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Oilfield Equipment & ServicesReport 2013A Clearwater Industrials Team Report

EVERY BUSINESS DAY, SOMEWHERE IN THE WORLD, AN IMAP ADVISOR IS CLOSING AN M&A TRANSACTION

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Clearwater Corporate Finance operates globally across 32 countries worldwide through

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by Thomson Reuters for deals up to $200m.

80% of Clearwater’s trade sales last year were cross-border transactions

Even in such an unpredictable and volatile market as the oil and gas industry these are extraordinary times.

For instance in 2013 demand for oil in the developing world will overtake that in industrialised countries for the very first time, driven particularly by strong demand from China, India and other developing nations across Asia which continue to see strong economic growth.

And then there is the shale revolution which has so transformed the US energy sector, and which is now sweeping the wider world too. If its impact elsewhere is anything like we have seen in the US – in just a decade shale gas has risen from 2 per cent of natural gas production to 37 per cent - then the ramifications are going to be significant. Global production of gas is already growing at roughly twice the rate of oil, while global demand for gas could rise by as much as 50 per cent between 2010 and 2035.

One of the big side-effects of the shale revolution besides lower gas prices has been its impact on other industries, most notably the chemicals sector. Indeed it is little surprise that leading petrochemical players are investing heavily in the US to take advantage of cheaper prices.

The shale revolution has been driven by technological advances such as horizontal drilling and hydraulic fracturing, and it is these very same techniques, along with the likes of 3D seismology, that are now also making it possible to develop oil in reserves previously thought of as commercially unviable.

In particular 'directional drilling' has transformed the fortunes of many oilfields, while the industry has also seen huge strides in the scale and sophistication of subsea pipeline systems and deepwater production.

Against this backdrop it is little surprise that we have seen a complete restructuring of the supply chain in recent years as oilfield and gas services firms increasingly take on roles formerly carried out by the largest oil producers. Today the oilfield services market is worth $750bn a year and the growth of its leading players continues to be driven by a mix of technological breakthroughs, the willingness of oil majors to outsource production and reduce their exposure to ageing reserves, and by increasing demand from state-owned oil firms.

On the dealmaking front there is every sign that these factors will also ensure that the oil and gas market will continue to remain a very attractive play for M&A activity this year, particularly as companies look to expand their operations as they seek out new technologies, markets and customers.

Constantine BillerPartner, IndustrialsClearwater Corporate Finance LLP

O I L F I E L D E Q U I P M E N T & S E R V I C E S R E P O R T 2 0 1 3

ContentsGlobal overview ................................................4

The UK market ..................................................6

M&A activity .....................................................8

Reservoirs ........................................................ 10

Drilling ................................................................ 11

Hot topics ......................................................... 12

• Shale

• Deepwater/Subsea

• Gulf of Mexico

• Arctic

• Europe

• Brazil

Recent UK Oilfield Equipment &

Services deals ................................................. 15

Company profiles ........................................... 19

These are exciting times in the global oil and gas market, a market which - driven by technological breakthroughs and strong demand - continues to grow strongly despite the global economic pressures.

Undoubtedly one of the most exciting trends of recent years, and one which we refer to throughout this report, is the emerging energy independence of the United States, the world's largest energy consumer. The ramifications of the shale revolution that has swept the US are only beginning to be fully understood by both the industry itself and the wider world, not just in economic terms but also given the considerable political dimension of America's traditional reliance on Middle Eastern supplies.

The expectation has always been that increasing demand for oil over the next 15 to 20 years would be met by Opec, but the shale boom is rapidly changing the competitive advantage that the Gulf has had for so long and with it the political equations.

Indeed in late 2012 a report from the International Energy Agency (IEA) projected that the US could even overtake Saudi Arabia as the world's biggest oil producer by 2020, and in so doing rapidly become much less dependent on oil imports. In its World Energy Outlook it said the US could be almost self-sufficient in energy by 2035, while it would also overtake Russia as the largest gas producer as soon as 2015.

The figures are striking. US oil output has increased a staggering 25 per cent since 2008, and the IEA estimates it will increase a further 30 per cent by 2020 to 11.1m barrels a day. In just a decade shale gas has risen from 2 per cent of US natural gas production to 37 per cent. Natural gas prices in the US hit a decade low in 2012 as a result of shale supplies with benefits for consumers and producers alike.

Driven by technology

The combination of two specific technologies are behind the shale revolution, hydraulic fracturing and horizontal drilling. The former is the process whereby water, sand and chemicals are pumped underground to break apart rock and release gas. Specifically, technological advances mean it is now possible to deviate from 'straight line' drilling and direct drilling equipment to reach a point that is not directly underneath the point of entry. The impact is also altering the intricate global balance between oil and gas production. Global production of gas is growing at roughly twice the rate of oil and the IEA say the share of gas in the global energy mix could rise to as high as 25 per cent by 2035. Likewise, driven by its flexibility and efficiency as a fuel, it says global demand for gas could rise by as much as 50 per cent between 2010 and 2035.

In this respect it is important to remember the many uses of gas, namely that it does not just heat homes but can be widely used in industry too, for instance in the fuelling of industrial boilers. Gas is also increasingly used by the petrochemicals industry which uses it as a feedstock to make chemicals such as methanol and ammonia.

Global overview

Growth in primary energy demand

Source: IEA WEO 2011

China

India

Other developing Asia

Russia

Middle East

Rest of world

OECD

Mill

ion

tons

of o

il eq

uiva

lent

2010 2015 2020 2025 2030 2035

4500

4000

3500

3000

2500

2000

1500

1000

500

0

Impacts

One of the big side-effects of the shale revolution has been its impact on industries such as the chemicals sector, and specifically on companies looking to expand capacity in US to take advantage of low energy costs. In late 2012 even Saudi Basic Industries Corp, the world's largest petrochemical producer by market capitalisation, said it was looking at investing in the US to take advantage of cheap shale gas, following the likes of Dow Chemical, Royal Dutch Shell, ConocoPhillips and Chevron.

But there are concerns. In particular the US Environmental Protection Agency (EPA) and other government bodies are studying hydraulic fracturing and it has been reported that this year it could try to restrict the industry's operations. Gas is also difficult and expensive to transport, for instance only a third of gas reserves are exported, compared with two-thirds of oil supplies.

However the wider global growth of the shale industry could also be a major part of the answer to reducing China's dependence on imported energy. China currently relies heavily on imports of liquefied natural gas (LNG) and analysts predict that it will increasingly look to the Middle East for oil supplies too. However China does have the world's largest technically recoverable shale resources according to estimates from the US Energy Information Administration. Indeed China recently made shale gas a cornerstone of its five-year energy blueprint, although questions remain over whether the country has the infrastructure it needs to repeat the US shale story.

Oilfield services

A major impact of the wider technological developments in the oil and gas industry - and the rise of sectors such as shale - has been a complete restructuring of the supply chain as oilfield and gas services firms increasingly take on roles formerly carried out by the largest oil producers.

Today the oilfield services (OFS) market is worth $750bn a year and comprises of a range of businesses with very specific functions within the sector spectrum. Among those companies which make and sell products for use on drilling rigs or on the seabed are FMC Technologies, Cameron and National Oilwell Varco, while players which find and extract oil include Schlumberger, Halliburton, Baker Hughes and Weatherford International. There is also a major market for those firms which own and lease out drill rigs such as Rowan, Transocean, Seadrill and Noble.

The growth of companies across this spectrum has been driven by a range of factors. For instance technological breakthroughs such as horizontal and directional drilling have played a significant part, while the rising price of oil has also encouraged firms to look for oil in more remote places. A major driver has also been the trend by oil giants to increasingly outsource oilfield services, while rising global demand from state-owned oil firms has played its part too. Further down the supply chain a number of high quality niche companies are also benefitting from the outsourcing trend. If you take just the UK, companies such as EnerMech, Expro, Global Energy Group and Lymington are at the forefront of this trend and have seen significant growth in recent years.

