Maersk Oil. Company profile 2014

Transcription

1 Maersk Oil Company profile 2014

2 3 Contents Our world Maersk Oil Vision and values 4 In brief 6 Responsible operations 8 Historic milestones 10 Maersk Group In brief 12 Business Units 14 Key figures 16 Global activities Overview 20 Denmark 22 Qatar 24 Algeria 26 United Kingdom 28 Kazakhstan 30 Norway 32 Brazil 34 U.S. Gulf of Mexico 36 Kurdistan Region of Iraq 38 Angola 40 Greenland 42 Technical capabilities Introduction 46 Subsurface 48 Well engineering 58 Production technology 62 Improved and Enhanced Oil Recovery 66 Research and innovation Introduction 72 Maersk Oil Research and Technology Centre 73 TriGen 74 BioRec 76 The P 3 Project 77 Plant-wide De-oiling of Production Water using Advanced Control 78 Research in Smart Injection Water 79 For more information about Maersk Oil, please visit the website at Updated June 2014 / Maersk Oil Design Team

3 4 Our world - Maersk Oil Our world - Maersk Oil 5 Maersk Oil s vision Values Vision: the natural upstream oil and gas partner; navigating complexity, unlocking potential. As a member of the A.P. Moller - Maersk family of companies, Maersk Oil lives by the values of the Group. The values are at the core of Maersk Oil, and are a key element of the company s vision and way of doing business. THE NATURAL PARTNER NAVIGATING COMPLEXITY UNLOCKING POTENTIAL CONSTANT CARE Take care of today, actively prepare for tomorrow Maersk Oil recognises that its partners and partnerships are valuable. The company understands and appreciates its partners needs and goals, and delivers on given promises. Maersk Oil respects the individual, helps others to succeed and contributes to a positive working environment. Maersk Oil is dedicated to mastering its destiny through creative problem solving and innovative commercial solutions based on its values. The company s strong, broad technical and commercial competencies will help it find simple solutions to complex problems. Maersk Oil will be the expert in recognising opportunities, understanding and managing risks. The company s teams and individuals are empowered to create, innovate and deliver within a framework of effective processes. The key to success is persistence, determination and commitment. HUMBLENESS Listen, learn, share, and give space to others UPRIGHTNESS Our word is our bond Strategic focus: Incident free and profitable entitlement production growth towards 400,000 boepd with a return on invested capital of at least 10%. Value matters more than volume. OUR EMPLOYEES The right environment for the right people OUR NAME The sum of our values: passionately striving higher

4 6 Our world - Maersk Oil Our world - Maersk Oil 7 Maersk Oil in brief Maersk Oil is an international oil and gas company with a track record spanning more than 50 years. It focuses on pioneering technologies and harnessing talent to continue to operate safely and successfully, creating value for partners and host governments. To solve the puzzle of the tight reservoirs in the Danish North Sea, its home for more than 50 years, Maersk Oil developed a suite of innovative tools and techniques which it subsequently adapted to the giant but complex Al Shaheen field, offshore Qatar. Maersk Oil now produces 85% of Denmark s oil and gas and over a third of Qatar s oil output. These experiences generated a spirit of creative problem-solving and led to an innovative deployment of technology, which has helped Maersk Oil to spread its wings across the globe. It now has businesses in several countries and a broad portfolio that stretches across a wide variety of geological, geographical and operational conditions. Maersk Oil has experience in geological environments such as chalk and shelf carbonates, fluvio-deltaic and deepwater clastics and presalt. Its operations range the harsh offshore Arctic seas of Greenland to the arid steppe of Kazakhstan. The company is furthermore developing expertise in difficult operating conditions such as deepwater and high pressure, high temperature. As part of the A.P. Moller - Maersk Group, which has existed for more than 100 years and operates in more than 130 countries, Maersk Oil is backed by a global conglomerate that is renowned for its long-term investment strategies. MAERSK OIL BOARD OF DIRECTORS Maersk Oil s business is governed by its Board of Directors, which consists of: A.P. Moller - Maersk Chairman Michael Pram Rasmussen A.P. Moller - Maersk CEO Nils S. Andersen A.P. Moller - Maersk CFO Trond Ø. Westlie MAERSK OIL EXECUTIVE TEAM Jakob Thomasen, CEO Graham Talbot, CFO Gretchen Watkins, COO Troels Albrechtsen, Head of Corporate Technology & Projects Mikkel Falkenberg, Head of Legal Jón Ferrier, Head of Business Development & Strategy Wells Grogan, Head of Corporate HSE Lars Nydahl Jorgensen, Head of Exploration Bruce Laws, President of Maersk Oil Inc. Stina Bjerg Nielsen, Head of HR COMPANY DETAILS Mærsk Olie og Gas A/S, Esplanaden 50, 1263 Copenhagen K, Denmark. Mærsk Olie og Gas A/S is registered as a Danish company, company no.: USD million Maersk Oil A.P. Moller - Maersk FINANCIAL HIGHLIGHTS Revenue 9,142 10,154 47,386 49,491 Profit/loss before depreciation, amortisation and impairment losses, etc. (EBITDA) 5,760 7,156 11,372 11,797 Depreciation, amortisation and impairment losses 1,668 1,895 Gain on sale of non-current assets, etc., net Share of profit/loss in associated companies Profit/loss before financial items (EBIT) 4,050 5,328 7,336 7,694 Tax 3,004 2,884 Net operating profit/loss after tax (NOPAT) 1,046 2,444 Cash flow from operating activities 3,246 3,857 8,909 7,041 Cash flow used for capital expenditure -1,800-1,959-4,881-5,822 Invested capital 6,478 6,920 Return on invested capital after tax (ROIC) 16.2% 35.7% 8.2% 8.9% Exploration expenses, net 1,149 1,088 Average share of oil and gas production (thousand barrels of oil equivalent per day) Average crude oil price (Brent) (USD per barrel) Additional financial information for Maersk Oil and the A.P. Moller - Maersk Group is available on and investor.maersk.com.

