initiation update jun 2011

8/4/2019 Initiation Update Jun 2011

1/39

O

En

FuOilfi

appe

geop

indu

Cons

Pros

ener

Thes

posit

The

inves

and

Exhibi

This is

prohibi

may no

securiti

An

Pa uTel:

C

A

Pe

W

HLa

Ke

Ca

K

R

Sc

Te

Ba

Ne

ilfiel

rgy Equi

damentld service sh

tite has wane

olitical risk p

try remain s

olidation and

ects for glob

y demand, in

favourable

ions.

tretched valu

tment strateg

ood Group.

t 1: Stock attracti

marketing commun

tion on dealing ahea

t be associated pers

s held by a research

lysts

l S inger+44 (0)20 346

mpany

ec

trofac

od Group

ntingmprell

ntz

pe

C

I

hoeller-Bleck

chnip

ker Hughes

wpark Resou

Ser

pment &

als stillares globally

d reflecting g

emium and s

lid with an a

takeover spe

al oilfield ser

creasing oil/

acro factors

ations in the

y towards th

We are also

veness and sensi

ication. It has not be

d of the disseminati

ns of the member o

analyst account.

5042 Email:

mann

rces

ices

Support

ttractivhave perfor

lobal econom

tretched valu

round 20% p

culation are li

ices compani

as industry c

are augment

UK with the

sector. Our

ositive on N

itivity to key inv

en prepared in acco

n of investment res

rganisation and ma

paul.singer@fo

Reco

Sect

Services

, full valed modestly

ic concerns,

ations. Whilst

er annum EP

kely to contin

es remain mo

pital expendi

ed by health

E relative sta

ey buy reco

wpark Resour

stment issues (+

rdance with legal re

arch. Non-US resea

not be subject to N

x-davies.com

mmendation

HOLD

BUY

BUY

BUYHOLD

BUY

HOLD

HOLD

BUY

BUY

HOLD

HOLD

BUY

r Re

uations,this year foll

xpectations

we acknowle

S growth and

e to buoy th

st positive, g

iture through

corporate o

nding at arou

mendations

ces and Scho

= degree of attr

uirements designe

rch analysts who hav

ASD/NYSE restrictio

Ia nTe

Compe

Posit

++

++

++

++++

++

++

++

++

++

++

++

++

port

investmowing the str

f a correction

dge these co

a selective

sector.

iven the back

to 2014 and e

der books, g

nd a 40% pre

in the UK are

eller Bleckma

activeness)

to promote the ind

e prepared this rep

ns on communicatio

n Lucasl: +44 (0)20 34

itive Orde

ion Boo

++

+++

++

+++++

+++

++

+++

++

++

+++

++

++

ent straong perform

for oil prices

ncerns we be

ut defensive

rop of conti

xpectations o

od cash flo

mium to the

Kentz, Huntin

nn in the US a

ependence of invest

rt are not registered

ns with a subject co

3 5032 Emai

r Financial

++

+++

++

+++++

+++

++

++

++

+++

++

++

+++

egy selences in 2010

following the

lieve that fun

biased inves

ued rising gl

f oil prices at

generation

market precl

g, Petrofac,

nd Europe re

tment research and i

/qualified as researc

pany, public appe

il: ian.lucas@fo

s EPS

Growth

++

++

+++

+++++

++

++

++

+++

++

++

++

+++

20 June

ctiveas investors

recent rise in

damentals for

tment is meri

obal hydroca

favourable le

nd solid fina

de an aggre

ock Solid Im

spectively.

not subject to any

h analysts with FINR

rances and trading

-davies.com

Valuatio

++

+

++

++

++

+++

+++

+++

++

+++

++

+++

2011

risk

the

the

ited.

bon

vels.

cial

sive

ges

A,


2/39

Oilfie

Tabl

Invest

Stock

Financ

Valuat

Invest

Ene

Oil

Off

Off

Cru

Nat

Sha

Oil

US

M & A

Resea

ld Services

of Cont

ent Summar

erformances

ials/Forecasts

ions less co

ent Themes

rgy demand

Industry capit

hore Drilling

hore constru

de oil prices:

ural gas price

le Gas US t

rig count ac

Oil and horiz

buoyant ac

ch Disclosure

Sector Rep

nts

y Selectivity

Shares trea

underpinned

pelling but

Fundament

hydrocarbon

al expenditur

Deepwater

ction capital

volatile, high

s US prices

develop fav

tivity to remai

ntal rig count

ross all subse

s .....................

ort

still required

ding water fol

by still healt

alue plays re

al drivers still

sources will

to rise furt

expenditure i

expenditure

r geopolitical

o stay soft ne

urably, Euro

n at high leve

to drive glob

tors, multipl

.......................

.......................

lowing last ye

y order book

ain ...............

very much in

ontinue to d

her in 2011 an

ncreasing.......

set to increas

risk premium

ar term ..........

e potential b

ls in 2011 and

al count high

attractive .....

.......................

.......................

ars surge ......

s .....................

.......................

place ..............

minate rising

d through to

.......................

.....................

with upside f

.......................

ut slow takeo

2012 .............

r ....................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

energy dem

2014 ..............

.......................

.......................

undamental r

.......................

f .....................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

nd .................

.......................

.......................

.......................

isk ..................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

20 June 2

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

.......................

011

p1

.......... 2

.......... 4

.......... 7

........ 12

........ 17

........ 17

........ 19

........ 20

........ 22

........ 23

........ 25

........ 26

........ 29

........ 29

........ 31

........ 34


3/39

Oilfie

Inv

The fu

hydro

high o

gener

UK ar

Table 1:

CompaKentz

Petrofa

Huntin

Rock S

Wood

Newpa

Schoell

Global

Kentzwide r

giving

with a

for the

the dri

Petrofexpos

backlo

enhan

backlo

Huntinbalanc

activit

Howe

sector

Wooddevel

standi

shareh

and th

Rock Smarin

leader

poise

explor

servicintere

seismi

ld Services

stment

ndamental ou

arbon energ

il prices and r

tion, EPS gro

Kentz, HuntiBuy Recommen

an yc

lid Images

roup

rk Resources

er Bleckmann

Average

continues to

nge of upstr

good earnin

2012 EV/EBIT

group and a

ver for share

facs shares arre to Middle

g at around $

cing strategic

g. The premi

ng has a strone sheet and

especially in

er, our DCF

stocks given

Group : Thepments PS

g, with stron

olders but w

is supports o

Solid ImagesCSEM acqui

ship position

to benefit fr

ation activity.

s and technot as the only i

c and electro

Sector Rep

ummar

tlook for the

demand, inc

ising oil rig co

wth of aroun

ing, Petrofac,ations valuati

epresent an

am and dow

s visibility an

DA of around

tractive risk/r

rice outperf

e performing

East markets.

12.0Bn is com

moves and th

m valuation

g competitiv

ill continue t

the US. Conv

aluation is no

he relatively f

roup contin

acquisition

g market posi

still believe t

r still positive

is rated as asition busines

in the integra

m its stronge

The recent tr

logy and salendependent

agnetics. Th

ort

Sele

lobal oil fiel

reasing oil/ga

unts. These p

20% per ann

, Rock Solid In metrics

Price413p

1516p

734p

5.0p

634p

$8.1

EUR59.8

-

xcellent inve

nstream mark

the financial

6.3 times an

ward profile.

rmance.

most modest

. The groups

paratively ve

e improving

as been ero

position owi

look for acq

entional valu

t unattractive

avourable ris

es to offer so

nd Well Sup

tion. The shar

hat there is fu

stance towar

BUY. Havings, RSI has a tr

ion of data t

r financial po

ding statem

prospect piupplier of int

e groups fina

tivity sti

services com

s industry cap

ositive factor

um and solid

mages and W

PE 201115.9

14.1

24.8

n.m

18.6

10.8

20.9

19.0

tment oppor

ets and many

position of th

P/E discount

The securing

ly following la

goal to doub

y healthy. We

usiness envir

ed to some e

g to its prod

uisitive growt

tion metrics i

and we belie

/reward profi

lid growth op

ort disposal

es have perfo

rther upside

ds the stock.

emerged fro

nsformed ou

pes. With the

ition and the

nt read positi

eline growinegrated proc

ncial position

ll requir

panies remai

ital expendit

are support

financial posi

Wood Group.

PE 201

1

2

1

1

1

15

unity. The gr

geographies.

e group is ve

to the sector

of prospecti

st years stron

le recurring 2

remain posit

onment give

xtent providi

uct focus and

. The group i

ndicate a sign

e the shares

le from a geo

portunities fo

and has an

rmed well m

otential. The

the disposal

tlook as a hig

resolution of

opportunitie

ively with the

. RSI is positissing and int

is improving.

d

ns favourable

re, expectati

d by healthy

ions. Our key

012 EV/EBIT4.9

2.4

2.0

9.6

4.7

9.6

6.1

5. 0

up is compe

The order bo

ry solid. The v

do not reflec

e business wi

g performan

10 earnings

ive on the sto

the good ea

g an excellen

global footpr

s a cyclical pl

ificant premiu

are likely to o

political pers

llowing the tr

ttractive and

st recently, b

risk/reward p

of its loss ma

h end geophy

the strategic

to it in the d

group seeing

oned to takeerpretation p

We suggest t

reflecting risi

ns of volatile

rder books,

buy recomm

TDA 2011 E6.7

8.8

9.2

n.m

12.2

5.7

9.1

8. 9

itively well pl

ok is extreme

aluation rema

the fundam

l reflect such

e reflecting t

y 2015 is atta

k reflecting c

nings visibilit

t entry oppor

int. The grou

y on oil and

m valuation t

tperform oth

ective.

nsformation

ell position

oyed by the

rofile is now

king and cash

sical consulta

uncertainties,

-risking of hy

increased int

dvantage ofoducts and s

he group will

ng global

but relatively

good cash flo

endations in t

EV/EBITDA 2016.