Global subsea oil and gas capex spend by region

USD million

Source: IEA WEO 2011

20 000

18 000

16 000

14 000

12 000

10 000

8 000

6 000

4 000

2 000

0

2005

Africa/Medit APAC/Middle East North Sea North America South America

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

The UK marketAlthough North Sea oil production is declining and energy imports now exceed UK production for the first time in 40 years, the sector - driven by technological breakthroughs - is still vibrant and continues to attract considerable interest from both home and overseas investors.

In particular the market is being strongly driven by the trend of larger oil groups to reduce their exposure to the North Sea and sell developed assets to companies more willing to extend the life of declining fields and 'get at' all remaining reserves.

According to Oil and Gas UK, a trade body, some 24 billion barrels of oil still remain to be extracted from the North Sea while the UK currently exports around £6bn worth of oil and gas a year. Little wonder that the UK government still sees oil, and especially gas, as a key part of its energy strategy and in early 2013 is set to publish an industrial strategy for the sector.

The moves come after a bruising dispute between the government and oil companies in 2011 when the Treasury raised marginal tax rates for companies operating in the North Sea to up to 81 per cent in some cases in a £2bn tax raid. The government later said that income from mature sites would be shielded from the full impact of the supplementary tax charge, a move which Oil and Gas UK says has been instrumental in ensuring certain large-scale investments have happened over the past year to 18 months. The government has also since announced a brownfield tax allowance designed to encourage investment in older fields. The tax break shields the first £250m-£500m of income on certain projects from paying a 32 per cent supplementary charge tax.

Life in North Sea yet

A good example of how the life of oilfields is being prolonged is the Forties field which was first discovered in the early 1970s by BP. Production peaked at over 500,000 barrels per day (bpd), but when Texas-based Apache purchased the field from BP a decade ago production had declined to 40,000 to 45,000 bpd and it was expected that the field would close.

However since then Apache has raised production by drilling a number of wells off the Echo platform where drilling costs had historically been high. Apache removed the platform and drilled several new wells, adding significantly to production. Apache has since used seismic technology to identify areas of the field that had not previously been fully drained. Meanwhile in 2011 Apache also paid £1.1bn for the oil and gas assets of ExxonMobil in the Beryl field in the North Sea.

The continued health of the sector was also evidenced in late 2012 when oilfield services company Expro opened a new facility in Aberdeen to enhance its growing well intervention business.

Shale comes to UK

Seeing the phenomenal changes to the US market brought about by the shale revolution, the UK government is increasingly keen to see a piece of the action too. In December 2012 the government lifted restrictions on fracking, the method of extracting gas from shale rock, as it gave the green light to drilling operations at a site in Lancashire. Dozens of more sites could be licensed in coming years as the government seeks to make up for declining North Sea supplies.

At the time of the lifting of the restrictions the government said shale gas could contribute significantly to the UK’s energy security. It said that companies drilling wells would be subject to a traffic light system with seismic monitoring to ensure that if there were tremors above a certain level then drilling would be halted pending investigations.

Recent notable deals:

• In December 2012 the Abu Dhabi National Energy Co (TAQA) announced it was buying a number of BP's North Sea assets for £814m. BP said the deal brought its asset divestment programme close to the targeted £23.8bn. The deal involves BP's interests in the Harding, Maclure and Devenick fields. TAQA said the deal opened up new investment opportunities such as infill drilling on Harding; the ability to unlock significant discovered gas resources together with other adjacent field owners; and the development of the Morrone field.

• In October 2012 Shell was given the go-ahead to develop the Fram oil and gas field in the North Sea. Fram is a joint venture between Shell UK and Esso Exploration & Production UK. The project is one of the largest currently planned for the UK North Sea and will add around two per cent to UK oil and gas production. The field is expected to produce an average of 35,000 barrels of oil equivalent per day and Shell is working to achieve first production within the next three years.

• In October 2012 Canadian oil company Talisman Energy said it was going ahead with a £1.6bn oil project in the North Sea. The company said the Montrose Area Redevelopment project would create or sustain more than 2,000 jobs and lead to the production of a further 100 million barrels from the fields which lie east of Aberdeen. The Montrose platform was first installed in 1976 and is one of the oldest in the North Sea. The project will extend the life of the existing fields by 13 years to 2030.

• In July 2012 Chinese state-controlled oil group Sinopec struck a £940m deal with Talisman Energy to acquire a 49 per cent stake in its UK assets. The deal was part of Talisman's strategy to sell off some of its interests in Britain to focus on higher-growth shale gas projects in North America and Southeast Asia where it has long-term exploration plans.

• In June 2012 Cairn Energy acquired North Sea oil company Nautical Petroleum for £414m. After selling the bulk of its Indian business to Vedanta Resources, Cairn is attempting to build up an oil producing business. In April 2012 it acquired Agora Oil and Gas.

• In May 2012 an agreement was struck between EnQuest and Kuwait's national oil company to commit £313m to fund the redevelopment of Britain's first producing - but now abandoned - North Sea oilfield. The foreign investment arm of Kuwait Petroleum Company acquired a 35 per cent interest in the Alma and Galia oilfield developments.

• In March 2012 BP sold £250m of North Sea gas assets to Perenco of France as part of its strategy of offloading ageing British fields to concentrate on new projects in UK and Norwegian waters. In May 2011 BP also sold Wytch Farm, the UK's largest onshore oilfield, along with other assets, to Perenco. BP said the divestment represented a "refocusing of efforts" rather than a withdrawal from the North Sea where it still plans to develop projects worth £10bn over the next five years.

Company

John Wood Group Plc

Petrofac Limited

Amec Plc

Weir Group Plc (The)

KCA Deutag Alpha Limited

Kentz Corporation Limited

Lamprell Plc

Cape Plc

Hunting Plc

Expro International Group Holdings Limited

Description

Provider of rotating equipment services & solutions to the power, oil & gas and clean energy markets.

International provider of facilities solutions to the oil & gas production & processing industries.

Supplier of consultancy, engineering and project management services to the oil and gas, minerals and metals, clean energy, environment and infrastructure markets.

Engineering group operating within three divisions: Minerals, Oil & Gas and Industrial.

A group engaged as providing drilling and related well and facilities engineering services.

Provision of construction and engineering services, principally in the oil services sector.

A group engaged in the provision of specialised refurbishment and construction services to the oil and gas industry.

Provides non-mechanical services, principally to plant operators in the oil and gas, power generation, chemical, mineral and mining sectors, and E&C contractors.

Manufacture and distribution of products that enable the extraction of oil and gas for the world’s leading energy companies.

A group engaged in the provision of well flow management services and products to the upstream oil and gas industry.

Sales: Total £m

3,916

3,753

3,261

2,292

925

885

742

723

609

601

Sales: Oil & Gas £m

3,916

3,753

1,696

755.7

925

398

742

362

609

601

UK Oilfield Equipment and Services groups

M&A activityDespite strong price volatility, changing regulations and a continued uncertain economic outlook, most analysts agree that the oil and gas market will continue to remain an attractive play for M&A activity in 2013, particularly as OFS companies look to consolidate operations as they seek out new technologies, markets and customers.

Indeed the tail end of 2012 saw considerable activity, particularly among US private equity players. For instance Gulf Coast Machine & Supply, a leading provider of forging solutions to energy and industrial end markets, was sold to Altus Capital Partners. Gulf Coast operates in demanding environments such as subsea production facilities, refineries, offshore oil and gas rigs, mining machinery, off-highway equipment, hydraulic fracturing equipment, and wind power turbines.

Texan PE fund OFS Energy Fund also completed an investment in KW International (KWI), a provider of production and midstream equipment for oil and gas producers. KWI is looking to capitalise on the high demand for equipment and related infrastructure around the shale industry, and its products are geared towards gas and liquids production, processing and transmission. Another Texan PE firm, CapStreet Group, sold GHX Holdings, a fluid transfer and sealing products company, to United Central Industrial Supply, a mining supply distribution company.

