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January 25, 2013 • Volume 03, No. 02

OilfieldServiceSServing the marketplace with news, analysis and business opportunities

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China seeking 20% of some offshore segments by 2015

China is targeting 20% of the global rig, production facility and offshore product markets by 2015, according to its national shipbuilding association. As such, the nation is encouraging more local yards to get into the offshore energy business. The China Association of the National Shipbuilding Industry said Chinese shipbuilders grew offshore equipment output 22% through October vs. 2011 levels to $3.7 billion.

Global rig-construction leader Keppel Corp. is considering buying a yard in China due to rising demand. CEO Choo Chiau Beng told Bloomberg the company will consider the move if the government opens offshore projects to foreign companies.

Aker to double sales by 2017 on backlog & offshoreAker Solutions recently expanded its growth outlook on the back of continuous

contract wins. At its recent capital markets day, the company said that not only is it on track to meet its prior growth target of a doubling in size from 2010 to 2015,

but it may also be on track to double revenues from 2012 levels by 2017. Executive chairman Oyvind Eriksen made the call based on a record ~$10.7 billion backlog and estimated 10% annual growth rates in offshore spending.

Aker sales were up 32% YOY through Q3. Margins should also grow, from a Q3 10.1% EBITDA margin to ~15% by YE17.

A spate of subsequent contract wins lent credence to those projections. In the largest recent win, Aker took a $200-400 million, five-year global subsea umbilical and cable frame agreement with Shell, under which it will deliver dynamic and static steel tube umbilicals. Revenues will ultimately depend on call-offs and how many projects Shell decides to execute. The deal includes an option for a second five-year term. Product will be sourced through Moss, Norway and Mobile, Alabama and managed and engineered through Fornebu, Norway and Mobile.

Apache, Halliburton & partners make gas fuel stridesApache plans to become the first company to power a full 12-pump (24,000

hp) frac spread with natural gas, which it believes will cut fuel costs ~40% to $74,473 per frac. The company says the industry spent ~$2.38 billion on diesel

to frac last year. Apache VP Mike Bahorich told FuelFix that the company had been working with Schlumberger, Halliburton and

Caterpillar to increase its gas usage in oilfield operations, not only to cut costs but to increase domestic gas consumption and cut emissions.

Halliburton provided more detail at least regarding the interaction between itself, Apache and Caterpillar, saying Caterpillar had developed the Dynamic Gas Blending dual-fuel gas/diesel engine technology, which Halliburton then applied to a “typical” large-scale frac spread of its new Q-10 pumps with Apache collaborating regarding applications. Halliburton also noted that Linde North America supported development of the gas distribution system and supplied LNG for the project.

North America again pressures integrated service firmsSchlumberger benefits from reservoir services & international

Earnings season has kicked off with reports from two of the Big Four; both were helped to varying degrees by international activity while continuing to see challenges in North America. European seasonality hurt Schlumberger, while African and Russian sales helped Baker Hughes. Schlumberger’s net income in Q4 fell as sales grew, with

the company earning $1.37 billion in net

income (down 4% sequentially and 4% YOY) on $11.17 billion in sales (up 5% sequentially and 8% YOY). But adjusted operating income excluding items was flat sequentially at $1.44 billion, although still down 3% YOY. The company is tightening its belt a bit this year, with capex guidance of $3.9 billion, down 17% from 2012’s $4.7 billion.

Sales grew in all segments on both sequential and YOY bases, and segment pre-tax income also grew sequentially and YOY in reservoir characterization (9% sequentially and 13% YOY to $3.15 billion).

Keppel may buy China yard if non-local operators allowed to compete.

Company already on track to double sales from 2010 levels by 2015.

Apache said using natural gas to frac should cut fuel costs ~40%.

Schlumberger Q4 profits down 4% vs. Q3; Baker Hughes down 24%.

Continues On Pg 10

Continues On Pg 12

Continues On Pg 4

Continues On Pg 14

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OilfieldServiceS 2 January 25, 2013

•Atwood Oceanics announced a one-year extension of its contract with Salamander Energy for the jackup Atwood Mako off Thailand beginning in September. At $155,000/day, the deal adds $56.6 million in new backlog.

• CB&I announced a $250 million engineering project with Daewoo Shipbuilding & Marine Engineering related to Statoil’s Mariner project in the UK North Sea. CB&I will provide detailed engineering design for the Mariner Topsides under the deal. The new order will be included in Q4 backlog, although work was not slated to begin until this quarter.

•Ensco reported contract extensions with Energy XXI for jackups Ensco 90 and Ensco 99 to October for work in the Gulf of Mexico. Barring the extensions, both would have completed work in January. The rigs both received significant bumps from their prior rates ($90,000/day and $75,000/day, respectively) to $110,000/day. Ensco also reported 245 days of additional 2013 downtime (229 days this quarter). Jackup additions were 154 days, while deepwater added 64 days largely due to customer Petrobras.

Contract Briefs US rig count keeps dropping but a few bright spotsThe US rotary drilling rig count fell by 12 the week ending January 18 to 1,749

according to Baker Hughes data. The oil count showed another sequential drop, falling by seven to 1,316. The count has been trending lower over the past several months, although appearing through late November and early December to stabilized in the

1,380s. The oil count is now down 8.1% from the August 10 high of 1,432, roughly at 10-month lows. Meanwhile despite a five-rig drop to 429 last week, the gas-directed

count appears to be maintaining the high end of its recent range. The gas count has vacillated within the ~415-435 range since October. In Canada, the count jumped by 70 (or 13%) to 601, its highest levels since March. The entire gain was in the oil segment.

By play, the Permian was the clear driver of the week’s move, losing 15 rigs (3.2%) to 453. The Mississippian also dropped by 4 (4.4%) to 86, and the Niobrara, Utica and Woodford each dropped a rig as well. These offset a 4-rig gain in the Eagle Ford to 233,

a 4-rig gain in the Williston to 197, a 3-rig gain in the Marcellus to 95 and smaller gains in the Granite Wash and Haynesville.

The biggest movers over the past month were the Haynesville which has added 5 rigs, the Permian which lost 11, the Niobrara which lost 6 and the Barnett which lost 4.

Meanwhile December well starts dropped 2.8% sequentially to a 2012 low of 2,971 according to RigData, but regional trends were mixed. Although California, Kansas, Texas and Louisiana saw either large drops, annual lows or both, North Dakota, Pennsylvania and New Mexico saw healthy gains. North Dakota’s 270 starts were a 26% sequential increase over November’s prior 2012 high of 215.

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Permian was the week’s driver, losing 15 rigs; Haynesville seeing rare gains.

US well starts hit one-year low while North Dakota hit annual high.

North American Rotary Rig Count As Of January 18 Source: Baker Hughes

LocationCurrent1/18/13

Week Ago1/11/13

Month Ago12/21/12

Year Ago1/20/12

% Chg.YOY

United States 1,749 1,761 1,774 2,008 -13%

Canada 601 531 384 654 -8%

US Breakout Information

Oil 1,316 1,323 1,340 1,223 8%

Gas 429 434 429 780 -45%

Miscellaneous 4 4 5 5 -20%

Major Basins

Barnett 36 36 40 63 -43%

D-J (Niobrara) 35 36 41 45 -22%

Eagle Ford 233 229 232 232 0%

Fayetteville 13 13 13 31 -58%

Granite Wash 69 67 67 86 -20%

Haynesville 43 42 38 106 -59%

Marcellus 95 92 92 143 -34%

Mississippian 86 90 84 49 76%

Permian 453 468 464 473 -4%

Utica 31 32 31 14 121%

Williston 197 193 196 205 -4%

Woodford 46 47 45 85 -46%

Major Basins 1,337 1,345 1,343 1,532 -13%

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Volume 03, No. 02 3 ServiceSectOr

McDermott takes Pemex deal & partners for expansionMcDermott International announced a $230 million turnkey EPCIC contract

with Pemex for its PB-Litoral-A production platform in the Litoral Tabasco Tsimin-Xux fields. The project includes FEED, detailed engineering, procurement, fab, load-out, sea fastening, transport, installation, hook-up, commissioning and start-up of an eight-leg, 1,800-tonne jacket, 4,500-tonne topsides and 2,000 tonnes of associated

equipment. McDermott will also provide operations and maintenance training to Pemex personnel. Work will be performed

through McDermott’s Houston and Chennai engineering locations and its Altamira, Mexico fab facility with engineering beginning early this year. Topsides installation will be executed via float-over method with McDermott’s Intermac 600 float-over barge supported by its Derrick Barge 50. Backlog will be included in McDermott’s Q4 report, with completion expected in 2Q15.

McDermott also provided additional detail regarding its joint FEED contract with Allseas covering Anadarko’s Area 1 in the Rovuma Basin off Mozambique. FEED is expected to be complete in 3Q13, at which point the companies will be able to bid on

full EPCI for Area 1.Building for the future, a McDermott

subsidiary ordered a high-spec, dynamically positioned S-Lay vessel with a 2,000-ton crane, the Derrick Lay Vessel 2000, from Keppel Singmarine for an undisclosed price. The vessel will be able to install pipe to depths up to 10,000 feet and feature transit speeds of 12-14 knots. It will accommodate up to 400. McDermott chief Stephen Johnson projected “extremely robust” deepwater pipeline demand and said a combination heavy lift/deepwater S-lay pipelay vessel would be an important asset for expansion, particularly focusing on subsea construction. Vessel construction is expected to take 2.5 years.

McDermott is also seeking opportunity through two new JVs. McDermott affiliates formalized a marine construction JV with TH Heavy Engineering Berhad. The venture will focus on providing full EPCIC services to the Malaysian and Asia Pacific markets. McDermott presumably benefits from TH’s regional market exposure while TH Chairman Yang Berbahagia Datuk Azizan Rahman said his firm would benefit from McDermott’s complex offshore EPCI knowledge and technology.

McDermott has also exclusively partnered with Norway’s Ocean Installer targeting rigid pipelay EPCIC work in the North Sea. The deal improves Ocean Installer’s offshore installation capabilities (it was previously focused on SURF installation projects), while marking McDermott’s return to the region after a decade-plus absence. McDermott brings three advanced pipelay vessels to the relationship, including the previously mentioned Derrick Lay Vessel 2000.

McDermott said strategic Mexico fab site beginning to show dividends.

McDermott’s anticipates ’extremely robust‘ deepwater pipelay demand.

New partners help McDermott target Malay and North Sea markets.

