The Oilfield in 2019 Directional Drilling Trends Richard

The Oilfield in 2019 Directional Drilling Trends Richard Spears & Associates rspears@spearsresearch. com

Global Directional Drilling Market $18 $16 $14 Billions $12 $10 $8 $6 $4 $2 $0 2012 2013 2014 2015 2016 2017 2018 2019

Will there be an oil industry in 20 years? • This is the question we ask on the campus of Stanford University each January as part of an MBA lecture series. 4

Oil demand grows due to population growth Global Oil Demand 105 Million bpd 100 95 90 85 80 2012 2013 2014 2015 2016 2017 2018 2019 2020

Is frac good or bad? • This is the question we ask everywhere and to everybody. • Will you answer the same way the Stanford MBA students answered? 6

Threats? Politics & Environment

Threats? Politics & Environment SECTION 2. A new section of the Oil and Gas Act is enacted to read: "[NEW MATERIAL] HYDRAULIC FRACTURING PROHIBITED. --In accordance with Article 20, Section 21 of the constitution of New Mexico, the energy, minerals and natural resources department shall halt the issuance of new permits allowing hydraulic fracturing for the purpose of extracting oil or natural gas. " BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: SECTION 1. Section 70 -2 -33 NMSA 1978 (being Laws 1935, Chapter 72, Section 24, as amended) is amended to read: "70 -2 -33. DEFINITIONS. --As used in the Oil and Gas Act:

The only topics that matter Teachers Retirement

Global Oilfield $500 $450 $400 $350 Billions $300 $250 $200 $150 $100 $50 $0 2012 2013 2014 2015 2016 2017 2018 2019

Global Directional Drilling Market $18 $16 $14 Billions $12 $10 $8 $6 $4 $2 $0 2012 2013 2014 2015 2016 2017 2018 2019

Permian 25. 0 Mid. Continent Eastern 20. 0 Bakken East Tx/No. La 15. 0 Millions of feet Reservoir Feet Drilled Per Quarter 40. 0 35. 0 30. 0 South Texas Rockies Other US 10. 0 5. 0 - Q 4 20 Q 3 20 Q 2 20 Q 1 20 Q 4 19 Q 3 19 Q 2 19 Q 1 19 Q 4 18 Q 3 18 Q 2 18 Q 1 18 Q 4 17 Q 3 17 Q 2 17 Q 1 17 Q 4 16 Q 3 16 Q 2 16 Q 1 16 Q 4 15 Q 3 15 Q 2 15 Q 1 15 Q 4 14 Q 3 14 Q 2 14 Q 1 14

Average Lateral Lengths 11, 000 10, 000 South Texas 9, 000 Permian Mid. Continent 8, 000 Eastern Bakken East Tx/No. La 7, 000 Rockies Other US 6, 000 5, 000 Q 4 18 Q 3 18 Q 2 18 Q 1 18 Q 4 17 Q 3 17 Q 2 17 Q 1 17 Q 4 16 Q 3 16 Q 2 16 Q 1 16 Q 4 15 Q 3 15 Q 2 15 Q 1 15 Q 4 14 Q 3 14

Wells Per Pad

Global Directional Drilling Market $18 $16 $14 US Land Elsewhere Billions $12 $10 $8 $6 $4 $2 $0 2012 2013 2014 2015 2016 2017 2018 2019

Global Directional Drilling Market $18 $16 $14 Elsewhere US Land Billions $12 $10 $8 $6 $4 $2 $0 2012 2013 2014 2015 2016 2017 2018 2019

Rotary Steerable continues growing $10 $9 RSS Conventional $8 $7 Billions $6 $5 $4 $3 $2 $1 $0 2012 2013 2014 2015 2016 2017 2018 2019

Land Contract Drilling 7000 Millions of USD 6000 5000 4000 3000 2000 1000 0 Q 1 13 Q 1 14 Q 1 15 Q 1 16 Q 1 17 Q 1 18 Q 1 19

Directional Market $4, 000 Millions of USD $3, 500 $3, 000 $2, 500 $2, 000 $1, 500 $1, 000 $500 $0 Q 1 13 Q 1 14 Q 1 15 Q 1 16 Q 1 17 Q 1 18 Q 1 19

Offshore Contract Drilling $14, 000 Millions of USD $12, 000 $10, 000 $8, 000 $6, 000 $4, 000 $2, 000 $0 Q 1 13 Q 1 14 Q 1 15 Q 1 16 Q 1 17 Q 1 18 Q 1 19

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