Meanwhile a recent report from Barclays described conditions as "ripe" for OFS players such as Halliburton, Schlumberger and National Oilwell Varco to continue to acquire smaller companies. Indeed the latter has continued to be a very acquisitive player in the market. In 2012 it spent about £2.8bn on deals including the £1.6bn acquisition of Robbins & Myers.

The Barclays report says new regulations are also encouraging high-specification equipment, and also boosting operator demand for high-calibre technologies and equipment capable of increasing efficiencies and reducing unplanned downtime.

Similar sentiments were expressed in a 2012 report conducted by Mergermarket on behalf of Ernst & Young which concluded that OFS companies needed to adapt quickly to the changing landscape. The report said "technology, global reach and local delivery capability" were key in the present market and the M&A route was one way for OFS companies to respond to the challenges.

The report found strong appetite among industry executives for M&A activity in the year ahead. Nearly three quarters of those questioned planned to make acquisitions in the next two years. It said multiple drivers explained the increase in appetite for M&A with most respondents citing access to new markets and customers as the primary driver of acquisitions. Vertical integration to extend services, and access to new technology were also given as reasons. More than half of respondents cited changes in the regulatory framework as the biggest challenge to executing their business strategy.

Oilfield Equipment & Services – H2 2010 - H1 2012

Source: Copal Analysis and S&P Capital IQ

H2 2010

No.

of D

eals

H1 2011

Total Deals

Average Deal Value

125.0

99109

134

115

261.8

234.0

101.0

H2 2011 H1 2012

300

240

180

120

60

0

160

128

96

64

32

0

US

D m

illio

n

Analysts agree that the oil and gas market will continue to remain an attractive play for M&A activity in 2013.


• In December 2012 British valve business HSP Group was acquired by the Edgen Group, a global distributor of specialty steel products for energy and infrastructure markets. HSP sells valves and actuation products and services to customers in global oil and gas offshore, refining, petrochemical and power markets from bases in the UK, Qatar and the US. Edgen said the deal would help it better serve the European, Middle East and Caspian regions.

• In May 2012 National Oilwell Varco acquired the Wilson distribution business from Schlumberger. Wilson is a leading distributor of pipe, valves and fittings as well as mill, tool and safety products and services. National Oilwell Varco is a global leader in the design, manufacture and sale of equipment and components used in oil and gas drilling and production operations, the provision of oilfield services, and supply chain integration services to the upstream oil and gas industry.

• In March 2012 Phoenix Equity Partners acquired Gall Thomson Environmental, a global supplier of safety critical flow control products from Lupus Capital. Gall makes the couplings which ensure that fuel is transferred safely and securely down a hose and that the loss of fuel is limited as much as possible.

• In May 2011 National Oilwell Varco acquired UK valve distributor Capital Valves, a specialist supplier of gate, globe, check, ball, butterfly, non slam and double block and bleed valves.

• In April 2011 GE completed the acquisition of John Wood Group's Well Support Division, expanding GE's drilling and surface manufacturing and services portfolio. The £1.8bn transaction enabled GE to capitalise on fast-growing demand for enhanced oil recovery from mature oilfields using downhole pump ‘artificial lift’ in brownfield developments. It also expanded GE's high-technology product and service offering in unconventional oil and gas production, with significant applications for shale gas production.

• In 2010 GE bought Wellstream, the UK oil and gas services group, for approximately £800m as part of an expansion into the energy sector. Wellstream has manufacturing bases in the UK and Brazil and is one of the world’s largest suppliers of flexible pipes for the oil and gas sector. One of its main attractions to potential bidders was its exposure to Brazil which is investing heavily in exploration.

• In April 2009 National Oilwell Varco acquired Anson, a British manufacturer of oilfield equipment such as valves, swivel joints, flowline equipment, manifolds and wellheads.

M&A deals by region – H2 2010 - H1 2012

Source: Copal Analysis and S&P Capital IQ

250

200

150

100

50

0

136

65

13

227

16

Europe Asia Pacific Africa / Middle East North America Latin America

No.

of D

eals

ReservoirsNowhere is technological change in the industry more important than in helping to clearly identify how much oil and gas can be extracted from specific reservoirs.

Although the actual volume of oil and gas can be estimated from the volume of the reservoir itself, only a certain amount of this volume will ever be recovered (the recovery factor) depending on factors such as reservoir dimensions and pressure. The latter is particularly important as reservoir drive is powered by the difference in pressures within the reservoir and the well.

UK Oil and Gas, a trade body, say that if permeability is good and the reservoir fluids flow easily, then oil, gas and water will be driven by natural depletion into the well and up to the surface. Thus the proportion of oil that can be recovered from a reservoir is dependent on the ease with which oil in the pore spaces can be replaced by other fluids like water or gas.

It says the quoted recovery factor for most North Sea fields is about 35 per cent, but may be as low as 9 per cent where the oil is very viscous, or perhaps as high as 70 per cent where reservoir properties are exceptionally good and the oil of low viscosity. The recovery factor in gasfields is much higher and can be more than 85 per cent.

The science of analysing reservoirs is being strongly driven by the growth of complex mathematicals models and computer simulations which try to best predict what will actually happen during production and thereby help companies choose the most effective method of discovery.


In November 2012 Cameron and Schlumberger announced a JV OneSubsea to manufacture and develop products, systems and services for the subsea oil and gas market. The companies said OneSubsea would offer a "step-change" in reservoir recovery for the subsea oil and gas industry through integration and optimisation of the entire production system over the life of the field. The companies said the deal would provide a powerful alliance of oilfield services technology and subsea equipment heritage.

In January 2012 the Reservoir Group, a global market leader in downhole tools, technologies and associated sub-surface services, combined its three well intervention services companies under one new brand, Wellvention. It added Saudi-based Nordic Well Services to existing member companies, Wellbore Intervention (WBI), based in the UK, and Dutch-based The Tool Company (TTC). The Reservoir Group reported a 60 per cent rise in revenues during 2011.

Nowhere is technological change in the industry more important than in helping to clearly identify how much oil and gas can be extracted from specific reservoirs.

DrillingAdvances in the techniques of horizontal drilling and hydraulic fracturing, first applied to shale gas reserves, are now making it possible to develop oil in reserves previously thought of as commercially unviable. Nowhere has this been more evident than in the United States which managed to increase output of crude oil and other liquid hydrocarbons by 1.1m barrels a day during 2008-11.

In particular a technique called directional drilling has had a massive impact on the sector. The process involves drilling shafts vertically to a depth of several kilometres and then drilling horizontally. The process significantly increases the area that one rig can extend to, and combined with advances in 3D seismology, is playing a key role in allowing companies to extract further from previously abandoned wells.

Advances in deepwater drilling are also beginning to dramatically change exploration in the sea. For instance Australia's annual deepwater drilling expenditure is forecast to increase to £1.56bn by 2016 as increased demand drives Australia to intensify deepwater natural gas production from its vast offshore reserves. According to GBI Research the country’s offshore drilling expenditure in 2011 was £1.2bn of which £800m was dedicated to deepwater production.

For the entire Asia-Pacific global region, GBI forecasts offshore drilling expenditure to increase from £10bn in 2011 to £15bn in 2016.


In December 2012 Freeport-McMoRan Copper & Gold acquired Plains Exploration and Production and McMoRan Exploration. McMoRan Exploraton has been pioneering drilling at extreme depths in the Gulf of Mexico. The deal creates a leading US-based natural resource company with an industry leading global portfolio of mineral assets and significant oil and gas resources.

In May 2012 Aker Solutions acquired NPS Energy, a division of oilfield services company National Petroleum Services. NPS Energy has a strong presence in the Middle East and North Africa, and its core offerings are well intervention services including coil tubing, wire-line services, cementing, pressure pumping, well logging and testing, as well as onshore drilling services. Aker Solutions provides oilfield products, systems and services for customers in the oil and gas industry worldwide, employing 23,500 in more than 30 countries.

In April 2012 the Japanese multinational Mitsui & Co acquired a 25 per cent stake in The Global Energy Group, the Scottish energy industry services group. Global said the deal would reinforce its expansion and acquisition drive in the UK and other markets. Global has seen particularly strong growth in Australia, Brazil and India.