5 8 Our world - Maersk Oil Our world - Maersk Oil 9 Responsible operations As an onshore and offshore operator in both established oil producing and frontier regions, Maersk Oil recognise that its activities have the potential to have an impact on employees, the environment and local communities. Maersk Oil strives to have a positive impact where it operates through local employment, training, research and investment. Demand for energy has increased significantly over the last 20 years and to access additional resources Maersk Oil has entered new challenging environments. Maersk Oil is committed to listening to stakeholders and partners to understand all impacts from our business and manage them accordingly. Maersk Oil not only considers this the right thing to do, but also an essential course of action if it is to be regarded as a natural partner by governments and peers. HEALTH, SAFETY, ENVIRONMENT Safety performance is a top priority for Maersk Oil. From top management to frontline staff, all employees are committed to an Incident-Free Maersk Oil. This principle is based on a belief that incidents are never inevitable and never acceptable. Maersk Oil recognises that safety is not just influenced by human factors; it also requires systems and controls to be robust and effective to prevent any accidents. Assessments of process safety have been carried out in all oil and gas producing locations. In 2013 Maersk Oil focused on reducing the risk of high potential events while pursuing ambitions towards Incident-Free environments. Maersk Oil uses established international impact assessment methodologies to understand and avoid any potential negative impact on the social and natural environment. It also adheres to certified management systems to control any such impact. All producing units are certified to the international standard ISO For Maersk Oil, Corporate Social Responsibility is about conducting business in a responsible way. In all countries of operation, Maersk Oil engages in projects that promote sustainable development such as whale shark research in Qatar and initiatives on health and education in Angola. An Incident-Free Maersk Oil Maersk Oil started the journey to become Incident- Free in Around 6,000 employees and contractors attended workshops to establish a shared commitment to safety. Now the focus is on turning the Incident-Free mindset into actions and improve performance, which is an effort led by everyone within Maersk Oil at all levels. CORPORATE SOCIAL RESPONSIBILITY Maersk Oil believes that insisting on a socially responsible approach to oil and gas exploration and production helps gain and maintain the licence to operate. It provides confidence to all Maersk Oil s stakeholders and enables better access to resources and people. INVESTING IN PEOPLE AND COMMUNITIES Maersk Oil is a signatory to the UN Global Compact (UNGC) and participates in the UNGC Lead Programme. This means that the company s commitment to sustainable development goes beyond compliance and that it actively works to develop and implement local CSR actions and strategies in all countries of operation. In its operations, Maersk Oil continuously aims to identify potential impacts on people and the environment from business activities and ensure that opportunities for local engagement and partnerships are captured. Maersk Oil has dedicated policies and guidelines for social investment and community relations that focus on how to identify and deliver value-adding projects in different national and local settings. The company supports a wide range of projects spanning from health and education and local capacity building to road safety and environmental protection. Common to all projects is the wish to support host states in their efforts to improve local socio-economic development. PROMOTING RESPONSIBLE BUSINESS PRACTICE Maersk Oil wants to be the partner of choice and is committed to conduct business in a transparent and responsible way. The company has supported the Extractive Industries Transparency Initiative (EITI) since The company has also established a strong compliance programme to limit the risks of corruption. The programme provides for risk assessments, thorough due diligence of business partners as well as integration of anti-corruption clauses in contracts. In addition, training of employees is conducted every year at a global level.

6 10 Our world - Maersk Oil Our world - Maersk Oil 11 Historic milestones Kraka, the first oil discovery in the North Sea. Maersk Oil becomes operator of field developments and some exploration. Breakthrough with horizontal wells. Maersk Oil is awarded a licence in Qatar, where the giant Al Shaheen field is later developed. Maersk Oil enters Kazakhstan. Maersk Oil enters U.S. Gulf of Mexico. Chissonga deepwater discovery in Angola. Maersk Oil enters Kurdistan Region of Iraq Arnold Peter Møller is awarded the concession for Danish oil and gas extraction. Danish Underground Consortium (DUC) established. First oil from the Dan field in the Danish North Sea. First gas from the Tyra field in the Danish North Sea. Maersk Oil enters Algeria and today it is one of our most profitable business units. First oil from the Al Shaheen field in Qatar. Maersk Oil acquires Kerr- McGee s assets in the UK. The Culzean discovery in UK. Discovery of the giant Johan Sverdrup field in Norway.

7 12 Our world - Maersk Group Our world - Maersk Oil 13 Maersk Group in brief 135 countries A.P. Moller - Maersk is a worldwide group of companies devoted to lasting success in shipping, and oil and gas. As well as being one of the world s largest shipping companies, the Group is involved in a wide range of activities in the energy, transportation, offshore and retail sectors. STRATEGIC DIRECTION A.P. Moller - Maersk s aspiration is to continue building a first class business. This will be achieved through continued investment in its five core growth businesses: Maersk Line; Maersk Oil; APM Terminals; Maersk Drilling; and Services and Other Shipping. The Group aims for long-term profitable growth, combining focused innovation, a performance-based culture and the philosophy of Constant Care to build and maintain leading positions in attractive industries and growth markets. LEADERSHIP The Executive Board handles day-to-day management and is responsible for the Group s financial results and business growth. The Executive Board consists of Nils Smedegaard Andersen, Group CEO; Trond Westlie, Group CFO; Kim Fejfer, CEO of APM Terminals; Claus V. Hemmingsen, CEO of Maersk Drilling; Jakob Thomasen, CEO of Maersk Oil; and Søren Skou, CEO of Maersk Line. HERITAGE The Group was founded by Arnold Peter Møller in Following Arnold Peter s death in 1965, his son, Mærsk Mc-Kinney Møller, assumed leadership of the Group, which thanks to his initiative, foresight and enterprise has grown into a major player in global shipping and energy. Until he passed away in April 2012, Mærsk Mc-Kinney Møller was the Chairman of the A.P. Møller and Chastine Mc-Kinney Møller Foundation, and he followed the business to the very end. During his career, Mr. Møller left an indelible mark on the Group, on Denmark and on the international business community. Ane Mærsk Mc-Kinney Uggla, his youngest daughter, continues to demonstrate the family s commitment to the A.P. Moller - Maersk Group as chairman of the controlling shareholder and member of the A.P. Møller - Mærsk A/S Board. VALUES A.P. Moller - Maersk s deeply held values govern the way it deals with its employees, customers, and society in general. Employees come from every corner of the world and the Group works in many fields and business areas, yet everyone shares the same set of basic values: Constant Care; Humbleness; Uprightness; Our Employees; Our name. They are the same principles that Arnold Peter Møller and Mærsk Mc-Kinney Møller relied on as they guided their family business through a century of success. OWNERSHIP A.P. Møller - Mærsk A/S is listed on the NASDAQ OMX Copenhagen Stock Exchange and had more than 66,000 private and institutional shareholders at the end of The company s controlling shareholder is A.P. Møller Holding A/S, which was established in 2013 when the A.P. Møller and Chastine Mc-Kinney Møller Foundation s (Foundation) shares were transferred to the new holding company. However, the Foundation maintains full control over the holding company. The Foundation was established by company founder A.P. Møller in 1953 to ensure that his life s work would always be owned by parties that held a long-term view on the company s development, in the spirit of the founder and according to his principles. The share capital is split between A and B-shares, and only the A-shares carry a voting right. The A.P. Møller Holding A/S holds more than 51% of the A-shares and consequently has the voting majority. The Foundation is mainly funded by the A.P. Moller - Maersk Group through A.P. Møller Holding A/S, but the Group has no influence on the Foundation s decisions regarding donations and investments. The Foundation aims to support Danish culture and heritage, Danish shipping, medical science and causes for the public good. Grants are only occasionally provided for non-danish projects. The A.P. Moller - Maersk Group operates in around 135 countries and has a workforce of some 89,000 employees. For more information about the A.P. Moller - Maersk Group, please visit the website at