7.

8.

4.

8.

4.

7.

6.Source: FoxD

aced servicin

ly promising,

ins compellin

ntal prospec

qualities and

he groups

inable and th

ontinued valu

y from its

tunity.

has a robust

articularly ga

o the sector.

er UK oilfield

l strategic

d competitiv

cash return to

ore favourab

draining

ncy with a

RSI is now

drocarbon

rest in its

this marketervices for

return to

20 June 2

he

23

5

4

8

8

9

4

7vies

a

g

s

be

e

e

s

le

011

p2


4/39

Oilfie

profita

revenu

Lamprbeliev

upwar

rights

which

is relat

AMECexcell

compl

remai

regard

remai

and st

gener

positiv

OutsidSchoewith m

happy

group

leadinpositi

believ

oppor

is low

Technsolid s

a bala

EUR 8,

52% d

respec

Newpmost a

Far Ea

Austra

to red

growt

price

Bakerservic

comp

prosp

.

ld Services

bility by the e

e growth we

rell is rated asto be strate

d trend of the

issue schedul

is close to the

ively expensi

C is well placent order boo

ementary gro

undervalued

ing a possibl

s compelling

ategies befo

tion are app

e.

de the UK ourl ler Bleckmananagement s

with our fore

is very well p

g competitiven. The recent

this premiu

unities and s

by historical s

ip is rated asupport to sha

ced and pro

502M, with ar

ownstream. T

tively with a

ark Resourcesttractive gro

st and Brazilia

lasian and Asi

ce debt. The

profile is no

eakness pro

Hughesis rats companies.

ny. The shar

ctive PE mult

Sector Rep

nd of 2011/1

believe that t

s a HOLD . Thically sound

groups orde

e. On adjuste

top of valuat

e with the val

with a good

k and healthy

wth however

despite the

litigation ca

ly undervalue

e becoming

aling relative

r investmentnn Oilf ie ld E qating that th

asts, current

sitioned in s

market positishare price p

valuation to

rong financia

andards and

HOLD . Prosres. Strategic

itable contra

ound 54% ex

he shares curr

rospective P

s is rated as ath opportuni

n market. Th

ian markets,

re is financial

reflected in t

ides an excel

ted as HOLDWe believe t

s currently tra

iple of 17 tim

ort

. A strong IP

e shares are

e shares havend substanti

r book and it

forecasts, th

ion range for

uation fully di

competitive

financial posi

he groups ri

ost recent st

e, despite th

but we still

ore fundam

to the sector.

stance is highquipment is ra

y continue to

trading is go

rvicing the m

on with nicheerformance h

be justified g

l position and

our DCF valu

pects looking

priorities are

t backlog wit

ected to be

ently trade o

multiple of a

a BUY . Newpies in the US

acquisition o

hich should a

headroom fo

he undeman

lent entry poi

. Baker Hugh

his to be unm

des on 2011

es.

portfolio und

undervalued

responded wlly earnings

backlog. We

e shares curr

the global oil

scounting pr

osition in its

ion. The Mac

k reward pro

rong perform

recent attra

wait further c

ntally positiv

The recent a

hly selective aated as BUY .expect the g

d, although

ajor oilfield s

products basas somewhat

iven the mor

overall qualit

tion suggest

most encour

o continue to

h key differen

xecuted in 2

2011 and 20

round 18 tim

ark is a well-p

gas shale bas

f Rheochems

llow for furth

further acqui

ing and favo

t.

s is often reg

erited given t

nd 2012 EV/

rpins the val

n a DCF basi

ell to the connhancing. Ea

believe the s

ntly trade on

ield sector w

spects follow

respective pr

tec acquisitio

ile is fairly ref

ance, but are

tive contract

onfirmation o

, although th

dmittance of

and our key rSBOsCapit

eneral industr

e believe the

rvice compa

ed upon prostretched the

speciality ori

y of the busin

s upside pote

ging, the un

bring innova

iating assets.

11 and split

12 EV/EBITD

s.

ositioned mi

ins and in int

drilling fluid

r competitiv

sition but suit

rable valuati

arded as the

he product br

BITDA multi

ation and wit

s

firmation of trnings visibilit

hares will trea

2012 EV/EBIT

ich we believ

ing the recen

duct and ge

n is strategica

lected in the

likely to be h

awards. Capef the delivera

e attractive v

he shares to

ecommendatl Markets Da

y cycle to rem

m to be cons

ies in the dir

rietary technvaluation on

entated prod

ess. However

ntial of aroun

emanding va

tive solutions

Technips co

y market 3

multiples of

-sized US oilf

rnational mar

unit in April

growth. The

able acquisiti

n compared

poor relation

eadth and ge

les of 7.5 and

h the prospec

e MIS acquisiremains go

d water durin

DA multiples

e to be fair fo

cautious tra

graphical ma

lly sound pro

urrent valuati

ld back by th

e , a strong outce of strateg

luation and c

he main mar

tions are as fonewsflow wa

ain positive.

rvative with

ctional drillin

logy and a sconventional

uct portfolio,

the prospecti

10%.

luation shoul

to clients and

tract backlo

% subsea, 9

around 7.7 an

ield services c

kets including

011 represen

groups strat

ons may be h

ith its peers.

f the major

ographical wi

6.1 times res

t of strong

ition which wd reflecting t

g the ensuing

of 8.8 times

r the time bei

ing update.

rkets with an

viding scale a

on. KBC share uncertaintie

performer,

ic objectives

ash flow

et is a further

ollows:s most positi

We are curre

pside risks. T

g market, wit

lid financialmetrics. We

superior gro

ve PE valuati

give further

further devel

is currently

offshore and

d 6.6 times

ompany with

the fast gro

ts a move int

gy is to conti

ard to find. Th

. The recent s

S oilfield

dth of the

pectively with

20 June 2

he

ng

d

s

s

e

tly

he

a

th

n

op

ing

the

ue

is

are

a

011

p3


5/39

Oilfie

Sto

The U

perfor

to foc

also b

Exhibit

We co

20% o

select

the sestocks

and fin

likelih

correl

Furthe

global

next 3

per an

knock-

Exhibit

ld Services

k Perfor

oil service s

ming sectors

s on sectors

oyed sector

2: FTSE 350 Oil S

ntinue to beli

er the 2011/

d value opp

tor as a wholand their inh

ancial recessi

od of solid g

tion and con

rmore, in the

energy dema

years, of whi

num of invest

on effect for

: Year to date S

Sector Rep

mances

ctor has perf

ith the UK m

ost sensitive

performance.

rvices Index pri

eve that the r

012 period. T

rtunities rem

e. The perforrent sensitivi

on we mainta

lobal econom

inued high le

long term we

nd, which, ac

ich 45% is exp

ment in oil an

il service co

ock and Index P

ort

Share

ormed much i

arket in 2010,

towards eco

e chart

covery cycle

he recent sha

in. Further c

ance of oilfiy to macroec

in that we are

ic growth in 2

vels of indust

continue to e

cording to th

ected to be

d gas produc

panies.

rformance Ch

treadin

n line with th

outperformin

omic recover

Source: FoxDavies

for oil service

re price perfo

rporate activi

ld sector stoonomic activit

on a new leg

011 and 2012,

y exploration

xpect strong

International

et by the oil

ion over the

ange year to dat

water

market in 20

g the UK mar

y prospects.