•Jacobs Engineering Group won a concept development study contract with Santos covering its Cooper Gas Growth satellite developments in South Australia. Jacobs will provide

study management, engineering

and design services focusing on standardization and modularization in the developments to provide both flexibility and reliability. Value was not disclosed. The news follows a commissioning and start-up win with Santos covering its GLNG coal seam gas field development in Queensland. That deal, for which value was also not disclosed, features a 3.5 year term plus a one-year option.

•Valerus won a contract of unspecified value to provide over 45,000 boiler hp of compression and onsite supervisory services for Iraqi processing facilities currently under development for an unidentified customer.

•Oceaneering won a contract of undisclosed value with Empire Oil & Gas to commission, run and maintain

its Red Gully gas and condensate

processing plant being built in Gingin, West Australia. Work begins in March with execution performed by Oceaneering’s Perth subsidiary Oceaneering Services Australia. The company also won an umbilical supply deal with ExxonMobil for its Kizomba Satellites Phase 2 project off Angola. Oceaneering will provide 26.7 miles of electro-hydraulic steel tube control umbilicals beginning 3Q13 for 3Q14 completion. Fab will be handled by Oceaneering’s Panama City facility.

Contract Briefs

Tidewater assumes three PSV contracts from STXTidewater has agreed to take over three newbuild PSV contracts from Norway’s

STX Pan Ocean. The vessels, of STX OSV PSV 09 design, are currently under construction by STX OSV in Norway. The contracts were originated in 2010, and the first vessel is slated for delivery this quarter. The other two will be delivered in Q2

and Q3, respectively. The vessels are ~290 ft in length with a ~62-ft beam. Tidewater has previously expressed interest in entering the tightening

North Sea market through acquisition or organic growth. Iberia Capital Partners estimates ~20% of current industry OSV spending occurs in the region.

The company also extended its JV with Angolan NOC Sonangol by three months to the end of March as the companies work toward a longer-term agreement. Including the 10 vessels jointly owned under the SonaTide JV, Tidewater has ~70 vessels operating in Angola.

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Oilfield Service Contracts

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OilfieldServiceS 4 January 25, 2013

Oilfield Service Contracts

Australian LNG is also helping backlog, with Aker taking a ~$90 million subsea tie-in connector contract with a McDermott sub supplying the Ichthys project off northwest Australia. Aker will provide 6-inch to 18-inch horizontal and vertical diverless tie-ins connecting flowlines to subsea structures, manifolds and export riser bases under the deal with McDermott, the lead SURF contractor for the project.

Fornebu will execute for deliveries through next year. Last year, Aker won an Ichthys supply contract for 39 miles of umbilicals.

In the North Sea, Aker secured a five-year brownfield frame agreement with Talisman Sinopec Energy UK covering the UK Continental Shelf. While the deal has no firm spending commitments, it is expected to be a multi-million-pound agreement as Talisman Sinopec has a “significant pipeline of projects” in its portfolio. And Statoil hired Aker to increase recoveries at its Gullfaks South field in the northern North Sea under a $32.3 million EPCIC deal. The primary objective

is to perform topsides modification for tie-in of two new templates and for re-routing production from an existing template.

Aker’s Bergen, Norway team will execute through YE14. Aker also won a subsea tree deal of undisclosed price with Marathon Oil for Alvheim field on the Norwegian shelf under its frame agreement with the company. Deliverables include four trees and related equipment. Aker’s Tranby, Norway facility will provide the trees, while its Aberdeen site will build control modules. Completion is slated for 1H14.

Subsidiary Aker Oilfield Services will provide subsea construction service off Brazil under a deal without disclosure of customer or pricing. Aker’s subsea construction vessel Aker Wayfarer will perform work for 230 days with expected start-up in May or June, although the contract will be logged under 4Q12 new orders. The Wayfarer is just coming off a previous Brazil contract.

And in Asia, Aker will provide a deepwater drilling riser system to DSME for an undisclosed price. Aker’s Port Klang, Malaysia plant will deliver the 10,000-ft riser system in November 2014. The win comes under a second option related to a July 2011 riser contract. It also has been recorded as 4Q12 intake.

Aker to double sales by 2017 Continued From Pg 1

Aker supplying tie-ins to McDermott under its Ichthys SURF deal.

5-year Shell subsea frame agreement should yield $200-400 million.

Expects offshore industry spending up 10% annually over next several years.

Subsea Market Rundown & Aker Revenue Projections

13 10 10,3

59,4 5335,6

19,314

19,5

6,9 23 33,31,3 1,3

Subsea tree awards: 2010-2012 YTDPercentage

41 40 25

42 39

25

4 2

10

12 19 38

1 1 2

Subsea controls awards: 2010-2012 YTDPercentage

02012

20

180160140120100806040

20112010

Aker Solutions

Peeranalysis*

* 2012 �gures based on Q1-Q3 2012 extrapolation

Revenue development (indexed: 2010 = 100)

2010 2011 2012 YTD

2010 2011 2012 YTD

Aker Solutions FMC Cameron GE Others

Source: Aker December 5 Presentation via PLS docFinder www.plsx.com/finder

Oilfield Service A&D

Aker Solutions makes 2 North American moves

Norway’s global offshore-focused services company Aker Solutions made two moves that will increase its North American presence. In the US, Aker

bought California-based water de-oiler and field services company Separation Specialists

for an undisclosed sum. In addition to increasing its US footprint, the buy gives Aker an integrated produced water de-oiling solution in addition to its existing crude treatment offering. Products and services include nutshell filters, mechanical induced gas flotation, gravity separation equipment, ASME tank fab and repair, and field lifecycle services, as well as a global distribution network. Separation is run out of Bakersfield, but has a Louisiana facility as well. It has clients in the US west coast, Gulf of Mexico, Russia and the Middle East.

In Canada, Aker bought out Newfoundland and Labrador-based AKCS Offshore Partner for an undisclosed sum. AKCS was formed in 2002 by Aker, SNC-Lavalin and GJ Cahill & Co. to provide maintenance, modifications and operations to the oil and gas market in Atlantic Canada. Aker said the deal supports its Atlantic Canadian and North American growth plans, as well as increasing its project management capacity in the region. Head of MMO ops Tore Sjursen said the “company’s heritage lies within harsh and arctic offshore environments,” so the region is a good fit. The buy builds on Aker’s November acquisition of Newfoundland quality service provider Thrum Energy.

Buys de-oiler Separation Specialists in US; AKCS Offshore in Canada.

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Volume 03, No. 02 5 ServiceSectOrOilfield Service Contracts Subsea 7 announces $440 million in new business

Subsea 7 won $440 million under two new contracts, with the larger a $300 million subsea EPIC support deal with Dana Petroleum covering its Western Isles development in the North Sea. Work will cover two ~1.6-mile pipeline bundles and a 6.8-mile gas export line. Engineering and management work has begun out of the

company’s Aberdeen office, with offshore work slated to begin next year. UK and Canada VP Steph McNeill said the win was a

testament to its unique bundle technology.The company’s Mexican JV with

Pemex also won its inaugural contract, a $140 million pipe engineering, fab and installation contract in the Bay of Campeche. Work includes a 9.9-mile pipe, two slug catchers and two cantilever structures for the Line 60 project. Engineering and project management have begun from Subsea 7’s Ciudad del Carmen and Houston offices, with offshore operations starting this quarter and

pipelay work in Q3 by the Seven Borealis.In an organizational change, Subsea

7 consolidated its renewables division into its 50:50 Seaway Heavy Lifting JV with Russia’s Lukoil. The company said the move would “rationalize” its renewable offering and enable Seaway to lever Subsea 7’s engineering and PM expertise to broaden its service offerings and scale. The renewable division was launched in 2011, primarily targeting European offshore wind projects. Installations include several offshore UK and Germany. Those capabilities are now combined with Seaway’s marine structure transport and installation track record.

Won a $300 million subsea EPIC support contract in North Sea.

Bay of Campeche win is Subsea 7’s first contract in Mexico.

GE wins $500MM Petrobras FPSO equipment deal

GE Oil & Gas announced a contract worth over $500 million with Petrobras to supply turbomachinery equipment and services to be used on four new FPSOs in the Santos Basin. Under the deal,

GE will provide 16 powergen turbogenerators incorporating PGT25+ gas turbines and

electric generators, 8 turbocompression trains powered by LM2500+ gas turbines and 32 electric motor-driven compressors to be used for gas main, export and CO2 reinjection services. The generators

will provide primary energy for the vessels via gas turbines and advanced generators, while the compressors reinject a compressed gas/CO2 mix into the well for EOR. Additional services include installation and commissioning technical assistance, repair, dedicated local engineering support and customer training. The deal will also incorporate support from GE’s Power Conversion and Power & Water divisions. FPSOs covered under the deal are the P-74, P-75, P-76 and P-77 units. Local site prep is under way.

GE said it won the contract by offering an “aggressive” delivery cycle; high equipment reliability, efficiency, extended life and performance; and improved emissions control. Latin America division chief Joao Geraldo Ferreira said collaboration and integration of the company’s different product and business lines also helped achieve the win. Significant local content will also be utilized including exclusively Brazilian packaging, testing, logistics and sourcing.

GE generators will power the FPSOs, which will operate in the Santos Basin.

Compression equipment will be used for export as well as EOR.

Enservco to heat frac water in Utica with 5 contract winsEnservco announced master service agreements with five unidentified major E&P

companies in the eastern Ohio Utica. Enservco said customers include four of the play’s largest operators. Primary services to be provided include frac heating, hot oiling, pressure testing and water hauling. President and CFO Rick Kasch predicted consistent fluid heating demand through fall, winter and spring, as Utica frac techniques generally require 65-70°F water temperatures. Most services were expected to begin in January, serviced by Enservco’s Carmichaels, PA office.

Kasch said the company would also soon begin frac-heating for one of the largest operators in the Mississippian in south Kansas. The unidentified operator is already using the company’s water hauling, pressure testing and well acidizing services.

Enservco is growing its frac heating capacity by 50%, with fab orders of several next-gen double-burner heating units expected to come online this quarter. These new units will primarily be deployed in the Rockies and northeastern US.

Utica region only at ideal frac water temps for 4 months of the year.

