2016-03-10_negatives create positive spin - d. gacicia
TRANSCRIPT
Negatives Create Positive Spin On Cyclical Wheel Lowering Rig Count Forecasts, Supply Response Looms
Darren Gacicia Managing Director
Senior Oilfield Services Analyst KLR Group, LLC 713-352-0887
For definitions and the distribution of analyst ratings, and other disclosures, please refer to pages 47 - 48 of this report
Raising Price Targets, Lowering Rig Count Forecasts Focuses Market on Looming Supply Response CAPEX Cuts & Rig Count Forecast Reductions Put a Positive Spin on the Cyclical Wheel. Our bullish initiation (Cyclical Wheel is Turning, 12/14/15) called for a production response to lower spending and upstream activity as the key positive catalyst for the oil services group. Evidence from EIA data of a production correction in the US has begun to emerge (pg .18), even as domestic rig counts continue to find new lows. In our view, our forecast for international rig counts, incongruent with production forecasts, increase chances for negative international supply revisions (pgs. 28-29). Tightening of credit spreads in high yield markets (pg. 10), as companies put a bid under discounted bonds, and a rally in oil services shares have begun to signal belief in the inevitability of tighter commodity market balances. At current depressed levels, incremental negative CAPEX and rig count news may start to act as positive catalysts for a faster commodity market recovery. Negative sentiment may not reverse immediately and volatility may persist, but we feel investors should take heed of the high yield and stock market rally for the group a sign post of an improvement in risk/reward. We remain buyers of oil services shares. Please see pgs. 7-8 for our preferences amongst stocks.
Raising Price Target’s to Reflect Tighter Credit Spreads, Lowering EPS to Reflect Lower Activity Forecast. We are raising a number of price targets to calibrate tighter credit spreads and in turn lower WACC’s. In our view, a focus on NPV valuations anchored on mid-cycle returns, trump 2016/2017 estimates revisions that represent a refinement of trough earnings on a lower rig count forecast. Company nuances aside, revenues across our group come down with respect to lower activity expectations and reduced operating margins to adjust for lower absorption of capacity and/or potential for pricing power that likely moves into 2017. We outline our price target changes on pg. 7 and EPS changes on pgs. 11-14.
Flattening Trajectory of North American Rig Count off 2Q/16 Bottom. We are lowering our North American rig count forecast to reflect the impact on our proprietary US land rig count model from a lower oil and natural gas forecast since our December initiation (pg. 3) and a narrower outspend of cash flow by E&P companies in 2016/2017 (pg. 19). We now anticipate US land rig counts find a bottom in 2Q/16 at an average rig count of 445, increasing to a 4Q/16 average of 640, assuming oil prices end the year above $50. In a year of balance sheet repair, we forecast funding gaps closer to ~10% vs. 30%-40% in recent quarters. Low commodity prices and a deleveraging of the system gives us confidence that 2016 should see the bottom of the rig count. The dramatic decline in rigs counts during 2015/2016 support the KLR forecast for a ~2 MMbpd decline in US liquids production from peak (2Q/15) to trough (2H/17), especially in light of recent reports of production declines from the EIA as markets come into balance (pg. 18). We are forecasting an average oil price of $67.50 in 2017 and see an acceleration of recovery to an average of 1,070 rigs operating in 4Q/17. Please see pages 16-22 for greater detail, including our rig count sensitivity analysis for the oil price and funding gaps on page 22.
Land Rig and Pressure Pumping Markets Tighten in 2017. A steeper activity decline and longer dated recovery may push out an improvement in market balances for the land rig and pressure pumping segments into 2017. That said, we see both markets tighten meaningfully by 3Q/17. We continue to favor land rig and pressure pumping stocks for exposure to a North American recovery. Please see pages 23-26 for our updated analysis of market dynamics and utilization for the land rig and pressure pumping markets.
International Rig Count Reductions Signal Further Negative Supply Revisions. We are lowering our international rig count assumptions in sympathy to 20%+ budget cuts from IOCs (and likely NOCs) and a further collapse of 1Q/16 international rig counts, excluding the Middle East & FSU (pgs. 3, 27-39). Our rig count/production forecasts completely disconnects from a multi-year trend of lower international production/rig metrics (pgs. 28-29). In our view, our forecasted peak to trough ~38% decline in international rig counts (excl. Middle East & FSU), over a 10+ quarter period, puts ~27 MMbpd of supply at risk for potential negative revisions. Heightened probabilities of non-OPEC supply revisions (excl. US) remain a key catalyst within our bullish thesis for the oilfield services group (Cyclical Wheel Is Turning, 12/14/15).