Exhibit 3: FT

s has further t

rmances hav

ty and consol

ks is highly vy and oil pric

of growth an

, relatively hig

activity and c

demand for t

l Energy Asso

and gas sect

eriod, which

ollowin

11 having be

ket by almost

onsolidation

E 350 Oil Servic

o go with sec

somewhat st

idation shoul

latile reflectie expectation

d on a long t

h oil prices

apital expend

e oil services

ciation (IEA),

r. The IEA est

will be requir

last ye

n one of the

50%, as inves

and takeover

s Index vs. Bren

or earnings g

retched valua

provide add

g the high cys. Following t

rm upcycle. T

o which ther

iture levels.

sector reflect

ould increas

imates that th

d, will have a

rs surg

stronger

tors continue

speculation

Oil price

Source:

rowth of arou

tions althoug

itional upside

clicality of thhe economic

his reflects th

is a degree

ing growing

55% over th

e $400 billion

very strong

Source: FoxD

20 June 2

d

as

oxDavies

nd

h

to

e

f

vies

011

p4


6/39

Oilfie

Table 2:

Exhibit

June 1

FTSE

FTSEAIM O

All Sha

AMEC

Huntin

Wood

Lampr

Petrofa

Kentz

Cape P

KBC A

OSX In

Bloom

Baker

Schlum

Hallibu

Weath

Transo

Nabors

Newpa

Bloom

Euro O

S&P Eu

Techni

Saipem

Schoell

Tenaris

TGS N

Seadrill

Subsea

CGG V

ld Services

Price Performan

5: OSX Index pric

2011

il Services Inde

il Producers InG Index

e

PLC

PLC

roup

ll PLC

c Ltd

orp Ltd

LC

vanced Techn

dex

erg US Oil Ser

ughes Inc

berger Ltd

rton Co

rford Internati

ean Ltd

Industries Ltd

rk Resources

erg EMEA Oil

il Producers In

ro 350 Index

SA

SpA

er

SA

pec Geophysi

Ltd

7 SA

eritas

Sector Rep

ce (Absolute)

e chart

x

ex

logies

ices

nal

ex

al Co

ort

Sou

1-Mont-2.8

-1.7-4.9

-3.3

-7.0

0.4

-3.6

5.1

-0.1

1.4

10.7

-4.8

-2.6

0.4

1.4

0.2

2.3

-10.0

-8.9

-3.2

7.0

-3.3

-3.7

-3.9

1.1

-2.3

-4.4

-6.2

0.6

-3.6

-7.0

3.0

rce: FoxDavies

th%

%%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

xhibit 6: OSX In

3-Month1.5%

-5.7%-9.8%

-0.2%

-3.6%

-1.8%

0.6%

27.7%

5.0%

22.5%

21.7%

0.7%

-9.7%

-5.3%

0.5%

-5.5%

4.6%

-16.1%

-21.6%

-8.6%

-10.6%

-0.2%

-7.0%

-0.4%

5.0%

2.6%

-0.3%

-2.3%

2.7%

-9.3%

-1.6%

-5.5%

dex vs. WTI Oil price

YTD-2.4%

-3.7%-18.5%

-3.5%

-6.9%

-1.2%

11.4%

14.8%

-7.6%

32.0%

30.3%

15.0%

2.8%

2.2%

22.2%

-1.5%

13.6%

-25.0%

-11.2%

6.4%

4.1%

0.4%

-4.7%

-3.3%

1.6%

-4.2%

-6.0%

-14.9%

7.6%

-9.1%

-8.9%

3.2%Source: FoxD

Source: Fo

1-Yea37.6

16.216.3

9.1

26.7

58.0

91.8

77.0

16.9

75.6

137.4

76.9

39.7

47.0

59.2

34.0

75.8

15.5

24.9

17.3

85.8

47.3

5.7

3.8

35.9

33.8

59.2

2.2

66.4

36.8

29.9

37.7

20 June 2

vies

Davies

ar

011

p5


7/39

Oilfie

Table 3:

Exhibit

June 1

FTSE

FTSEAIM O

All Sha

AMEC

Huntin

John

Lampr

Petrofa

Kentz

Cape P

KBC A

Afren P

BG GrBP PLC

Cairn E

EnQue

Essar E

Exillon

Heritag

JKX Oil

Premie

Royal

Royal

Salama

Soco In

Tullow

Ascent

BowLe

Circle

Gulf Ke

Gulfsa

Hardy

Max Pe

Rockho

San Le

Tower

ld Services

Price Performan

: FTSE Oil Servic

2011

il Services Inde

il Producers InG Index

e

PLC

PLC

ood Group PL

ll PLC

c Ltd

orp Ltd

LC

vanced Techn

LC

up PLC

nergy PLC

t PLC

nergy PLC

Energy PLC

e Oil PLC

& Gas PLC

r Oil PLC

utch Shell PLC

utch Shell PLC

nder Energy PL

ternational PL

Oil PLC

Resources PLC

en PLC

il PLC

ystone Petrole

ds Petroleum

il & Gas PLC

troleum PLC

pper Explorati

n Energy PLC

esources PLC

Sector Rep

ce (Absolute)

es Index versus

x

ex

logies

C

m Ltd

LC

n PLC

ort

&P and general

1-Mont-2.8

-1.7-4.9

-3.3

-7.0

0.4

-3.6

5.1

-0.1

1.4

10.7

-4.8

8.4

-1.7-1.2

-5.4

-6.5

-2.9

-6.1

-1.1

-7.4

0.4

-1.4

-1.5

-8.1

-1.2

-5.6

-24.0

0.9

2.3

-11.2

-9.4

-5.7

-19.0

25.9

-6.9

22.7

Indices

th%

%%

%

%

%

%

%

%

%

%

%

%

%%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

%

3-Month1.5%

-5.7%-9.8%

-0.2%

-3.6%

-1.8%

0.6%

27.7%

5.0%

22.5%

21.7%

0.7%

5.9%

-13.9%-6.2%

-5.2%

-17.2%

-13.4%

4.3%

-26.1%

-12.7%

-5.1%

-2.3%

-1.0%

-3.3%

1.7%

-10.5%

-33.5%

-0.5%

7.2%

12.8%

-27.1%

26.6%

-16.4%

21.6%

-22.6%

-7.0%

YTD-2.4%

-3.7%-18.5%

-3.5%

-6.9%

-1.2%

11.4%

14.8%

-7.6%

32.0%

30.3%

15.0%

6.9%

1.0%-7.8%

-5.4%

-11.3%

-28.9%

23.2%

-48.4%

-14.0%

-5.6%

-2.6%

-1.2%

-5.3%

-1.1%

-2.2%

-63.6%

-15.8%

-4.0%

-17.4%

-36.9%

-7.0%

-30.1%

-27.6%

9.1%

29.9%

Source: FoxD

Source: FoxD

1-Yea37.6

16.216.3

9.1

26.7

58.0

91.8

77.0

16.9

75.6

137.4

76.9

73.3

17.319.4

-6.4

18.6

-8.4

133.6

-34.9

8.2

51.7

13.4

18.9

4.1

-13.2

6.6

-5.0

136.5

0.4

73.5

-10.4

22.0

-13.6

-5.0

50.0

278.6

20 June 2

vies

vies

ar

011

p6


8/39

Oilfie

Fin

Our fofrom l

by det

Exhibit

For 20

books

indust

attain

contin

With

contin

Table 4:

Amec (

PetrofacWood Gr

Hunting (

LamprellKentz ($

Schoelle

Technip (

Saipem (

Subsea 7

Hunti

Kentz

Lamp

Woo

AME

Petro

Saipe

Tech

Baker

Schlu

Hallib

ld Services

ncials/F

recasts are prtest trading s

ails of the up

8: Order Books a

11 we are gen

and latest gu

ry generally e

ent of some

ued stringent

any of the co

ue to benefit

EBITDA margin

)

($m)oup ($'m)

)

($m))

r-Bleckmann (EUR)

EUR)

Eur)

($)

ng

rell

ac

m

ip

Hughes

mberger

urton

Sector Rep

orecasts

imarily basedtatements, su

ated backlog

nd Backlogs

erally assumi

idance from t

panded as 2

pricing powe

controls of c

rporates in n

from low tax

s (%) by compan

Dec-083,220

3,997nav

nav

3501,004

214

7,208

19,100

6,200

20054.8

2.9

6.1

4.2

7.5

12.4

7.0

22.6

28.7

14.6

ort

underpi

upon revenupported by o

/order books

g that under

e companies

10 progresse

r and the add

st bases.

t cash positi

harges, large

y

ec-09 Dec-103,170 3,100

8,100 12,300nav 6,000

nav nav

633 8361,497 1,602

76 131

8,018 8,502

18,730 20,505

5,900 6,400

20066.5

7.1

11.6

8.0

5.9

10.7

11.0

7.5

26.2

33.6

28.7

nned by

and marginur views on in

most recentl

lying revenue

and recent d

d. We do exp

ed value of th

ns, financial c

ly reflecting t

urrent Commen3,100 Acquist io

12,000 Back log6,000 Back log

nav New busi

1090 Boost fro1,602 Papua Ne

131 Good ord

8,502 Balanced

20,000 Record b

6,400 Complem

200716.7

6.3

16.0

8.8

5.5

12.2

12.0

5.5

26.8

36.2

26.4

still hea

trends identifidustry develo

revealed by

s increase in

iscussions wit

ect further m

e services pr

harges will n

e low tax juri

ts/Critical projectsn of Mactac boosts

of $12Bn followingof $6Bn following P

ness from Innova- E

m MIS acquisitionw Guinea projects d

er book to oilfield s

and diversified ord

cklog , well diversi

entary mix by contr

200817.8

5.9

12.5

9.3

8.0

12.6

14.2

10.8

25.9

33.0

25.6

lthy ord

ied at recent rpments. Thes

the company.

xcess of 10%,

h manageme

argin expansi

vided to oil i

t be onerous

sdictions in w

backlog

ward of 2nd phaseN acquisition

xtel acquisition

eveloping

rvice providers

r book

ied by activity, clien

act type and geogra

200916.2

7.0

9.7

8.6

8.5

15.4

15.6

9.0

15.1

29.1

19.9

r books

esult stages ae assumption

based upon

t. Margins ac

n in 2011 refl

dustry custo

and many co

ich they ope

Sour

of S.Yoloten project

t and geography

phy

2010 2017.1

6.7

16.3

8.2

8.7

14.6

16.4

12.6

18.2

26.0

22.9

nd comments are support

Source: FoxD

current order

ross the

ecting the

ers, and

panies will

rate.