In April 2012 Cameron International acquired the drilling equipment business of Norway's TTS Group in a deal valued at £169m. TTS is one of the biggest players in the design, development and supply of equipment for the marine and oil and gas industries, and following the sale will now focus on continuing to grow its offshore handling business. Cameron International is a global provider of oilfield equipment such as pressure control, processing, flow control and compression systems.

Advances in deepwater drilling are also beginning to dramatically change exploration in the sea.

Hot topicsShale

The shale revolution, along with other energy sources such as Canada’s tar sands, has radically altered the global balance of oil and gas supplies. Some analysts predict that through a combination of these two sources North America could become self-sufficient in oil by 2025 and even a net exporter.

At present shale contributes around a third of America's gas supplies. Crucially, the cost of getting at the gas has come down as techniques have become more efficient. In particular, drilling multiple wells from a single pad has made operations much cheaper, while 3D seismic imaging has helped better identify where the gas may be.

Such developments are making the eyes water of leading global players as they begin to grasp the potential of producing shale worldwide. For instance Texan oil giant ConocoPhillips said recently that it was looking to expand its Chinese operations to include shale gas. The company currently holds stakes in a number of Chinese offshore drilling projects. China is estimated to have 1.28 trillion cubic feet of recoverable shale gas.

Meantime discoveries of vast reserves of conventional gas from traditional wells have pushed up known reserves. Indeed gas is the only fossil fuel set to increase its share of energy demand in the years to come.

Deepwater/subsea

Deepwater oil and gas resources are an important part of the energy mix, especially in the US. According to BP, deepwater resources globally account for around 7 per cent of global oil production, a figure that is expected to rise to nearly 10 per cent by 2020.

Drilling for and producing oil and gas from deepwater reservoirs poses considerable engineering challenges. For instance the oil and gas reservoir can be up to 35,000 feet below sea-level, and once a deepwater field is discovered, huge production platforms, systems and pipelines are then required to extract and transport the oil and gas to shore. For example BP's Thunder Horse platform in the Gulf of Mexico is the size of three football fields and contains equipment and systems capable of processing a quarter of a million barrels of oil equivalent per day.

Meantime there have also been major advances in the scale and sophistication of subsea pipeline systems developed to carry oil and gas from fields to processing hubs onshore. For example BP's Mardi Gras deepwater transportation system in the Gulf of Mexico is the largest capacity deepwater oil and gas pipeline system ever built, capable of transporting over one million barrels of oil equivalent a day.

The benefits of such advances are being felt across the industry in its supply chain. For instance Aveva, the engineering software group which specialises in deepwater facilities, reported strong sales growth last year and says deepwater is the real growth area in oil and gas production, especially in countries such as Brazil, while a massive market for managing data in deepwater activities is also emerging.

Drilling for and producing oil and gas from deepwater reservoirs poses considerable engineering challenges.

Gulf of Mexico

Despite the steep drop in oil production in the wake of the Deepwater Horizon disaster of 2010, the biggest oil spill in US history, the Gulf of Mexico continues to play an important role in the US and global market.

According to consulting firm Bentek Energy, Gulf oil flows will increase by 28 per cent by 2022 to 1.8 million barrels per day, boosted by projects like Exxon Mobil's Hadrian field and Chevron's Jack and St. Malo projects.

However the proportion of supplies coming from the Gulf will continue to fall. The Gulf used to account for nearly a third of US oil production but driven by new extraction techniques the shale revolution has led to a surge in onshore production such that the Gulf now only accounts for around a fifth of US output. This is predicted to fall to around 15 per cent by 2022.

In the wake of the Deepwater disaster it was feared that tougher regulations would curtail exploration in the region but it appears that the industry has grown accustomed to the tougher regulatory environment.

The likes of Shell continue to be very active in the region while even BP plans to invest £2.5bn a year in the Gulf over the next decade, insisting that the region remains a key part of its global exploration and production portfolio despite Deepwater. In 2012 BP also sold £3.4bn of assets to Plains Exploration & Production.

Arctic

One of the most hotly debated topics in the industry remains the extent to which reserves in Arctic waters should be developed. The melting of the polar ice cap has made the area far more accessible, but huge questions remain about both the logistics and ethics of developing reserves in the region. According to a 2008 study by the US Geological Survey, the Arctic contains just over a fifth of the world’s undiscovered, recoverable oil and gas resources. The likes of ExxonMobil, ENI of Italy and Norway’s Statoil have signed deals to explore for oil in Russia’s Arctic waters, while others have secured licences to drill off Greenland.

The debate was given new impetus in autumn 2012 when Christophe de Margerie, chief executive of Total SA, said energy companies should not drill for crude in Arctic waters, stating that the risk of an oil spill in such an environmentally sensitive area was too high. However Total, which has a number of natural gas ventures in the Russian Arctic, stressed it was not opposed to Arctic exploration in principle.

The record of the industry in developing Arctic supplies has so far been mixed. Royal Dutch Shell postponed until this year an attempt to drill into oil-bearing rock off the Alaskan coast. Shell had originally planned to drill five Arctic wells in Summer 2012 but in the event failed to complete any. UK-listed explorer Cairn Energy spent $1 billion exploring off Greenland but failed to find commercial volumes of oil.

One of the most hotly debated topics in the industry remains the extent to which reserves in Arctic waters should be developed.

Europe

Europe is beginning to excite the industry on the back of a number of significant natural gas finds in the Levantine basin, an area that runs from Egypt north to Turkey. According to the US Geological Survey the basin contains 1.7bn barrels of oil and 122tn cubic feet of gas. Since 2009 around 35tn cubic feet of gas has been discovered in waters off Israel and Cyprus.

Israel's Leviathan field, discovered in 2010, was the world's largest deepwater gas find in a decade, and in December 2012 the Australian Woodside Petroleum group signed an agreement with the Leviathan Joint Venture to acquire a 30% participating interest in the Leviathan field for £435m.

Located at a depth of 5,550 feet, the Leviathan field contains about 17 trillion cubic feet of recoverable natural gas. Other companies participating in the project include Noble Energy Mediterranean, Delek Drilling, Avner Oil Exploration and Ratio Oil Exploration.While Noble Energy will continue as the upstream operator, Woodside will develop any liquefied natural gas (LNG) in the fields. Woodside will also be allowed to participate in further exploration opportunities in the Leviathan licences.

In other recent developments, in 2012 Genel Energy acquired a 75% interest in Mediterranean Oil and Gas's licence interests in offshore Malta. The blocks, which lie to the south of Malta, are within the Medina Bank area. An initial exploration well is planned for late 2013/early 2014. Meantime Cairn also has plans to drill in the Valencia Basin off the eastern coast of Spain in 2014.

Brazil

In terms of new oil discoveries few parts of the world have created as much excitement in recent years as Brazil. The rush of interest was sparked after state-owned Petrobas made significant discoveries in Brazil’s pre-salt layer which lies beneath a layer of salt up to 2km thick on the seabed off the country’s south-east coast. It is thought the reserves may contain as much as 80 billion barrels of oil.

However interest has waned since the initial euphoria as Brazil mulls new laws that would give the state a larger stake in oil and gas production from pre-salt areas. Although Petrobras has still been able to buy new exploration rights, independent oil and gas producers have been forced into M&A activity to gain a share of existing blocks.

However some companies have found a way into the market. For instance Petrobras and oilfield services giant Schlumberger have signed a cooperation agreement for pre-salt research and development.

Yet despite the regulatory concerns, longer term Brazil remains an attractive proposition for OFS players given its huge untapped reserves and wider economic stability.

Announced: 01/05/2012

Target: Expro International Group Limited’s subsea power and data connection systems business

Total Transaction Value (£m) £396m

Purchaser: Siemens AG

Stake Acquired (%): 100

Implied Enterprise Value / Revenues: 5.2x

Implied Enterprise Value / EBIT n.a

Implied Enterprise Value / EBITDA n.a.