Philadelphia Stock Exchange's Oil Service Sector Index vs. S&P 500

Dec 31 2013 Jan 14 Jan 22

10%

8%

6%

4%

2%

0%

-2%

Source: Yahoo! Finance

Jan 23, 2013 OSX S&P 500

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OilfieldServiceS 6 January 25, 2013

•Houston’s Custom Rubber Products was acquired by FDS Group for an undisclosed sum. Custom Rubber makes plastics for custom molding in the upstream and midstream oilfield and industrial sectors. Its products support compression, transfer and injection molding. FDS is a Paris-based global sealing solutions and products provider serving energy, chemical and petrochemical markets. FDS chief Remi Toledano said the addition of Custom Rubber positions the company as the global leader in static sealing technology in all energy segments. Gulfstar Group was FDS’s exclusive financial advisor under the deal.

•Oklahoma drilling fluid wholesaler General Supply Co. has been acquired by Alberta drilling fluid- and steel pipe-maker and distributor Bri-Chem for $2.5 million in stock and promissory notes. General has three warehouses in Oklahoma and is expected to add $3 million in revenues to Bri-Chem. Bri-Chem CEO Don Caron called the buy “extremely complementary” to the company’s plan to become the US’s dominant independent national drilling fluid supplier. Caron noted General’s business had no overlap with Bri-Chem’s and that the company had many long-term customers.

•Lufkin-based drilling fluid additives distributor and processor Grinding and Sizing Co. has been acquired by Prince Mineral Holding Corp. for an undisclosed sum. Grinding makes specialty mineral products, with two facilities in Lufkin and a custom production facility in Houston. Prince, which is backed by New York PE firm Palladium Equity Partners, refinanced existing debt and funded the deal with a $285 million senior note issue. Prince chief Willson Ropp said the goal would be to “add products and services through familiar channels.”

Oilfield Service A&D Briefs Oilfield Service Contracts

Transocean lines up $354 million in new backlog Transocean announced new contracts and extensions worth a combined $354

million in new backlog in January and December. All of January’s new backlog derived from a $235 million, 18-month contract extension for the company’s Sedco 714 midwater semisub with Total in the UK North Sea. The extension’s $435,000/day

rate represents a 9% increase over the rig’s prior rate of $398,000.The majority of Transocean’s $119 million in new December business

stemmed from a $90 million, three-well contract for high-spec deepwater floater Discoverer Seven Seas off Indonesia with Inpex. The vessel’s $500,000/day rate was a slight increase of its prior $490,000/day. Meanwhile high-spec jackup GSF Magellan will generate $29 million in new business through exercise of a six-month option by ExxonMobil off Indonesia at $160,000/day. The rate represents a 12% increase over its prior $143,000.

Transocean also announced completion of its sale of 37 jackup and one swamp barge to Shelf Drilling as of November 30. And the company sold its Trident 17 jackup to an unidentified buyer in a separate transaction for an undisclosed price.

Net 2012 out of service days increased by 55 between the two months, which includes 22 days of repairs for the high-spec harsh-environment floater Henry Goodrich and 19 days on the high-spec UDW floater GSF Explorer. Net 2013 downtime increased by a net 222 days, but this includes 253 days reactivating the midwater semisub Sedco 712 in anticipation of possible new business.

Noble takes $107 million in new jackup backlogNoble Corp. announced three jackup contracts worth a combined $107 million in

new backlog in its latest fleet status report. The Julie Robertson won a one-year deal with Centrica in the UK North Sea at $160,000/day, representing a 36% increase over

the rig’s previous $118,000/day rate with Centrica. The George McLeod took a one-year deal with Talisman off Malaysia at $115,000/day; the

rig was previously at a UAE shipyard. Eni-Agip exercised a two-month option on the Tommy Craighead in an as-yet-undetermined location at a flat $108,000/day. The rig’s prior three assignments with Eni-Agip have been off West Africa.

Noble also reported a 64-day increase in Q4 downtime to 339. Revenues lost due to increases for the Globetrotter I drillship and Dave Beard semisub alone should exceed $10 million. Delays have not been finalized for the Regina Allen jackup which tipped at Jurong Shipyard last month, but Iberia Capital Partners projects the delay could be up to six months.

Barclays recently projected a “cash flow wave” for Noble on the back of its rig delivery cycle, after a meeting with management. Impacts are expected to include a higher dividend next year and share buybacks.

Jackup Julie Robertson should generate over $56 million in UK North Sea.

Also closes sale of 37 jackups & one swamp barge to Shelf Drilling.

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Volume 03, No. 02 7 ServiceSectOr

Streamlined Helix eyed as acquisition targetAnalysts are beginning to call Helix Energy Solutions Group a takeover target after

exiting the pipelay vessel segment and agreeing to sell its upstream assets last quarter. The company made the moves to generate additional funds to expedite development of its well intervention and robotics businesses, where the company projects strong and

sustainable growth. Intervention seeks to boost production and incorporates subsea well maintenance, salvage and repair using both vessels and robots (or ROVs). In an investor

presentation, CFO Anthony Tripodo said Helix’s remaining business is more profitable than pipelaying, while less capital-intensive than E&P. It also features high barriers to entry in terms of both equipment and crew, another positive.

In addition to the capital generation, Helix’s now singlemindedness and business simplification may also appeal to potential acquirers, according to Helix stakeholder Thrivent Financial for Lutherans, whose analyst David Streit spoke with Bloomberg. Streit called the upstream business “the last major impediment to an acquisition.”

Capital One Financial anticipates Helix might appeal to companies like Aker Solutions or Technip, which may

want to grow into marine contracting. Aker currently operates in the segment with three deepwater intervention vessels (Helix has six including the chartered Skandi Constructor), while Technip could make sense due to its deepwater construction and engineering dominance. Stephens sees other oilfield service providers as potential suitors for business augmentation or expertise access, while Iberia Capital Partners thinks rig companies like Diamond Offshore might be in play to recoup some business lost to the less expensive intervention segment. Iberia’s Trey Stolz told Bloomberg intervention was “the next step forward in further specialization” of offshore equipment, noting associated vessels are cheaper than drilling rigs and that aging wells have nearly doubled over the past five years to 3,500.

Conversely, Ascendant Advisors chief Todd Smurl suggested to Bloomberg the now-strengthened Helix itself might be interested in intervention acquisitions. Smurl also notes possible acquirers might be put off by the recent surge in share prices. Despite shares seeing a 31% run last year, Bloomberg data suggests the company still trades at a 23% discount to its closest competitor Oceaneering on a 2013 earnings estimate basis and a 30% discount on an EV/estimated 2013 EBITDA basis. And Stephens believes the company could go for $25/share, nearly a 20% premium to recent prices.

Helix getting out of pipelay & upstream to focus on intervention.

Despite share run, Helix still cheap vs. Oceaneering under multiple metrics.

Intervention is cheaper alternative to drilling, with higher barriers to entry.

Helix Well Intervention Market Differentiators• The Helix fleet pioneered modern deepwater well intervention techniques

o MSV Seawell, the industry’s first dedicated monohull light well intervention vessel

o MODU Q4000, the industry’s first semi-submersible vessel dedicated to riser-

deployed well intervention

o MSV Well Enhancer, the industry’s first LWI monohull to deploy coiled tubing for

well intervention

o Subsea Intervention Lubricators (SILs) make intervention possible for a broad

range of applications, including connecting to the Macondo well in 2010

• Only intervention company with expertise in all intervention asset categories

• A significant track record of global intervention successes

o Primary operations in the U.S. Gulf of Mexico, North Sea, and Southeast Asiao Further growth potential in emerging global markets, including West Africa,

Asia Pacific, and Brazil

Source: Helix December 4 Presentation via PLS docFinder www.plsx.com/finder

FMC takes Africa equipment win & buys Houston land

FMC Technologies announced a subsea equipment order of unspecified value from CNR International to support development of its deepwater Baobab field Phase 3 operations off

the Ivory Coast. FMC will provide six

trees, eight wellheads, three manifolds and a subsea control system consisting

of a distribution system and topside controls. Deliveries are slated for next year. Iberia Capital Partners estimates value in the $100 million range but cautions that there could be a large degree of variance depending on equipment specs. Iberia projects $1.0-1.25 billion in orders per quarter for FMC this year.

Also, concurrent with news of LLOG Exploration’s $114 million subsea equipment order in the US Gulf of Mexico's Mississippi Canyon (see previous issue), FMC announced purchase of a 173-acre plot in Houston. FMC said the buy will provide flexibility and options for the company in the area on the back of “significant growth over the last several years.” FMC bought the land, located at Generation Park, from McCord Development for an unspecified sum.

FMC said its new 173-acre Houston plot will provide flexibility.

Oilfield Service Contracts Oilfield Service A&D

FMC GOPLS provides clients with research, insight and transaction opportunities...

24 | 7 | 365Source information at www.plsx.com

www.plsx.com

FMC took subsea equipment order from CNR off Ivory Coast.

To learn more about PLS, call 713-650-1212

OilfieldServiceS 8 January 25, 2013

•Rockwater Energy acquired Alberta-based Vencor Production Testing for an undisclosed sum. Vencor features over 25 production testing vessels and has 60 employees. Rockwater CEO Larry O’Donnell said Vencor will expand the company’s flowback and production testing capabilities to western Canada and complement its existing Canadian portfolio. Rockwater, which performs fluid management, environmental solutions, production testing and logistics services, has been a prolific acquirer of small service companies. O’Donnell previously told the Houston Business Journal he planned to take the company public by mid-2013.

•Investors have taken an 80% stake in Beasley, Texas-based downhole drilling tool-maker Rotary Drilling Tools USA LP. Offerings include drill pipe, collars, re-tool jointing and tubular services. Filings show investors including PE firm OFS Energy Fund II pooled $49.7 million into holding company RDT Holdco LLC which made the buy. OFS closed its fund to further investment in September at $90 million and has since placed capital with service companies KW International, Buckhorn Energy Services, Vision Oil Tools and now Rotary.

•Taylor Crane Service was acquired by Canada’s Entrec before YE12 for $5.83 million. Dickinson, North Dakota-based Taylor is a Bakken operator with seven cranes including all-terrain, carry decks and hydraulic truck-mounted units. Taylor’s fleet also includes several trailers and crane support equipment. Entrec chief John Stevens said Taylor, combined with Entrec’s current Bakken operations, give the company the scale it needs to better compete and grow in the region. Consideration consisted of $4.3 million cash and $1.53 million in Entrec shares. Taylor had estimated 2012 EBITDA of $1.7 million.