8 14 Our world - Maersk Group Our world - Maersk Group 15 Business Units The A.P. Moller - Maersk Group is a conglomerate of worldwide businesses with core focus on shipping and oil & gas. The Group employs approximately 89,000 people, operates in 135 countries and is headquartered in Copenhagen, Denmark. 1. Maersk Line is the Group s largest business unit in terms of revenue and the world s leading container shipping company. Maersk Line is a customer-focused leader in reliable and eco-efficient global transport. 2. Maersk Oil is an international oil and gas company with roots in the North Sea going back 50 years, now with operations worldwide. Maersk Oil is active in the oil and gas value chain from exploration to production both onshore and offshore. 3. APM Terminals has its core expertise in the development, construction and operation of port and cargo inland services with a Global Terminal Network including 65 operating port facilities in 40 countries and Inland Services operations in over 160 locations in 47 countries. 4. Maersk Drilling is a leading global operator of high-technology drilling rigs. Maersk Drilling provides offshore drilling services to oil and gas companies with one of the world s youngest and most advanced fleets. SERVICES & OTHER SHIPPING 5. Services & Other Shipping consists of Maersk Supply Service, Maersk Tankers, Damco and Svitzer. 2 Maersk Oil operates 77 platforms, three FPSOs and one onshore facility. The total entitlement production is 235,000 barrels of oil equivalent per day. Maersk Tankers owns and operates a fleet of 130 tankers. Maersk Tankers product tanker fleet is one of the largest in the world. 4 Maersk Drilling is a specialist in ultra-harsh and ultra deepwater environments and operates 16 drilling rigs and 10 drilling barges. Supporting the global demand for energy We support global energy needs through the exploration, extraction and transportation of oil and gas. Facilitating global containerised trade We are the world s largest container shipping company and together with our container terminals and logistics businesses we handle a large share of the world s containerised trade. 1 Maersk Line operates a global fleet of 584 vessels. Fleet capacity is ~2.6m TEU (a 20 foot long container). 3 APM Terminals operates a global terminal network in 68 countries. Damco is one of the world s leading providers of freight forwarding and supply chain management services. Damco operates in more than 93 countries worldwide. Svitzer Is a global market leader within towage, salvage and emergency response with a fleet of 376 vessels. Maersk Supply Service A fleet of 98 vessels providing worldwide services to the offshore and associated industries.

9 16 Our world - Maersk Oil Our world - Maersk Oil 17 Key figures The Group s invested capital was USD 55bn at the end of 2013 and the return on invested capital after tax (ROIC) was 8.2%. The Group s ambition is to achieve a ROIC above 10% over the cycle. Invested capital USD million Invested capital ratio ROIC Invested capital USD million Invested capital ratio ROIC 0 50% -25% 0 50% 0 50% -25% 0 50% THE GROUP % MAERSK SUPPLY SERVICE 4.2% % % 4.3% % % 4.3% % 54, % 2, % % MAERSK LINE 37.5% % MAERSK TANKERS 7.5% % 37.1% % 7.6% % 40.3% % 7.1% % 20, % % 2, % % MAERSK OIL 11.0% % DAMCO 0.4% % 12.9% % 0.6% % 13.5% % 1.0% % 6, % % % % APM TERMINALS 10.6% % SVITZER 4.2% % 10.3% % 3.2% % 10.7% % 2.9% % 6, % % 1, % % MAERSK DRILLING 8.3% % OTHER BUSINESSES 16.2% % 8.2% % 15.9% % 8.4% % 11.9% % 5, % % 6, % %

10 18 Global activities Global activities 19 Global activities

11 20 Global activities Global activities ,000 boepd Maersk Oil operated production Overview 54,000 km 2 Maersk Oil gross acreage 26 Number of Maersk Oil operated fields 15 Number of exploration and appraisal wells in 2013 Denmark Maersk Oil s home base since Maersk Oil and its partners are currently expanding the Tyra Southeast field with a new platform which will help to secure the future of Danish oil and gas production. UK Maersk Oil aims to increase oil and gas production significantly in the coming years through efficient operatorship and an active exploration and development programme. Brazil Maersk Oil is partner in three licences in Brazil, including the Itaipu and the Wahoo discoveries, which both are in the appraisal phase. Angola Maersk Oil has made a number of deepwater discoveries in Angola including Chissonga, which is being developed. Qatar Maersk Oil unlocked the Al Shaheen field shunned by other companies and with daily production of 300,000 barrels, has turned it into the largest offshore oil field in Qatar. Algeria Maersk Oil entered Algeria in It is partner in 16 onshore oil fields, including Ourhoud, the country s second largest oil field and the large El Merk field. Kazakhstan Maersk Oil operates the Dunga field, which is undergoing a USD 1 billion field development to increase production significantly. Norway Maersk Oil is a partner in the giant Johan Sverdrup field. Since entering the country in 2004, Maersk Oil has grown its Norwegian portfolio significantly and now holds licences in the North Sea, the Norwegian Sea and the Barents Sea. U.S. Gulf of Mexico Since entering the Gulf of Mexico in 2006, Maersk Oil has acquired over 200 licences and is a partner in the Jack development. Kurdistan Region of Iraq Maersk Oil is actively participating in exploration in three licences. Greenland Maersk Oil entered Greenland in 2010 and has been acquiring seismic in 2012.