Expro International Group Limited’s subsea power and data connection systems business, a UK based well flow management service provider, was acquired by Siemens AG the German communications operator, electrical equipment and mobile phone manufacturer. The sale of the business gave Expro the opportunity to invest in the growth strategy of their core business.

Equipment & Services deals


Target: Integrated Subsea Services Limited

Total Transaction Value (£m) n.a

Purchaser: Oaktree Capital Management LP

Stake Acquired (%): 62.5%

Implied Enterprise Value / Revenues: n.a


Implied Enterprise Value / EBITDA n.a

Oaktree Capital Management of the US acquired a majority stake in Integrated Subsea Services Limited, an Aberdeen-based oil and gas diving company, from private equity firm LDC. The acquisition is a powerful step in Oaktree’s strategy to strengthen its inspection, maintenance and repair subsea services.

Parker Hannifin Corp / Olaer Group Limited


Target: Olaer Group Limited

Total Transaction Value (£m) n.a

Purchaser: Parker Hannifin Corp


Implied Enterprise Value / Revenues: n.a


Implied Enterprise Value / EBITDA n.a

Parker Hannifin Corp acquired Olaer Group, a UK-based accumulator, oil cooler and filter manufacturer, from Gresham Private Equity Limited. The acquisition allowed Parker Hannifin to strengthen its position in key growth areas both geographically and by end market.

ENSCO Plc / Pride International Inc


Target: Pride International Inc

Total Transaction Value (£m) £4.4bn

Purchaser: ENSCO Plc




Implied Enterprise Value / EBITDA 17.8x

ENSCO Plc, a UK based provider of contract drilling and marine transportation services, acquired the US company Pride International Inc, an offshore oil drilling company. The acquisition is seen as an ideal fit for both companies as their rig types, markets, customers and expertise complement each other with minimal overlap.

Oaktree Capital Management LP / Integrated Subsea Services Limited

Siemens AG/ Expro International Group Limited’s subsea power and data connection systems business


Target: John Wood Group Plc’s Well Support division

Total Transaction Value (£m) £1.7bn

Purchaser: GE Energy Manufacturing Inc



Implied Enterprise Value / EBIT 21.9x


John Wood Group Plc has sold its Well Support division to GE Energy Manufacturing Inc, a provider of integrated product and service solutions in all areas of the energy industry including coal, oil, natural gas, nuclear energy and renewable resources. The acquisition is indicative of GE’s strategic focus on its core engineering and operations and maintenance activities in its Engineering & Production Facilities and Gas Turbine Services divisions.

MBO team (LDC) / Bifold Group Limited


Target: Bifold Group Limited


Purchaser: MBO team backed by LDC





Bifold Group Limited, the oil and gas valve manufacturer was acquired by its management team. The team, backed by private equity firm LDC, bought the company from Cavendish Square Partners LLP. Bifold believe that LDC's resources will help to grow the company as the market in which they operate accelerates.


Target: Gall Thomson Environmental Limited


Purchaser: MBO team backed by Phoenix Equity Partners





An MBO team backed by Phoenix Equity Partners, acquired Gall Thomson Environmental Limited, part of Lupus Capital PLC's Oil Services division. The Great Yarmouth based company is a pollution-free liquid product transfer operations instrument manufacturer. The acquisition marks the restructuring of Lupus to a focused window and door component supplier.


Target: Product Services Network Limited (PSN)


Purchaser: John Wood Group Plc





John Wood Group Plc acquired PSN Limited, an Aberdeen-based provider of oil and gas field support services. PSN merged with John Wood Group's Production Facilities business to become Wood Group PSN. The acquisition better positions the company to tackle key industry issues such as operational assurance, competency, reliability and asset integrity.

GE Energy Manufacturing Inc / John Wood Group Plc’s Well Support Division

John Wood Group Plc / Product Services Network Limited

MBO Team (Phoenix Equity Partners) / Gall Thomson Environmental Limited

Wärtsilä Oyj / Hamworthy Plc


Target: Hamworthy Plc


Purchaser: Wärtsilä Oyj





Wärtsilä Oyj, a Finnish marine turbine manufacturer acquired Hamworthy Plc, the UK based manufacturer of handling systems for ships and offshore oil and gas facilities. The acquisition enabled Wärtsilä Oyj to offer a wider portfolio of environmentally sustainable products and systems.


Target: Wellstream Holdings Plc


Purchaser: General Electric Company





General Electric Company through its subsidiary General Electric Austria GmbH acquired Wellstream Holdings Plc, a Newcastle-based flexible pipelines manufacturing holding company. The acquisition of Wellstream expands GE Oil & Gas’ extensive subsea manufacturing and services portfolio and accelerates its presence in the fast growing deepwater production regions of Africa, Asia and Brazil.

Weir Group Plc / Seaboard Holding Inc


Target: Seaboard Holding Inc


Purchaser: Weir Group Plc



Implied Enterprise Value / EBIT n.a.


Weir Group Plc, the Industrial pump and oil and gas mining equipment manufacturer, acquired Seaboard Holding Inc of the US, an engineered wellhead and pressure control equipment manufacturer. The acquisition broadened Weir Group’s product offering.


Target: ASCO Group Limited


Purchaser: Doughty Hanson & Co Managers Limited





Doughty Hanson, the UK mid-market private equity group acquired ASCO Group Limited, the largest global provider of outsourced logistics services and solutions to the oil and gas industry, from Phoenix Equity Partners. The deal gave Doughty Hanson a foothold in the fast-growing outsourced logistics market.

General Electric Company / Wellstream Holdings Plc

Doughty Hanson & Co Managers Limited / ASCO Group Limited


Target: RBG Limited


Purchaser: Stork Technical Services Holdings BV





London Acquisition Luxco Sarl, the holding company for Stork BV and Stork Technical Services Holding BV, acquired RBG Limited, an international multi-disciplined, integrated service contractor in the oil, gas and petrochemical industry from 3i Ashley Group Limited. The acquisition was consistent with Stork’s strategy to enhance its service offering while expanding its global footprint.

Hamworthy Plc / AW Flow Holdings Limited


Target: AW Flow Holdings Limited


Purchaser: Hamworthy Plc


Implied Enterprise Value / Revenues: n.a.

Implied Enterprise Value / EBIT n.a.

Implied Enterprise Value / EBITDA n.a.

Hamworthy Plc, a British headquartered global engineering company announced that it had acquired the Leeds-based valve manufacturer for the oil and gas sector. The acquisition expanded Hamworthy’s position and scope in the oil and gas market.

Stork Technical Services Holdings BV / RBG Limited

Company ProfilesAker Solutions ASA

Revenues £m:

EBITDA £m:

EBITDA Margin %:

Number of employees: 18,397

Headquarters: Norway

Principle areas of business: Drilling Technologies; Engineering; Maintenance, Modifications & Operations; Mooring & Loading Systems; Subsea Technologies & Services; Subsurface and Well Services; Surface Products; Wellsteam Processing

Segmental revenue breakdown: Product Solutions (49%); Field Life Solutions (30%); Engineering Solutions (8%): Other (13%)

Geographical revenue breakdown: Norway (44%); Asia (21%); Europe (13%): North America (10%); South America (4%); Australia (4%); Rest of the World (4%)

Recent M&A activity: • Announced in May 2012 the acquisition of NPS Energy DMCC, a Dubai-based coil tubing company for £291m• Acquired Sandnessjoen Engineering AS, a Norway-based engineering company in Feb 2012

Cameron International Corporation

Revenues £m:

EBITDA £m:

EBITDA Margin %:


Headquarters: United States

Principle areas of business: Flow Control; Drilling Systems; Subsea Systems; Surface Systems; Process Systems; Reciprocating Compression; Centrifugal Compression; Valves; Actuation; Gears; Measurement; CAMSERV Aftermarket Services; PVM Project Valve Management

Segmental revenue breakdown: DPS Segment (58%); V&M Segment (24%); PCS Segment (18%)

Geographical revenue breakdown: United States (56%); United Kingdom (11%); Other Foreign (34%)