ce: FoxDavies, Bloo

B

011E 20116.2 1

7.0

10.4 1

7.8

9.4

13.7 1

17.2 1

12.5 1

23.1

26.7

24.9

20 June 2

d

vies

mberg

acklog/forecasted s0.90

2.261.05

1.561.43

0.33

1.27

1.64

1.28

12 E7.1

7.1

2.3

8.3

9.8

3.7

8.0

2.9

5.2

8.7

7.1

011

p7

ales


9/39

Oilfie

Exhibit

ld Services

9: EBITDA margi

Sector Rep

s (%) by compa

ort

ny

Source:: FoxDavies, Bloom

20 June 2

berg

011

p8


10/39

Oilfie

Exhibit

Exhibit

Exhibit

ld Services

0: UK oilfield se

2: European oilfi

4: US oilfield se

Sector Rep

rvice companies-

ield service com

rvice companies

ort

EBITDA Margin

anies EBITDA m

ROA (%)

(%)

Source: FoxDavi

rgin (%)

Source: FoxDavi

Source: FoxDavi

Exhibit 11: U

s

Exhibit 13:

s

Exhibit 15: E

s

S oilfield service

K oilfield service

uropean oilfield

companies EBIT

companies ROA

service compani

DA Margin (%)

Sourc

(%)

Sourc

s ROA(%)

Sourc

20 June 2

: FoxDavies

: FoxDavies

: FoxDavies

011

p9


11/39

Oilfie

Exhibit

Exhibit

Exhibit

ld Services

6: UK Oilfield Se

8: European oilf

20: US oilfield se

Sector Rep

rvices Companie

ield service com

rvice companies

ort

s ROC (%)

anies ROC (%)

ROE (%)

Source: FoxDavi

Source: FoxDavi

Source: FoxDavi

Exhibit 17:

s

Exhibit 19:

s

Exhibit 21: E

s

S oilfield service

K Oil Services c

uropean oilfield

companies ROC

mpanies- ROE (

service compani

(%)

Sourc

)

Sourc

s ROE (%)

Sourc

20 June 2

: FoxDavies

: FoxDavies

: FoxDavies

011

p10


12/39

Oilfie

Table 5:

HuntiMReve

EBIT

EPS

DPS

EV/E

PE

Yield

Petro$MReve

EBIT

EPS

DPS

EV/E

PE

Yield

Wood$MReve

EBIT

EPS

DPS

EV/E

PE

Yield

Newp$MReve

EBIT

EPS

DPS

EV/E

PE

Yield

ld Services

Company financ

ngue

A

ITDA

fa cue

A

ITDA

d Group ue

A

ITDA

parkue

A

ITDA

Sector Rep

ial forecast sum

2010461.6

68.3

24.7

12.0

11.1

29.3

1.7

20104,354

759

162.6

43.8

9.0

14.0

1.9

20105,063

418.6

39.7

11.0

14.9

30.9

1.6

2010716.0

105.0

0.46

0.0

7.8

17.5

0.0

ort

aries and Valua

2011e509.1

84.3

29.2

12.6

9.2

24.8

1.7

2011e5,239

761

162.1

50.4

8.8

14.1

2.2

2011e5,694

444.6

56.4

12.1

12.2

18.6

1.3

2011e864.4

147.5

0.75

0.0

5.7

10.8

0.0

tion

2012e542.6

91.9

32.8

13.2

8.4

22.0

1.8

2012e5,910

852

183.5

57.9

7.5

12.4

2.5

2012e6,156

527.6

70.7

13.3

8.8

14.7

1.4

2012e971.1

163.4

0.84

0.0

4.9

9.6

0.0

Kentz$MRevenues

EBITDA

EPS

DPS

EV/EBITD

PE

Yield

RSI'000Revenues

EBITDA

EPS

DPS

EV/EBITD

PE

Yield

Schoeller EURM

Revenues

EBITDA

EPS

DPS

EV/EBITD

PE

Yield

1

A

A

r

A

Sour

2010 20057.4 1,1

81.7

40.02 4

10.00 1

7.1

17.0

1.5

2010 203,633 4

1,706 -1

-6.02

0.00

-0.9

-0.8

0.0

2010 20306.1 3

81.1 1

1.9

0.8

11.7

31.9

1.3

ce: FoxDavies, Bloo

011e 20125.3 1,2

85.6

2.83 4

0.40 1

6.7

15.9 1

1.5

011e 201,058 8,

,954 1,

-2.50

0.00

-2.7

-2.0 1

0.0

011e 20177.3 4

05.2 1

2.9

1.3

9.1

20.9 1

2.2

20 June 2

mberg

12 e1.3

0.9

.78

.82

6.3

4.9

1.6

12 e162

332

.26

.00

4.8

9.6

0.0

12 e6.3

5.8

3.8

1.7

7.4

6.1

2.8

011

p11


13/39

Oilfie

Val

Oilfiel

servic

We us

metric

The m

such a

constr

comp

should

amorti

cases

term g

Exhibit

Exhibit

ld Services

ations

service com

companies a

e a combinati

s.

ost important

s the seismic

uction. Also t

nies operate

be noted th

sation conse

ut are cautio

rowth rates a

22: FTSE 350 Oil

24: FTSE 350 Oil

Sector Rep

less co

panies from a

nd are conse

on of multipl

multiple is P

and subsea c

x rates can v

(Lamprell op

t some comp

uently inflatin

us on applyin

nd cost of cap

Services Index P

Services Index E

ort

pelling

valuation sta

uently best

s to take into

although th

mpanies havi

ry significantl

rates in the U

anies, especi

g the multipl

g this method

ital.

graph

/EBITDA ratios

but valu

dpoint are in

alued using t

account vario

PE varies sig

ng lower mul

y from one c

AE so tax is vi

lly the seismi

by reducing

ology across

Source: FoxDavi

e plays

many ways si

e traditional

us specific sh

nificantly by s

iples than th

mpany to an

irtually zero).

c companies,

EBITDA. We

the compani

Exhibit 23:

s

emain

milar to tradit

methodologi

ortcomings w

ub-sector wit

asset light-c

ther 0% to 4

EV/EBITDA

book part of

have looked

s because of

SX Index PE gra

ional manufa

s PE, EV/E

ith each of th

asset-intensi

mpanies e

% dependi

ultiple is wid

ost of goods

t DCF valuati

ignificant se

ph

cturing or

ITDA and D

e traditional

ive companie

gineering &

ng upon wher

ly used but it

sold as

ons in certain

sitivity to lon

Source:

Source: FoxD

20 June 2

F.

e

FoxDavies

vies

011

p12


14/39

Oilfie

Exhibit

Over t

to 18 t

multip

geogr

ensuin

or UK

Exhibit

Exhibit

ld Services

25: OSX Index EV

he past 10 ye

imes. There is

le tends to b

phical persp

g table indica

markets.

27: FTSE 350 Oil

29: Bloomberg E

Sector Rep

/EBITDA ratios

rs, the Europ

no strong co

high when th

ectives is gen

te that invest

ervices Index P/

EA Index P/Bo

ort

S

ean sector ha

rrelation bet

e oil price is

rally trading

ent opportu

Book graph

k graph

ource: FoxDavies

s averaged a

een the multi

ising. The foll

at relatively hi

nities are mor

Source: FoxDavi

Source: FoxDavi

Exhibit 26: Blo

P/E of approx

ple and any s

owing graphs

gh multiples

e apparent in

Exhibit 28:

s

Exhibit 30:

s

mberg EMEA Oi

imately 15 ti

ector specific

suggest that

rom a histori

the US secto

SX Index P/Boo

TSE 350 Oil Serv

l Services Index

es, with a typ

macro factor

the sector fro

al perspectiv

r than in eithe

k graph

ices Index EV/Sa

EV/EBITDA ratio

Sourc

ical range of

although th

m various

e value and th

r the Europe

Sourc

les graph

Sourc

20 June 2

: FoxDavies

1

e

n

: FoxDavies

: FoxDavies

011

p13


15/39

Oilfie

Exhibit

ld Services

31: OSX Index EV

Sector Rep

/Sales graph

ort

Source: FoxDavi

Exhibit 32:

s

loomberg EMEAIndex EV/Sales

Sourc

20 June 2

: FoxDavies

011

p14


16/39

Oilfie

Exhibit

Exhibit

17 June 2

UKAMEC

Hunting

Kentz

Lamprell

Petrofac

Wood Gr

Rock Soli

Cape

KBC

FTSE Oil

Europe

Saipem

Technip

Subsea 7

BW Offsh

Seadrill

TGS

Schoeller

BBG EM

US ($)

Baker Hu

Halliburto

Schlumb

Weatherf

Transoce

Newpark

Oil State

BBG US

Market D

FTSE All-

Euro 350

S&P 500

Sub-se

Diversif

Offshor

Land D

Equipm

Engine

Reserv

Energy

Averag

ld Services

33: Valuation tab

34: Oilfield Servi

011

up

d Images

Services

ore

-Bleckmann

A Oil Services

ghes

n

rger

ord

an

Oil Services

ata

Share

ctor

ied Oil Services

e Drillers

rillers

ent

ring & Constructi

ir Information/Se

Shipping

e

Sector Rep

le (Geographic)

es sub-sector v

Share price

(Loc)