OPEC Production “Freeze” vs. Rig Counts. OPEC rig counts are down ~13% from Feb 2015 peak (pg. 30). Middle East rigs counts are down sequentially, both quarterly (-2%) and monthly (-1%) (pg. 34). Saudi rigs counts have remained flattish for the last six months (pg. 33). The KLR forecast calls for OPEC production to increase ~1.9 MMbpd by 4Q/18 from 4Q/15, entirely from Middle East production growth. If production/rig metrics hold for the Middle East (pg. 33), we would assume the region would need to add ~70 rigs in the coming quarters. Given recent OPEC discussions of production “freezes”, we question whether OPEC’s market share goals have yielded to cash flow constraints at current oil prices and minimal spare capacity. Although expected Iranian production increases move the needle toward ~1.9 MMbpd, we continue to monitor rig activity with respect to Middle East production growth aspirations.
March 10, 2016 2
KLR Rig Count Forecast Sees Further 2016 Activity Downside, Recovery Accelerates in 2017
Source: BHI; Industry sources; KLR Group, LLC Forecasts
2003 2004 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E
US Horizontal Land 180 285 393 553 454 816 1,072 1,151 1,102 1,275 748 440 764 919 933 996
US Total Land 1,263 1,537 1,670 1,795 1,048 1,493 1,825 1,871 1,697 1,793 944 549 955 1,185 1,245 1,328
Canada Land 456 471 343 382 221 349 420 364 353 379 194 145 150 158 159 161
Land 1,719 2,008 2,012 2,176 1,269 1,842 2,245 2,235 2,050 2,172 1,138 694 1,105 1,343 1,404 1,488
Y/Y 17% 0% 8% (42%) 45% 22% (0%) (8%) 6% (48%) (39%) 59% 21% 5% 6%
Offshore 93 90 73 65 44 32 32 47 56 57 36 27 30 41 44 42
Y/Y (4%) (19%) (10%) (33%) (28%) 2% 48% 18% 2% (38%) (24%) 10% 39% 7% (4%)
North America 1,812 2,098 2,085 2,241 1,313 1,874 2,277 2,282 2,106 2,230 1,173 721 1,135 1,384 1,448 1,531
Land 251 260 283 305 281 308 338 342 332 323 257 185 197 295 320 335
Y/Y 4% 9% 8% (8%) 10% 10% 1% (3%) (3%) (20%) (28%) 6% 50% 8% 5%
Offshore 64 63 72 79 75 76 86 82 86 74 62 43 51 57 62 60
Y/Y (2%) 13% 10% (4%) 0% 13% (5%) 6% (14%) (17%) (31%) 19% 12% 8% (3%)
Latin America 316 324 355 384 356 383 424 423 419 397 319 228 247 352 382 395
Land 25 26 28 49 36 45 70 73 85 95 71 60 61 73 73 70
Y/Y 3% 8% 74% (26%) 24% 56% 4% 18% 12% (26%) (15%) 2% 19% 1% (4%)
Offshore 45 52 50 49 47 49 48 46 50 50 46 32 32 38 40 44
Y/Y 15% (3%) (1%) (4%) 4% (3%) (3%) 7% 0% (7%) (31%) 2% 17% 7% 10%
Europe 70 77 78 98 84 94 118 119 135 145 117 92 94 110 113 115
Land 36 42 51 50 48 57 51 64 90 94 74 69 66 85 97 102
Y/Y 18% 22% (3%) (3%) 18% (11%) 26% 39% 5% (22%) (6%) (5%) 29% 14% 5%
Offshore 14 16 15 15 13 26 27 31 36 40 32 22 34 37 34 40
Y/Y 14% (6%) 2% (13%) 94% 3% 18% 14% 11% (19%) (33%) 60% 8% (8%) 16%
Africa 50 58 66 65 62 83 78 96 125 134 106 91 100 122 131 142
Land 116 119 124 134 136 150 151 144 142 138 126 114 120 144 151 150
Y/Y 2% 4% 8% 2% 10% 1% (4%) (1%) (3%) (9%) (10%) 5% 20% 5% (1%)
Offshore 109 109 117 118 107 120 106 97 103 116 93 68 74 91 98 103
Y/Y 1% 7% 1% (9%) 12% (12%) (8%) 7% 12% (20%) (27%) 8% 23% 8% 5%
Asia/Pacific 225 228 241 252 243 269 256 241 246 254 220 182 194 234 249 252
Land 214 209 233 246 220 229 253 309 329 360 356 350 362 393 403 395
Y/Y (3%) 12% 6% (11%) 4% 10% 22% 6% 10% (1%) (1%) 3% 9% 2% (2%)
Offshore 33 29 32 34 32 35 39 47 44 46 50 55 66 77 88 99
Y/Y (13%) 11% 4% (4%) 10% 10% 20% (6%) 6% 9% 9% 20% 17% 14% 13%
Middle East 248 238 265 280 252 265 291 356 372 406 406 405 428 470 490 493
International Land 643 656 720 784 722 789 863 932 978 1,011 884 779 806 989 1,044 1,052
Y/Y 2% 10% 9% (8%) 9% 9% 8% 5% 3% (13%) (12%) 3% 23% 5% 1%
International Offshore 265 269 286 295 275 306 304 303 318 326 283 219 257 299 322 346
Y/Y 2% 6% 3% (7%) 11% (0%) (0%) 5% 2% (13%) (23%) 18% 17% 7% 7%
International Total 908 925 1,005 1,079 997 1,094 1,167 1,234 1,296 1,337 1,167 998 1,063 1,289 1,366 1,397
Y/Y 2% 9% 7% (8%) 10% 7% 6% 5% 3% (13%) (14%) 7% 21% 6% 2%
Eastern Hemishere 592 602 650 695 640 711 743 811 878 939 848 770 816 937 984 1,003
Y/Y 2% 8% 7% (8%) 11% 5% 9% 8% 7% (10%) (9%) 6% 15% 5% 2%
Western Hemisphere 2,128 2,421 2,440 2,626 1,669 2,257 2,701 2,706 2,525 2,627 1,492 949 1,382 1,736 1,830 1,925
Y/Y 14% 1% 8% (36%) 35% 20% 0% (7%) 4% (43%) (36%) 46% 26% 5% 5%
World Land 2,361 2,664 2,732 2,960 1,991 2,631 3,107 3,167 3,028 3,184 2,021 1,473 1,911 2,332 2,448 2,540
Y/Y 13% 3% 8% (33%) 32% 18% 2% (4%) 5% (37%) (27%) 30% 22% 5% 4%
World Offshore 359 359 358 361 319 337 336 350 375 383 319 246 287 341 366 388
Y/Y 0% (0%) 1% (11%) 6% (0%) 4% 7% 2% (17%) (23%) 17% 19% 7% 6%
March 10, 2016 3
Previous KLR Rig Count Forecast
KLR Global Rig Count Forecast