Oilfield Service A&D Briefs Oilfield Service Capital

Oilfield Services Stock Movers—Last 30 Days Source: Capital IQ

Company Ticker$/Share1/24/13

$/Share 12/25/12

% Change

Top

5

Matrix Service MTRX $14.46 $11.27 28%Parker Drilling PKD $5.54 $4.38 26%Transocean RIG $55.93 $45.16 24%Willbros Group WG $6.57 $5.50 19%Weatherford International WFT $12.61 $10.60 19%

Bott

om 5

Save the World Air ZERO $1.00 $1.09 -8%Dawson Geophysical DWSN $24.95 $26.91 -7%Cal Dive International DVR $1.69 $1.80 -6%Global Geophysical Services GGS $4.10 $4.07 1%Heckmann HEK $3.99 $3.95 1%

Note: Data includes public, international companies operating in the oilfield service space, limited to companies >$100 million market cap & >$1.00/share.

PE firm Main Street keeps making service sector movesHouston’s Main Street Capital has been very active the past few months in its favored

lower middle market financing segment, investing a combined $91.0 million in debt and equity in service sector companies. This month’s big winner was Quality Lease and Rental Holdings, which received a combined $40.5 million from Main Street consisting of $38.0

million in senior secured debt and $2.5 million in equity. El Campo, Texas-based Quality provides upstream drill site services and equipment rental including mobile housing units; pad, pit and road construction; pipeline and

flow line equipment installation; and heavy hauling. Main Street acquired Quality with the investment, in conjunction with third party investors and management.

The firm also invested $8.9 million (consisting of $6.0 million in secured debt and $2.9 million in equity) in Houston-based Texas ReExcavation (T-Rex) parent Hydro Ex Acquisition. T-Rex provides hydro and vacuum excavation services for the petrochemical, pipeline, utilities, construction, oil and gas, engineering, transportation and environmental industries, among other target markets. Again, Main Street acquired the company with third party

and management support.Main Street also partially exited an

investment this month, selling 27% of its equity position in utility and energy asset management solutions firm irth Solutions for $500,000. Main Street made a 123% cumulative internal rate of return on the deal.

After a largely quiet autumn, deal activity for Main Street picked up significantly toward the end of 2012. Last month, Main Street invested $35.1 million in two lower middle market service product-makers. Main Street invested $14.8 million in debt and $6.3 million in equity in Odessa, Texas-based Permian-focused tubing and casing-maker Bond-Coat Inc. It also invested $14.0 million in marine building fabricator Marine Shelters Holdings and subsidiary LoneStar Marine Shelters. Debt/equity breakdown on the latter investment was not disclosed. It also invested $6.5 million in ruggedized onsite liquid and gaseous oxygen and nitrogen generator-maker PCI Holding Co., consisting of $5.0 million in senior secured debt and $1.5 million in equity. Main Street generally seeks to partner with firms with annual sales of $10 million to $150 million.

Quality Lease and Rental Holdings got $40.5 million in debt & equity.

Main Street targets firms with $10-$150 million in sales.

Expected 2013 tax implications drove dealmaking activity late last year.

Gain clarity & perspective with the PLS Global M&A Database, plsx.com/ma

For general inquiries, e-mail info@plsx.com

Volume 03, No. 02 9 ServiceSectOrFrontier moves beyond Bakken with Canary buy

Frontier Energy Group has acquired Canary Wellhead, resulting in one of the largest US private oilfield service companies. Frontier has changed its name to Canary LLC with the deal and now has 26 locations, operations in every major US shale region and ~900 customers. Frontier's Dan Eberhart will lead the combined company, with Canary Wellhead execs Lynn Blevins and Jim Chappell coming on as VPs. Terms were not disclosed, but

Eberhart told The Wall Street Journal the price was under $100 million.Frontier was heavily

Bakken-focused; the largest provider in the region providing wellheads and services including pressure testing, hot oil, slick/wireline, valve repair, frac tree and downhole rental and wenching. Canary provides comprehensive drilling and production services, and Eberhart said it allows for one-stop shopping and in-house design and fab capabilities. The resulting company will have ~$100 million in annual revenues and be headquartered in Denver. Combined profits are expected to grow 50%. Eberhart said Canary will compete with the largest multinationals on a nationwide basis.

Workovers tie 22-month low with broad regional declines The active US workover rig count tied a 22-month low of 1,990 in December

according to Cameron data, dropping 136 rigs or 6.7% vs. the November count. The decline also more than doubled November’s 66-rig drop. West Texas again led decliners with a 14-rig (3.5%) decline, but the overall drop was more uniform than in recent months with other large sequential declines in the West Coast (12), Rockies (9) and Mid-Con (7). Only the Eastern US had a positive uptick, adding 5 rigs for a 6.1% increase to 87.

Overall utilization also ticked down from 65% to 64%. Regions with the biggest declines were ArkLaTex which dropped 300 basis points from 63% to 60%, the West Coast which also dropped 300 bps to 67% and Mid-Con which dropped 200 bps to 50%. Most other regions saw 100 bp declines, other than the Eastern US which tightened 100 bps to 60% and West Texas which stayed flat at 69%. Combined with the large decline in the region, it appears workovers are leaving the Permian. Canada was flat again in December, but utilization dropped 100 bps to 77%, so perhaps some of those rigs are moving north.

•Total Instrumentation & Controls was acquired by Proserv Group for an undisclosed sum. TIC provides advanced process and control systems equipment including BOPs, drilling and production control systems and subsea components including remote terminal, hydraulic power and topside umbilical termination units. Proserv cited GOM and BOP exposure as rationales, also citing the company’s staff of largely offshore-trained employees. Proserv believes the GOM BOP market will grow significantly.

•Seacor Holdings sold energy trading division Seacor Energy to Par Petroleum for $14 million cash, exiting the crude trading business. Subsidiary Gateway Terminals will continue to provide petroleum product, shale oil and ethanol storage and transfer services. Seacor will also spin off helicopter operator Era Group under a January 31 stock issuance. Finally, Seacor combined its O’Brien’s Response Management sub with Witt Associates, forming Witt O’Brien’s. Seacor called the new venture America’s leading preparedness, crisis management and disaster response/recovery firm.

Oilfield Service A&D

Water treater Altivia picked up in $125 million deal

Houston water treatment company Altivia was acquired by German chemical distributor Brenntag AG for $125 million before year’s end. Altivia serves both municipal and industrial customers, with facilities in Texas, Oklahoma and Louisiana. Brenntag board member William Fidler said the deal would strengthen the company’s positions in both the Southwestern US and the water additives business.

Chemical production affiliate Altivia Chemicals was not included in the deal. CEO and founder J. Michael Jusbasche is staying with Altivia for 90 days and will continue in the chemical space with Altivia Chemicals. Jusbasche said the chemical business would likely continue to focus on water treatment but would also consider new chemical acquisitions. He hopes to expand into oil and gas due to the high volume of water used in hydraulic fracturing.

Canary Wellhead had operations in all major US shale plays.

Oilfield Service A&D Briefs

North American Workover Rig Status by Region Dec. 2012 Nov. 2012 Dec. 2011 % Change

Area Active Util. Active Active Util. Active YOY

Texas Gulf Coast 206 65% 210 227 72% -9%

ArkLaTex 128 60% 132 156 62% -18%

Eastern US 87 60% 82 103 69% -16%

South Louisiana 20 28% 21 22 31% -9%

Mid-Continent 209 50% 216 254 58% -18%

West Texas /Permian 667 69% 681 684 70% -2%

Rocky Mountain 345 70% 354 349 74% -1%

West Coast/Alaska 328 67% 340 336 68% -2%

Total US 1,990 64% 2,036 2131 67% -7%

Canada 703 77% 705 711 70% -1%

Total US & Canada  2,693 67% 2,741 2842 68% -5%

Source: Cameron

The Eastern US bucked the trend, growing active units by over 6%.

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OilfieldServiceS 10 January 25, 2013

Schlumberger said the reservoir characterization segment performed so strongly on robust international software sales, three quarters of testing service business growth particularly buttressed by the Middle East and consulting sales growth in Mexico and Central America. At $696 million, drilling pre-tax income was also up 5.8% YOY but down 5.0% sequentially. Meanwhile, production was up 8% sequentially on completion, artificial lift and subsea strength, but still down 23% YOY at $590 million with the tailing

off of frac margins. And although

pressure pumping also continued to hurt North American results on a YOY basis, the company showed improvement over last quarter supported by robust Gulf of Mexico activity. Sequentially, pre-tax income rose 7% to $655 million on sales up 4% to $3.41 billion. But vs. 4Q11, profits were still down 31% on sales which were down 3%. North America also managed to regain its position as profit-leader last quarter (at 30% of total), taking the lead back from Europe/CIS/Africa which had jumped ahead last quarter. Although still well up YOY, that region was the only Schlumberger coverage area to see both sales and income sequential declines, although it still accounted for ~27% of both sales and profits. The company said this was due to lower seismic vessel utilization due to a seasonal exodus from the North Sea. Both sequential and YOY growth trends continued in both Middle East/Asia (profits up 5% sequentially and 26% YOY; profits 28% of total) and Latin America (profits up 13% sequentially and 25% YOY;

profits 17% of total).On a full-year basis, both pre-tax

profits and sales grew 14% to $8.35 billion and $42.15 billion respectively, while net income rose 10% to $5.01 billion. Reservoir characterization was the standout, growing profits 31% to $3.21 billion and sales 15% to $11.4 billion. Drilling also grew nicely with a 25% profit jump to $2.82 billion and sales rising 15% to $15.97 billion. While production sales also grew 13% to $14.88 billion, fracking’s impact was again felt with a 10% profit drop to $2.37 billion. Again, North American sales grew (9%) while profits declined (10%) to $2.74 billion, now accounting for 33% of profits vs. 42% in 2011. But unlike the sequential quarterly comparison, Europe/CIS/Africa made a huge push last year, with profits growing 52% to $2.24 billion and now accounting for 27% of total profits vs. 2011’s 20%. Middle East/Asia and Latin America both saw solid YOY revenue and profit growth, with pre-tax income in both regions increasing ~$300 million.

Baker Hughes has tougher time— With even greater leverage to North America, Baker Hughes’ Q4 results were

even more heavily impacted by local market challenges. The company reported net income of $215 million (down 24% sequentially and 32% YOY) on $5.22 billion in revenues (flat sequentially and down 1% YOY). CEO Martin Craighead said

unfavorable pressure pumping pricing continued, leading to Q4 sales and margin declines in the region. However,

these were in part offset by international performance where the company saw record revenues. Excluding $63 million for bad Latin American debt writeoffs, adjusted operating income was $274 million, down 11% sequentially and 48% YOY. Full-year capex was $2.87 billion. Baker plans to curtail spending a hefty 30% to ~$2.0 billion this year, citing capital discipline.

