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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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