation, inflation and currency exchange (USD)2. Forecasts include escalation and inflation but no FX movements

Example deliverable: UCCSMarket Index Scenarios

Breakout Indices

Market Changes

Iron ore prices have decreased, driven by decreased steel production in Europe and flat Chinese demand

Coal shipments from Australia to China are increasingly being replaced by inland shipments from Mongolia

Transportation costs increased on higher fuel costs

Regional IndicesRaw MaterialsQ4 2011 to Q1 2012 Price Changes (USD)

Structural steel prices declined in Asia and Europe, reflecting regional slowdowns in construction activity

Overcapacity kept linepipe prices in check in all regions

Rebar prices were up primarily due to speculation of higher scrap prices in upcoming months

36

Offshore

Rigs

Land

Rigs Installation

VesselsYards &

FabricationEquipment

Subsea Equipment

Steel Products

Bulk

MaterialsConstruction

LaborEngineering

& PM

Example deliverable: UCCSMarket Index Regional Breakout

Market Trends

Trends

Raw steel prices will vary depending on region and type of steel

Demand growth in 2012 will be positive in the United States and Asia but will decline in Europe

Supply is ample and lead times are normal

China has ramped up production after the New Year celebrations, and restocking has begun

Imports are flowing to the United States due to steep discounts, keeping US prices in check

Traditional trade flows will shift, exports will flow from Asia to Europe, as the dollar weakens and more European mills close

Pipe pricing is as low as it will be for 2012, and will likely rise for the rest of the year

OCTG demand is expected to grow on high oil prices which will offset a decline gas drilling

Drivers

Supply, demand, GDP are the main drivers for this market

Changes in exchange rates can lead to shifts in trade patterns

Projected Trends

Market Q4 2012 2013 2014

Global Redesign 6% 14% 5%

Metamorphosis 3% 6% 14%

Vortex -6% -8% -13%

Regional ForecastsGlobal Redesign

37

Offshore

Rigs

Land

Rigs Installation

VesselsYards &

FabricationEquipment

Subsea Equipment

Steel Products

Bulk

MaterialsConstruction

LaborEngineering

& PM

Note: Forecasts include escalation and inflation but no FX movements.

Example deliverable: UCCSMarket Index Regional Forecast

Six-month review

38

May 2012

Houston Forum

May 2012

Q1 Market Update

July 2012

Q2 Market Update

MSS and CCAF Cost Alignment

Aug/Sept New Excel Workbook

Ongoing Forecast

Work

October 2012 15th

CCAF London Forum

Q3 2012 Market Update

Houston Workshop Items:

Consistent Work Book Format

Update Regional Forecasts

Review Portfolio

Portfolio Recommendation

Chineses Contractors

Local Content Review

MSS and CCAF Overlap Review

Details behind Cost of Oil

Cost of Oil

The methodology calculates regional costs through the following steps

Determine the cost of exploration, including appraisal wells but excluding license, lease, or purchase costs.

Determine the cost of development, including any relevant risk premiums.

Determine the cost of operations.

Apply the fiscal model to determine the oil and gas price required for a 15% IRR and highlight the areas where project development is viable at current oil and gas prices

Cost of Oil

Q1 2014Equivalent Brent

price ($/bbl)10% IRR

Equivalent Brent price ($/bbl)

15% IRR

Capex($/bbl)

Opex($/bbl)

Exploration ($/bbl)

Saudi Arabia 21.07 22.77 3.73 2.15 0.04

Iran 27.07 29.77 4.63 3.15 0.04

Libya (current situationmakes costs uncertain)

Uncertain Uncertain Uncertain Uncertain Uncertain

Egypt 40.06 43.81 19.48 11.31 0.37

Mexico 44.71 48.95 5.94 4.64 0.32

China 47.23 52.61 18.08 8.93 0.41

Argentina 49.91 51.34 6.84 5.64 0.32

Russia with export tax and tariff

48.0886.67

54.1492.69

11.24 6.46 0.07

US Tight Oil 50.02 60.19 18.65 11.45 0.10UK North Sea (shallow water)

51.51 60.04 11.52 12.53 0.40

Brazil 54.16 63.28 12.88 12.50 0.27

US GOM (deepwater) 55.40 63.96 17.29 13.61 0.54

Norway 61.21 67.29 14.07 15.34 0.46

Angola 64.00 74.20 17.28 13.52 0.55

Nigeria 67.86 78.57 20.88 13.92 0.10

SAGD 72.24

Mine 108.34

41

Current cost of oil for selected new projectsBreakeven price at 10% & 15% IRR

Q1 2014Natural gas price

for 15% rate of return ($/Mcf)

Capex($/Mscf)

Opex($/Mscf)

Exploration ($/Mscf)

Iran (uncertain for newprojects)

3.12 1.50 1.02 0.02

Oman 3.80 1.70 1.12 0.01

Russia 4.04 1.80 1.14 0.04

Peru 5.39 2.41 2.04 0.05

Algeria 4.67 1.95 1.75 0.05

Egypt 5.05 2.20 1.95 0.04

Argentina 5.75 2.83 2.03 0.04

Australia 5.83 3.19 1.47 0.07

Norway 5.56 3.00 2.37 0.09

Azerbaijan 5.70 1.97 2.14 0.03

Thailand 5.86 2.66 2.05 0.04

Nigeria 6.45 3.13 1.76 0.03

42

Current cost of gas for selected new projectsBreakeven price at 15% IRR

Global breakeven cost stack

43

The range of full cycle break even prices is very wide for US tight oil and deep water projects, although some projects costs are highly skewed

Proof of our commitment

1,200world-class experts

and researchers

1,400industry analysts

800software developers

140+global offices