North American pre-tax profits were $222 million (down 23% sequentially and 47% YOY) on sales of $2.56 billion (down 7% sequentially and 10% YOY).

North America pressures integrated firms Continued From Pg 1

Earnings & Capex

Reservoir characterization was a major boon for Schlumberger during Q4.

North America continued to challenge both companies, but the GOM helped.

Middle East/Asia profits up 26% for Schlumberger YOY ; 14% for Baker Hughes.

Standard now down to one newbuild with latest sale

Standard Drilling announced that CP Latina is exercising an option to purchase the company’s newbuild jackup B338, currently under construction by Keppel Fels, for the previously agreed price of $215 million. Closure is slated for mid-March. Standard also announced closure of the previously announced sale of its B337 rig to CP Latina. The company’s lone remaining newbuild the B340 is slated for delivery from Keppel in May 2014.

With this latest deal, Standard will have sold six of an originally planned seven newbuild jackups. The most recent announcement was quite succinct compared to other recent sale announcements from the company, which cited difficulties in obtaining financing as rationales for the previous sales. The company has also consistently noted it was considering additional sales with each announcement; it did not do so with this latest sale. Standard did not say by what sum proceeds from sale of

the B338 would reduce its remaining obligation to Keppel, but after its last sale the obligation was cut by $154 million to $307 million. The preceding sale (of the B337) cut funding obligations by roughly the same dollar value, so Standard may be nearing the vicinity of $150 million in remaining obligations to Keppel. Combining cash proceeds of $67.9 million and $65.4 million on Standard’s two previous sales with whatever unstated cash proceeds it may receive from sale of the B338 may mean the company’s long period of financing woes finally have come to an end.

Announcement provided much less detail than news of other recent sales.

Combined cash proceeds from latest 3 sales may be enough to fund last rig.

Oilfield Service A&D

Standard Drilling

www.plsx.com

Continues On Pg 11

Volume 03, No. 02 11 ServiceSectOrOilfield Service Capital

Seadrill grooms North Atlantic Drilling for US IPO After much discussion of the possibility, Seadrill has filed to IPO its aptly named

North Atlantic-focused drilling sub North Atlantic Drilling in US markets. The company currently operates in the Norwegian and UK North Sea, and plans to lever its ties to Seadrill into long-term re-contracts and acquisition- and newbuild-based fleet expansion.

North Atlantic operates seven harsh environment units (four semisubs, a drillship and two jackups) and has a semisub and jackup

newbuild under construction at Jurong Shipyard. Four rigs are under contract with Statoil, one is with ExxonMobil, one Total and one with Shell. All operate in the Norwegian and UK sections of the North Sea. The jackup newbuild is contracted to ConocoPhillips, while the semisub remains uncontracted. Average contract term as of Q3 was three years.

The newbuilds are largely unfunded; the company has paid $238 million of a projected $1.18 billion in costs between the two units. North Atlantic plans to fund the remainder with operating cash (backlog as of Q3 was $4.2 billion), new credit facility borrowings and net proceeds from public and private debt markets. Proceeds from the equity offering will be used for general corporate purposes and working capital.

North Atlantic has won a 2-year, $215 million extension with Statoil for its

harsh-environment jackup West Epsilon. The rig is now contracted to the NOC through 2016. At $289,000/day, dayrate is flat against the underlying five-year contract.

Meanwhile another Statoil-contracted unit, semisub West Hercules, encountered regulatory deficiencies while undergoing upgrades and winterization for its upcoming Barents Sea campaign. Problems included non-conformities in watertight closing equipment, pumps and anchor winches. Norway’s regulator suggested remediation might take longer than the mid-February completion anticipated by the company.

Shares of the company, in which Seadrill holds a 74% stake, currently trade in Norway. Estimated capital to be raised from the offering, number of shares and price per share have not yet been determined. Seadrill has also not said how large a stake it plans to sell to US equity markets. Morgan Stanley will serve as lead underwriter.

Nearly half of fleet is contracted to Statoil; all work in North Sea.

Offering details still up in the air.

North America pressures integrateds Continued From Pg 10

And Latin American profits dropped to almost nothing ($8 million) although sales still grew 10% sequentially and 6% YOY, with regional margins hitting 1%. However margins surged to 18% (from 12% in Q3 and 11% in 4Q11) in Baker’s Europe/

Africa/Russian Caspian division, as pre-tax profits spiked 66% sequentially and

71% YOY to $173 million on more modest 10% sequential and 4% YOY sales gains to $950 million. Middle East/Asian profits

also grew from ~$70 million in Q3 and 4Q11 to $80 million, while sales rose 5% sequentially and 15% YOY to $882 million.

On an annual basis Baker reported record revenues of $20.93 billion (up 8%) but net income dropped 25% to $1.31 billion, by North America. Baker’s Gulf of Mexico business grew over 30% in 2012 on deepwater activity improvements, drilling and wireline share gains and pricing improvements. North American sales grew 5% to $10.84 billion on introduction of new well construction technologies and unconventional demand. Pre-tax profits fell 34% to $1.27 billion (52% of total pre-tax profits) due to the aforementioned market

dynamics. Craighead noted international sales grew 11% despite 2% growth in the international rig count. And the company significantly expanded its integrated Middle East operations. This likely pressured margins in the division, where profits were flat YOY. Latin America also saw a 12% profit drop YOY. But European/African/Russian Caspian profits more than made up for those challenges, growing 74% to $586 million (24% of total).

Schlumberger cutting capex 17%; Baker Hughes 30%.

Big income gains in Europe/Africa/Russian Caspian helped Baker Hughes. GreenHunter Marcellus wastewater barge plans on hold

The US Coast Guard has put a hold on Magnum Hunter subsidiary GreenHunter Water’s plans to move Marcellus wastewater by barge to southeastern Ohio, seeking additional safety assurances. Coast Guard HazMat division chief Commander Michael Roldan told PublicSource the wastewater may be hazardous and was most concerned about a possible “bathtub ring” effect of radioactive particle buildup inside barges.

The company bought and refurbished 70,000 bbl worth of liquids storage tanks in New Matamoras, Ohio as a transfer point to three

disposal wells in Washington County. The company is also converting an old oil and gas well into a fourth disposal well. GreenHunter VP John Jack said the company had planned to start barging this month using a 10,000 bbl unit and expressed surprise at the situation, with no other relevant regulators expressing concerns to this point. Jack said the barging was not essential to the company’s outlook but would reduce road wear (he said one barge can haul as much as 1,050 trucks) and could save producers up to $5.3 million per year.

Coast Guard spokesman Carlos Diaz gave no timetable for a decision but said the Coast Guard was “working this really hard.” Jack hoped for a decision over the next few weeks. State records show 12.2 MMbbls of frac waste and brine were injected into Ohio disposal wells in 1H12, with 56% coming from Pennsylvania and West Virginia.

Legal & Regulatory

Magnum Hunter said barge can haul as much water as 1,050 trucks.

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OilfieldServiceS 12 January 25, 2013

Meanwhile, Green Field Energy Services said Apache used its technology in tests to successfully perform the first frac pump operation powered solely by field gas. Green Field’s turbine frac pump executed the achievement in the Granite Wash, where Apache says a typical frac job can consume 36,000 gallons of diesel. Green Field achieved

“typical” North American frac rates and pressures in

a simulated job. Gas was taken from a producing well and routed through field production units and a Green Field conditioning unit before being fed to the pump. Green Field president Rick Fontova said the company will now use gas exclusively to fuel its entire frac spread.

Bahorich said using gas from nearby producing wells would cut costs even further, as currently gas must still be transported to the site, primarily on trucks burning diesel. Halliburton SVP of completion and production Marc Edwards anticipates that the Dynamic Gas Blending engines could be easily retrofitted to burn on-site conditioned field gas in the “not-so-distant future.” But for now Apache will still use trucked-in gas under a

dual-fuel approach, as pure gas combustion would require the purchase of new engines.

Green Field appears to be making strides toward wider adoption, partnering with GE Oil & Gas under a global supplier agreement. GE will provide technology and equipment including ESPs, modular compressed natural gas systems and LNG production systems, which will be combined with Green Field’s natural gas frac and drilling fueling technologies. The deal includes an MOU for the companies to collaborate on joint technology efficiencies. The draw for GE appears to be Green Field’s focus on powering equipment solely on natural gas, eliminating the diesel component.

Green Field also won two pilot program deals with operators. The company will work with SandRidge to perform an artificial lift test “without the use of an external fuel source to power the downhole pump” in the Mississippian with expectations of YE13 conclusion. And it will shift Granite Wash efforts with Apache this quarter from fracking to drilling, powering a 1,500-hp land drilling rig with four field gas-powered 1-MW turbine engines. Green Field estimates that by shifting from diesel to 100% field gas operators could lower energy costs up to 75%.

Technology

Apache & Halliburton make gas fuel strides Continued From Pg 1

Field gas usage will cut costs further, eliminating transportation costs.

Green Field working with GE to combine technology with GE’s compression/LNG.

Green Field partners with SandRidge & Apache to test gas artificial lift and drilling.

Green Fields Gas-Fueled Pressure Pumping Equipment

Source: Green Field Energy Services Website

•Anton Oilfield Services Group announced an oil-based drilling fluid services contract with an unidentified customer covering five ultra-HP/HT conventional gas wells in the PetroChina-operated Tarim Basin.

Anton said average contract value for each job is $1.45 million for estimated total

projected revenues of $7.25 million. The company won 8-10 similar jobs in July, and said projects completed to date have reduced complexity in downhole ops, shortened drilling lead time and generated additional customer cost savings. Anton said oil-based fluids are ideal for the Tarim due to geological complexities.

•AusGroup won a $13.6 million contract with Fugro-TSM to provide

fab services related to Woodside Petroleum’s Greater Western Flank

development off West Australia. Work will include post-metrology subsea spools for Phase 1 of the project. The broader $106 million project will use subsea tie-backs to connect the existing Goodwyn A platform to the Goodwyn GH and Tidepole fields. Work is expected to take ~12 months and will be performed at facilities in Kwinana and Henderson, both in Western Australia. The deal brought AusGroup’s order book to ~$286.2 million.

•Cosco subsidiary Cosco Nantong Shipyard won a $370 million FPSO

construction contract for an undisclosed European customer. The vessel will

feature 400,000 bbl storage capacity. Delivery is slated for June 2015. The yard also delivered the T-15 tender drilling rig to Seadrill before year’s end. Since the yard was contracted to deliver two rigs to the driller in 1Q13 and a third in 3Q13, the delivery comes ahead of schedule. The rig can drill in water depths up to 6,500 ft, with total drilling depth capacity of 20,000 ft.