1102

734

413

375.6

1516

634.5

5

548

68.5

35.7

71.4

134.4

11.95

182.4

143.5

59.78

69.84

46.39

82.25

17.1

61.75

8.07

69.76

ion

ismic

ort

luations

Mkt Cap

US$

5,921

1,581

778

1,218

8,483

4,877

9.0

1,045.9

62.1

22,534

11,260

8,553

1,487

15,483

2,702

1,368

30,355

42,447

111,608

12,742

19,733

729

3,573

2010a

35.8

17.1

40.9

24.8

17.8

26.7

72.7

33.7

2010a 2011e

14.9 15.8

29.3 24.8

17.0 15.9

18.1 17.6

14.0 14.1

30.9 18.6

-0.8 -2.0

13.1 12.3

17.2 9.7

18.0 17.8

18.0 17.3

18.2 18.2

19.7 23.2

- 12.7

8.1 10.5

17.2 13.7

31.9 20.9

20.3 17.9

25.9 16.9

19.4 15.3

27.2 22.0

99.7 20.1

15.9 14.1

17.5 10.8

19.1 13.6

18.9 14.1

14.1 10.3

12.3 10.4

14.5 12.9

PE

2011e

17.2

13.5

24.0

19.9

19.1

22.1

19.1

19.3

PE

2012e 2013e

13.6 12.1

22.0 20.2

14.9 14.2

12.6 10.6

12.4 11.1

14.7 13.0

19.6 3.6

10.9 9.4

9.5 -

14.8 12.8

14.6 12.8

15.1 12.7

15.1 11.8

9.1 8.7

10.1 9.7

12.0 10.9

16.1 13.0

13.9 11.6

13.1 10.6

12.0 10.2

15.9 13.2

11.2 8.3

9.8 9.5

9.6 8.6

11.1 10.5

11.7

9.2 8.6

9.2 8.5

11.3 10.3

2012e 201

12.8 11

12.8 22

13.7 9

14.6 12

11.9 10

12.7 7

31.0 23

15.6 13

2010a 2011e

11.3 9.4

11.1 9.2

7.1 6.7

13.8 13.0

9.0 8.8

14.9 12.2

-0.9 -2.7

7.0 6.8

5.8 4.0

11.3 9.9

10.3 9.1

8.4 7.7

17.2 8.8

17.9 7.6

11.7 9.9

5.0 4.3

11.7 9.1

9.4 8.5

12.5 7.5

10.7 7.7

16.2 11.3

10.8 7.5

6.4 6.7

7.8 5.7

11.8 7.3

11.6 9.2

9.5 7.8

12.5 11.4

10.0 9.1

EV/E

e 2010a

.5 10.7

.8 11.0

.0 10.0

.4 12.5

.8 13.4

.2

.2 14.3

.8 12.0

Source:

Source:

2012e 2013e

8.1 7.2

8.4 7.6

6.3 6.0

8.8 7.5

7.5 6.4

8.8 7.1

4.8 2.1

6.3 5.7

3.6 -

8.5 7.5

7.9 7.3

6.6 5.8

6.7 5.7

6.0 5.8

8.9 8.5

3.9 3.7

7.4 6.2

7.2 6.3

6.1 5.1

6.2 5.3

9.0 7.7

5.7 4.6

5.7 5.7

4.9 4.2

6.2 5.9

7.4 6.4

7.3 6.9

10.4 10.1

8.3 7.8

ITDA

2011e

7.3

8.6

6.1

9.7

8.8

8.1

13.4

8.9

EV/EBITD

: Bloomberg, FoxD

: Bloomberg, FoxD

2010a 20

2.40

1.66

1.47

1.68

1.92

1.60

0.00

2.19

2.70

1.92

1.76

2.03

0.95

0.00

8.29

19.26

1.27

2.01

0.86

0.78

1.02

0.00

0.00

0.00

0.00

0.79

3.53

4.04

2.02

Yield (%)

2012e 201

6.0

7.0

4.5

7.5

6.6

5.3

9.9

6.7

A

20 June 2

vies

vies

11e

.45

1.74

1.53

.30

.21

1.25

.00

.43

.07

.20

1.91

.08

.56

.57

.10

.14

.15

.30

.84

.78

1.18

.00

.21

.00

.00

.82

.91

.49

.24

3e

6.0

6.7

4.2

6.7

6.4

3.2

8.9

6.0

011

p15


17/39

Oilfie

Exhibit

17 June 2

Diversifie

Schlumbe

Halliburto

Baker Hu

Weatherfo

Oil States

RPC Inc

Average

Offshore

Transoce

Seadrill Lt

China Oilf

Noble Cor

Diamond

Ensco PL

Pride Inter

Average

Land Dril

Nabors In

Helmerich

Patterson-

Precision

Pioneer D

Average

Equipme

National

Tenaris S

Vallourec

Cameron

FMC Tec

Oceaneer

Average

Engineeri

Saipem S

Keppel C

Technip S

Subsea 7

Petrofac L

AMEC PL

John Woo

Average

Reservoir

CCG Veri

Petroleum

TGS Nop

ION Geop

OYO Geo

Polarcus

Average

Well Serv

Complete

Key Ener

Basic Ene

Average

Market D

FTSE All-

Euro 350

S&P 500

BBG US

FTSE Oil

BBG EME

ld Services

35: Global detail

011

d Oil Services

rger Ltd

Co

hes Inc

rd International Ltd

International Inc

Drillers

n Ltd

d

ield Services Ltd

p

ffshore Drilling Inc

national Inc

lers

ustries Ltd

& Payne Inc

UTI Energy Inc

Drilling Corp

rilling Co

nt

ilwell Varco Inc

SA

International Corp

nologies Inc

ing International Inc

ing & Construction

pA

rp Ltd

A

SA

td

C

d Group PLC

Information/Seismic

as

Geo-Services ASA

c Geophysical Co AS

hysical Corp

space Corp

td

ices

Production Services I

y Services Inc

rgy Services Inc

ta

hare

il Services

Services

A Oil Services

Sector Rep

d valuation tabl

Shar

A

c

ort

(sub-sector bas

price Mkt Cap

(Loc) US$

82.25 111,608

46.39 42,447

69.84 30,355

17.1 12,742

69.76 3,573

21.95 3,256

61.75 19,733

182.3 15,518

13.96 10,424

37.66 9,497

66.94 9,306

51.39 7,371

40.7 7,243

24.95 7,170

58.91 6,302

28.13 4,347

12.81 3,605

13.1 712

69.98 29,607

15.75 26,559

79.85 13,452

46.07 11,288

40.38 9,704

35.87 3,893

35.72 22,515

10.44 15,067

71.41 11,246

134.3 8,570

1497 8,371

1090 5,853

632 4,855

24.195 5,247

84.75 3,348

143.6 2,712

8.5 1,318

96.96 607

4.88 363

30.65 2,419

16.17 2,308

25.95 1,095

is)

