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Oil & Gas Markets Index 2017 The oil & gas industry operators have experienced challenges throughout the last few years. With weak demand and low prices, it has been difficult to make long-term plans and implement strategic decisions. Only now, with oil prices back to a more stable state, is the sector beginning to emerge from its prolonged period of upheaval.

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Our Oil & Gas Markets Outlook 2017 explores the following:

Facilitator Portfolia Projecto Strategia Transactor

How has the downturn impacted sector spending?

What technologies are being integrated into the supply chain?

Can shale production success be sustained?

What energy-centric markets are exposed to market fluctuations?

ASOILPRICESRECOVER,CAN INTERNATIONALOILCOMPANIES HOLDONTOTHEBENEFITSOFCOSTREDUCTION?

Whileorganizations thathave reshaped themselves intofitter, leaner and fasterversions that can thrivewith oil at$50 abarrel remainwellpositioned, inevitably further roundsof investmentwillhave to return in order to sustain thispaceofdevelopment.According toBarclays’s latestE&PSpendingSurvey,oil andgas industry capitalexpenditures areexpected to increase by asmuch as7% in2017 as a result, following the cut backsof thepast2years. Forexample,oil-field services companieswill likely start takingbackprice concessions theygave international oil companieswhen themarket collapsed.This could add asmuch as 15% to thepriceofproducing abarrel ofoil,which in turnwould allow services company operations togetback tobreak-even levels.Newmeans of taxation could also add additional costs tobottom lines. With this inmindupstream companieswillhave to be industrious about containingotherexpenditure increases,particularly in the supply chain and resource development,withCorporateRealEstatepositioning remaining a keypartof this.

Thatmayprovedifficult,because thewaveofworker layoffsduring thedownturneliminated significant experience, knowledge, and skills.The lossof these capabilities couldpushdevelopmentproject costs up substantially if they arenot carefullymonitored, withnew recruitment and talent attraction strategies commandingheavy investment in talentprograms and workingenvironments tomeet theneedsofnew labour accordingly. Smarterfirmswillembracenewdigital initiatives as ameansofoffsettingexpenseescalation and in an attempt to add further to the cost andefficiency improvements theyhave already achieved.They will alsoneed toengagewith recentgraduates and collaboratewitheducationpractices able toprovide the skilled labour required armedwithnew ideas that willmake the futureeasier tonavigate.With somuch innovation in the sector, it shouldn’tbehard toengage youngeremployees,but companiesneed a clear and attractive talent agenda alignedwithoverarching businessplans todo so.

Forexample,Shell indicates it candrill awell today for approximately$5.5million,down a staggering56% from 2013.And thenewwells, thanks tomorepowerful fracking techniques, areyieldingmorebarrels.The average Permianwellnowproduces668barrelsperday, compared to just98barrels fouryears ago, in accordance to governmentdata.To capitaliseon this it is a caseofwhohas the scale to adapt and actquickly. It’snow amatter of rignumbers,manufacturing andoperation as to the supply levels thatwillbe achieved andno longer the availabilityofnatural resources.

OIL & GAS MARKETS OUTLOOK 2017

GLOBALOILANDGASCAPEX

June 2014 -December 2016 NUMBEROFGLOBALRIGS

US$billions

$500

4,000

U.S. Canada

7.3%

AsiaPacific MiddleEast Africa Europe LatinAmerica

3,500

400

3,000

2,500

300

2,000

200

1,500

1,000

100

500

0

0

6

2016

2017

2014

2015

2016

2015

Source:Barclays 2017E&PSpendingOutlook,BakerHughes,Strategy&Research

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