Recent M&A activity: • Acquired TTS Group ASA’s drilling equipment business based in Norway in June 2012 for £176m• Acquired LeTourneau Technologies Drilling Systems Inc., a Texas-based oil and gas drilling equipment manufacturer, and the Offshore Products division of LeTourneau Technologies Inc., a Texas-based oil and gas drilling and mining machinery manufacturer, in Oct 2011 for £235m

Bilfinger Berger SE

Revenues £m:

EBITDA £m:

EBITDA Margin %:


Headquarters: Germany

Principle areas of business: Industrial Services; Building & Facility Services; Construction Services; Power Services; Concessions

Segmental revenue breakdown: Industrial Services (40%); Building & Facility (27%); Construction (17%); Power Services (14%); Concessions (2%); Consolidation (1%)

Geographical revenue breakdown: Europe (41%); Germany (40%); Americas (8%); Africa (7%); Asia (5%)

Recent M&A activity: • Acquired Westcon Inc., a US-based assembly and service specialist in July 2012• Acquired Envi Con, a Germany-based design and management company for large coal and gas-fired power plant projects, in June 2012• Acquired Tebodin BV, a Dutch-based consulting and engineering services company, in Feb 2012• Acquired personnel, selected holdings and customer contracts from Are Oy Industrial Service in Finland, a unit which specialises in electrical and automation technology, in Dec 2011• Acquired Neo Structo, an India-based industrial services provider, in Nov 2011

Baker Hughes Inc

Revenues £m:

EBITDA £m:

EBITDA Margin %:



Principle areas of business: Reservoir Development Services; Integrated Operations; Drilling; Evaluation; Completions; Production; Pressure Pumping; Tubular Services; Process and Pipeline Services; Downstream Chemicals; Specialty Chemicals; TotalDepth Education Services

Segmental revenue breakdown: Completion and Production (63%); Drilling & Evaluation (31%); Industrial Services and Other (6%)

Geographical revenue breakdown: United States (46%); Europe/Africa/Russia (19%); Middle East/Asia Pacific (15%); Latin America (11%); Canada (9%)

Recent M&A activity: • Acquired BJ Services, active in pressure pumping, stimulation and fracturing, in April 2010• Acquired Tanroc Equipment Limited, a processing cavity pumps manufacturer, in Aug 2010

2011

2011

2011

2011

Aker Solutions provides oilfield products, systems and services for customers in the oil and gas industry world-wide. The company's knowledge and technologies span from reservoir to production and through the life of a field. The company is present in more than 30 countries.

Cameron is a leading provider of flow equipment products, systems and services to worldwide oil, gas and process industries. Leveraging its global manufacturing, engineering and sales and service network, Cameron works with drilling contractors, oil & gas producers, pipeline operators, refiners and other process owners to control, direct, adjust, process, measure and compress pressures and flows.

Bilfinger Berger is an international engineering and services company. The group’s activities consist of the Industrial Services, Power Services, Building and Facility Services, Construction and Concessions business segments.

Baker Hughes is a supplier of oilfield services, products, technology and systems to the worldwide oil and natural gas industry. It also provides industrial and other products and services to the downstream refining and the process and pipeline industries. It operates in more than 80 countries worldwide.

3,637.0

362.3

9.9

3,942.0

371.0

9.4

5,385.7

442.4

8.2

2010 2009

3,968.6

652.7

16.4

3,279.2

559.8

17.1

4,501.0

609.0

13.5

2010 2009

6,812.2

417.0

6.1

6,877.7

432.0

6.3

6,641.7

257.3

3.9

2010 2009

9,316.9

1,621.1

17.4

12,830.0

2,516.2

19.6

6,067.3

915.9

15.1

2010 2009

Chicago Bridge & Iron Company NV

Revenues £m:

EBITDA £m:

EBITDA Margin %:


Headquarters: Netherlands

Principle areas of business: Licensed Technologies; Energy Process Facilities; Storage Tanks / Vessels

Segmental revenue breakdown: Project Engineering and Construction (50%); Steel Plate Structure (40%); Lummus Technology (10%)

Geographical revenue breakdown: Rest of the World (45%); United States (18%); Colombia (15%); Canada (11%); Papua New Guinea (10%)

Recent M&A activity: • Has agreed to acquire The Shaw Group, a service provider to the power generation and government service sectors. The acquisition is expected to close in early 2013• Acquired Chemical Research and Licensing from CRI/Criterion, a subsidiary of Royal Dutch Shell PLC in 2011, giving CB&I, through its Lummus Technology business, a 100% interest in Catalytic Distillation Technologies (CDTECH)

Fluor Corporation

Revenues £m:

EBITDA £m:

EBITDA Margin %:



Principle areas of business: Engineering; Procurement; Construction; Maintenance; Project Management

Segmental revenue breakdown: Industrial & Infrastructure (41%); Oil & Gas (34%); Government Services (15%); Global Services (7%); Power (3%)

Geographical revenue breakdown: United States (30%); Asia Pacific (19%); Canada (18%); Africa / Middle East (14%); Central & South America (12%); Europe (7%)

Recent M&A activity: • Acquired Goar, Allison & Associates, a Texas-based provider of sulphur technologies for upstream gas plants, downstream refineries and gasification, in Nov 2011• Acquired a controlling stake in NuScale Power LLC, an Oregon-based designer of small modular nuclear reactors, in Sept 2011

FMC Technologies Inc

Revenues £m:

EBITDA £m:

EBITDA Margin %:



Principle areas of business: Subsea Systems; Surface Wellhead; Fluid Control; Loading Systems; Measurement Solutions; Material Handling Solutions; Separation Systems; Blending & Transfer Systems

Segmental revenue breakdown: Subsea Technologies (64%); Surface Technologies (26%); Energy Infrastructure (10%)

Geographical revenue breakdown: United States (23%); Norway (19%); Brazil (11%); Angola (10%); Other countries (38%)

Recent M&A activity: • Acquired Control Systems International Inc, a leading supplier of innovative control and automation system solutions for the oil & gas industry and other markets, in April 2012• Acquired the remaining 55% of Schilling Robotics LLC, a leading producer of ROVs and associated equipment for oil and gas subsea exploration and production, in April 2012

2011

2011

2011

CB&I is an engineering, procurement and construction company and a major process technology licensor. The company offers a full range of services, from conceptual design and technology licensing, through to engineering, procurement, fabrication and construction, to final commissioning and beyond. CB&I serves the oil and gas, chemical and petrochemical, power generation, water and wastewater, and metals and mining sectors.

Fluor is an engineering, procurement, construction, maintenance and project management company operating in five segments: Oil & Gas, Industrial & Infrastructure, Government, Global, and Service and Power. As an integrated services provider to the Oil & Gas segment, Fluor serves the upstream oil and gas production, downstream refining, offshore production, chemicals and petrochemicals markets.

FMC Technologies is a global provider of technology solutions for the energy industry. The company designs, manufactures and services technologically sophisticated systems and products such as subsea production and processing systems, surface wellhead systems, high pressure fluid control equipment, measurement solutions, and marine loading systems for the oil and gas industry. The company operates 27 production facilities in 16 countries.

2,354.3

243.1

10.3

2,860.7

247.2

8.6

2,944.2

275.2

9.3

2010 2009

13,476.3

590.0

4.3

13,805.9

832.7

6.0

15,127.7

788.7

5.2

2010 2009

2,666.7

418.9

15.7

2,765.8

389.5

14.1

3,299.1

461.9

14.0

2010 2009

General Electric Company

Revenues £m:

EBITDA £m:

EBITDA Margin %:



Principle areas of business: Subsea Systems; Drilling & Surface; Turbomachinery; Global Services; Measurement & Control; PII Pipeline Solutions

Segmental revenue breakdown: Capital Finance (31%); Energy Infrastructure (30%); Aviation (13%); Healthcare (12%); Home & Business Solutions (6%); Corporate & Eliminations (5%); Transportation (3%)

Geographical revenue breakdown: United States (47%); Europe (20%); Pacific Basin (16%); Americas (9%); Africa / Mid East (7%); Other Global (1%)

Recent M&A activity: • Acquired the Well Support division of John Wood Group in April 2011 for £1.7bn• Acquired Dresser, a manufacturer of engines pumps and valves for the oil and gas industry in Feb 2011 for £1.9bn• Acquired Wellstream Plc, a British oil drilling pipe company in February 2011 for £800m

2011 Part of General Electric, GE Oil & Gas is a world leader in advanced technology equipment and services for all segments of the oil and gas industry, from drilling and production, LNG, pipelines and storage to industrial power generation, refining and petrochemicals. GE Oil & Gas also provides pipeline integrity solutions, including inspection and data management.

