PPG - Contractors24/8/01
Preliminary Report
AUPEC Survey
WSCA
PPG - Contractors24/8/01
Gross Revenues as a % of 1998
60%
70%
80%
90%
100%
110%
1996 1997 1998 1999 2000 2001
UK
World Wide
EBITDA as a % of 1998
40%
60%
80%
100%
1996 1997 1998 1999 2000 2001
UK
World Wide
1. Over 5 years UK market has fallen from 5% to 3.9% of the global total
2. Slower recovery in earnings is indicative of pressure on margins
PPG - Contractors24/8/01
UK Capital Investment
90
110
130
150
170
1996 1997 1998 1999 2000 2001
`
$MWorld Wide Capital Investment
2.0
2.5
3.0
3.5
4.0
1996 1997 1998 1999 2000 2001
`
$Bn
1. Capital investment in 2000 is 54% of 1998 peak with little improvement for 2001
2. Globally, drop was to 61% but has recovered sharply
PPG - Contractors24/8/01
UK Ratio of NBV to GBV(8 WSCA members only)
0%
10%
20%
30%
40%
50%
60%
1996 1997 1998 1999 2000 2001
1. Decline in NBV/GBV from 57% in 1996 to 25% today is an alarming trend
2. The UK sector asset base is getting older (fully depleted within 2 to 3 years!)
PPG - Contractors24/8/01
UK New Technology Spend
0
10
20
30
40
50
60
1996 1997 1998 1999 2000 2001
$M
World Wide New Technology Spend
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1996 1997 1998 1999 2000 2001
$Bn
1. Globally there was a modest 15% cutback in global spend.
2. However in the UK the drop was 42% and not recovering
PPG - Contractors24/8/01
UKCS Employee's
6,000
7,000
8,000
1997 1998 1999 2000 2001
N.B. Exludes Co.'s that have expanded through acquisitions
% of UKCS Used for Intnl. Work
24%
26%
28%
30%
32%
34%
1997 1998 1999 2000 2001
1. Reduction in headcount recovering in 2001 as companies try and recruit
2. An increase from 27% to 32% of people based in the UK but working internationally
PPG - Contractors24/8/01
Graduate Engineers
540560580600620640660680700720740
1997 1998 1999 2000 2001
Technicians (HND)
500
550
600
650
700
750
800
850
900
1997 1998 1999 2000 2001
1. Sharp decline through 1998 to 2000
2. Recruitment started, but experience level decreased in UKCS
PPG - Contractors24/8/01
Surface Units
300
350
400
450
500
550
600
650
700
1997 1998 1999 2000 2001
Downhole Units
1,200
1,250
1,300
1,350
1,400
1,450
1,500
1,550
1997 1998 1999 2000 2001
1. Resource flight - 15% to 20%
2. Continuing
3. Helped with efficiencies; limited “stretch” left in the system
PPG - Contractors24/8/01
Closing points:
1. Report will be factual, with no WSCA recommendations:• Financial performance of WSCA companies in the UKCS has suffered• Capital investment has dropped• Resource flight is proven
2. Published mid September, a full report with many other interesting comments.
3. WSCA will develop recommendations to coincide with release of report.
• The UKCS followed the world during the downturn. Will it recover as before?• Resources can return but at this time the UKCS appears unattractive.• With the expected increased work program through the end of 2001, can the
well services sector meet expected demand?