12 22 Global activities Global activities 23 Denmark Maersk Oil is the operator of all licences held by A.P. Moller - Maersk in Denmark. The biggest partnership is the Danish Underground Consortium (DUC) where 85% of the oil and 97% of the gas export in the country stems from. This adds an important contribution to Denmark s economy, energy supply and employment. Tyra Southeast extension MAJOR MILESTONES First oil production came from the Dan field in Since then, 14 other fields have been brought on stream: Gorm, Skjold, Tyra, Rolf, Kraka, Dagmar, Regnar, Valdemar, Svend, Roar, Harald, Lulita, Halfdan and Halfdan Northeast. A third-party field, Trym, in the Norwegian North Sea, has been tied-in to Harald s infrastructure. DEVELOPMENT Development projects include the extension of the Tyra Southeast platform which is an investment of USD 800 million and thus, it is the largest investment made by DUC since the approval of the Phase IV development of Halfdan in EXPLORATION Studies and geological/geophysical assessments have led to the maturation of several opportunities. In 2014, Maersk Oil and the partners expect to drill three exploration wells. MAERSK OIL ADDED VALUE The oil and gas reservoirs in the Danish North Sea are characterised by high-porosity, low-permeability chalk. The production peaked in 2005 and has since been on a natural decline. In 2013, Maersk Oil produced 225,800 barrels of oil equivalent a day in Denmark. Faced with the difficulty of extracting oil and gas from tight chalk reservoirs, Maersk Oil has developed technological solutions which have raised the recovery factor from 5% to 30%. One example is the company s cutting-edge expertise in extended reach horizontal drilling and well stimulation techniques. Total production, boe 50 mio Overview* Date of entry 1962 First oil 1972 Acreage total 2,122 km 2 Acreage operated 2,122 km 2 Licences total 3 Licences operated 3 Production, 2013 total 225,800 boed Production, 2013 operated 225,800 boed North Sea BERGEN STAVANGER Norway OSLO Denmark Sweden COPENHAGEN In 2013, Maersk Oil and the partners in Danish Underground Consortium approved an USD 800 million investment in a new wellhead platform in the Tyra Southeast field. It is the kind of investment needed to secure the future of Danish oil and gas production and is contributing positively to Denmark s economy and employment. The platform has space for 16 wells and will be connected to the existing Tyra Southeast platform with a bridge. Production will commence in 2015, and over the next 30 years it is expected that some 50 million barrels of oil equivalent will be extracted. TYRA SOUTHEAST FACTS Licence: Sole Concession Location: 220 km west of Esbjerg Water depth: 38 m Production start: 2015 Being built in: Denmark Production: Mixture of oil and gas Peak production: 2017 with 20 thousand barrels of oil equivalents per day Reserves and resources: Combined approx. 50 million barrels of oil equivalents Production, 2013 equity 71,000 boed ESBJERG Production, 2013 entitlement 70,000 boed Fields total 15 Fields operated 15 Development projects 3 Exploration and appraisal wells, 2013 total 1 Germany Exploration and appraisal wells, 2013 operated 1 United Kingdom Holland * See notes on page 81

13 24 Global activities Global activities 25 Qatar Maersk Oil entered into an Exploration and Production Sharing Agreement (EPSA) with Qatar Petroleum (QP) in The EPSA included an oil-bearing reservoir the Al Shaheen field which had been deemed uneconomic by others as its reservoirs were extremely tight and stretched across vast distances. Despite this complexity, Maersk Oil produced first oil just two years later and is now producing over one third of Qatar s daily oil production, some 300,000 barrels of oil per day. Al Shaheen Field Development Plans MAJOR MILESTONES First oil from the Al Shaheen field was produced in 1994 from a well that was drilled during the field s initial exploration and appraisal stage. A second Field Development Plan (FDP) was sanctioned in 1996, and the first permanent offshore facilities were inaugurated at the end of The field is under continuous development through a series of FDP s. The 2001 FDP included additional production platforms and facilities for gas compression and a gas export pipeline to QP s North Field Alpha Platform. DEVELOPMENT The Al Shaheen field contains a large number of further development opportunities and these are being evaluated with our partner Qatar Petroleum. EXPLORATION The primary focus of exploration and appraisal activity is evaluating different stratigraphic intervals in the EPSA area. The latest discovery from 2010 is currently being integrated in the Al Shaheen development. The single largest development plan to date, the 2005 FDP, comprised a major expansion of the field infrastructure with 15 new process and wellhead platforms, and more than a 160 new production and water injection wells, increasing field production to 300,000 bopd. In 2012 the most recent development plan was approved. The 2012 FDP comprises an additional 51 new wells and debottlenecking of existing production facilities. The plan aims to optimise recovery and maintain a longer-term stable production plateau from the Al Shaheen field. Overview* Date of entry 1992 First oil 1994 Acreage total 2,214 km 2 Acreage operated 2,214 km 2 Licences total 2 Licences operated 2 Production, 2013 total Production, 2013 operated Production, 2013 equity Production, 2013 entitlement 298,500 bopd 298,500 bopd 298,500 bopd 99,200 bopd Fields total 1 Fields operated 1 Development projects 1 Exploration and appraisal wells, 2013 total 0 Exploration and appraisal wells, 2013 operated 0 MAERSK OIL ADDED VALUE The Al Shaheen discovery, made in the 1970s, was well known to oil majors but thought to be impossible to develop commercially. The application of the drilling, stimulation and completion techniques that Maersk Oil developed during the 1980s and 1990s for the tight chalk reservoirs of the Danish North Sea were crucial to unlocking the complexity of the Al Shaheen field. Iraq Kuwait City!( Kuwait Saudi Arabia Bahrain Doha!( Qatar Iran Abu Dhabi!( United Arab Emirates The Al Shaheen 2005 Field Development Plan (FDP) was a true mega project. With investment of USD 6.5 billion and work carried out over five years, the project was executed on time and on budget. Considered by peers as one the most complex offshore projects in the region, the development entailed the building of 15 new platforms, the construction and installation of over 140,000 tonnes of new facilities, the drilling of more than 160 wells and the laying of 230 kilometres of pipeline and 55 kilometres of subsea cables. Brownfield developments were mixed with greenfield projects, and hundreds of contractor agreements were signed, including multiple Engineering Procurement Installation and Barrels of oil a day 300,000 Construction (EPIC) contracts with contractors fabricating simultaneously in the UK, India, Abu Dhabi, Malaysia and Dubai. Maersk Oil honed its skills in simultaneous operations producing oil and, in fact, increasing production, while the development work continued around existing platforms. During the 4 million man hours spent on expanding the existing infrastructure, the work was completed without a single fatality or serious incident. In that time, oil production was increased to 300,000 barrels a day, gas flaring was reduced to a minimum and production uptime was kept at over 99%. Maersk Oil is currently executing the next step in the field development as specified in the 2012 FDP. * See notes on page 81

