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Valuation Mod-1. Chris Jennis. Oil and Gas Industry. Industry Overview. Offer support services to companies involved in oil and gas extraction and mining. Involved in drilling , taking core samples, and making geological observations at prospective work sites.
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Valuation Mod-1 Chris Jennis
Industry Overview • Offer support services to companies involved in oil and gas extraction and mining. • Involved in drilling, taking core samples, and making geological observations at prospective work sites. • Manufacture oil and gas equipment and underground mining machinery.
Industry Snapshot Source: Ibisworld.com
Industry Terminology DAY RATEThe daily price charged to a producer for a drill rig, drilling and the associated costs of personnel and routine supplies.DAYWORK CONTRACTA work agreement that provides a basic day rate when drilling and lower rates when the rig is moving or when drilling operations are interrupted or restricted.DRILLING RIGA machine used to drill holes for oil and natural gas wells. DRILLSHIPA ship fitted with oil and gas drilling equipment.HYDRAULIC FRACTURING (FRACKING)The process of utilizing pressurized water, chemical additives and propping agents to fracture rock layers and release petroleum, natural gas or other substances so that they can be extracted. JACK-UP RIGAn offshore oil rig with a floating hull and retractable legs that can be lowered to the seabed for support.SEMI-SUBMERSIBLE RIGA mobile offshore drilling or production unit that floats on the water’s surface above the subsea wellhead and is held in position either by anchors or dynamic positioning.WELL LOGGINGThe practice of making a detailed record (a well log) of the geologic formations penetrated by a borehole. Source: Ibisworld.com
Business Locations Source: Ibisworld.com
Schlumberger Background • Schlumberger (NYSE:SLB) is the world’s leading supplier of technology, integrated project management and information solutions to customers working in the oil and gas industry. • Founded 1926 • Headquartered in Houston, TX • Three groups: Reservoir Characterization, Drilling, Production • Revenue of $41.73B (FY 2012) • 120000+ employees in 85 different companies 2012 10-K
Porter’s Value Chain Model Firm Infrastructure: Exploration, Production, Transportation, Refining, Marketing Human Resource Mgmt: Personnel, recruiting, training Technology: Wireline, WesternGeco, Pathfinder, Well Services, Subsea, Water Services, etc Procurement: Mechanical or electrical parts, project management, legal expertise • Exploration • Rights to explore • Graphing • Plotting • Monitor and evaluate well production • Developing • Progress into reserves • Sell off • Production • Transporting • Movement through truck and rail and pipelines • Different routes and markets • Manufacturing • Create high value assets • Convert crude oil into finished products • Marketing • Distribute and sell refined products 2012 10-K
SWOT Analysis • Strengths • Global • High R&D • Market share • Brand equity • Pricing • Management/ Employees • Weaknesses • Legal issues • Environmental issues • Oil spill controversies • Opportunity • Acquisitions of competition • Increasing demand for fuel • Threats • Government regulations • High competition • Environmental laws • Economic instability