International Briefs

Seadrill

www.plsx.com

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Volume 03, No. 02 13 ServiceSectOrTechnology

European supermajors make Houston tech moves Both BP and Shell have made recent news regarding new or expanded technology

facilities in Houston. BP announced it will build a new supercomputing facility at its Westlake Campus in Houston which will serve as the company’s global geologic and seismic data processing and management hub. The facility will replace a smaller

existing one and will feature 5,000 computers, each with 12-16 CPUs for a total memory of 536 terabytes (the computer vendor has not

yet been determined). Processing speed will be 63% faster than that of the existing facility, and will allow completion of an imaging project in a single day which would have taken four years a decade ago. Seismic imaging is expected to be a core focus of the center, with improved resolution and deeper imaging both objectives.

At a briefing, BP said construction has commenced on a three-story, 110,000 sq. ft. facility which it says will house the largest commercial research supercomputing complex on the planet. EVP of production Robert Fryar said

in a statement that the center would be “as important to our global search for new energy resources as any piece of equipment

we employ today.” Opening of the facility is slated for mid-2014. The company plans to spend $100 million on high-performance computing over the next five years.

Meanwhile, Shell has re-launched its Houston tech center after extensive modernization and expansion. The company called it one of the “largest industrial technology centers in the world,” larger than both its Netherlands and India facilities. It features over 1 million sq. ft. of lab and office space and houses over 2,000 scientists and engineers including six chief scientists the company described as “international-recognized thought leaders” in multiple disciplines. Unlike BP’s center, Shell’s facility includes focus on downstream, as well as upstream efforts. Director of projects and technology Matthias Bichsel said in a statement that Shell spends over $1.0 billion per year on new technology R&D.

BP also noted that company officials would join others from Chevron, Shell, ExxonMobil and Total at a high-performance computing workshop at Rice University in February.

New BP facility will process data 63% faster than current facility.

BP building largest commercial research supercomputer facility on Earth.

Shell’s tech center is company's largest, besting Netherlands and India sites.

•Diamond Offshore reduced expected Q4 downtime by 16 days to 160 in its latest fleet status, although the semisub

Ocean Victory was expected to be in the yard 15 extra days last quarter for its five-year

survey and BOP upgrade. Meanwhile, Diamond’s Ocean Whittington semisub has been cold stacked. The company reported no new contracts for December.

•Fairmount Minerals company Santrol opened its Columbiana proppant terminal serving the Marcellus and Utica. The facility is located in Youngstown, Ohio to reduce proppant transport costs. The terminal has a 500,000-ton/year capacity.

Oilfield Service Contracts

Sembcorp wins two jackup orders, uprights tilter

Sembcorp Marine announced that its PPL Shipyard won two turnkey jackup contracts with Mexico’s Integradora de Servicios Petorleros Oro Negro worth

a combined $434 million. The rigs will be PPL-designed Pacific Class 400s, equipped for HP/HT

drilling at depths up to 30,000 feet and operable in water depths of 400 feet. They

will accommodate 150 people. Deliveries are slated for 4Q13 and 1Q14, and are not expected to impact 2012 earnings.

The company announced its Jurong Shipyard successfully restored jackup Noble Regina Allen to its upright position on January 14, after an early December incident in which the rig tilted during a jacking test, hospitalizing 89. Jurong

and relevant authorities are focused on investigating the cause of the tilting. A stop work order is in place; when lifted repairs and restoration work will commence. The rig is one of two Jurong is building on a turnkey basis for Noble Corp. Delivery was slated for this quarter, Sembcorp said it is now likely to be by the end of 3Q13.

2 jackup wins with Oro Negro worth a combined $434 million.

Oilfield Service Briefs

Rig manager Frigstad enters UDW market with $1.3B order Privately held Cyprus offshore rig manager Frigstad Offshore is undergoing a

sea change with its $1.3 billion order of two UDW semisubs, making the jump from manager to owner. The order comes through subsidiaries of Frigstad Deepwater with CIMC Raffles in China, and includes options for an

additional four units. The rigs are in-house designed

Frigstad D90s focusing on ultra-deepwater exploration and development drilling. They will be able to operate in water depths up to 12,000 feet and be capable of drilling to 50,000 feet. They will feature DP3 positioning and a full dual activity hydraulic drilling outfit with two seven-ram BOPs and double 1,400 ST hoisting capacity. Deliveries are slated for 4Q15 and 2Q16.

International

Frigstad ordered two UDW semisubs & has options for four more.

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Regina Allen jackup restored to upright position; delivery in 3Q13 at earliest.

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OilfieldServiceS 14 January 25, 2013

•DOF Subsea won vessel contracts totaling $130 million for work in the North Sea and Asia Pacific. Unidentified clients will use DOF’s Skandi Skolten, Skandi Bergen, Geosund and Geoholm vessels off

the UK and Norway, with work including mooring and flexible flowline system installation,

construction support, survey and inspection services. Another four unidentified customers will utilize the Skandi Hercules and Skandi Hawk off Australia, Indonesia and Philippines for subsea structure installation, pipelay and field maintenance services.

•Farstad Shipping announced contracts worth a combined $58 million. PSVs Far Spica and Far Scotsman will work with Statoil for nine months off East Africa with options for an additional nine months, while the Far Star will work for Technip in Brazil for two months with a one-month option. Farstad AHTS Far Sagaris won a one-year deal (six-month option) with Perenco off Brazil, while Petrobras exercised a 292-day option on the AHTS Far Sea. Fugro hired the IMS Far Saga for six months with options in the North Sea.

•Kreuz Holdings won two contracts worth a combined $15.5 million. Kreuz is providing subsea installation work for an unidentified customer in Southeast Asia under a $10 million deal slated for completion this quarter. Kreuz will also perform work for Swiber Group under a $5.5 million deal beginning in Q2 or Q3 and slated for completion by the end of Q3.

•EPC firm Kvaerner acknowledged bidding challenges due to Norway labor costs and other disadvantages vs. Asian companies. CEO Jan Arve Haugan told analysts the firm was working to improve productivity, as current bids have run 7-10% above those of competitors. The company is considering increasing ties to Far East fab firms. Haugan said pressure was stemming from Kvaerner’s construction segment, as opposed to topsides engineering where the competition is largely European. Statoil CEO Helge Lund recently told DN that nearly all contracts for its Mariner tender were awarded to Asian companies.

International Contract Briefs Choo said Chinese operators use their own yards to build rigs, so private yards

implicitly operate at a disadvantage. Keppel already has one yard in China which makes rig parts. For now, the company is focusing on ties to regional markets including Brazil, where it is building a second yard. Local presence is a value-add,

with associated speed of delivery and accountability.Maybank Kim Eng Research’s Yeak Chee Keong said the Chinese yards

will eventually pose a threat to Keppel, but now customers prefer security of working with an established player who can deliver on time and under budget. A construction accident at Jurong shipyard last month has been linked to Chinese yards which built the jacking systems involved in the incident, so some concern may be warranted.

But pricing is compelling. Chinese yards Yangzijiang Shipbuilding and Jinhai Heavy Industry announced their first orders with Yangzijiang’s $170 million jackup award coming in 17% below a comparable 2012 Keppel win.

China also targeting global engineering & construction— And as Chinese yards loom on the global competitive landscape for rigmakers,

Sinopec is making a play to cut into the integrated offshore engineering and construction business currently led by the likes of Technip and Saipem. Sinopec’s new Sinopec Oilfield Service Corp. consolidates the service departments of eight oil fields including Shengli, Zhongyuan and Jianghan and will feature a starting overseas contract backlog of $14.2 billion. The resulting company has 140,000 employees, $12.3 billion in fixed assets and expected 2012 revenues of $15.3 billion.

The company is already a major domestic services player. Sinopec, CNPC and China Oilfield Services control a combined 80% of business in the market.

Sinopec formed a downstream E&C division last year called Sinopec Engineering. Reuters reported a company official saying both units would eventually trade publicly, with state media saying Sinopec Engineering would be listed by 2014.

China seeks 20% of some offshore segments Continued From Pg 1

Sinopec formed a mega-offshore E&C firm to compete with Technip & Saipem.

Offshore ops & services grow Petrofac backlog 15%Petrofac recently projected a 15% YOY profit increase for 2012 and 7% YOY

backlog gains to $11.6 billion. Core engineering, construction, operations and maintenance (ECOM) backlog may drop 7% to $8.6 billion, down from 85% to 74% of backlog. Drops are led by offshore E&C, which should fall 22% to $5.0 billion (43%

of total). But offshore projects and operations may grow 26% to $3.4 billion (29% of total) while integrated services may have doubled YOY to $3.0 billion (26% of total). CEO Ayan Asfari reports a strong bidding pipeline this year and

believes the ECOM decline should reverse on activity gains in many regions.

The company is issuing a tender for construction of its first offshore construction vessel to support T&I capability improvements for turnkey deepwater contracts. The hi-spec deepwater pipelay vessel will be an Ulstein DLV 5000 with DP3 capabilities and a 5,000-tonne heavy lift crane for S-lay and J-lay operations in up to ~6,500 ft of water. The as-yet-undetermined yard will build the hull and install certain equipment including engines and automation systems.

Construction is expected to last three years.The company also won a “substantial”

three-year service contract in Algeria with JVs backed by Sonatrach, BP and Statoil. Petrofac’s E&C division will provide a variety of consulting, design and procurement services under the deal supporting development of the groups In Salah and In Amenas assets. The deal includes two one-year extension options. Much of work will be performed through Petrofac’s Algiers engineering center.

Integrated energy services backlog nearly doubled YOY to $3.0 billion.

Building deepwater pipelay vessel to support future offshore E&C turnaround.

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Volume 03, No. 02 15 ServiceSectOrInternational Oilfield Services

Deep Sea partners up for Brazilian OSV joint venture

John Fredriksen’s Deep Sea Supply announced a 50/50 JV with Brazilian BTG Pactual Oil & Gas covering operation of nine AHTSVs and six PSVs in Brazil. Deep Sea is selling the fifteen vessels to the JV, along with 50% interests in two Brazil-focused operating subsidiaries. BTG will pay Deep Sea cash equal to vessel equity as well as assuming current financing. The JV is also acquiring another six 300-foot Ulstein PX 105 PSVs from Deep Sea shareholder Hemen Holding, currently

under construction by Sinopacific Shipbuilding for 2013 delivery. The companies will make a combined $48 million contribution for JV working capital, with the venture seeking additional vessels, as well. The venture combines Deep Sea’s offshore knowledge and experience with BTG’s local ties.