14 26 Global activities Global activities 27 Algeria Maersk Oil entered Algeria in 1990 through a joint venture that includes Sonatrach. It currently retains interest in two blocks, which are situated in the Sahara Desert some 700-1,000 kilometres south of the Mediterranean. Maersk Oil holds an interest between 4.589% and 12.25%. El Merk field development MILESTONES Exploration activities began in 1990 and over 30 exploration wells have been drilled, resulting in 16 field discoveries. The initial discoveries were the El Merk (EMK) and El Merk East (EME) fields in Block 208. These were followed by the discovery of three major oil fields in Block 404: Hassi Berkine (HBN), Hassi Berkine South (HBNS) and Ourhoud. Later, nine satellite fields were discovered in Block 404. Development of the El Merk project was sanctioned in 2009 and the final stages of development and commissioning work are ongoing. First oil was achieved in March Export of the produced oil takes place through a 30 pipeline linking with Algeria s export infrastructure to the north and produced condensate and liquefied petroleum gas (LPG) will be exported through two 16 pipelines to Gassi Touil to the west. The HBNS field was brought on production in 1998 with an initial production capacity of 60,000 barrels of oil per day. In 2002, the central production facility (CPF), located at the HBNS field, was expanded to 285,000 barrels of oil per day to accommodate additional production from the HBNS, HBN and the Block 404 satellite fields. The Ourhoud field, located in the south-eastern corner of Block 404 and one of the largest oil fields in Algeria, was discovered in Development drilling began in 1998 and oil production in The field has a separate CPF with a capacity of about 250,000 barrels of oil per day. Overview* Date of entry 1990 First oil 1998 Acreage total 1,639 km 2 Acreage operated 0 km 2 Licences total 1 (2 blocks) Licences operated 0 Production, 2013 total 307,700 bopd Production, 2013 operated - Production, 2013 equity Production, 2013 entitlement 24,000 bopd 28,000 bopd Fields total 17 Fields operated 0 Development projects 1 Exploration and appraisal wells, 2013 total 0 Exploration and appraisal wells, 2013 operated 0 EXPLORATION Maersk Oil is actively working to increase its acreage position through exploration opportunities. MAERSK OIL ADDED VALUE Through its participation as a non-operator, Maersk Oil has worked with Sonatrach, Anadarko and Eni to provide technical input into the exploration and development phases of the project. The three major projects in Algeria are particularly significant for broadening Maersk Oil s onshore expertise, complementing the Dunga Field project in Kazakhstan and the work carried out in the Kurdistan Region of Iraq. &- Algiers Algeria Mediterranean Sea Tunisia &- Tunis Libya Italy The El Merk project is a large onshore development in the Berkine Basin of the Algerian Sahara Desert, approximately 260 km southeast of the town of Hassi Messaoud and close to both Tunisia and Libya. It contains the first discovery of the joint venture in February 1993, the EMK field. The project is designed to process and export reservoir fluids from four primary sources the EMN, EME and EKT fields in Block 208 and the unitised EMK field in Block 208 and Block 405a. Production will not only come from the TAGI formation, but also from the RKF and Strunian formations. The project entails drilling up to 140 wells and construction of a CPF to process the oil and associated liquids, condensate and natural gas liquids (NGL). First oil was achieved in March 2013 with ramp up to plateau production in First oil achieved in 2013 The CPF consists of three trains two oil/condensate and one NGL to process, store, meter and export the hydrocarbon liquids. The export streams include: Sahara blend crude, light condensate and a mixed LPG stream of propane and butane. Anticipated peak production from the project is 160,000 barrels a day of hydrocarbon liquids with peak gas production and injection of 600 million standard cubic feet a day (MMscfd) and produced water treatment of 80,000 barrels per day. In addition to the CPF, the facilities at El Merk comprise off-site fluid gathering and gas/water injection systems, oil, condensate and LPG export systems and infrastructure for the operating phase of the facility i.e. roads, an airfield, waste disposal sites, living accommodation, administration, warehousing, maintenance workshops and storage facilities. * See notes on page 81

