Be Smart, Play Your Part - Allrig

Unlocking Projects in
USD 50 Oil
The perspective of a
rig maintenance
company
OJME, Dubai
9th October 2017
Mark Hannigan | CEO Allrig
OJME 2017 | Be smart, play your part | Building a sustainable industry together Company Confidential
Agenda
Speaker Profile
Company Profile
Shale vs Offshore
Sustainable Savings
Q&A
2
Speaker profile
Meet Mark Hannigan

CEO Allrig
Nationality: British
Based in: Houston, TX, USA
Age: 44 Years
Education
Bachelor Mechanical Engineering, University
of West Scotland
Master of Business Administration, University
of Strathclyde
Member of the Institution of Mechanical Engineers
Previous roles
S&N Pump, Houston, TX: President
Clydeunion Pumps, Glasgow, UK: Managing
Director
Weir Pumps, Glasgow UK: Supply Chain Director
3
Who Are Allrig?
Leading independent MODU

service company
One stop shop for turnkey project
& fleet solutions
Global footprint & broad
equipment scopes
Offshore Finally Gets There
Offshore has lost out on investment in recent years to shale

Lower breakeven (B/E) economics of shale have proven attractive
Offshore has aggressively reduced cost to restore viability at <$50 bbl
Shale B/E now rising due to capacity constraints
5
Sources 1) Transocean investor presentation Sept 2017 2) Morgan Stanley research, April 2017 3) Rystad Energy April 2017
The Problem Offshore Project B/E & Cost Redn
Global offshore B/E pricing now < $50 bbl 2014 2016
Average offshore project cost reduction of 35%
However > 50% of these savings unstainable
Deflation means
Layoffs & pay cuts

Price reductions
Less people doing more
Taking jobs at negative cash flow
These savings will rebound as market recovers reviving offshore viability problem
So, another step change in efficiency savings is required thats sustainable
But how???
6
Source: IH Markit comparisons of 34 deepwater projects between Q3 2014 & Q3 2016
The Solution
A winning formula for a

sustainable industry
Collaboration
Innovation
Localisation
7
Digitisation
8
Collaboration
Working with partners to reduce

overall cost of solution and improve
added value
Dont try to do it all-in-house
Focus on core competence
Play to your strengths
1+1=3
9
Collaboration Case Study

Objective
Overseas derrick OEM seeks to establish localised in region derrick repair capability in Middle East to service
installed base, reduce market response time and meet localisation requirements of regional NOCs & rig
owners
Traditional Solution Cost Time Risk

Complete due dilligence & find local attorney/rep $30k 3 months high
Establish local trading entity in-region $50k 6 months low
Secure prequalification as local vendor $50k 1 year med
Invest in local in-region repair facility $10m 18 months med
Send expat manager to oversee set up $500k 1 year med
Recruit localised service tech workforce $300k 3 months high
Collaborative Solution
Launch immediate capability through smart, established, strategically aligned partnerships where each
member plays to their strengths to offer client a single competitive solution
Design authority Service capability Repair capability

Engineering Local workforce Approved facility
Accreditations Fast mobilisation Established QA/QC
Result
Regional rig fleet receive OEM approved service & repair support with rapid response, from in region technical
10 at local market rates
experts
11
Innovation
Innovation means creative new

solutions to achieve the objective
and can take many forms
Product
Process
Technical
Commercial
12
Innovation Case Study
Scope
Install protective cover over exposed gears within jacking system to
retain oil bath and prevent mechanical damage, while permitting
access for inspection & maintenance
Conventional Solution
Fit mild steel coated cover with gasket and multiple bolts around
perimeter. Cover includes spyglass peep hole for visual inspection
of contact point only
Innovative Solution
Design plexiglass replacement cover which meets all corrosion, UV
and mechanical integrity requirements
Result
Entire circumference of both mating gears can be visually
inspected on an ongoing basis and early signs of damage can be
identified before component failure
Geartrain can be inspected while jacking system remains online

No need to remove steel cover, drain oil bath and lose ability to
jack up or down for relocation or weather emergency.
13
14
Localisation
Putting capability as close to the rig

as possible
Reduce response time

Avoid Ex-pat cost premiums
Build regional infrastructure
Stimulate local innovation
Tailor for regional nuansces
15
Localisation Case Study
Scope
Complete rebuild and overhaul of two PCM 120 AS cranes acquired
by client from competitor for future installation on client rigs
Conventional Solution
Dissassemble cranes and ship containerised crane to overseas
centre of excellence (C of E) for tear down, inspect, repair, install
replacement parts, reassemby & testing before shipping back to
region
Localised Solution
Replicate C of E in region by investing in premises, equipment and
accreditations. Relocate overseas SME to region and transfer
workforce knowledge by recruiting and training local team. Complete
entire turnkey overhaul process in region
Result
Client receives world-class crane overhaul at local facility, using
local cost base, whilst avoiding time consuming shipments.
Progress can be tracked by client by visiting local facility.
Supply chain capability in region is enhanced via knowledge

transfer and investment in local capability and infrastructure
16
17
Digitisation
Harness power of digital technology

to dramatically improve efficiency
Digital Transformation Maturity Model
Transforming
Customer Customer Top Line Customer
Experience Understanding Growth Touch Points
Transforming
Process Workforce Performance
Operational
Digitisation Enablement Management
Processes
Transforming Digitally Modified New Digital Digital

Business Business Business Globalisation
Models
18 Source: MIT Sloan Management Review April 2017

Digitisation Case Study
Digital Solution
Local technician wears smart glass and is guided
Scope through inspection process by SME who remains
Conduct periodic jacking at home but attends rig virually, while client
system inspection observes process from HQ office in real time
Result
Conventional Solution Client receives support of most experienced Allrig
Fly US based SME to rig to SME with no travel cost or time delay, paying local
complete scope, fly home again tech day rate and is able to observe inspection
then submit client report process in real time with digital record
take aways
20
Key Messages & Take Aways
Great progress made but we must do

more to ensure offshore remains viable
Next wave of savings must be truly
sustainable
There are huge opportunities to realise
these if we all
Collaborate
Innovate
Localise
Digitise
21
questions?
22
23
Join the
conversation
at:
allyours@allriggroup.com
24

Be Smart, Play Your Part - Allrig

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Unlocking Projects in

Meet Mark Hannigan

Who Are Allrig?

Leading independent MODU

Offshore Finally Gets There

Offshore has lost out on investment in recent years to shale

The Problem Offshore Project B/E & Cost Redn

Average offshore project cost reduction of 35%

However > 50% of these savings unstainable

Layoffs & pay cuts

So, another step change in efficiency savings is required thats sustainable

A winning formula for a

Working with partners to reduce

Collaboration Case Study

Traditional Solution Cost Time Risk

Design authority Service capability Repair capability

Innovation means creative new

Innovation Case Study

Geartrain can be inspected while jacking system remains online

Putting capability as close to the rig

Reduce response time

Localisation Case Study

Supply chain capability in region is enhanced via knowledge

Harness power of digital technology

Transforming Digitally Modified New Digital Digital

18 Source: MIT Sloan Management Review April 2017

Digitisation Case Study

Key Messages & Take Aways

Great progress made but we must do

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