Deep Sea said deal dynamics imply a JV enterprise value of $852 million, with existing vessels valued at $578 million and newbuilds at $274 million. Deep Sea expects to net $60 million in cash after its share of newbuild funding and capital contributions. Iberia Capital Partners noted the market has significant potential despite difficulties of operating in the region, with Brazil projected to need over 200 additional OSVs over the next five years.

The JV will be operated by one of the jointly owned operating subsidiaries, with two directors from each partner serving on the board of the venture. Closure is expected this quarter.

Separately, Deep Sea won $19.3 million in contracts with undisclosed clients covering three AHTSVs. Its Sea Badger took a three-year contract off Thailand, while the Sea Tiger and Sea Bear will work under 120-day deals with 60-day options off Brazil. All vessels are expected to begin operations at the beginning of March.

EMAS wins over $160 million in North Sea & Asia contracts Offshore contractor and integrated solution provider EMAS announced its EMAS

AMC, EMAS Marine and EMAS Energy divisions recently won over $160 million in combined contracts for work in the North Sea and Asia Pacific regions. Subsea

service division AMC generated more than half of the backlog, winning contracts and options in the regions worth up to $85 million, including a single Asia Pacific oil deal worth up to $45 million. AMC also won a subsea

and moorings installation deal related to offshore Malaysia oil development with an unidentified independent operator, as well as option exercises and variation orders with Statoil related to 2012 contracts.

Offshore support segment EMAS Marine won five contracts worth ~$75 million including options. EMAS will utilize some of its advanced 12,000 bhp AHTS vessels and a 3,250 dead-weight ton PSV to support completion of these contracts. Average contract term for the marine deals is 2.6 years including options. And energy services division EMAS Energy took a multimillion decommissioning contract in the Gulf of Thailand with an unidentified “major oil and gas operator.”

Offshore rush continues growing global active rig count 2% A healthy twelve offshore rigs activated over the past month, increasing global

active rigs 2.1% to 594 according to Rigzone. This amounts to an 11.0% YOY global offshore active rig increase. Only four new rigs came online last month, pushing total rigs to 700 and tightening utilization from 83.6% to 84.9%. Total global supply is now up by 29 rigs YOY (or 4.3%) while 59 rigs activated during the same period, driving

utilization up 520 basis points from 79.7% this time last year.West Africa is thriving, adding four active rigs over the past month

(7.6% increase) to 57. Meanwhile the region only added one loose rig, pushing utilization from 82.8% to 87.7%. Things also continue to move in the Mexican GOM, where three new rigs came under contract growing the region’s actives 8.8% to 37. Like West Africa, only one new rig entered the region and utilization rose from 77.3% to 82.2%. The North Sea, US (GOM) and Persian Gulfs and Southeast Asia also saw modest gains, while Brazil lost two actives. The North Sea is now the tightest major region at 92.0%.

Offshore Rig Utilization as of January 18 Source: Rigzone

Current 1 Month Ago 1 Year Ago

RegionAvailRigs

ActRigs

Util%

AvailRigs

ActRigs

Util%

AvailRigs

ActRigs

Util%

W. Africa 65 57 87.7% 64 53 82.8% 63 56 88.9%

Far East 26 21 80.8% 25 21 84.0% 28 23 82.1%

S. Asia 34 30 88.2% 32 30 93.8% 32 25 78.1%

SE Asia 98 78 79.6% 99 77 77.8% 101 77 76.2%

Australia 12 12 100.0% 12 10 83.3% 12 7 58.3%

North Sea 88 81 92.0% 87 79 90.8% 83 71 85.5%

Medit. 19 15 78.9% 20 16 80.0% 23 19 82.6%

Persian Gulf 102 85 83.3% 102 84 82.4% 94 75 79.8%

Red Sea 11 8 72.7% 11 8 72.7% 9 8 88.9%

Mexico 45 37 82.2% 44 34 77.3% 38 30 78.9%

U.S. GoM 84 68 81.0% 84 67 79.8% 79 60 75.9%

Brazil 76 69 90.8% 76 71 93.4% 75 60 80.0%

Venezuela 10 8 80.0% 10 8 80.0% 10 9 90.0%

Other S. Am. & Carib. 8 6 75.0% 8 6 75.0% 9 6 66.7%

After acquisitions, the partners will own and operate 21 AHTSVs and PSVs.

Deep Sea netting $60 million cash in vessel sales after start-up costs.

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OilfieldServiceS 16 January 25, 2013

International Contracts •Matrix Composites & Engineering

announced six drilling riser buoyancy and installation buoyancy supply contracts with new and existing customers worth a combined $56.3 million. Four of the riser buoyancy deals will support modules with depth ratings to 12,000 feet for drillships and semisubs belonging to previous clients. The fifth will support the first ever Brazilian-built drillship. Installation buoyancy is for Chevron’s Wheatstone LNG project off northwest Australia. Deliveries will occur this year and next. Matrix reported record orders and projects production growth into 2014 to accommodate growing demand.

•Miclyn Express Offshore removed its last three vessels and crew from Iran due to international sanctions. The vessels were its AHTS the Miclyn Orion and the Express 60 and 61 service and utility crew vessels. Corporate finance and IR manager Adam Clayton told Rigzone an “immediate, unannounced” withdrawal was used to ensure employee safety and vessel recovery. The vessels are awaiting alternate assignment in the UAE. Miclyn hopes to earn better returns elsewhere in the Middle East, but doubts it will recover $5.4 million in receivables and deposits.

•November North Sea OSV cargo spot rates fell 34% to a 2012 low ~$10,684, while OSV rig move spot rates fell 33% to ~$18,104, according to Seabrokers Group. Iberia Capital Partners predicts a Q4 drop in spot rates with many rigs avoiding winter moves, but said North Sea rates were below its expectations. That said, Iberia is bullish on the North Sea in the long-term with successful licensing rounds taking place and 15 rigs expected to enter the region by 2015 (including five floaters and five jackups this year).

•Welltec won a three-year contract with Total Angola to provide conveyance and intervention services. The deal includes two one-year options. The company claims to be the “pioneer and market leader of robotic conveyance and intervention technologies and methodologies” and says its tech and services increase intervention flexibility and reduce mobilization time vs. CT or jointed pipe. It also reduces offshore lifting operations, personnel and footprint.

TGS announces nearly 6,000 sq mi in new 3D multiclient TGS announced a number of 3D multiclient seismic projects and 3D vessel

charters for 2013. All-in project coverage comes in just under 6,000 square miles. The company is undertaking a 2,700-sq-mi survey in the Central Gulf of Mexico called the Amerigo 3D study. Amerigo will cover the eastern Central Gulf through Lloyd

Ridge, Desoto Canyon and Atwater Valley. Data will be acquired using a Fugro C-class vessel, while processing will use TGS’s new Clari-Fi broadband technology. Acquisition should be complete next

quarter, while preliminary data will be available in Q3. SVP of Western Hemisphere activity Rod Starr said industry support of Amerigo indicated increasing interest in the region.

Off Liberia, TGS began its Sunfish survey covering up to 3,012 sq mi of source-prone, syn-rift and early post-rift sequences in the Harper Basin. The company will use the 12-streamer Polarcus Asima under a six-month charter, with data available in 4Q13 before Liberia’s 2013 bid round.

TGS is undertaking another survey, The Three Bears, off Northwest Australia covering ~178 sq mi of the Carnarvon Basin. Adjacent to the development-stage Clio and Gorgon gas fields, the survey will increase TGS’s northwest Australia seismic coverage beyond 6,750 sq mi. TGS is also reprocessing a study which covered 1,680 sq mi of Exmouth Plateau data. Three Bears data will be acquired

with the M/V Geo Caspian, with data available next quarter.

Onshore, TGS sub Arcis Seismic Solutions began the Ille Lake survey of 70 sq mi of the Deep Basin in central Alberta. The survey will evaluate multiple zones of the Cardium, Upper and Lower Mannville, and Duvernay. Proprietary Arcis tools will also enhance imaging and rock property assessments to support horizontal well placement decisions. Data will be available this quarter.

The company also signed multiple letters of intent to charter 3D seismic vessels for European work over the past month. The company said project details would be announced separately. It is chartering 16-streamer newbuild M/V Sanco Swift from Dolphin Geophysical under a three-month deal commencing in July. TGS is also leasing an unidentified 12-streamer from CGGVeritas Services under a six-month deal beginning in April. And it is chartering an 8-streamer from Fugro-Geoteam under a five-month deal also beginning in April.

The company projects it will generate $280 million in revenues for Q4, bringing total annual revenues up 53% YOY to $931 million. Meanwhile, it believes multi-client investments were $93 million. In 2013, TGS expects revenues to grow another 8% (from midpoint) to $970 million-$1.05 billion. It plans to spend $530-600 million on multi-client with average pre-funding of 50-60%. Contract sales should account for 5% of revenues.

International Contract Briefs

TGS notes growing industry interest in the Eastern Central GOM.

Largest survey, called Sunfish, covers over 3,000 sq mi offshore Liberia.

Chartered three 3D seismic vessels for work in Europe this summer.