Source: BHI; Industry sources; KLR Group, LLC Forecasts
2003 2004 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E
Land 1,719 2,008 2,012 2,176 1,269 1,842 2,245 2,235 2,050 2,172 1,121 1,031 1,454 1,488 1,567 1,654
Y/Y 17% 0% 8% (42%) 45% 22% (0%) (8%) 6% (48%) (8%) 41% 2% 5% 6%
Offshore 93 90 73 65 44 32 32 47 56 57 35 24 26 35 37 35
Y/Y (4%) (19%) (10%) (33%) (28%) 2% 48% 18% 2% (39%) (31%) 10% 35% 4% (4%)
North America 1,812 2,098 2,085 2,241 1,313 1,874 2,277 2,282 2,106 2,230 1,155 1,055 1,480 1,523 1,604 1,689
Land 251 260 283 305 281 308 338 342 332 323 267 272 274 297 303 317
4% 9% 8% (8%) 10% 10% 1% (3%) (3%) (17%) 2% 1% 8% 2% 5%
Offshore 64 63 72 79 75 76 86 82 86 74 61 41 48 54 58 56
(2%) 13% 10% (4%) 0% 13% (5%) 6% (14%) (18%) (32%) 18% 11% 8% (3%)
Latin America 316 324 355 384 356 383 424 423 419 397 328 313 322 351 361 373
Land 25 26 28 49 36 45 70 73 85 95 67 59 63 85 87 91
3% 8% 74% (26%) 24% 56% 4% 18% 12% (30%) (12%) 7% 34% 2% 5%
Offshore 45 52 50 49 47 49 48 46 50 50 46 33 34 39 40 43
15% (3%) (1%) (4%) 4% (3%) (3%) 7% 0% (8%) (28%) 4% 15% 3% 8%
Europe 70 77 78 98 84 94 118 119 135 145 113 92 97 124 127 134
Land 36 42 51 50 48 57 51 64 90 94 75 61 52 66 77 79
18% 22% (3%) (3%) 18% (11%) 26% 39% 5% (21%) (18%) (15%) 29% 16% 3%
Offshore 14 16 15 15 13 26 27 31 36 40 32 24 35 37 34 39
14% (6%) 2% (13%) 94% 3% 18% 14% 11% (19%) (25%) 47% 4% (8%) 15%
Africa 50 58 66 65 62 83 78 96 125 134 107 85 87 103 111 118
Land 116 119 124 134 136 150 151 144 142 138 127 121 126 162 176 181
2% 4% 8% 2% 10% 1% (4%) (1%) (3%) (8%) (5%) 4% 29% 8% 3%
Offshore 109 109 117 118 107 120 106 97 103 116 95 86 87 103 110 111
1% 7% 1% (9%) 12% (12%) (8%) 7% 12% (18%) (10%) 2% 17% 8% 1%
Asia Pac 225 228 241 252 243 269 256 241 246 254 222 206 213 265 286 292
Land 214 209 233 246 220 229 253 309 329 360 353 346 349 414 442 457
(3%) 12% 6% (11%) 4% 10% 22% 6% 10% (2%) (2%) 1% 18% 7% 3%
Offshore 33 29 32 34 32 35 39 47 44 46 49 58 68 77 87 97
(13%) 11% 4% (4%) 10% 10% 20% (6%) 6% 6% 18% 17% 14% 13% 11%
Middle East 248 238 265 280 252 265 291 356 372 406 402 404 417 491 529 554
International Land 643 656 720 784 722 789 863 932 978 1,011 889 859 864 1,024 1,085 1,126
Y/Y 2% 10% 9% (8%) 9% 9% 8% 5% 3% (12%) (3%) 1% 18% 6% 4%
International Offshore 382 386 415 429 387 424 432 484 517 565 525 489 506 592 626 651
Y/Y 1% 8% 3% (10%) 9% 2% 12% 7% 9% (7%) (7%) 4% 17% 6% 4%
International Total 1,024 1,042 1,134 1,212 1,109 1,213 1,295 1,415 1,495 1,576 1,414 1,348 1,370 1,616 1,711 1,777
Y/Y 2% 9% 7% (9%) 9% 7% 9% 6% 5% (10%) (5%) 2% 18% 6% 4%
Eastern Hemishere 592 602 650 695 640 711 743 811 878 939 843 788 814 982 1,053 1,099
Y/Y 2% 8% 7% (8%) 11% 5% 9% 8% 7% (10%) (7%) 3% 21% 7% 4%
Western Hemisphere 2,128 2,421 2,440 2,626 1,669 2,257 2,701 2,706 2,525 2,627 1,483 1,368 1,803 1,874 1,965 2,062
Y/Y 14% 1% 8% (36%) 35% 20% 0% (7%) 4% (44%) (8%) 32% 4% 5% 5%
March 10, 2016 4
KLR Oil & Natural Gas Price Forecast Imbedded in Our Forecast
Brent Crude Oil ($/bbl)1
NYMEX WTI Crude Oil ($/bbl)1
1Based on daily average price Sources: Bloomberg; KLR Group, LLC Forecasts
NYMEX Natural Gas ($/mmbtu)2
1Based on settlement price on last trading day each month Sources: Bloomberg; KLR Group, LLC Forecasts
2014 1Q15 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 4Q16 2016 2017 2018 2019 2020
KLR Group $99.55A $55.38A $63.39A $51.37A $44.71A $53.71A $38.50 $43.50 $51.00 $56.00 $47.25 $70.00 $86.00 $86.00 $86.00
Futures Market $35.43 $40.99 $42.54 $43.89 $40.71 $45.77 $48.17 $49.77 $51.17
Consensus Forecast $34.00 $37.50 $42.50 $46.00 $40.00 $54.00 $61.00 $62.00 $65.00
2014 1Q15 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 4Q16 2016 2017 2018 2019 2020
KLR Group $93.00A $48.80A $57.80A $46.70A $42.15A $48.86A $37.50 $42.50 $50.00 $55.00 $46.25 $67.50 $82.50 $82.50 $82.50
Futures Market $33.44 $40.13 $41.96 $42.82 $39.58 $44.63 $46.52 $47.56 $48.43
Consensus Forecast $33.00 $36.50 $42.00 $45.92 $39.50 $52.53 $60.00 $60.00 $65.00
2014 1Q15 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 4Q16 2016 2017 2018 2019 2020
KLR Group $4.41A $2.99A $2.64A $2.77A $2.28A $2.67A $2.09A $2.65 $2.95 $3.25 $2.74 $3.80 $4.00 $4.00 $4.00
Futures Market $1.82 $2.05 $2.32 $2.07 $2.63 $2.71 $2.75 $2.83
Consensus Forecast $2.31 $2.50 $2.80 $2.42 $3.00 $3.25 $3.01 $3.51
March 10, 2016 5
Company Price Target & EPS Changes
March 10, 2016 6
Coverage Breakdown & Preference Ranking
Sources: KLR Group, LLC Forecasts; Factset
Company Ticker Rating
B/S & Covenant
Risk
Market Cap.
(MM)
Last
Close
Price
Current
Price
Target
Previous
Price
Target Upside North America International Business Mix
National Oilwell Varco NOV Buy No $ 11,793 $ 31.38 $ 48.00 $ 48.00 53% Mixed Mixed Rig Equipment, Diversified Equipment, Diversified Servies, Oilfield Consumables
Nabors Industries NBR Buy No $ 2,320 $ 8.24 $ 12.00 $ 11.00 46% Mixed Mixed Land Contract Driller