15 28 Global activities Global activities 29 United Kingdom Maersk Oil firmly established itself in the UK in 2005 after the acquisition of Kerr-McGee s UK assets for USD 2.95 billion. The purchase included offshore installations that produce from the Gryphon, Maclure and Tullich fields (Gryphon FPSO) and from the Janice, Affleck and James fields (Janice FSO). Maersk Oil has an ambitious growth target of doubling its UK production by In 2013, it invested around USD 1 billion in the UK to help reach this target. UK development projects MAJOR MILESTONES In 2007, Maersk Oil began producing from Dumbarton, a field that had been abandoned by a previous operator but which by 2013 had produced over 50 million incremental barrels. The Gryphon and Janice fields were in production when Maersk Oil acquired Kerr-McGee s UK assets. In 2008, the high pressure, high temperature (HPHT) Culzean gas condensate discovery was made and in 2011 development approval was granted for the Golden Eagle field. In May 2013, the Balloch field began production, three months after receiving field development plan approval. DEVELOPMENT Maersk Oil is currently developing a number of projects. Operated projects include the Culzean and Flyndre/Cawdor oil and gas discoveries, the latter straddling the UK and Norwegian median line. Maersk Oil is investing USD 1 billion in the Nexen-operated Golden Eagle field, with first production planned in late EXPLORATION Maersk Oil is notably strong in exploring the mature UK offshore area. In 2013, two exploration and appraisal wells, of which one is operated, were drilled. Maersk Oil was active in the 27 th Licencing Round with twelve awards of which six are operated. MAERSK OIL ADDED VALUE Bucking the trend of many oil companies in the maturing North Sea, Maersk Oil aims to increase oil and gas production significantly in the coming years through efficient operatorship of its current assets and an active exploration and development programme. Maersk Oil has gained significant expertise in high pressure, high temperature (HPHT) operations by operating the Culzean and Ockley discoveries in the UK, and participating in the Jackdaw, Faraday and White Bear wells. Photo: First oil expected 2014 Overview* Date of entry 1992 First oil (Maersk Oil) 2005 STAVANGER Norway CULZEAN The Culzean discovery was made in late 2008 in the UK Central North Sea. The high pressure, high temperature (HPHT) discovery is located in a water depth of approximately 90 metres. Maersk Oil as operator holds a 49.99% interest in Culzean, with partners JX Nippon UK (34.01%) and BP (16%). GOLDEN EAGLE The Golden Eagle field was discovered in January 2007 followed by Peregrine in 2008 and Hobby in 2009, all of which are considered part of the Golden Eagle Area development. The fields are operated by Nexen, with Maersk Oil holding a 31.6% share. Acreage total 4,300 km 2 Acreage operated 1,755 km 2 Licences total 73 (blocks) Licences operated 36 (blocks) Production, 2013 total 93,000 boed Production, 2013 operated 27,000 boed Production, 2013 equity 30,400 boed Production, 2013 entitlement 30,400 boed ABERDEEN North Sea Denmark ESBJERG The accumulation consists of two main reservoirs, the Middle Jurassic Pentland Formation and Upper Triassic Joanne Sandstone in the Skaggerak Formation. At a downdip location, further reservoir potential may exist in the Upper Jurassic Fulmar Formation. The selected development concept is a new standalone facility comprising a wellhead platform, a central processing facility and utilities and living quarters. Maersk Oil is investing around USD 1 billion of the USD 3 billion field development, which is expected to produce over an 18-year period. First oil production is forecast for late 2014 and the development is expected to have an initial gross production rate of up to 70,000 barrels of oil equivalent a day, adding 20,000 boed to Maersk Oil s portfolio. The facilities built for Golden Eagle can act as a hub for future tiebacks. Fields total 15 Fields operated 9 Development projects 4 Exploration and appraisal wells, 2013 total 2 United Kingdom Holland Exploration and appraisal wells, 2013 operated 1 LONDON Germany * See notes on page 81 Belgium

16 30 Global activities Global activities 31 Kazakhstan Maersk Oil has a 60% interest and is the operator of the onshore Dunga field in the Mangystau region. The company is currently implementing a USD 1 billion development project that will allow a fivefold production increase from the field. Dunga Phase II project MILESTONES Maersk Oil acquired an operating interest in the Saigak field in Following a "fast track" development, oil production from the field was started in early 2002, and continued through 2011, when Maersk Oil divested its interest. In 2002 Maersk Oil acquired a 60% stake and operatorship of the Dunga Block. The remaining 40% is owned by Partex Corporation and Oman Oil Company Limited, each holding 20%. The acreage is operated under a Production Sharing Contract signed in The Dunga Phase I development began in 2007 and Phase II in DEVELOPMENT In 2012 Maersk Oil began a $1 billion Phase II development project, which, through further development of the field, upgrade and expansion of the facilities and infrastructure, will increase production from the Dunga field fivefold. EXPLORATION An exploration programme of up to four wells is planned for early 2015 to target additional Dunga potential. Maersk Oil is currently working to grow its position in Kazakhstan. Overview* Date of entry 2000 First oil 2002 Acreage total 281 km 2 Acreage operated 281 km 2 Licences total 1 Licences operated 1 Production, 2013 total Production, 2013 operated Production, 2013 equity Production, 2013 entitlement 6,100 bopd 6,100 bopd 3,000 bopd 2,900 bopd Fields total 1 Fields operated 1 Development projects 1 Exploration and appraisal wells, 2013 total 0 Exploration and appraisal wells, 2013 operated 0 MAERSK OIL ADDED VALUE In 2011 Maersk Oil took the strategic decision to relocate its Kazakh headquarters to Aktau, just 50 km away from the Dunga field. This move has improved the efficiency of the project and enabled cost savings. Additionally, it has allowed Maersk Oil to enhance its positive footprint in Mangystau Region through increasing local purchasing and creating more jobs locally. Today, more than 70% of Maersk Oil Kazakhstan s headcount and 90% of its new recruits are Mangystau residents. Maersk Oil engaged with a local drilling contractor for its Phase II drilling campaign and has assisted the contractor in meeting international HSE and operation standards, improved procurement, and in establishing a maintenance system. This partnership approach to contractor management enabled Maersk Oil to reduce the average time taken to drill and complete a well in Kazakhstan from 21 to 14 days, and achieve significant CAPEX reductions for the drilling campaign. Russia Azerbaijan Caspian Sea Baku!( Aktau!( Atyrau!( Kazakhstan Turkmenistan The Dunga field is an existing onshore development producing 6,000 barrels of oil per day. The 281 km 2 onshore block is situated close to the coast of the Caspian Sea in western Kazakhstan. During Dunga Phase II development, 198 wells will be drilled with pumping facilities at each well, capacity at the central processing facility will be expanded to 35,000 bopd, 135 kilometres of roads will be constructed and 180 kilometres of pipelines will be laid. First oil achieved in 2012 The existing processing site will have a number of new facilities and buildings, including new oil storage tanks with capacity of up to 30,000 barrels, export facilities, gas compressors, a fuel station, a power plant and a water injection plant. First oil from the development was obtained in December Active work on Phase II development continued in 2013 including installation of the new oil gathering facility. * See notes on page 81