95,950.4

24,860.5

25.9

96,877.8

23,886.9

24.7

92,028.0

27,481.6

29.9

2010 2009

Halliburton Company

Revenues £m:

EBITDA £m:

EBITDA Margin %:



Principle areas of business: Cementing; Simulation; Intervention; Pressure Control; Specialty Chemicals; Artificial Lift; Completions; Modelling; Drilling; Evaluation; Wellbore Placement Solutions

Segmental revenue breakdown: Completion and Production (61%); Drilling and Evaluation (39%)

Geographical revenue breakdown: North America (58%); Latin America (12%); Europe/Africa/CIS (16%) and Middle East/ Asia (14%)

Recent M&A activity: • Acquired Petris Technology Inc, an oil and gas data management software developer in Aug 2012• Acquired Multi-Chem, a premier provider of production and completion chemicals focused on production assurance throughout the life of wells, in June 2011• Acquired Boots & Coots Inc, a pressure control services provider to onshore and offshore oil and gas exploration companies in Sept 2010 for £154m

KBR Inc

Revenues £m:

EBITDA £m:

EBITDA Margin %:



Principle areas of business: Engineering; Procurement; Construction & Design / Build; Project and Programme Management; Operations & Maintenance; Logistics Support; Special Facility Services; Lifestyle Services

Segmental revenue breakdown: Hydrocarbons (46%); Infrastructure, Government & Power (36%); Services (17%); Other (1%)

Geographical revenue breakdown: United States (22%); Africa (23%); Iraq (21%); Asia Pacific (16%); Other Middle East (8%); Europe (6%); Other Foreign (5%)

Recent M&A activity: • Acquired Roberts & Schaefer Company, a Chicago based engineering and construction company, for £173m in Dec 2010• Acquired Energo Engineering Inc, a Texas based structural engineering services firm serving the offshore oil and natural gas industry in April 2010

National Oilwell Varco Inc

Revenues £m:

EBITDA £m:

EBITDA Margin %:



Principle areas of business: Solutions for Downhole; Drilling; Engineering & Project Management; Industrial; Lifting & Handling; Production; Supply Chain; Tubular & Corrosion Control; Well Service & Completion

Segmental revenue breakdown: Rig Technology (51%); Petroleum Services (37%); Distribution Services (12%)

Geographical revenue breakdown: United States (37%); Other (28%); South Korea (15%); Canada (6%); Singapore (5%); Norway (5%); United Kingdom (3%)

Recent M&A activity: • Acquired CE Franklin Limited, a supplier of products and services to the energy industry via its subsidiary NOV Distribution, in July 2012• Acquired Wilson International Inc, a pipes wholesaler from Schlumberger Limited in May 2012• Acquired NKT Flexibles I/S, a manufacturer of flexible flowlines and risers for the offshore oil and gas industry, in April 2012 for £425m• Acquired TechDrill Limited, a high pressure pipeline and API drilling equipment manufacturer in Jan 2012• Acquired Ameron International Corp., a fibreglass-composite and concrete and steel pressure pipe manufacturer in Oct 2011 for £502.2m

2011

2011

2011

Halliburton is an oilfield services company serving the energy industry related to the exploration, development and production of oil and natural gas. The business is present in 80 countries. Halliburton serves the upstream oil and gas industry throughout the life cycle of the reservoir from locating hydrocarbons and managing geological data, production through the life of the field, to drilling and formation evaluation, well construction and completion.

KBR is a provider of engineering, construction and management services delivering a wide range of services through its Downstream; Gas Monetization; Infrastructure and Minerals; International Government, Defence and Support Services; North American Government and Logistics; Oil and Gas; Power and Industrial; Services; Technology; and Ventures business segments.

National Oilwell Varco is a global organisation providing major mechanical components for land and offshore drilling rigs, complete land drilling and well servicing rigs, tubular inspection and internal tubular coatings, drill string equipment, extensive lifting and handling equipment, and a broad offering of downhole drilling motors, bits and tools. The company also provides supply chain services through its network of distribution service centres.

11,617.4

2,638.5

22.7

6,439.2

341.2

5.3

7,850.9

1,886.1

24.0

9,213.3

1,826.9

19.8

16,064.5

3,931.2

24.5

7,571.5

340.9

4.5

5,889.7

324.4

5.5

7,964.9

1,697.6

21.3

9,478.6

2,246.7

23.7

2010

2010

2010

2009

2009

2009

Petrofac Limited

Revenues £m:

EBITDA £m:

EBITDA Margin %:


Headquarters: United Kingdom

Principle areas of business: Petroleum Engineering; Facilities Engineering; Well Engineering; Construction; Production Operations; Training

Segmental revenue breakdown: Onshore Engineering & Construction (70%); Offshore Engineering & Operations (20%); Integrated Energy Services (9%); Engineering & Consulting Services (1%)

Geographical revenue breakdown: United Arab Emirates (22%); United Kingdom (16%); Turkmenistan (13%); Other countries (13%); Algeria (13%); Malaysia (11%); Kuwait (7%); Qatar (4%)

Recent M&A activity: • Acquired KW Limited, a high-end subsea pipeline consulting and engineering services business in Feb 2012• Acquired the FPF3 vessel, currently deployed on the Jasmine Field in the Gulf of Thailand from Pearl Energy in June 2011• Acquired Scotvalve Services Limited, a UK based servicer / repairer of oilfield pressure control equipment in Jan 2010 for £4.6m• Acquired TNEI Services Limited, a provider of services in the area of power transmission and distribution, planning and environmental consent and energy management, in June 2010 for £6.1m

2011 Petrofac provides services to customers across the entire spectrum of the oil and gas asset lifecycle, on either a standalone or integrated business. The company designs and builds oil & gas infrastructure; operates, maintains and manages assets; and trains personnel.

2,814.4

496.4

17.6

2,294.7

348.3

15.2

3,753.0

497.2

13.2

2010 2009

Saipem SpA

Revenues £m:

EBITDA £m:

EBITDA Margin %:


Headquarters: Italy

Principle areas of business: E&C Offshore; E&C Onshore; Drilling; Vessels; Yards

Segmental revenue breakdown: Onshore construction (47%); Offshore construction (40%); Offshore drilling (7%); Onshore drilling (6%)

Geographical revenue breakdown: West Africa (25%); North Africa (23%); Middle East (19%); Rest of Europe (13%); Americas (9%); Far East (6%); Italy (5%)

Recent M&A activity: • Saipem Portugal acquired European Maritime Commerce BV, a provider of oil and gas exploration services, in June 2010• Has agreed to acquire Terminal Portuario do Guaruja SA, a Brazil-based port operation services company. The deal is expected to complete in two and a half years.