Halliburton HAL Buy No $ 29,776 $ 34.69 $ 48.00 $ 44.00 38% Majority Minority Diversified Services & Equipment
Superior Energy SPN Buy No $ 1,846 $ 12.19 $ 17.00 $ 14.00 39% Majority Minority Diversified Services
Core Labs CLB Buy No $ 4,903 $115.70 $ 155.00 $ 150.00 34% Mixed Mixed Reservoir Analysis, Oilfield Consumables
Forum Energy FET Buy No $ 1,159 $ 12.77 $ 18.00 $ 15.00 41% Majority Minority Diversified Equipment
Patterson-UTI PTEN Buy No $ 2,593 $ 17.62 $ 24.00 $ 22.00 36% Majority -- Land Contract Driller
Schlumberger SLB Buy No $ 91,172 $ 72.75 $ 103.00 $ 91.00 42% Minority Majority Diversified Services & Equipment, Subsea Equipment (CAM)
Helmerich & Payne HP Buy No $ 6,720 $ 62.22 $ 83.00 $ 75.00 33% Majority Minority Land Contract Driller
Frank's International FI Buy No $ 2,398 $ 15.44 $ 21.00 $ 20.00 36% Mixed Mixed Offshore Services & Equipment
Oil States OIS Buy No $ 1,510 $ 29.34 $ 43.00 $ 43.00 47% Mixed Mixed Offshore & Onshore Services & Equipment
FMC Technologies FTI Buy No $ 5,734 $ 25.27 $ 41.00 $ 40.00 62% Mixed Mixed Offshore & Onshore Equipment
Transocean RIG Buy Yes $ 4,078 $ 11.17 $ 19.00 $ 15.00 70% Mixed Mixed Offshore Driller
Newpark Resources NR Buy Yes $ 345 $ 4.10 $ 5.50 $ 5.25 34% Mixed Mixed Offshore & Onshore Services & Equipment
Ensco ESV Buy No $ 2,466 $ 10.48 $ 16.50 $ 14.00 57% Mixed Mixed Offshore Driller
Noble Corp. NE Buy No $ 2,758 $ 11.34 $ 16.50 $ 11.50 46% Mixed Mixed Offshore Driller
Rowan Companies RDC Buy No $ 1,970 $ 15.78 $ 22.00 $ 17.00 39% Mixed Mixed Offshore Driller
Flotek Industries FTK Buy No $ 407 $ 7.60 $ 10.75 $ 8.75 41% Majority Minority Oilfield Consumables
C&J Energy Services CJES Buy Yes $ 221 $ 1.84 $ 3.00 $ 4.00 63% Majority -- Pressure Pumping, Oilfield Services
Dril-Quip DRQ Accumulate No $ 2,213 $ 58.32 $ 70.00 $ 68.00 20% Mixed Mixed Subsea Equipment, Rig Equipment
Oceaneering Intl OII Accumulate No $ 2,806 $ 28.68 $ 35.00 $ 32.00 22% Mixed Mixed Offshore Services & Equipment
Diamond Offshore DO Accumulate No $ 2,926 $ 21.33 $ 25.00 $ 21.00 17% Mixed Mixed Offshore Driller
Weatherford WFT Accumulate Yes $ 5,717 $ 6.50 $ 7.50 $ 8.00 15% Mixed Mixed Diversified Services & Equipment
Atwood Oceanics ATW Accumulate Yes $ 595 $ 9.19 $ 11.25 $ 6.75 22% Mixed Mixed Offshore Driller
US Silica SLCA Hold No $ 1,067 $ 19.97 $ 22.00 $ 17.00 10% Majority -- North American Proppant
Carbo Ceramics CRR Hold Yes $ 466 $ 19.83 $ 21.25 $ 15.25 7% Majority -- North American Proppant
Fairmount Santrol FMSA Hold Yes $ 408 $ 2.53 $ 2.60 $ 2.30 3% Majority -- North American Proppant
Pacific Drilling PACD Hold Yes $ 128 $ 0.61 $ 0.55 $ 0.55 (9%) Mixed Mixed Offshore Driller
Seadrill SDRL Reduce Yes $ 1,948 $ 3.95 $ 3.25 $ 1.85 (18%) Mixed Mixed Offshore Driller
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March 10, 2016 7
Industry & Company Comparable Valuation Analysis
Source: Factset, Company Filings; KLR Group, LLC Forecasts
Note: Currency in ($ US), unless otherwise indicated
Company Ticker
3/9/16
Price Rating KLR Target Upside WACC
Mkt Cap
(MM)
EV
(MM)2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017
Diversified Oilfield Services
Schlumberger SLB $72.75 B $103.00 42% 9% $91,172 $92,469 $3.37 $1.71 $2.87 21.6X 42.5X 25.3X 9.4X 11.9X 9.1X 1.9X 2.4X 1.9X 6% 9% 7%
Halliburton HAL $34.69 B $48.00 38% 10% $29,776 $29,001 $1.56 $0.25 $1.13 22.2X -- 30.7X 7.0X 9.5X 5.7X 3.7X 6.7X 4.0X 18% 32% 43%
Weatherford WFT $6.50 A $7.50 15% 15% $5,717 $12,388 ($0.33) ($0.55) ($0.11) (19.9X) (11.9X) (58.6X) 9.5X 15.6X 9.1X 5.7X 9.0X 4.8X 56% 45% 45%
8.0X 15.3X (0.9X) 8.6X 12.3X 8.0X 3.8X 6.0X 3.6X 27% 29% 32%
Mid/Small Cap Oilfield Services
Core Laboratories CLB $115.70 B $155.00 34% 4% $4,903 $4,587 $3.17 $1.67 $2.54 36.5X 69.2X 45.5X 21.2X 34.0X 25.0X 2.0X 3.2X 2.3X 9% 9% 9%
Franks International FI $15.44 B $21.00 36% 9% $2,398 $2,682 $0.62 $0.24 $0.52 24.9X 64.2X 29.4X 8.4X 14.8X 10.3X 0.0X 0.0X 0.0X (22%) (21%) (19%)
Superior Energy Services SPN $12.19 B $17.00 39% 20% $1,846 $2,327 ($1.29) ($2.00) ($1.24) (9.5X) (6.1X) (9.8X) 5.5X 11.5X 6.0X 3.8X 8.0X 4.2X 46% 50% 57%
Oil States International OIS $29.34 B $43.00 47% 11% $1,510 $1,375 $0.84 ($0.85) ($0.15) 34.9X (34.5X) -- 7.1X 25.4X 14.0X 0.7X 2.4X 1.3X 7% (4%) 3%
Flotek Industries FTK $7.60 B $10.75 41% 15% $407 $0 ($0.02) ($0.36) $0.49 -- (21.1X) 15.6X -- -- -- 4.1X (3.1X) 0.9X -- -- --
Newpark Resources NR $4.10 B $5.50 34% 21% $345 $394 ($0.19) ($0.40) $0.14 (21.7X) (10.2X) 29.0X 12.7X -- 5.8X 5.8X -- 2.6X 18% (6%) (3%)
C&J Services CJES $1.84 B $3.00 63% 34% $221 $1,351 ($1.85) ($2.19) $0.19 (1.0X) (0.8X) 9.7X 27.9X -- 3.8X 23.9X -- 3.3X 84% 86% 82%
10.7X 8.7X 19.9X 11.8X 17.2X 9.3X 5.8X 2.1X 2.1X 23% 19% 21%
Proppant
US Silica SLCA $19.97 H $22.00 10% 15% $1,067 $1,251 $0.08 ($0.67) $0.01 -- (29.8X) -- 13.3X 29.0X 13.9X 5.2X 11.4X 5.5X 15% 16% 20%