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Volume 03, No. 02 17 ServiceSectOr

MULTISTATE & CROSS REGIONROCKIES MULTISTATE PROSPECTS250-Potential Wells. 50,000-Acres.WELD, LOGAN, MORGAN, ADAMS& ARAPAHOE CO., COLORADO LLARAMIE CO., WYOMING - DJ BASINNiobrara/Codell. 4,000-6,000 Ft.D&J Sands/Greenhorn. 4,000-6,000 Ft.2-D Seismic & Subsurface Geology75% OPERATED WI; 80% NRIExpected IP: 200-500 BOPD (Niobrara) DJExpected IP: 125-300 BOPD (D&J Sand) BASINWell Reserves: 125 MBO/WellProject Reserves: 31 MMBODHC: $1,500,000; Compl: $2,500,000CALL GENERATOR FOR MORE INFOL 1678DV

PATENTED EOR TECH & PROJECT2-Pilot Projects Planned.MICHIGAN & KENTUCKYMobile Exhaust Gas Technology. DVSEEKING GROUND FLOOR PARTNERProcess Recovers > 50% of OOIP. NEWInitial Investment: ~$5,000,000 TECHCONTACT SELLER TO LEARN MOREDV 9044TECH

EQUIPMENTDRILLING RIG FOR SALEReady For Immediate Delivery.2,000 HP AC. 20,000 FT. CAPACITY.American Block DKS-2600 AC EDrawworks, MaxRig IRI20 RemoteOp Iron Roughneck, Fully OutfittedCabin & VFD House, & 500 Ton NOV DRILLINGTDS11 Top Drive.Brand New. Build Out Completed 2011.SELLER HAS ASKING PRICEE 1691RIG

EQUIPMENTDRILLING RIG FOR SALECABOT 750 - 800 HP112’ Mast, 300,000# CapacityNew and Rebuilt Components EAdditional Equipment Also AvailableREADY FOR BUYER INSPECTION RIGExcellent Rig Attractive PriceSELLER HAS ASKING PRICEE 1195RIG

MIDCONTINENTWESTERN OKLAHOMA LEASEHOLD~77,000-Net Acres. ~650-Sections.ANADARKO BASIN - WOODFORDSIGNIFICANT UPSIDE POTENTIAL L>2,500 Identified Woodford (Cana) Locations.All Leasehold WI Rights in All Depths.New Entrant to Play or Bolt-On -- LEASE--- Opportunity for an Established Operator. HOLD>50% OPERATED WI FOR SALEHorizontal Woodford Prod: ~90 MMCFEDOFFERS DUE LATE FEBRUARY 2013L 1473PP

ROCKIESCENTRAL COLORADO PROSPECT20,000-Net Acres. 25,000-Gross Acres.ELBERT & EL PASO CO.DENVER BASIN LObj 1: Niobrara. 6,500 Ft.Obj 2: Codell. 6,900 Ft.Obj 3: Marmaton.Subsurface Geology Data Available. DENVER100% OPERATED WI; 80% NRI BASINExpected IP: 200-400+ BOPDWell Reserves: 200-400 MBOE/Well ---- Niobrara B-bench OnlyTotal AFE/Well: $3,000,000-$8,000,000CONTACT SELLER FOR MORE INFOL 1721DV

CENTRAL MONTANA PROSPECT300-Potential Wells. 75,000-Acres.PETROLEUM, GARFIELD, ROSEBUD-- & MUSSELSHELL COUNTIES LObj 1: Heath Shale. 4,000-6,000 Ft.Obj 2: Bakken Shale. 8,000 Ft.2-D Seismic & Subsurface Geology.75% OPERATED WI; 80% NRIEst. IP: 200-500 BOPD (Heath Shale) BAKKENEst. IP: 250 BOPD & 200 MCFD (Bakken)Well Reserves: 135 MBO/WellProject Reserves: 40 MMBODHC: $1,500,000; Compl: $2,500,000CALL GENERATOR FOR MORE INFOL 1808DV

MULTISTATE & CROSS REGIONMULTISTATE OPPORTUNITY8,000-Net Mineral Acres. 100+ Locations.KIT CARSON & CHEYENNE CO., COSHERMAN & LOGAN CO., KS DVLas Animas Arch, Niobrara Gas Field, --& Undeveloped Mississippian Lime Play.2-D Seismic & Well Control Data Available MISSSEEKING LEASING OR FARMOUT LIMEFLEXIBLE ON DEAL STRUCTURE PLAYNumerous Local Producers in the Area.CONTACT SELLER FOR MORE INFODV 1068FO

GULF COASTDEWITT CO., TX PROSPECT3-Potential Wells. 1,055-Gross Acres.GULF COAST ONSHOREMIDDLE WILCOX TREND DVObj: Holt Sand. 10,390 Ft. & M-Sand. 10,080 Ft.On Trend with Middle Wilcox Fields.3-D Seismic & Subsurface Geology50% WI AVAILABLE; 75% NRIOperations Only if 50% or Larger WI GULFExpected IP: 7.9 MMCFD COASTEst Well Reserves: 4.7 BCF & 104 MBOProject Reserves: 14.2 BCF & 313 MBODHC: $1,956,000; Compl: $1,268,000CONTACT GENERATOR FOR DETAILSDV 1752

PERMIAN BASINCROCKETT CO., TX ACREAGE ~5,660-Acres For Lease.PERMIAN BASINLeases Are All Depths. LWolfcamp & Yates Area Activity.Leases Can Deliver 75% NRI. ALLOffset Wells: 1,500 BOPD & 17.7 MMCFD DEPTHSCALL PLS FOR MORE INFOL 1010DV

MIDCONTINENTNORTHWEST KANSAS LEASEHOLD2-Areas. 1,000-1,500 Potential Locations.THOMAS, LOGAN, WALLACE, --SHERIDAN, SHERMAN & GOVE CO. LHorizontal Mississippian. <5,500 Ft. (TVD)Additional Targets: Cherokee, Lansing, ---- Kansas City, Virgilian & Niobrara.~173,000-Net Acres. Fairly Contiguous.LEASES WILL DELIVER 80% NRI MISSISSIPPIANSeeking JV Partner/Drilling PartnersProjected IP: 190 BOPD & 400 MCFDEUR(Hz. Mississippian): 318 MBOE/WellEst. Rsrvs/Well: 150+ MBO & 500 MMCFCONTACT LESSOR FOR DETAILSL 1059DV

NORTH TEXAS SALE PACKAGE ~87-Total Leases. ~7,300-Net Acres.MONTAGUE, JACK, WISE, GRAYSON,-- YOUNG, CLAY & COOKE CO. PPAtoka, Mississippian, Strawn, Marble Falls-- Bend Congl., Caddo & Baker-Viola.Avg. WI 55% & NRI 46% 113Net Production: 68 BOPD & 272 MCFD BOEDAvg Net Income: ~$180,000/MonthPLS IS BUILDING DATA ROOMPP 1651DV

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OilfieldServiceS 18 January 25, 2013

People Briefs •Anton Oilfield Services appointed

Jean Francois Poupeau as a non-executive director. He currently serves as EVP at Schlumberger.

•Nathan Conway has been named CEO of Arrow Energy Services.

•Baker Hughes appointed Achana Deskus as CIO. She previously served as VP and CIO at Ingersoll Rand.

•Cancen Oil Canada announced the departure of Neil McLennan from its board. Keith Talbot has been appointed to replace him. He joins from Weslease of Canada, where he serves as president and director.

•Poseidon Concepts announced the resignation of US Division EVP Joe Kostelecky. Operations VP Angus Jenkins has assumed management responsibilities.

•TETRA Technologies announced the departure of human resources VP Linden H. Price. Elisabeth K. Evans has been appointed to replace him. She previously served as SVP, human resources and corporate communications at Boardwalk Pipeline Partners.

Analysts' view on select stocksKey: Ticker/Current Price/52-Week Low/52-Week High/Market Cap

Upgrades:•Diamond Offshore Drilling (DO/$74.41/$55.83/$73.50/$10.35B) from

Market Perform to Market Outperform by Howard Weil. •FMC Technologies Inc. (FTI/$46.70/$36.89/$55.19/$11.09B) from Market Perform

to Market Outperform by Howard Weil.•FMC Technologies Inc. (FTI/$46.70/$36.89/$55.19/$11.09B) from Equalweight

to Overweight by Morgan Stanley.•FMC Technologies Inc. (FTI/$46.70/$36.89/$55.19/$11.09B) from Neutral to Buy

by Sterne Agee.•Superior Energy Services (SPN/$24.55/$17.54/$31.88/$3.87B) from Sector Perform

to Outperform by RBC Capital Markets.•Weatherford International (WFT/$12.62/$8.84/$18.33/$9.67B) from Neutral to

Buy by Guggenheim.

Downgrades:•Baker Hughes Inc. (BHI/$45.35/$37.08/$52.93/$19.93B) from Market Outperform

to Market Perform by Howard Weil.•Baker Hughes Inc. (BHI/$45.35/$37.08/$52.93/$19.93B) from Outperform to

Sector Perform by RBC Capital Markets.•Baker Hughes Inc. (BHI/$45.35/$37.08/$52.93/$19.93B) from Buy to Neutral by

Sterne Agee.•Basic Energy Services Inc. (BAS/$12.95/$8.52/$21.25/$513.68M) from Market

Outperform to Market Perform by Howard Weil.•Diamond Offshore (DO/$74.41/$55.83/$73.50/$10.35B) from Outperform to

Neural by Credit Suisse.•Dresser-Rand Group Inc. (DRC/$58.49/$41.01/$59.69/$4.42B) from Market

Outperform to Market Perform by Howard Weil.•FMC Technologies Inc. (FTI/$46.70/$36.89/$55.19/$11.09B) from Outperform to

Sector Perform by RBC Capital Markets. •Halliburton Co. (HAL/$37.82/$26.28/$39.19/$35.25B) from Buy to Hold by

Standpoint Research.•National Oilwell Varco Inc. (NOV/$73.68/$59.07/$89.95/$31.54B) from

Outperform to Sector Perform by RBC Capital Markets.•Precision Drilling Co. (PDS/$9.19/$5.82/$12.89/$2.54B) from Market Outperform

to Market Perform by Howard Weil.•Rowan Companies Inc. (RDC/$34.53/$28.62/$39.40/$4.28B) from Focus Stock

to Market Outperform by Howard Weil. •Superior Energy Services Inc. (SPN/$24.52/$17.54/$31.88/$3.87B) from Buy to

Neutral by Sterne Agee.•Tenaris SA (TS/$42.49/$29.79/$44.88/$25.11B) from Overweight to Equal Weight

by Barclays.•Tesco (TESO/$12.08/$8.70/$16.88/$468.18M) from Buy to Hold by Dahlman Rose.

Key: Ticker/Current Price/52-Week Low/52-Week High/Market CapSource: Yahoo! Finance

Who's Hot/Who's Not — As Of January 22

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FRIO CO., TX ACREAGE~1,970-Net Mineral Acres On Trend.EAGLE FORD SHALE PLAYLIQUID RICH SOUTH TEXAS LEagle Ford, Buda, Austin Chalk & PearsallProposed 5,000 Ft. Effective Lateral Lengths100% OPERATED WI; 72% NRIOver 200' of Combined Pay >5% PorosityAmple Upside for Long Lateral DevelopmentWell Rsrvs (Eagle Ford): 351 MBOE/WellTotal Eagle Ford Potential: >3.5 MMBOCompleted Well Cost: +/- $8,300,000CALL PLS FOR MORE INFOL 1819DV

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DALLAS JAN 16 ■ DENVER APR 18 ■ CALGARY APR 30 ■ HOUSTON MAY 15 ■ DALLAS JUL 18 ■ CALGARY SEP 19 ■ HOUSTON OCT 02 ■ DENVER NOV 05

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