17 32 Global activities Global activities 33 Norway Maersk Oil entered Norway in By early 2014, its portfolio consists of 20 licences; five of which are operated. Maersk Oil is partner in one of Norway s biggest discoveries, Johan Sverdrup. The concept for first phase of field development was selected in February 2014 and first oil is expected in late With Johan Sverdrup as a solid foundation for continued growth, Maersk Oil is building a portfolio with valuable acreage and assets in key areas. Johan Sverdrup field MILESTONES In 2009, Maersk Oil was awarded a 20% interest in the PL501 licence operated by Lundin Petroleum AS. Drilling in 2010 led to the Avaldsnes discovery which now forms part of the giant Johan Sverdrup field. A Plan for development and operations (PDO) is planned to be submitted in early 2015 and first oil is expected in late In 2010, Maersk Oil acquired a 20% interest in PL435. Later that year, operator RWE-Dea made the Zidane gas discovery. Maersk Oil has operated two exploration wells: T-Rex (PL431) drilled in and Albert (PL513) drilled in A third operated well, Tvillingen (PL510) is planned for drilling in MAERSK OIL ADDED VALUE With presence in the three sectors of the North Sea Norway, the UK and Denmark, Maersk Oil is uniquely positioned to take advantage of its cross-border knowledge and experience. First oil expected 2019 EXPLORATION By early 2014, Maersk Oil holds interest in 20 licences acquired through licensing rounds and farm-in activities; 11 in the North Sea, five in the Haltenbanken region of the Norwegian Sea and a further four licences in the Barents Sea. Since 2004, Maersk Oil has participated in 28 exploration and appraisal wells in Norway: 15 of these have encountered hydrocarbons in commercial quantities. Overview* Date of entry 2004 Acreage total 7,343 km 2 Acreage operated 990 km 2 Licences total 20 Licences operated 5 Development projects 1 Exploration and appraisal wells, 2013 total 8 As the only non-operating partner with experience in managing large-scale projects, Maersk Oil is in a strong position to support the development of the Johan Sverdrup field. In addition, Maersk Oil has 40 years experience of shallow-water jacket-based development, knowledge which will be central to the success of the Johan Sverdrup project. Norwegian Sea BERGEN STAVANGER Barents Sea Norway TRONDHEIM OSLO TROMSO Sweden Finland Russia The giant Johan Sverdrup discovery, one of Norway s largest ever discoveries, was a positive surprise to many geologists around the world. The field is located in the area in which the first licence on the Norwegian Continental Shelf was awarded (PL001) in 1965 and, after several dry wells were drilled in the 1960s and 70s, was considered to have no exploration potential. Many thought it was impossible for oil to migrate to this area; however they were proved wrong. The Avaldsnes discovery well in PL501 encountered oil in extremely high quality sandstone of Jurassic age and was followed up by the Aldous South oil discovery in PL265. By May 2014, 31 appraisal wells, including sidetracks, have been drilled and confirmed the huge extent of the reservoir making Johan Sverdrup a world class field. The success of Johan Sverdrup has not only given a boost to the oil industry in Norway but also challenged explorers worldwide to look for oil in well-explored mature basins. The recoverable resource range of 1,800 to 2,900 million barrels of oil equivalent (MMboe) makes Johan Sverdrup one of the five largest fields in Norway. When the field reaches its forecast plateau production of 550,000 to 650,000 barrels of oil equivalent per day (boepd), it is expected to represent around 25 percent of the total Norwegian oil production. In February 2014, the concept for Phase 1 of the development was agreed by the five partners. Sitting in 120 metres of water, a field centre will comprise of four jacket based fixed platforms for processing; housing the risers, wellhead and drilling facilities and living quarters. These will be connected by bridge links. The capacity of the first phase will be approximately 315,000 bpd and the capital investment, which includes the oil and gas export pipelines as well as a power from shore cable, is estimated to be between NOK 100 to 120 billion (17 to 20 billion USD). A plan for development and operation will be submitted for approval by the Norwegian government in early The development plan will also outline subsequent development phases needed to recover the vast resource of Johan Sverdrup in the coming 50 years. The Johan Sverdrup field extends into three licences, each with different partnership. The PL501 partners are Maersk Oil with a 20% share, and Lundin Petroleum (operator) and Statoil Petroleum AS each with a 40% interest. The PL265 partners are Statoil Petroleum AS(operator with a 40%), Det norske oljeselskap ASA (20%) and Petoro AS (30%). The PL502 partners are Statoil Petroleum AS (operator 44.44%), Petoro AS (33.33%), Det norske oljeselskap ASA (22.22%) and Lundin Petroleum (10%). Exploration and appraisal wells, 2013 operated 1 * See notes on page 81 United Kingdom ABERDEEN North Sea Denmark Denmark COPENHAGEN

18 34 Global activities 35 Brazil Maersk Oil entered Brazil in Since then, Maersk Oil has expanded its footprint in the offshore Campos Basin through licensing rounds and acquisitions. Up to the fourth quarter of 2013, Maersk Oil has drilled four wells as operator and participated as partner in 16 other wells. The acquisition of SK do Brasil, an affiliate of SK Energy, provided Maersk Oil with access to exploration acreage, development opportunities and production. EXPLORATION The Brazilian assets of SK Energy, acquired in 2010, comprise a 40% interest in the Polvo field (BM-C-8), 20% in the Wahoo discovery (BM-C-30) and 27% in the Itaipu discovery (BM-C- 32). The SK deal gave Maersk Oil access to pre-salt resources in the Campos Basin, located just south of the prolific Whale Park complex of oil fields. Since the acquisition, two appraisal wells were drilled in Itaipu and also two appraisal wells at Wahoo. DEVELOPMENT Maersk Oil currently has no fields under development in its Brazil portfolio. MAERSK OIL ADDED VALUE The Whale Park complex of oil fields, located just north of Itaipu and Wahoo, has shown the quality of the Brazilian presalt in this area. Any presalt acreage in Brazil will, going forward, be licenced under new and more onerous production-sharing arrangements. Therefore, through Itaipu and Wahoo, Maersk Oil has secured access to Brazilian presalt resource under legacy terms, with a significant potential for value creation. There is also an opportunity for Maersk Oil to strengthen its deepwater experience and to transfer knowledge across the globe to Angola and the U.S. Gulf of Mexico, other regions where Maersk Oil has a deepwater presence. Production of 11,600 bopd Maersk Oil gained access to the prolific presalt acreage in the Campos Basin though its acquisition of SK Energy s Brazilian assets. Overview* Date of entry 2001 Acreage total 1,339 km 2 Acreage operated 0 Licences total 3 Brazil Rio de Janeiro &- Licences operated 0 São Paulo &- Production, 2013 total 11,600 bopd Production, 2013 operated - Production, 2013 equity Production, 2013 entitlement 5,000 bopd 4,500 bopd South Atlantic Sea Fields total 1 Fields operated 0 Development projects 0 Exploration and appraisal wells, 2013 total 0 Exploration and appraisal wells, 2013 operated 0 * See notes on page 81