Carbo Ceramics CRR $19.83 H $21.25 7% 19% $466 $379 ($1.89) ($3.91) ($2.20) (10.5X) (5.1X) (9.0X) (44.3X) (6.3X) (47.1X) (10.3X) (1.5X) (14.0X) 2% 6% 22%
Fairmount FMSA $2.53 H $2.60 3% 22% $408 $1,265 $0.10 ($0.30) ($0.10) 25.9X (8.5X) (24.6X) 9.8X 61.8X 14.8X 9.6X 60.7X 14.5X 82% 81% 83%
7.7X (14.5X) (16.8X) (7.1X) 28.2X (6.1X) 1.5X 23.5X 2.0X 33% 34% 42%
Oilfield Equipment & Manufacturers
National Oilwell Varco NOV $31.38 B $48.00 53% 10% $11,793 $12,093 $2.79 ($0.37) $0.79 11.2X (84.0X) 39.9X 5.1X 17.2X 9.5X 1.7X 5.6X 3.1X 15% 5% 6%
FMC Technologies FTI $25.27 B $41.00 62% 11% $5,734 $5,697 $2.23 $1.19 $1.40 11.3X 21.2X 18.1X 5.5X 7.6X 7.1X 1.1X 1.5X 1.4X 4% (2%) (7%)
Oceaneering OII $28.68 A $35.00 22% 12% $2,806 $3,385 $2.86 $1.60 $1.66 10.0X 17.9X 17.3X 5.0X 6.9X 6.6X 1.2X 1.6X 1.5X 12% 4% 5%
Dril-Quip DRQ $58.32 A $70.00 20% 10% $2,213 $1,795 $4.87 $2.62 $2.00 12.0X 22.2X 29.2X 6.6X 11.3X 14.4X -- -- -- (21%) (32%) (31%)
Forum Energy FET $12.77 B $18.00 41% 15% $1,159 $0 $0.42 ($0.75) ($0.23) 30.6X (17.0X) (54.9X) -- -- -- 2.7X -- 6.8X -- -- --
15.0X (7.9X) 9.9X 4.4X 8.6X 7.5X 1.3X 2.2X 2.6X 3% (6%) (7%)
Offshore Contract Drillers
Transocean RIG $11.17 B $19.00 70% 18% $4,078 $9,354 $3.86 ($0.01) ($0.12) 2.9X -- (93.7X) 3.0X 7.0X 7.5X 2.7X 5.6X 5.6X 66% 63% 60%
Diamond Offshore DO $21.33 A $25.00 17% 13% $2,926 $5,059 $3.09 $1.29 $0.34 6.9X 16.5X 63.4X 4.7X 6.6X 8.1X 2.5X 3.9X 4.7X 51% 52% 45%
ENSCO ESV $10.48 B $16.50 57% 17% $2,466 $6,751 $4.56 $1.73 $1.34 2.3X 6.1X 7.8X 3.3X 5.3X 5.8X 2.9X 4.7X 5.0X 68% 65% 62%
Noble NE $11.34 B $16.50 46% 15% $2,758 $5,560 $2.62 $0.24 $0.20 4.3X 47.5X 57.7X 3.3X 5.6X 5.6X 2.7X 4.5X 4.5X 72% 74% 71%
Rowan RDC $15.78 B $22.00 39% 14% $1,970 $3,656 $3.53 $1.60 $0.50 4.5X 9.9X 31.7X 3.6X 4.5X 5.5X 2.6X 3.3X 4.1X 60% 45% 34%
Seadrill SDRL $3.95 R $3.25 (18%) 26% $1,948 $11,723 $2.00 $1.02 $0.62 2.0X 3.9X 6.4X 5.0X 6.8X 8.1X 4.7X 5.4X 6.8X 82% 73% 78%
Atwood Oceanics ATW $9.19 A $11.25 22% 25% $595 $1,753 $7.74 $4.28 ($0.80) 1.2X 2.1X (11.5X) 2.2X 3.2X 9.1X 2.2X 2.9X 8.3X 90% 68% 69%
Pacific Drilling PACD $0.61 H $0.55 (9%) 50% $128 $2,776 $0.82 ($0.60) ($0.99) 0.7X (1.0X) (0.6X) 4.6X 7.7X 12.5X 4.7X 7.6X 12.0X 100% 92% 83%
3.1X 12.1X 7.7X 3.7X 5.8X 7.8X 3.1X 4.7X 6.4X 73% 67% 63%
Onshore Drilling
Helmerich & Payne HP $62.22 B $83.00 33% 10% $6,720 $5,177 $2.99 ($0.74) ($0.42) 20.8X (83.8X) -- 4.7X 10.8X 10.3X 0.5X 1.1X 1.1X (4%) (8%) (7%)
Patterson-UTI Energy PTEN $17.62 B $24.00 36% 13% $2,593 $0 ($0.74) ($2.19) ($0.69) (23.8X) (8.0X) (25.4X) -- -- -- 1.5X 3.8X 1.8X -- -- --
Nabors Industries NBR $8.24 B $12.00 46% 17% $2,320 $5,379 ($0.22) ($1.26) ($0.38) (37.0X) (6.5X) (21.7X) 4.7X 8.3X 6.3X 3.2X 5.7X 4.3X 63% 58% 56%
(13.3X) (32.8X) (23.5X) 3.1X 6.4X 5.6X 1.7X 3.5X 2.4X 30% 25% 24%
Net Debt/EVKLR EPS P/E EV/EBITDA Total Debt/EBITDA
March 10, 2016 8
Coverage Universe Risk/Reward Map
Source: Factset, Company Filings; KLR Group, LLC Forecasts
ACCUMULATE
BUY
ESV
SLB
HAL
CLBFI
NR
OIS
FTK
CJES
NOV
FTI
FET
NE
RDC
HP
NBR
PTEN
SPN
WFT
OIIDRQ
DO
ATW
SLCA
FMSA
CRR
SDRL
HOLD
REDUCE
(20%)
(15%)
(10%)
(5%)
-
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
3% 4% 5% 6% 7% 8% 9% 10%
11%
12%
13%
14%
15%
16%
17%
18%
19%
20%
21%
22%
23%
24%
25%
26%
27%
28%
29%
30%
31%
32%
33%
34%
35%
Up
sid
e (
%)
WACC (%)
March 10, 2016 9
Energy High Yield Bond Rally May Signal A Positive Change in Risk Profile
50
60
70
80
90
100
Mar
-15
Ap
r-1
5
May
-15
Jun
-15
Jul-
15
Au
g-1
5
Sep
-15
Oct
-15
No
v-1
5
Dec
-15
Jan
-16
Feb
-16
Mar
-16
Bank of America/Merrill Lynch US High Yield Energy Index
Source: Factset
March 10, 2016 10
KLR EPS Estimates vs. Consensus Company Category 2013 2014 2015E 2016E 2017E 1Q15 2Q15 3Q15 4Q15E 1Q16E 2Q16E 3Q16E 4Q16E 1Q17E 2Q17E 3Q17E 4Q17EDiversified Oilfield SerivicesSchlumberger EPS $4.80 $5.56 $3.37 $1.71 $2.87 $1.06 $0.88 $0.78 $0.65 $0.42 $0.42 $0.42 $0.45 $0.51 $0.61 $0.78 $0.98
Prior EPS $4.80 $5.56 $3.37 $2.00 $3.62 $1.06 $0.88 $0.78 $0.65 $0.45 $0.48 $0.51 $0.56 $0.69 $0.81 $0.99 $1.13
Consensus EPS $2.03 $2.80 $0.50 $0.47 $0.49 $0.54 $0.56 $0.63 $0.72 $0.81
Consensus EPS-High $2.44 $3.62 $0.60 $0.54 $0.62 $0.77 $0.73 $0.81 $0.99 $1.13
Consensus EPS-Low $1.47 $1.67 $0.41 $0.34 $0.34 $0.34 $0.40 $0.35 $0.48 $0.44
Halliburton EPS $2.45 $4.01 $1.56 $0.25 $1.13 $0.49 $0.44 $0.31 $0.31 $0.08 $0.07 $0.08 $0.09 $0.15 $0.25 $0.37 $0.49
Prior EPS $2.45 $4.01 $1.56 $0.37 $1.35 $0.49 $0.44 $0.31 $0.31 $0.09 $0.09 $0.12 $0.13 $0.20 $0.30 $0.44 $0.56
Consensus EPS $0.50 $1.40 $0.10 $0.09 $0.12 $0.18 $0.20 $0.29 $0.38 $0.47
Consensus EPS-High $0.94 $2.31 $0.15 $0.17 $0.28 $0.39 $0.30 $0.39 $0.49 $0.60
Consensus EPS-Low $0.15 $0.91 $0.04 $0.03 ($0.01) $0.06 $0.14 $0.20 $0.27 $0.33
Weatherford EPS $0.60 $1.01 ($0.33) ($0.55) ($0.11) ($0.04) ($0.10) ($0.05) ($0.13) ($0.18) ($0.13) ($0.13) ($0.11) ($0.09) ($0.05) ($0.01) $0.04