Schlumberger Limited

Revenues £m:

EBITDA £m:

EBITDA Margin %:



Principle areas of business: Seismic; Drilling; Characterization; Completions; Subsea; Production; Well Intervention

Segmental revenue breakdown: Oilfield Services (93%) made up of: Reservoir Characterization (25%); Drilling (36%); Reservoir Production (32.2%) Eliminations & Other (0.08%) - and Distribution (6.6%)

Geographical revenue breakdown: North America (37.6%); Latin America (16.3%); Europe/CIS/Africa (24.7%); Middle East & Asia (20.4%) and Eliminations & Others (1%)

Recent M&A activity: • Signed a definitive agreement to acquire Tesco Corp.’s Casing Drilling division in April 2012 for £28m• Acquired Smith International Inc., a supplier of premium products and services to the oil and gas exploration and production industry in Aug 2010, for £7.1bn• Acquired Geoservices SA, a privately owned oilfield services company specialising in mud logging, slickline and production surveillance operations, in April 2010 for £712m

Subsea 7 ASA

Revenues £m:

EBITDA £m:

EBITDA Margin %:


Headquarters: Luxembourg

Principle areas of business: Development (Subsea umbilical, Riser and Flowline; Conventional; Flexibles / Heavy Lifting); Production (Life-of-Field; Conventional Refurbishment; Decommissioning); ROV’s; Renewable Energy

Segmental revenue breakdown: Africa & Gulf of Mexico (46%); Asia Pacific & Middle East (3%); Brazil (13%); North Sea, Mediterranean & Canada (38%)

Geographical revenue breakdown: n/a

Recent M&A activity: • Acergy SA and Subsea7 Inc. merged in Jan 2011 to become Subsea7 SA

2011

2011

2011

Saipem is a contractor in the oil and gas industry in remote areas and deepwater. It supplies engineering, procurement, project management and construction services with the design and the execution of large-scale offshore and onshore projects. It is organized into two business units: Engineering & Construction and Drilling.

Schlumberger is a leading oilfield services company supplying technology, information solutions, and integrated project management that optimise reservoir performance for customers working in the oil and gas industry. The company is present in approximately 85 countries with significant operations in the UK. Schlumberger supplies a wide range of products and services.

Subsea7 was formed from the merger of Acergy SA and Subsea7 Inc in January 2011 and is a seabed-to-surface engineering, construction and services contractor to the offshore energy industry worldwide. The company provides integrated services to plan, design and deliver complex projects in deepwater and challenging environments.

9,872.7

2,353.8

23.8

9,521.3

2,354.9

24.7

10,092.0

2,155.7

21.4

2010 2009

17,760.7

4,392.8

24.7

14,252.9

4,035.6

28.3

25,582.0

6,422.1

25.1

2010 2009

1,521.2

359.4

23.6

1,345.9

318.1

23.6

3,252.8

605.8

18.6

2010 2009

Technip SA

Revenues £m:

EBITDA £m:

EBITDA Margin %:


Headquarters: France

Principle areas of business: Subsea: design, manufacture and installation of subsea pipelines and umbilicals; Offshore: Engineering; Procurement; Construction; Installation; Commissioning; Refurbishing of offshore facilities; Onshore: Full range of services

Segmental revenue breakdown: Subsea (44%); Onshore (43%); Offshore (13%)

Geographical revenue breakdown: Europe / Russia / Central Asia (26%); Americas (23%); Middle East (22%); Africa (16%); Asia Pacific (14%)

Recent M&A activity: • Agreed to acquire all of the Energy & Chemicals Group business from the Shaw Group in May 2012 for £190m• Acquired Global Industries Limited, an offshore oil and gas support and construction services provider in Dec 2011 for £684m• During 2011, acquired 98.6% of Cybernetix SA, a French designer of robotic systems for offshore oil and natural gas projects and nuclear facilities• Acquired AETech, a specialist in acoustic technology, in Feb 2011

2011 Technip is engaged in project management, engineering and construction for the energy industry, and holds a portfolio of solutions and technologies. The company operates in two segments: Subsea, and Onshore/Offshore. Its main markets include onshore plants, offshore platforms and subsea construction. The company is present in 48 countries.

3,931.2

502.4

12.8

4,053.2

565.5

14.0

4,408.1

571.6

13.0

2010 2009

TransOcean Inc

Revenues £m:

EBITDA £m:

EBITDA Margin %:



Principle areas of business: Offshore drilling using Ultra Deep Floaters; Deepwater Floaters; Harsh-Environment Floaters; Midwater Floater; High Specification Jackups; Standard Jackups; Swamp Barge

Segmental revenue breakdown: Contract Drilling Services (94%); Drilling Management Services (6%)

Geographical revenue breakdown: United States (22%); Rest of the World (54%); United Kingdom (13%); Brazil (11%)

Recent M&A activity: • Acquired Aker Drilling, a Norway-based drilling rig operator in Oct 2011

Wärtsilä Oyj

Revenues £m:

EBITDA £m:

EBITDA Margin %:


Headquarters: Finland

Principle areas of business: Power Plants; Ship Power; Services

Segmental revenue breakdown: Power Plants (32%); Ship Power (24%); Services (43%)

Geographical revenue breakdown: Asia (38%); Other European (29%); Americas (20%); Rest of the World (12%); Finland (1%)

Recent M&A activity: • Acquired MMI Boiler Management Pte Limited, a Singapore-based company specialising in the service and maintenance of boilers for marine and industrial applications, in March 2012• Acquired Hamworthy Plc, a global provider of specialist equipment and services to the marine, oil & gas and industrial sectors in Jan 2012• Acquired Cedervall & Sönar AB, a leading manufacturer of shaft seal and bearing systems for the marine industry In July 2011

Weatherford International Limited

Revenues £m:

EBITDA £m:

EBITDA Margin %:


Headquarters: Switzerland

Principle areas of business: Drilling, Evaluation; Completion, Production; Intervention

Segmental revenue breakdown: n/a

Geographical revenue breakdown: North America (46%); Middle East/North Africa/Asia (19%); Europe/West Africa/FSU (18%); Latin America (17%)

Recent M&A activity: • Acquired Sicom AS, a Norway-based subsea communication and control systems developer, in Sept 2011• Acquired CygNet Software Inc, a company which collects and manages real time data from oilfields, in May 2011

John Wood Group Plc

Revenues £m:

EBITDA £m:

EBITDA Margin:


Headquarters: United Kingdom

Principle areas of business: EPCM; Operations & Maintenance; Power Solutions; Rotating Equipment Services; Specialist Services

Segmental revenue breakdown: Wood Group PSN (56%); Wood Group Engineering (24%); Wood Group GTS (20%)

Geographical revenue breakdown: Europe (32%); North America (31%); Middle East & Africa (15%); Asia Pacific (13%); Central & South America (6%); CIS & Caspian (3%)

Recent M&A activity: • Acquired Duval Lease Services Inc, a Texas-based provider of maintenance, installation and fabrication services in Aug 2012• Acquired Production Services Network Limited (PSN), a UK-based provider of oil and gas field support services, in April 2011 for £585m

2011

2011

2011

2011

TransOcean is a provider of offshore contract drilling services for oil and gas wells. The company owns or partially owns and operates a fleet of 132 mobile offshore drilling units. The company specialises in technically demanding sectors of the global offshore drilling business with a particular focus on deepwater and harsh environment drilling services.

Wärtsilä is involved in complete lifecycle power solutions for the marine and energy markets. The company has operations in nearly 170 locations in 70 countries. For the oil & gas industry, Wärtsilä offers power solutions for every phase of oil & gas exploration, production, transportation and refining, both onshore and offshore. The company offers state-of-the-art prime movers, complete pumping, compression and power plant solutions.

Weatherford is a provider of equipment and services whose portfolio spans the life cycle of a well-drilling, evaluation, completion, production and intervention. The company operates in over 100 countries and has manufacturing facilities and sales, service and distribution locations in approximately all of the oil and natural gas producing regions in the world.

John Wood Group is an independent services provider for the oil & gas and power generation markets. Worldwide, these services include engineering, procurement and construction management, facility operations & maintenance, and repair and overhaul of turbines and other high speed rotating equipment. The group has three businesses: Wood Group Engineering; Wood Group PSN and Wood Group GTS.

6,118.6

2,180.2

35.6

3,899.9

583.3

15.0

6,606.6

1,071.7

16.2

3,272.6

223.0

6.8

7,255.1

3,685.3

50.8

5,914.9

-2,194.6

n.a.

4,733.2

633.4

13.4

3,526.4

469.1

13.3

5,545.5

978.8

17.7

8,404.6

1,523.7

18.1

3,093.2

224.7

7.3

3,915.6

258.1

6.6

2010

2010

2010

2010

2009

2009

2009

2009

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