1Yr

Performance

34%

76%

59%

16%

58%

129%

25%

40%

47%

25%

11%

28%

64%

17%

38%

90%

66%

102%

86%

3%

6%

23%

47%

49%

36%

34%

38%

34%

19%

29%

95%

42%

16%

71%

82%

85%

4%

107%

51%

202%

2010a 2011e

27.3 22.1

19.4 15.3

26.0 17.0

100.6 20.2

19.2 13.7

16.6 10.8

35.8 17.2

15.9 14.0

8.1 10.5

12.6 11.4

20.1 18.5

10.5 10.3

16.3 13.9

35.7 16.2

17.1 13.5

16.6 15.1

18.4 15.1

25.3 13.1

21.4 15.5

- 49.8

40.9 24.0

17.6 16.8

21.6 16.8

22.3 16.0

19.3 17.7

29.2 24.0

19.3 18.7

24.8 19.9

17.8 17.1

11.2 13.7

17.9 17.9

19.6 22.8

14.0 14.1

14.9 15.8

30.9 18.6

17.8 19.1

- 41.7

- 28.8

17.2 13.7

53.1 21.9

22.5 19.7

- -

26.7 22.1

19.0 11.4

- 19.0

- 17.6

19.0 16.0

14.1 10.3

12.3 10.4

14.4 12.8

24.1 18.9

18.0 17.8

20.3 17.8

PE

2012e 2013e

16.0 13.3

12.0 10.2

13.1 10.7

11.2 8.4

11.1 10.6

9.5 10.8

12.8 11.5

9.8 9.5

10.1 9.8

10.0 9.2

9.5 8.7

12.3 12.2

8.9 8.1

12.2 12.1

12.8 22.8

9.9 8.6

12.9 11.4

10.4 9.7

11.5 10.6

18.8 -

13.7 9.0

13.3 11.9

13.0 11.8

10.4 8.3

13.4 11.1

19.0 15.6

15.0 12.6

14.6 12.4

14.4 12.7

12.5 11.8

14.9 12.5

14.8 11.7

12.4 11.1

13.7 12.1

14.7 13.0

11.9 10.8

15.0 10.5

12.1 8.3

12.0 11.0

13.6 8.9

18.2 -

5.0 2.8

12.7 7.2

9.2 8.6

11.3 10.8

12.8 21.8

11.1 13.7

9.2 8.6

9.2 8.5

11.3 10.2

14.1 11.7

14.8 12.7

13.8 11.6

2010a 2011e

16.2 11.3

10.7 7.7

12.5 7.5

10.8 7.5

11.8 7.3

9.0 5.0

10.7 7.3

6.4 6.7

11.9 10.1

10.0 9.0

8.9 9.6

5.4 5.9

9.4 6.8

19.1 11.1

11.0 8.6

7.5 5.6

9.1 6.4

9.2 4.9

9.7 6.8

9.5 5.4

10.0 6.1

8.8 8.2

12.4 9.4

10.9 8.5

9.8 9.2

14.7 13.6

7.9 8.0

12.5 9.7

10.3 9.1

9.3 9.5

8.4 7.7

17.1 8.8

9.0 8.8

11.2 9.3

14.9 12.2

13.4 8.8

8.1 6.7

8.2 7.6

5.1 4.4

8.1 7.3

22.9 11.9

31.2 10.3

-14.6 8.1

7.8 4.9

21.4 7.0

12.6 5.2

13.9 5.7

9.6 7.8

12.5 11.4

10.0 9.1

12.9 9.2

12.5 9.9

10.3 8.5

EV/EBIT

2012e 2013e

9.0 7.7

6.2 5.3

6.1 5.1

5.7 4.6

6.2 5.9

4.4 4.9

6.0 6.0

5.7 5.7

9.1 8.6

8.1 7.6

6.3 5.9

6.5 6.3

4.1 4.0

8.5 7.9

7.0 6.7

4.6 4.2

5.6 4.9

4.1 3.8

5.6 5.3

4.3 -

4.5 4.2

6.7 6.2

7.6 6.8

5.9 5.0

7.3 6.2

11.1 9.1

6.7 5.9

7.5 6.7

7.9 7.3

8.5 7.7

6.6 5.8

6.7 5.7

7.5 6.4

8.0 7.1

8.8 7.1

6.6 6.4

5.2 4.4

5.3 4.3

4.0 3.8

5.8 3.7

11.0 -

4.0 2.9

5.3 3.2

4.2 4.0

5.1 -

4.4 5.1

4.6 4.5

7.3 6.9

10.4 10.1

8.3 7.8

7.4 6.4

8.5 7.5

7.2 6.3

DA

20 June 2

2010a 2011

1.02 1.1

0.78 0.7

0.86 0.8

0.00 0.0

0.00 0.0

0.64 1.2

0.00 4.21

1.47 1.3

1.07 1.21

2.34 1.6

7.84 5.2

2.09 2.8

0.00 0.0

0.00 0.0

0.37 0.4

0.71 0.71

0.00 0.0

0.00

0.59 0.61

1.51 1.8

1.63 2.2

0.00 0.0

0.00 0.0

0.00 0.0

1.76 1.91

3.66 3.5

2.03 2.0

0.94 0.5

1.92 2.21

2.43 2.4

1.60 1.2

0.00 0.1

0.00 1.1

19.19 3.1

0.00

0.00

0.00 0.0

0.00

0.00 0.0

0.00

3.53 3.9

4.04 4.4

2.04 2.2

0.79 0.8

1.92 2.21

2.02 2.31

Yield

011

p16

-

-

-

-

-


18/39

Oilfie

InvThe fu

and g

Histori

of futu

Energ

The re

driven

report

domin

Exhibit

Hydro

The IE

over t

appro

found.

over.

decre

ld Services

stment

ndamental dr

s exploration

cally, the leve

re oil and nat

demand

covery in worl

by non-OEC

s suggests th

ate the globa

36: World Energy

carbon supp

A suggests th

e next twent

imately half

By 2030 that

New supply is

se.

Sector Rep

hemes

ivers of oilfiel

and producti

l of explorati

ural gas price

ydrocarbon

ld demand fo

energy dem

t world ener

l energy mix,

Demand

ly easy sou

at to match t

years, to ena

f the convent

figure may ha

relatively cos

ort

Funda

services and

on activity to

n and produ

s.

sources will

oil from the

and. In the m

y demand wi

ith coal, oil

rces utilised,

is demand g

ble such gro

ional oil prod

ve increased

tly and the ch

ental d

drilling activi

ether with up

tion (E&P) ca

continue to d

adir of the e

edium/longer

ll grow by so

nd natural ga

Sourc

deepwater

owth, around

th in oil and

uction neede

o approxima

allenges of m

rivers st

ty are energy

stream capit

pital expendit

ominate risi

onomic and

term, the Int

e 40% by 20

s supplying a

Exh

: IEA

nd shale gas

$350bn has t

natural gas su

d by the end

ely two third

atching ener

ill very

demand, the

l expenditure

ure has been

ng energy de

inancial crisis

rnational En

0, with hydro

lmost 80% of

ibit 37: World Oil

growth are

o be invested

pplies. Furthe

f the next de

. The era of o

y demand an

uch in

economic cyc

s by oil and g

primarily driv

mand

has been rea

rgy Agency (I

arbon fuels c

primary energ

Demand

s

in upstream

rmore, the IE

cade has yet

btaining relat

d supply and

lace

le and levels

as companies

en by expecta

sonably robus

EA) in recent

ontinuing to

y needs.

Source

ctivity every

A estimates t

o be develop

ively cheap oi

are not likely

20 June 2

f oil

.

tions

t,

: SBO, IEA

ear

at

ed or

l is

o

011

p17


19/39

Oilfie

Exhibit

Exhibit

ld Services

38: World supply

0: Global Oil su

Sector Rep

pply/demand, sp

ort

are capacity

Sourc

Source: Sch

e: ODS Petrodata

lumberger, IEA

Exhibit 4

Exhibit 39:

: OPEC Spare ca

orld Oil Supply

pacity

Sou

20 June 2

Source: SB

rce: Schoeller Blec

011

p18

, IEA

mann


20/39

Oilfie

Oil In

The ca

2007-0

capital

and n

elevat

reserv

econo

Lookin

15%.

and C

Ameri

South

15%. Ffive ye

We be

will ris

11% C

Exhibit

Exhibit

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

US

ld Services

ustry capita

pital expendi

8, as a result

expenditure

tural gas pric

d levels. Lar

s in the Sant

mies and infr

g at 2011, on

hevron has in

noco may in

a Petrobras

East Asia, so

or example Cars in offshor

lieve as a wh

between 5-1

AGR through

2: Oil Industry

4: Global EPCI

1999 2000 2001

$M

Sector Rep

l expenditur

ture of oil and

of the econo

witha rise in e

es had reach

e NOCs gen

and Rio de

structure.

average the i

dicated that i

rease their e

nd Pemex ha

e of the NO

hina Nationaloil explorati

le we will con

0% per annu

2010-14.

APEX

APEX by Sector

Oil industry E & P Capita

2 00 2 2 00 3 2 00 4 2 0

ort

to rise fur

gas compani

ic and financ

xcess of 10%.

d their nadir i

rally led the

aniero areas)

nternational s

ts expenditur

penditure by

ve indicated

s have sugg

Offshore Oiln.

tinue to see r

. Other com

Source Industr

Sourc

l Expenditure

5 20 06 2 00 7 2 00 8

ther in 2011

ies, both NO

ial crisis and l

This increase

n 2009 and th

ay (Brazilian

as their gove

upermajors ar

e will rise som

around 25%

apital expen

sted that the

Corp has just

ising levels of

mentators are

Data, FoxDavies

e McDermott Intl

2 00 9 2 01 0 2 01 1

nd through

s and IOCs,

ck of cash an

in investmen

at over the m

company Pet

rnments wish

e expected t

e 20% to aro

nd RDS and

iture increas

ir E & P capit

announced t

expenditure.

suggesting t

Exhibi

Exhibi

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

US$

to 2014

ecreased sig

d access to c

was led by t

edium term,

robras, is inve

to use future

increase the

nd $26Bn. Ex

Exxon Mobil

s of around 2

l expenditure

at it will spen

Our assumpt

hat E&P expe

43: Oil Majors C

45: Industry spe

2 00 0 2 00 1 2 00 2

M

nificantly in 2

pital. 2010 sa

e general ex

rices would r

sting heavily

il revenues t

ir E & P expe

pectations su

oth by aroun

0% and in the

budgets will

d close to $1

ions are that

nditure could

APEX

nding breakdow

Major IOC Capital Exp

2 00 3 2 00 4 2 00 5

09, after the

w a resurgen

pectation that

emain at curr

s it seeks to

o develop the

ditures by at

ggest that To

d 10%. In Lati

Middle East

increase by a

0Bn over the

apital expen

see as much

Source: Industry

n

Source: Sch

penditure

2006 2007 2008 2

20 June 2

ise in

e in

crude

nt

xploit

ir

least

al

n

and

least

next

iture

as

data, FoxDavies

oeller Bleckman

0 09 2 01 0e 2 01 1e

011

p19


21/39

Oilfie

Offsh

Offsho

platfor

segm

floatin

pipe l

Offsho

and ul

been

need

the in

advan

expen

to fro

Exhibit

Deep

Existin

and W

but un

explos

will re

proce

enviroappro

ld Services

re Drilling

re constructi

ms, risers, infi

nted into sha

g production

ying vessels

re Drilling co

ra deepwate

ffshore and i

ith deepwat

reasing well

ed and highl

diture is expe

around 450

6: Deepwater p

ater constru

g markets inc

est Africa. Sy

its are being

ion (Macond

tart in earnes

ses by indep

nmental maned.