Prior EPS $0.60 $1.01 ($0.33) ($0.36) $0.23 ($0.04) ($0.10) ($0.05) ($0.13) ($0.14) ($0.10) ($0.08) ($0.04) ($0.01) $0.03 $0.08 $0.14
Consensus EPS ($0.20) ($0.61) ($0.15) ($0.19) ($0.17) ($0.14) ($0.11) ($0.09) ($0.06) ($0.02) $0.01
Consensus EPS-High ($0.20) ($0.36) $0.40 ($0.13) ($0.10) ($0.04) $0.01 ($0.01) $0.03 $0.08 $0.14
Consensus EPS-Low ($0.20) ($0.96) ($0.60) ($0.27) ($0.25) ($0.23) ($0.19) ($0.14) ($0.15) ($0.10) ($0.08)
Oilfield Equipment & Manufacturers
National Oilwell Varco EPS $5.52 $6.48 $2.79 ($0.37) $0.79 $1.14 $0.77 $0.61 $0.23 ($0.06) ($0.11) ($0.10) ($0.10) ($0.04) $0.05 $0.27 $0.51
Prior EPS $5.52 $6.48 $2.79 ($0.20) $1.12 $1.14 $0.77 $0.61 $0.23 ($0.04) ($0.07) ($0.05) ($0.04) $0.03 $0.11 $0.36 $0.62
Consensus EPS $2.52 ($0.01) $0.54 $0.01 ($0.05) ($0.03) ($0.00) $0.02 $0.07 $0.15 $0.22
Consensus EPS-High $2.52 $1.35 $2.12 $0.26 $0.29 $0.36 $0.44 $0.27 $0.29 $0.36 $0.62
Consensus EPS-Low $2.52 ($0.55) ($0.11) ($0.07) ($0.16) ($0.20) ($0.22) ($0.14) ($0.07) ($0.01) $0.02
FMC Technologies EPS $2.17 $2.94 $2.23 $1.19 $1.40 $0.63 $0.52 $0.61 $0.46 $0.35 $0.30 $0.28 $0.26 $0.28 $0.31 $0.37 $0.44
Prior EPS $2.17 $2.94 $2.23 $1.26 $1.50 $0.63 $0.52 $0.61 $0.46 $0.36 $0.32 $0.30 $0.28 $0.31 $0.34 $0.39 $0.46
Consensus EPS $1.76 $1.29 $1.17 $0.32 $0.35 $0.32 $0.31 $0.25 $0.27 $0.28 $0.31
Consensus EPS-High $1.76 $1.53 $1.55 $0.41 $0.41 $0.38 $0.40 $0.32 $0.34 $0.39 $0.46
Consensus EPS-Low $1.76 $1.13 $0.75 $0.21 $0.27 $0.24 $0.21 $0.15 $0.22 $0.21 $0.18
Oceaneering EPS $3.44 $4.00 $2.86 $1.60 $1.66 $0.70 $0.76 $0.82 $0.58 $0.47 $0.43 $0.41 $0.30 $0.35 $0.39 $0.47 $0.44
Prior EPS $3.44 $4.00 $2.86 $1.60 $1.66 $0.70 $0.76 $0.82 $0.58 $0.47 $0.43 $0.41 $0.30 $0.35 $0.39 $0.47 $0.44
Consensus EPS $2.27 $1.34 $1.28 $0.36 $0.35 $0.33 $0.29 $0.26 $0.28 $0.30 $0.27
Consensus EPS-High $2.27 $1.95 $2.05 $0.47 $0.55 $0.50 $0.42 $0.40 $0.50 $0.57 $0.51
Consensus EPS-Low $2.27 $0.87 $0.19 $0.25 $0.20 $0.18 $0.13 $0.11 $0.07 $0.04 ($0.03)
Forum Energy EPS $1.46 $1.84 $0.42 ($0.75) ($0.23) $0.30 $0.16 $0.08 ($0.12) ($0.20) ($0.20) ($0.18) ($0.17) ($0.13) ($0.09) ($0.04) $0.03
Prior EPS $1.46 $1.84 $0.42 ($0.68) ($0.11) $0.30 $0.16 $0.08 ($0.12) ($0.19) ($0.18) ($0.16) ($0.14) ($0.11) ($0.06) ($0.01) $0.06
Consensus EPS $0.54 ($0.64) ($0.17) ($0.19) ($0.18) ($0.15) ($0.12) ($0.12) ($0.09) ($0.05) ($0.01)
Consensus EPS-High $0.54 ($0.19) $0.57 ($0.15) ($0.08) $0.00 $0.08 ($0.06) ($0.05) ($0.01) $0.06
Consensus EPS-Low $0.54 ($0.95) ($0.64) ($0.21) ($0.24) ($0.26) ($0.26) ($0.23) ($0.19) ($0.14) ($0.09)
Dril-Quip EPS $4.23 $5.09 $4.87 $2.62 $2.00 $1.25 $1.24 $1.18 $1.20 $0.82 $0.68 $0.59 $0.52 $0.47 $0.43 $0.47 $0.63
Prior EPS $4.23 $5.09 $4.87 $2.62 $2.00 $1.25 $1.24 $1.18 $1.20 $0.82 $0.68 $0.59 $0.52 $0.47 $0.43 $0.47 $0.63
Consensus EPS $3.68 $2.53 $1.80 $0.83 $0.67 $0.54 $0.47 $0.47 $0.46 $0.47 $0.54
Consensus EPS-High $3.68 $2.75 $2.71 $0.93 $0.74 $0.61 $0.67 $0.58 $0.63 $0.70 $0.75
Consensus EPS-Low $3.68 $2.34 $0.85 $0.76 $0.61 $0.45 $0.28 $0.28 $0.23 $0.19 $0.16
Source: Factset, Company Filings; KLR Group, LLC Forecasts
March 10, 2016 11
KLR EPS Estimates vs. Consensus (continued) Company Category 2013 2014 2015E 2016E 2017E 1Q15 2Q15 3Q15 4Q15E 1Q16E 2Q16E 3Q16E 4Q16E 1Q17E 2Q17E 3Q17E 4Q17EMid/Small Cap Oilfield Serices
Core Laboratories EPS $5.32 $5.79 $3.17 $1.67 $2.54 $0.86 $0.82 $0.83 $0.65 $0.37 $0.38 $0.43 $0.48 $0.53 $0.59 $0.67 $0.75
Prior EPS $5.32 $5.79 $3.17 $1.95 $2.83 $0.86 $0.82 $0.83 $0.65 $0.43 $0.45 $0.51 $0.57 $0.60 $0.67 $0.74 $0.82
Consensus EPS $1.83 $2.56 $0.42 $0.40 $0.45 $0.48 $0.55 $0.61 $0.70 $0.77
Consensus EPS-High $2.62 $3.06 $0.43 $0.45 $0.60 $0.67 $0.68 $0.68 $0.82 $0.88
Consensus EPS-Low $1.20 $1.87 $0.38 $0.31 $0.23 $0.24 $0.40 $0.45 $0.49 $0.52
Superior Energy Services EPS $1.56 $1.79 ($1.29) ($2.00) ($1.24) ($0.01) ($0.31) ($0.46) ($0.51) ($0.57) ($0.53) ($0.46) ($0.44) ($0.38) ($0.34) ($0.30) ($0.23)
Prior EPS $1.56 $1.79 ($1.29) ($1.85) ($0.85) ($0.01) ($0.31) ($0.46) ($0.51) ($0.46) ($0.48) ($0.46) ($0.46) ($0.38) ($0.29) ($0.17) $0.00
Consensus EPS ($0.78) ($2.17) ($1.42) ($0.57) ($0.57) ($0.53) ($0.51) ($0.46) ($0.39) ($0.32) ($0.28)
Consensus EPS-High ($0.78) ($1.78) ($0.75) ($0.46) ($0.48) ($0.37) ($0.29) ($0.35) ($0.25) ($0.14) $0.00
Consensus EPS-Low ($0.78) ($2.48) ($2.19) ($0.69) ($0.64) ($0.63) ($0.63) ($0.60) ($0.57) ($0.53) ($0.49)
Flotek Industries EPS $0.67 $0.97 ($0.02) ($0.36) $0.49 ($0.04) $0.01 $0.04 ($0.03) ($0.11) ($0.15) ($0.07) ($0.03) $0.02 $0.09 $0.17 $0.20
Prior EPS $0.67 $0.97 ($0.02) ($0.16) $0.71 ($0.04) $0.01 $0.04 ($0.03) ($0.09) ($0.10) ($0.01) $0.04 $0.10 $0.13 $0.22 $0.25
Consensus EPS ($0.05) $0.44 ($0.05) ($0.04) ($0.00) $0.02 $0.07 $0.10 $0.16 $0.19
Consensus EPS-High $0.08 $0.71 ($0.03) $0.00 $0.05 $0.06 $0.10 $0.13 $0.22 $0.25
Consensus EPS-Low ($0.20) $0.04 ($0.09) ($0.10) ($0.03) ($0.01) $0.02 $0.08 $0.12 $0.14