19 36 Global activities Global activities 37 U.S. Gulf of Mexico Maersk Oil entered the U.S. Gulf of Mexico in 2006 when it acquired interest in over 100 exploration licences and has since more than doubled that number to over 200. Maersk Oil is participating as partner in the Chevron-operated Jack development and in the Buckskin discovery. The Jack development EXPLORATION Maersk Oil currently holds a 33% interest in around 80 leases in the western part of the Gulf of Mexico in water depths of up to 1,500 metres. It is working with operator Hess Corporation to define drillable prospects in these areas. In the central U.S. Gulf of Mexico, Maersk Oil currently has a 20% share in some 32 leases, which were acquired through an exploration agreement with Chevron that started in Through this agreement Maersk Oil participated in seven wells, one of which resulted in the Buckskin discovery in the Wilcox Formation. The second appraisal well on Buckskin is expected to be completed in Maersk Oil has been building a portfolio of leases via lease sales, as operator with 100% share. Some 62 leases were acquired in the Central Gulf of Mexico lease sale in A further 12 leases were acquired in the 2011 Western Gulf of Mexico lease sale, seven leases were acquired in 2012 and 19 leases in the 2013 Overview* Date of entry 2006 Acreage total 4,916 km 2 Acreage operated 2,353 km 2 Licences total 211 Licences operated 101 Gulf of Mexico lease sales. Prospect definition is ongoing and farm outs are in progress to build partnerships for drilling. DEVELOPMENT Maersk Oil has a 25% interest in the Jack discovery, in some 6,000 feet water depth, which is being developed by the operator, Chevron, and is expected to be on production in late MAERSK OIL ADDED VALUE Initially learning through non-operated ventures with Hess, ExxonMobil and Chevron, Maersk Oil has brought leadingedge geophysical techniques to enhance seismic imaging below salt layers. By leveraging its cross-company expertise, Maersk Oil has been able to bring value-adding process-flow recommendations that operators have taken on board to achieve important imaging enhancements. Houston &- United States New Orleans &- In February 2010, Maersk Oil acquired a 25% interest in the Jack development project in the central Gulf of Mexico from Devon. Chevron is the operator of the Jack field with a 50% interest. The field is located in the Walker Ridge area of the Gulf of Mexico in water depths of 2,100 metres. Chevron is also the operator of the nearby St. Malo field, holding a 51% interest. Chevron is co-developing its Jack and St. Malo projects. The Stage I field development consists of the installation of a new semi-submersible Floating Production Unit (FPU) placed half way between the two fields. The Jack development consists of a single drill centre with four new wells producing into a four-slot manifold. The St. Malo development consists of two drill centres. First oil expected 2014 Both fields will be connected to the moored FPU with steel risers. The FPU design capacity is 170,000 barrels of oil a day and 42.4 million cubic feet of gas a day. Enbridge will build, own and operate a new gas pipeline, termed the Walker Ridge Gathering System, serving the Jack and St. Malo fields as well as Chevron s Big Foot field. The Amberjack Pipe Line Company will build and operate a 222-kilometre oil pipeline connecting the Jack/St. Malo FPU to the Shell-operated Boxer platform. Production from Jack is expected to commence in the fourth quarter of Stage II development is expected to immediately follow the start-up of Stage I. Development projects 1 Mexico Gulf of Mexico Exploration and appraisal wells, 2013 total 0 Exploration and appraisal wells, 2013 operated 0 * See notes on page 81

20 38 Global activities Our world - Maersk Oil 39 Kurdistan Region of Iraq Maersk Oil entered the Kurdistan Region of Iraq in 2011 as a shareholder in HKN Energy, which has operating interest in the Sarsang licence. In late 2013 Maersk Oil continued to grow in the Kurdistan Region of Iraq, entering a joint venture with Repsol Oriente Medio S.A. as operator, in two exploration licences. In 2014 the Swara Tika discovery in the Sarsang licence was declared commercial and Maersk Oil converted its shareholding position in HKN Energy to equity interest in the Sarsang licence. Exploration activities in three licences MILESTONES In 2014 the Swara Tika discovery was declared commercial in the Sarsang licence following a successful test of the Swara Tika-2 appraisal well in In 2014, Maersk Oil converted its 30% shareholding in HKN Energy, a privately owned U.S. company, to an 18% non-operated interest in Sarsang Production licence. HKN Energy continues as operator for the Sarsang licence, holding its 37% interest, with partners Marathon Oil (20%) and the Kurdistan Regional Government (KRG) with 25%. In late 2013 Maersk Oil farmed into two exploration licences, the Piramagrun and Qala Dze PSC s, taking a 40% interest in these Repsol operated (40%) ventures with KRG (20%) as partner. The first exploration well in Piramagrun spudded in the fourth quarter of 2013, and drilling operations concluded in first quarter of In the Qala Dze licence, the first exploration well spudded in first quarter of Maersk Oil opened a representative office in Erbil in EXPLORATION Exploratory drilling continues in the Sarsang licence and is anticipated to be completed in the first half of 2015, including the completion of activity on two ongoing wells and spudding of one additional well. Piramagrun and Qala Dze licences are in the initial exploration sub-period. DEVELOPMENT In the Sarsang licence, HKN Energy has delivered the first phase of the field development plan for Swara Tika in the second quarter of MAERSK OIL ADDED VALUE Maersk Oil uses its extensive experience as operator and partner in working closely with regional governments, of developing challenging reservoirs, of integrated operations and of largescale project to positively support partnerships in the Kurdistan Region of Iraq. Since 2012, Maersk Oil has seconded supervisory staff into HKN Energy s Erbil office. Through the support of HKN Energy s activities, Maersk Oil has contributed to the successful operations and learned valuable lessons to apply to our exploration activities in the Kurdistan Region of Iraq. Overview* BAKU Date of entry 2011 Armenia Azerbaijan Azerbaijan Acreage total 3,344 km 2 Turkey Acreage operated 0 Licences total 3 Kurdistan Region of Iraq ERBIL Licences operated 0 Syria Iran Development projects 1 Iraq BAGHDAD Exploration and appraisal wells, 2013 total 1 Jordan Exploration and appraisal wells, 2013 operated 0 Saudi Arabia * See notes on page 81