corporate venture capital - pesa · capital deployment of a few hundred million by end of 2021...

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Corporate Venture Capital

Imran Kizilbash

Vice President – Schlumberger Venture Fund

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Agenda

▪ Introduction to Schlumberger

▪ Macro environment

▪ Corporate Venture Capital – Schlumberger Objectives and Rationale

▪ Historical Portfolio Companies

▪ Focus Areas and Ambition

▪ Current Portfolio Companies

▪ Conclusions

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Schlumberger at a Glance

16 GeoMarkets in 2 Hemispheres

95 Research, Engineering &

Manufacturing Centers located

in 18 countries

Approximately 100,0002 People

Representing 140 Nationalities

▪ Revenue $27.8 billion ▪ Net Income1 $ 1.6 billion ▪ R&E $ 1.0 billion

2016 Financials

DrillingCharacterization

▪ Wireline

▪ Testing & Process

▪ WesternGeco

▪ Software Integrated Solutions

▪ Integrated Services Management

▪ Drilling & Measurements

▪ Drilling Tools & Bits

▪ M-I SWACO

▪ Integrated Drilling Services

▪ Land Rigs

Production

▪ Well Services

▪ Completions

▪ Artificial Lift Solutions

▪ Integrated Production Services

▪ Production Management

*Notes: (1) Net income, excluding charges and credits, (2) Total employee headcount, Jan 2017

Cameron

▪ OneSubsea

▪ Drilling Systems

▪ Surface Systems

▪ Valves & Measurement

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Working in more than 85 countries

Number of clients ~ 7500

Number of suppliers ~ 55,000

Schlumberger is the worlds leading provider of technology and solutions in Oil & Gas industry since 1926

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0

20

40

60

80

100

120

200

300

400

500

600

700

800

2014 2015 2016 2017

*During the downturn period of 2014 — 2016

Source: IEA, IHS, RigZone, IEA

Oil Price

Industry Headcount Reduction*

USD/bbl

2015 20172014 2016

Schlumberger Revenue – Excluding CAM

Upstream Capex Spend

USD Billion

Thousands of employees USD Million

91

93

45

425

196

E&PWell Services Suppliers Total

Upstream

Job Cuts

Drilling

4

0

5,000

10,000

15,000

2014 2015 2016 2017

Worst Oil & Gas Downturn – Looking for Growth

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R&E Spend (Oilfield Service Sector – 3 largest

competitors)

R&E Spend

Schlumberger

0.0

0.4

0.8

1.2

1.6

Billion USD

2014 20162015

0.0

0.4

0.8

1.2

1.6

Billion USD

201620152014

Commitment to R&E is a hallmark of Schlumberger

Source: SEC Filings

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Increasing Pace of Innovation and Adoption

Innovation:

▪ Increasing global IP development

▪ More open innovation shortens development time

▪ First mover technological advantage increasing in importance

▪ Increasing competition for partnering with Universities and

academia increasing monetizing these relationship and IP

Adoption:

▪ Rate of innovation adoption has greatly increased

▪ Speed to market has become a more important competitive

advantage

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Schlumberger Corporate Venture Capital Effort

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▪ Nearly a decade of experience ~ since 2008

▪ Small team of ~ 4 team members + legal/financial support from corporate

▪ Portfolio of ~ 20 companies

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Objectives and Business Case

Strategic Drivers

▪ Access to technology, especially from other verticals

▪ Future disruptive innovation

▪ Faster response to market changes

▪ Explore new areas for growth (white spaces)

▪ Create demand for parents company’s products and services

▪ Partnering with other firms

Financial Driver ~ to ensure that the corporate venture program is economically robust

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Strategic Financial

Schlumberger

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Investment Rationale

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Driving

(advance strategy of current business)

Link

to o

pera

tiona

l cap

abili

ty

Tight

Loose

Corporate Investment ObjectiveStrategic Financial

Enabling

(complements strategy of current

business)

Emergent

(allows exploration of potential new

business)

Passive

(provides financial return only)

Source: Harvard Business Review Articles, 2002 and 2013

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Historical Portfolio Companies – Liquid Robotics

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▪ Silicon Valley and Hawaii based startup

▪ Autonomous marine surface measurement platform propelled by ocean waves

▪ Applications:

– Military applications

– Meteorological measurements

▪ Schlumberger interest in seismic and subsea. Exit to Boeing in December 2016

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Historical Portfolio Companies – Contour Energy Services

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▪ Caltech battery technology spin-off, Nobel Laureate Founder

▪ Initially developing both Primary and Secondary cells

▪ Applications:

– Consumer battery applications

– Multiple industrial applications

▪ Schlumberger interest was in downhole high temperature batteries

▪ Company failed in 2014

▪ Schlumberger commercialized three different batteries for downhole tools

that are currently in use

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Ambition

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Build a portfolio of 30-50 companies. Capital deployment of a few hundred million by end of 2021

Transact ~ 5+ new opportunities each year

▪ Strategic

– Successful joint technology development with Schlumberger business lines

– Business development successes for Schlumberger

– Growth in some white spaces

▪ Financial

▪ Delivering to corporate a financial return slight higher than our WACC (weighted average

cost of capital)

▪ Self sustaining business unit in 5 years time

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Business and Technology – Areas of Interest

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Business Verticals

Upstream Oil & Gas

Energy (beyond traditional Oil & Gas i.e. Geothermal,

renewables)

Mid stream and downstream – Oil & Gas

Energy storage (batteries, fuel cells …)

Transport and mobility

Resources – mining

Technologies

Alternative and renewable energy

Emissions monitoring

Robotics and automation

Novel sensors and instrumentation

Industrial internet of things

Battery and energy storage technologies

Advanced materials, chemistry and nanotechnology

Additive manufacturing

AI, analytics and machine learning

Secure data transmission and storage

Data and video analytics

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Current Portfolio Companies – CelluForce

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▪ Montreal based startup

▪ Collaboration with Waterloo University, FP Innovations, Domtar

▪ Nanocrystalline cellulose (a non toxic byproduct of wood pulping process)

produced via innovative manufacturing process

▪ Applications:

– Reinforced composites

– Adhesives

– Optical films

– Pigments and inks

– Drug delivery

▪ Schlumberger applications are around non-toxic well construction and stimulation

▪ Completed field trials in 6 well. Expected to be commercial end of 2017

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Current Portfolio Companies – WiTricity

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▪ Boston based MIT spin off

▪ Wireless power transfer over short to medium

distances via resonant magnetic coupling

▪ Listed as one of the top inventions of 2014 by Time

Magazine

▪ Applications:

– EV (electric vehicle charging)

– Consumer product applications (Dell computers …)

▪ Schlumberger interest – wireless downhole and

surface power applications in Oil & Gas

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Conclusions

▪ Schlumberger corporate venture capital group has a decade of experience

▪ Portfolio of ~ 20 companies

– Main driver for investments are strategic

– Need to deliver a certain threshold of financial performance

▪ Portfolio companies are bringing value to Schlumberger in terms of technology, applications from

other verticals and potential growth opportunities

▪ We have a broad remit beyond Oil & Gas and an ambition to grow our portfolio of investments

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