Franks International EPS $1.99 $1.09 $0.62 $0.24 $0.52 $0.25 $0.15 $0.12 $0.10 $0.06 $0.06 $0.06 $0.06 $0.08 $0.11 $0.15 $0.19
Prior EPS $1.99 $1.09 $0.62 $0.31 $0.66 $0.25 $0.15 $0.12 $0.10 $0.08 $0.07 $0.08 $0.09 $0.11 $0.14 $0.18 $0.22
Consensus EPS $0.52 $0.27 $0.35 $0.06 $0.06 $0.06 $0.06 $0.08 $0.09 $0.11 $0.15
Consensus EPS-High $0.52 $0.40 $0.66 $0.08 $0.08 $0.08 $0.09 $0.11 $0.14 $0.18 $0.22
Consensus EPS-Low $0.52 $0.15 $0.15 $0.05 $0.04 $0.03 $0.03 $0.05 $0.06 $0.06 $0.08
Oil States International EPS $0.71 $3.74 $0.84 ($0.85) ($0.15) $0.45 $0.15 $0.11 $0.13 ($0.21) ($0.22) ($0.22) ($0.20) ($0.17) ($0.10) ($0.00) $0.12
Prior EPS $0.71 $3.74 $0.84 ($0.79) ($0.04) $0.45 $0.15 $0.11 $0.13 ($0.19) ($0.20) ($0.21) ($0.19) ($0.15) ($0.07) $0.03 $0.15
Consensus EPS $0.71 ($0.78) ($0.42) ($0.18) ($0.21) ($0.21) ($0.19) ($0.21) ($0.17) ($0.12) ($0.06)
Consensus EPS-High $0.71 ($0.40) $0.37 ($0.14) ($0.16) ($0.13) ($0.10) ($0.15) ($0.07) $0.03 $0.15
Consensus EPS-Low $0.71 ($1.07) ($1.32) ($0.21) ($0.27) ($0.30) ($0.32) ($0.37) ($0.34) ($0.32) ($0.29)
Newpark Resources EPS $0.50 $0.78 ($0.19) ($0.40) $0.14 $0.01 ($0.03) ($0.06) ($0.11) ($0.11) ($0.11) ($0.10) ($0.08) ($0.03) $0.01 $0.05 $0.12
Prior EPS $0.50 $0.78 ($0.19) ($0.37) $0.18 $0.01 ($0.03) ($0.06) ($0.11) ($0.11) ($0.10) ($0.09) ($0.07) ($0.03) $0.01 $0.07 $0.13
Consensus EPS ($0.08) ($0.39) ($0.00) ($0.13) ($0.13) ($0.11) ($0.09) ($0.08) ($0.06) ($0.02) $0.03
Consensus EPS-High ($0.08) ($0.09) $0.35 ($0.11) ($0.10) ($0.09) ($0.07) ($0.03) $0.01 $0.07 $0.13
Consensus EPS-Low ($0.08) ($0.57) ($0.42) ($0.14) ($0.15) ($0.14) ($0.14) ($0.12) ($0.12) ($0.10) ($0.08)
C&J Services EPS $1.21 $1.51 ($1.85) ($2.19) $0.19 ($0.12) ($0.46) ($0.65) ($0.45) ($0.62) ($0.60) ($0.53) ($0.43) ($0.28) ($0.09) $0.15 $0.40
Prior EPS $1.21 $1.51 ($1.85) ($2.00) $0.68 ($0.12) ($0.46) ($0.65) ($0.45) ($0.63) ($0.55) ($0.46) ($0.36) ($0.19) $0.02 $0.28 $0.56
Consensus EPS ($1.24) ($2.40) ($1.38) ($0.67) ($0.63) ($0.58) ($0.55) ($0.45) ($0.35) ($0.25) ($0.14)
Consensus EPS-High ($1.24) ($2.00) $0.68 ($0.60) ($0.52) ($0.44) ($0.36) ($0.19) $0.02 $0.28 $0.56
Consensus EPS-Low ($1.24) ($3.02) ($2.05) ($0.81) ($0.79) ($0.74) ($0.68) ($0.60) ($0.52) ($0.43) ($0.34)
Source: Factset, Company Filings; KLR Group, LLC Forecasts
March 10, 2016 12
KLR EPS Estimates vs. Consensus (continued) Company Category 2013 2014 2015E 2016E 2017E 1Q15 2Q15 3Q15 4Q15E 1Q16E 2Q16E 3Q16E 4Q16E 1Q17E 2Q17E 3Q17E 4Q17EOffshore Contract Drillers
Seadrill EPS $3.03 $2.69 $2.00 $1.02 $0.62 $0.48 $0.77 $0.21 $0.54 $0.30 $0.30 $0.23 $0.20 $0.11 $0.12 $0.15 $0.25
Prior EPS $3.03 $2.69 $2.00 $1.02 $0.62 $0.48 $0.77 $0.21 $0.54 $0.30 $0.30 $0.23 $0.20 $0.11 $0.12 $0.15 $0.25
Consensus EPS $1.46 $1.37 $0.36 $0.40 $0.42 $0.31 $0.24 $0.13 $0.09 $0.06 $0.03
Consensus EPS-High $1.46 $1.99 $0.90 $0.60 $0.60 $0.40 $0.38 $0.28 $0.18 $0.18 $0.25
Consensus EPS-Low $1.46 $0.20 ($0.35) $0.28 $0.30 $0.19 $0.05 $0.06 $0.00 ($0.12) ($0.16)
Transocean EPS $3.73 $5.03 $3.86 ($0.01) ($0.12) $1.10 $1.12 $0.85 $0.78 $0.21 $0.01 ($0.10) ($0.13) ($0.04) ($0.03) ($0.05) $0.01
Prior EPS $3.73 $5.03 $3.86 $0.00 ($0.11) $1.10 $1.12 $0.85 $0.78 $0.21 $0.01 ($0.10) ($0.13) ($0.04) ($0.03) ($0.05) $0.01
Consensus EPS $3.07 $0.22 ($0.66) $0.28 $0.02 ($0.02) ($0.07) ($0.08) ($0.15) ($0.29) ($0.31)
Consensus EPS-High $3.07 $1.94 $1.67 $0.71 $0.46 $0.45 $0.31 $0.19 $0.11 ($0.05) $0.01
Consensus EPS-Low $3.07 ($0.50) ($2.10) $0.05 ($0.14) ($0.27) ($0.38) ($0.29) ($0.42) ($0.72) ($0.68)
ENSCO EPS $6.16 $6.21 $4.56 $1.73 $1.34 $1.38 $1.16 $1.09 $0.92 $0.49 $0.47 $0.40 $0.37 $0.21 $0.30 $0.39 $0.44
Prior EPS $6.16 $6.21 $4.56 $1.73 $1.34 $1.38 $1.16 $1.09 $0.92 $0.49 $0.47 $0.40 $0.37 $0.21 $0.30 $0.39 $0.44
Consensus EPS $3.63 $2.16 $0.86 $0.67 $0.65 $0.45 $0.38 $0.28 $0.28 $0.25 $0.17
Consensus EPS-High $3.63 $3.00 $2.35 $0.90 $0.85 $0.69 $0.60 $0.62 $0.61 $0.59 $0.53
Consensus EPS-Low $3.63 $0.94 $0.01 $0.40 $0.31 $0.21 $0.02 $0.07 ($0.02) $0.02 ($0.06)
Diamond Offshore EPS $4.77 $3.17 $3.09 $1.29 $0.34 $0.49 $0.66 $1.05 $0.88 $0.23 $0.28 $0.42 $0.36 $0.17 $0.13 $0.07 ($0.02)
Prior EPS $4.77 $3.17 $3.09 $1.29 $0.34 $0.49 $0.66 $1.05 $0.88 $0.23 $0.28 $0.42 $0.36 $0.17 $0.13 $0.07 ($0.02)
Consensus EPS $2.20 $0.85 $0.83 $0.25 $0.11 $0.18 $0.29 $0.29 $0.20 $0.16 $0.03
Consensus EPS-High $2.20 $1.63 $1.60 $0.49 $0.40 $0.42 $0.57 $0.57 $0.44 $0.39 $0.30
Consensus EPS-Low $2.20 $0.08 ($0.08) ($0.06) ($0.10) ($0.13) ($0.03) $0.08 $0.01 ($0.18) ($0.32)
Noble EPS $2.92 $3.04 $2.62 $0.24 $0.20 $0.72 $0.66 $0.72 $0.52 $0.27 ($0.05) $0.02 $0.01 $0.02 ($0.02) $0.03 $0.17
Prior EPS $2.92 $3.04 $2.62 $0.24 $0.15 $0.72 $0.66 $0.72 $0.52 $0.27 ($0.05) $0.02 $0.01 $0.02 ($0.02) $0.00 $0.14
Consensus EPS $2.10 $0.90 ($0.00) $0.30 $0.20 $0.20 $0.18 $0.11 $0.00 ($0.07) ($0.13)
Consensus EPS-High $2.10 $1.73 $0.68 $0.49 $0.44 $0.43 $0.42 $0.24 $0.15 $0.10 $0.14