Sector Rep

Deepwater

n comprises

ield flowlines,

llow water co

units, subsea

nd offshore s

vers hydrocar

>1,500m. Si

is currently f

r supplying

omplexity an

y reliable tech

cted to increa

by 2015 to

roduction

tion is one of

lude the Nort

tems are con

onstructed t

oil well) in 2

t albeit with n

ndent third p

gement prog

ort

xpenditure i

offshore struc

and a variety

struction p

construction

upport vessel

on drilling in

ce 2000 mor

recasted tha

ore than 10

d reserves in t

nology. Lates

se by just few

round $75Bn.

the fastest gr

h Sea and Gu

stantly being

drill in dept

10 are well d

ew standards

arty inspecto

rams in the fu

ncreasing

tures and plat

of other ancill

latforms fixed

nd offshore

s.

various water

e than 50% of

by 2020 that

. With this co

he more rem

t industry and

er than 200%

Source: EI

owing and hi

lf of Mexico w

developed an

s of up to 12,

cumented a

well design

rs, BOP desig

ture. Since 2

forms includi

lary specialist

to the seabe

latforms incl

depths sha

all new oil an

offshore oil c

mes increasin

te and less a

consultant r

by 2015 with

Exhibit

h technically

ith medium, t

d refined and

000ft. The eff

d known but

, casing and c

n and functio

8/02/11 14 de

g subsea eq

equipment. T

, deepwater

ding FPSOs.

llow water


22/39

Oilfie

Exhibit

ld Services

8: Offshore Jac

Sector Rep

-up order book

ort

Source: EI

Exhibit 49: Deepwater apital Expenditure

Sou

20 June 2

rce: Industry Data

011

p21


23/39

Oilfie

Offsh

Globa

growt

produ

predic

Exhibit

Much

projec

projec

Exhibit

ld Services

re construct

l offshore Eng

in the comin

tion and exp

ted to be in

50: Global Offsh

of the increas

ts can be co

ts. Currently,

52: Industry Subs

Sector Rep

ion capital

ineering, Pro

g years, led b

loration incre

ater over 500

re EPCI Capex b

es in CAPEX

plex and thu

global oil pric

ea spending

ort

expenditure

urement, Co

y increases in

ses will fuel

m deep. A he

Region

Source: Infiel

ill be depen

capital inten

e trends app

set to increa

nstruction an

the pipelayin

uch of this g

althy level of

, McDermott Intl

ent on oil an

sive, needing

ar to support

se

Installation s

g and subsea

rowth with ov

hallow water

Exhibit 51:

gas prices,

higher oil pri

the growth o

pending is ex

systems sect

er half the for

activity will su

Global Offshore

s offshore an

es to suppor

f the sector.

pected to ex

rs. The impa

cast subsea

pport the sec

EPCI Capex by S

So

d especially d

the economi

erience healt

t of deepwat

projects

tor.

ctor

urce: Infield, McD

eepwater

cs of the

Source: Global Ind

20 June 2

hy

er

rmott Intl

ustries

011

p22


24/39

Oilfie

Crude

Table 6:

Crude

buoye

tensio

prices

althou

We as

before

be onenerg

Exhibit

Funda

2011 a

Middl

oil de

90% o

Ameri

Table 7:

DemaGlobaremaiOECDmediuevidenslowddestru

ld Services

oil prices: v

Crude Oil Prices

oil prices in 2

d by favourab

s in the Mid

have eased o

gh the most r

ume that pri

easing as th

a rising trend/oil reports p

53: WTI Oil price

mental oil pri

nd 2012. Non

East and Lat

and growth i

this years oi

a, will show a

Crude Oil mark

ndl demand sho

robust, led bcountries ov

m term. Currce of somewn and dem

ction

Sector Rep

latile, highe

Brent $/bbl2009

61.5/bbl

011 have refl

le supply/de

le East and N

n concerns ab

ecent OPEC

es will remai

year progres

into 2012.Thublished by t

chart

e expectatio

-OECD count

in America.

in 2011 is exp

l demand gro

much more

t dynamics

In vuldy non-rnt

and

OElevch

ort

geopolitical

cted the gen

and fundam

. Africa and c

out a slowing

isaccord has

volatile but

ses. Average

se expectatioe IEA and O

Source

s reflect mar

ries will remai

verall we are

cted to be a

wth is attribut

oderate de

ventory levelsCD stocks atels but levelnge very rapi

risk premiu

2010$80/bbl

eral expectati

ntals and an

oncerns abou

of global ec

had an elevat

lose to curre

yearly prices

ns are primarEC et al.

: FoxDavies

ket anticipatio

n the key con

expecting th

around 1.3m

ed to the non

and increase

healthys candly

with upsid

ons of health

elevated geo

t the levels of

nomic activit

ing effect on

t levels in th

re though es

ily based upo

Exhibit 54:

n of a genera

tributors to e

world econ

b/day, not to

-OECD count

of 0.2 mb/d.

NonOPECSufficient negrowth is limmature fielddeclines of aannum thisaccelerating

e fundament

2011$85-105/b

global econ

political risk p

spare capaci

and easing

rices.

short term,

timated to be

n details and

il Forward Price

l robustness i

onomic grow

my to see gr

dissimilar to

ries, whereas

supplyr term but

ited withproductiont least 5% perdecline is

al risk

1ebl

mic growth i

remium reflec

y with OPEC.

f spare OPE

ith an elevat

higher in 201

omments fro

n global econ

th, led by Chi

wth close to

that seen in

the OECD, m

OPEC suSpare capressuredisappeatension adisaccor

2011$85-11

Source: Fox

2011 and 20

ting the polit

More recentl

capacity con

d risk premiu

1 than for 201

m recent avai

Source:

omic activity i

na, India, the

4.0% in 2011.

010. More th

ainly North

upplyacity under

and can quicr. Middle Easnd OPEC

concerning.

Source: Fox

20 June 2

1-12e0/bblDavies

12

ical

cerns

m,

0 and

lable

oxDavies

n

World

n

ly

Davies

011

p23


25/39

Oilfie

From

remai

seen t

remaifurther

envisa

10%, o

In the

signifi

Furthe

memb

major

to con

ld Services

supply pers

so over the

be major co

high owing tnew product

ged. Also, wit

verall supply

case of OPEC

ant supply di

rmore, the m

ers are happ

supply disrup

cerns about

Sector Rep

ective we bel

edium term.

ntributors to

o natural declion is schedul

h production

growth from

there appear

sruptions. Th

rkets can ne

with funda

tions, we rem

PEC supply

ort

ieve that sup

Supply from

rowth in 201

ine, as well aed to come o

from mature

on-OPEC so

s to be ampl

recent politi

er be certain

ental crude

ain concerne

ver the medi

ly growth fro

non-OPEC so

, while Norw

technical, pon stream, it is

ields declinin

rces will rem

spare capaci

cal tensions in

of OPECs su

il prices arou

that the rece

m/longer ter

m non-OPEC

urces such as

ay, Mexico an

litical and entaking longer

g at least aro

in constraine

ty to meet it

North Africa

ply policy an

nd the $80 le

nt lack of oil i

m.

sources rema

Brazil, Canad

d the UK are

ironmental fato come into

nd 4% per an

d.

call and con

and the Midd

d strategy, d

el. Whilst we

nvestment in

ins somewhat

, Azerbaijan,

et to continu

ctors. In theproduction t

num, but mo

sequently the

le East are o

spite recent

are confiden

some OPEC c

limited and

and Kazakhst

e to decline.

edium term,an initially

re likely close

re should be

viously conc

omments tha

there will be

ountries coul

20 June 2

ill

an are

isks

whilst

to

o

rning.

t its

no

d lead

011

p24


26/39

Oilfie

Natur

US nat

since

Table 8:

Table 9:

InvenLevellevel

Curren

of po

supply

numb

levels

In the

relativ

demaeffect

could

tight

Exhibit

ld Services

l gas prices

ural gas price

nd currently l

US Natural Gas

20$8.9/mm

US Natural Gas

ntory levelss currently atfrom a histo

t market dyn

er consumpti

augmented

r would be p

over the short

medium/long

ly clean and

d would be aould obviou

rise relatively

arkets. This s

55: US Natural G

Sector Rep

US prices t

s peaked in

anguish at ar

prices Henry

008tu

Market dynami

relatively highical perspecti

mics suggest

on and indus

y continuing

redictive of hi

/medium ter

term global

economic sou

ugmented cosly be for pric

strongly give

cenario is unli

s price chart

ort

o stay soft n

id-2008 at ar

und $4.7/m

ub $/mmBtu

2009$3.95/mmBtu

csDema

ve

IEA egrowgas snuclestron

that demand

rial activity in

increases in s

gher prices,

.

atural gas gl

rce of energy

nsiderable ifes to rise in m

the current l

kely to unfol

Source

ar term

und $11/mm

Btu.

$

andxpectations ah in demand.

een as a replaar in the longgly boost de

will remain fl

the US. With

hare gas prod

e are not exp

bal demand

compared wi

uclear fuel sost markets a

ck of gas dril

until 2013

: FoxDavies

Btu and amid

2010.7/mmBtu

re for overall. However natcement forterm whichand

at but much d

inventories g

uction a 10

ecting any si

could surge r

th the other f

urces becamnd the US thi

ling because

Exhibit 56: N

st volatility ha

$4.7

Supplatural

ould

Ampland egas rbeco

epends upon

nerally at hig

reduction i

nificant chan

flecting natu

ossil fuels and

e redundant as would be no

of weak price

atural Gas Forw

ve been on a

2011emmBtu

lye supply drivconomically csources. Proing margina

the weather

h level and wi

the current

e in US gas

al gas attrac

renewable s

nd unacceptexception. P

and conseq

rd Prices

downward tr

2$4.8/m

Source: Fox

n by abundaompetitive suction econ

lly unattractiv

Source: Fox

and general l

th more than

S gas rig co

ricing from c

iveness as a

urces. This

ble. The knorices in this m

ent likelihoo

Source: Fox

20 June 2

nd

2012emBtuDavies

talemicse

Davies

vels

ample

nt

rrent

k-onarket

of

Davies

011

p25


27/39

Oilfie

Shale

In rec

indep

produ

recent

mark,

Exhibit

Shale

and a

have b

emissi

Exhibit

Europ

the re

ld Services

Gas US to

nt years, shal

ndent from f

tion increase

years. Curren

hich is aroun

57: Previous ten

evelopment

mature servic

een some en

ons from ope

59: Improving U

has a relativ

ources canno

Sector Rep

evelop favo

e gas product

reign gas im

s in the last d

tly, the Henry

d $4 lower th

ears US shale pr

in the US has

sector, and

vironmental c

rations and th

shale economic

ely large reso

t be seen as l

ort

urably, Euro

ion has beco

ports, and ev

ecade, as sho

Hub spot pri

an the futures

oduction

benefitted gr

as improved

oncerns asso

e possible im

s

urce base of s

ike-for-like wi

e potential

e of huge im

n possibly be

n below, ca

ce is at $4.68/

quoted in 20

Source: EIA

eatly from tax

drilling times

iated with th

pact of hydra

Source: EIA

hale gas, con

h the larger b

ut slow take

portance in t

coming a net

be clearly se

Btu and ten y

08.

Exhibit 58:

incentives, a

and producti

drilling, such

lic fracturing

Exhibit 60: US

centrated aro

asins in the U

off

he US, with th

exporter in t

en in the cha

ear futures lie

Disparity betwe

cess to large

on rates in re

as contamin

on seismicity.

shale resources l

und central a

S, such as th

e country bec

e future. The

ge of gas fut

at around th

n future prices

tracts of und

ent years. Ho

tion of water,

ocations

d Eastern Eu

Barnett and

oming almos

impact of th

ures prices in

seven dollar

rom 2008-11

Source: FoxDacvie

veloped land

wever, there

, increased

rope. Howev

Fayetteville.

20 June 2

, Bloomberg

Source: EIA

r,

011

p26


28/39

Oilfie

Exhibit

Firstly,

propp

requir

associ

enviro

much l

Exhibit

Globa

regula

ld Services

61: Shale gas res

the services i

ant and other

ments for dri

ted with the

nmental conc

ess economi

63: Shale gas bre

lly, other regi

tion, but prog

Sector Rep

urces

ndustry in Eur

facilities is la

lling and frac

complexity of

erns resulting

than in the U

akeven prices

ns may be m

ress towards

ort

ope is much l

king. Concer

ing may be d

the geology,

from proble

S, and may ta

ore viable for

production is

Source:

ess mature th

ns over water

ifficult to me

the scarcity o

s in the US b

ke a much lo

shale produc

also likely to

Exhib

EIA

an in the US,

supply have a

t and disrupt

f undevelope

asins. As a re

ger time to d

ion due to si

e slow.

it 62: Shale gas r

and infrastruc

lso been voic

local supplie

d land in mai

ult of these is

evelop.

pler geolog

esources locatio

ure for movin

ed, and the e

. Further pro

land Europe

sues, shale g

S

and less stri

ns in Europe

g rigs, fluids,

xtensive wate

lems are also

and

s in Europe i

urce: Wood Macke

gent

20 June 2

Source: EIA

r

nzie

011

p27


29/39

Oilfie

Exhibit

USA

Europe

UK

N Afric

M East

China

India

Indone

Austral

Russia

Key: One

ld Services

64: Shale gas pr

a

sia

ia

star for lowest qualit

Sector Rep

spectivity by ge

Geology

***

*

*

***

**

**

*

**

***

***

, three stars for highe

ort

graphical marke

Gas Market

**

***

**

**

*

***

**

**

**

*

st

t.

Infrastru

***

**

**

**

*

**

*

**

**

**

ture Supp

***

**

**

*

*

**

**

***

***

***

Sou

ly Chain R

**

**

**

*

*

*

*

**

**

*

rce: FoxDavies, Oxf

gulation

ord Energy Insitut

Environmental

**

*

*

***

***

**

**

***

**

***

20 June 2

, BP

011

p28


30/39

Oilfie

Oil rig

One o

This tr

2008

conse

in the

Baker

and u

1,513 i

1,090

drillin

US Oil

Lookinand F

numb

contin

Lookin

Table 10

Area

US

Canad

N. Am

RoWTotal

Exhibit

ld Services

count acti

f the most im

acks the num

ith 3,557 acti

utive months

global drilling

Hughes recen

380 from 2,7

n May 2010.

ounted in M

continues to

and horizon

g forward wer East. The ri

r of new verti

uing its negat

g into 2012 w

: Worldwide Rig

rica

65: World Rig Co

Sector Rep

vity to remai

ortant indica

er of active d

e rigs. As a r

to reach its l

activity.

tly announce

50 in May 201

he internatio

y 2010. All thi

remain stron

tal rig count

expect drillincount in the

cal drilling rig

ive decline as

e see a furthe

Forecast

unt

Sour

ort

n at high lev

tors for the oi

rilling rigs in

esult of the m

w point in M

that the wor

0. The US rig

al rig count f

s data, despit

worldwide a

to drive glob

g activity in 2US will see c

s. We see th

natural gas p

r, perhaps 9-1

ce: Baker Hughes,

els in 2011 an

lfield service i

he world. Th

acro econom

y 2009 with 1

ldwide rig co

count for Ma

or May 2011

e some volati

nd in most g

al count hig

11 to increasntinued gro

oil rig count

rices remain r

0% increase i

2010 Actua

154

34

189

109299

oxDavies

d 2012

ndustry and c

global rig co

ic turmoil and

,983 active ri

nt for May 2

2011 was 1,8

as 1,151, up

lity in respect

ographical a

er

e worldwideth with the h

increasing an

elatively soft.

n the rig cou

l

Exhibit 66:

ompanies lik

unt reached i

declining oil

s. Since then,

11 was 3,130,

36, up 46 fro

2 from 1,129

ive regional a

eas.

ith particularrizontal/dire

d the natural

t again drive

2011 Fore

1

2

13

SA Rig Count

Hunting is th

s cyclical pea

prices, the rig

there is a visi

up 27 from 3

April 2011 a

in April 2011,

eas indicates

y robust activtional rig cou

gas rig count

by oil horizo

ast

00

40

40

8020

Source: B

e global rig c

k in Septemb

count fell for

ble upwards t

,103 in April 2

nd up 323 fro

and up 61 fro

that oil and g

ity in the Amnt outpacing

at similar

ntal/vertical ri

% c

Source: Baker

aker Hughes, FoxD

20 June 2

ount.

er

eight

rend

011

the

m the

as

ricashe

gs.

ange

16.5

-2.0

13.0

7.811.0

ughes

avies

011

p29


31/39

Oilfie

Exhibit

Exhibit

ld Services

67: US Oil Rig Co

69: International

Sector Rep

unt

Sour

(Outside US) Ri

Sour

ort

ce: Baker Hughes,

Count

ce: Baker Hughes,

oxDavies

oxDavies

Exhibit 68:

Exhibit 70: E

S Gas Rig Count

urope Rig Count

Source: B

Source: B

aker Hughes, FoxD

aker Hughes, FoxD

20 June 2

avies

avies

011

p30


32/39

Oilfie

M &Table 11:

Year20102010

2009

2010

2010

2010

2010

2010

2010

2010

2010

Table 12

Year20102010

2010

2010

2009

2010

2009

2010

Table 13

YearFeb 20

Dec 20

Mar 20Dec 20

Apr 201

Jun 201

Dec 20

May 20

The m

their c

comp

Transa

EV/EB

acquirand wi

mediu

respec

repres

deal t

We ex

positi

devel

better

increa

countrpositi

securi

ld Services

A bu: Oilfield Service

: Oilfield Service

: Oilfield Service

initiation update jun 2011

Documents