Consensus EPS-Low $2.10 $0.24 ($0.75) $0.03 ($0.05) ($0.02) $0.01 ($0.02) ($0.15) ($0.32) ($0.49)
Rowan EPS $1.96 $2.11 $3.53 $1.60 $0.50 $0.99 $0.70 $0.89 $0.95 $0.49 $0.29 $0.35 $0.47 $0.38 $0.11 $0.03 ($0.02)
Prior EPS $1.96 $2.11 $3.53 $1.60 $0.50 $0.99 $0.70 $0.89 $0.95 $0.49 $0.29 $0.35 $0.47 $0.38 $0.11 $0.03 ($0.02)
Consensus EPS $2.58 $2.31 $0.29 $0.71 $0.56 $0.48 $0.56 $0.42 $0.12 ($0.07) ($0.20)
Consensus EPS-High $2.58 $3.43 $1.95 $0.94 $0.83 $0.78 $0.89 $0.73 $0.55 $0.41 $0.35
Consensus EPS-Low $2.58 $1.60 ($1.06) $0.49 $0.29 $0.30 $0.29 $0.13 ($0.11) ($0.50) ($0.76)
Atwood Oceanics EPS $5.32 $4.89 $7.74 $4.28 ($0.80) $1.71 $1.97 $1.73 $2.32 $1.32 $1.43 $0.93 $0.60 ($0.33) ($0.16) ($0.18) ($0.14)
Prior EPS $5.32 $4.89 $7.74 $4.28 ($0.80) $1.71 $1.97 $1.73 $2.32 $1.32 $1.43 $0.93 $0.60 ($0.33) ($0.16) ($0.18) ($0.14)
Consensus EPS $4.41 ($0.67) $1.57 $1.04 $0.65 ($0.23) ($0.05) ($0.07) ($0.23)
Consensus EPS-High $5.52 $1.01 $1.79 $1.54 $1.06 $0.56 $0.38 $0.31 $0.13
Consensus EPS-Low $3.41 ($2.44) $1.08 $0.58 $0.42 ($0.69) ($0.56) ($0.40) ($0.78)
Pacific Drilling EPS $0.42 $0.86 $0.82 ($0.60) ($0.99) $0.24 $0.22 $0.19 $0.16 ($0.09) ($0.10) ($0.15) ($0.26) ($0.25) ($0.27) ($0.26) ($0.21)
Prior EPS $0.42 $0.86 $0.82 ($0.60) ($0.99) $0.24 $0.22 $0.19 $0.16 ($0.09) ($0.10) ($0.15) ($0.26) ($0.25) ($0.27) ($0.26) ($0.21)
Consensus EPS $0.65 ($0.44) ($1.28) ($0.08) ($0.07) ($0.09) ($0.18) ($0.24) ($0.28) ($0.31) ($0.32)
Consensus EPS-High $0.65 ($0.17) ($0.71) ($0.03) ($0.01) ($0.02) ($0.05) ($0.18) ($0.22) ($0.24) ($0.21)
Consensus EPS-Low $0.65 ($0.79) ($2.04) ($0.19) ($0.20) ($0.15) ($0.27) ($0.32) ($0.41) ($0.47) ($0.45)
Source: Factset, Company Filings; KLR Group, LLC Forecasts
March 10, 2016 13
KLR EPS Estimates vs. Consensus (continued) Company Category 2013 2014 2015E 2016E 2017E 1Q15 2Q15 3Q15 4Q15E 1Q16E 2Q16E 3Q16E 4Q16E 1Q17E 2Q17E 3Q17E 4Q17EOnshore Drilling
Helmerich & Payne EPS $5.67 $6.25 $2.99 ($0.74) ($0.42) $1.70 $0.97 $0.27 $0.04 $0.05 ($0.14) ($0.34) ($0.31) ($0.23) ($0.18) ($0.10) $0.09
Prior EPS $5.67 $6.25 $2.99 ($0.41) $0.18 $1.70 $0.97 $0.27 $0.04 $0.05 ($0.08) ($0.22) ($0.16) ($0.08) ($0.03) $0.06 $0.23
Consensus EPS ($0.72) ($0.78) ($0.22) ($0.27) ($0.25) ($0.24) ($0.23) ($0.18) ($0.11)
Consensus EPS-High ($0.30) $0.35 ($0.08) ($0.12) $0.03 $0.04 $0.09 $0.10 $0.23
Consensus EPS-Low ($1.02) ($1.46) ($0.27) ($0.38) ($0.43) ($0.42) ($0.42) ($0.37) ($0.36)
Nabors Industries EPS $1.35 $1.14 ($0.22) ($1.26) ($0.38) $0.20 ($0.15) ($0.07) ($0.22) ($0.33) ($0.33) ($0.31) ($0.29) ($0.25) ($0.16) ($0.05) $0.08
Prior EPS $1.35 $1.14 ($0.22) ($1.22) ($0.10) $0.20 ($0.15) ($0.07) ($0.22) ($0.33) ($0.33) ($0.29) ($0.27) ($0.20) ($0.10) $0.03 $0.17
Consensus EPS ($0.01) ($1.55) ($1.15) ($0.35) ($0.41) ($0.41) ($0.39) ($0.36) ($0.33) ($0.27) ($0.21)
Consensus EPS-High ($0.01) ($1.08) ($0.10) ($0.23) ($0.28) ($0.25) ($0.21) ($0.20) ($0.10) $0.03 $0.17
Consensus EPS-Low ($0.01) ($2.00) ($1.94) ($0.44) ($0.51) ($0.53) ($0.53) ($0.45) ($0.46) ($0.40) ($0.36)
Patterson-UTI Energy EPS $1.46 $1.26 ($0.74) ($2.19) ($0.69) $0.06 ($0.13) ($0.27) ($0.40) ($0.53) ($0.63) ($0.57) ($0.46) ($0.37) ($0.24) ($0.11) $0.02
Prior EPS $1.46 $1.26 ($0.74) ($2.09) ($0.62) $0.06 ($0.13) ($0.27) ($0.40) ($0.53) ($0.58) ($0.53) ($0.46) ($0.36) ($0.23) ($0.09) $0.04
Consensus EPS ($0.34) ($2.25) ($1.82) ($0.54) ($0.58) ($0.57) ($0.56) ($0.55) ($0.52) ($0.45) ($0.39)
Consensus EPS-High ($0.34) ($1.62) ($0.62) ($0.48) ($0.46) ($0.36) ($0.32) ($0.36) ($0.23) ($0.09) $0.04
Consensus EPS-Low ($0.34) ($2.55) ($2.60) ($0.57) ($0.66) ($0.65) ($0.69) ($0.69) ($0.70) ($0.64) ($0.63)
Proppant
US Silica EPS $1.45 $2.41 $0.08 ($0.67) $0.01 $0.27 $0.08 ($0.03) ($0.26) ($0.18) ($0.17) ($0.16) ($0.16) ($0.14) ($0.09) $0.03 $0.21
Prior EPS $1.45 $2.41 $0.08 ($0.57) $0.25 $0.27 $0.08 ($0.03) ($0.26) ($0.18) ($0.17) ($0.14) ($0.08) ($0.04) $0.01 $0.09 $0.20
Consensus EPS $0.33 ($0.91) ($0.03) ($0.28) ($0.24) ($0.19) ($0.19) ($0.13) ($0.02) $0.06 $0.09
Consensus EPS-High $0.33 ($0.47) $1.30 ($0.17) ($0.15) ($0.07) ($0.01) $0.07 $0.15 $0.21 $0.26
Consensus EPS-Low $0.33 ($1.63) ($0.63) ($0.52) ($0.44) ($0.34) ($0.33) ($0.25) ($0.16) ($0.06) ($0.10)
Carbo Ceramics EPS $3.70 $3.39 ($1.89) ($3.91) ($2.20) ($0.28) ($0.41) ($0.35) ($0.85) ($1.08) ($1.01) ($0.95) ($0.87) ($0.78) ($0.65) ($0.49) ($0.28)
Prior EPS $3.70 $3.39 ($1.89) ($3.82) ($2.17) ($0.28) ($0.41) ($0.35) ($0.85) ($1.06) ($0.99) ($0.93) ($0.85) ($0.76) ($0.63) ($0.48) ($0.30)
Consensus EPS ($3.26) ($2.11) ($0.88) ($0.93) ($0.82) ($0.75) ($0.72) ($0.65) ($0.57) ($0.48)
Consensus EPS-High ($2.31) ($0.57) ($0.57) ($0.83) ($0.69) ($0.63) ($0.67) ($0.63) ($0.48) ($0.30)
Consensus EPS-Low ($3.82) ($2.85) ($1.06) ($0.99) ($0.93) ($0.92) ($0.76) ($0.66) ($0.66) ($0.66)
Fairmount EPS $0.63 $1.05 $0.10 ($0.30) ($0.10) $0.18 $0.02 ($0.05) ($0.06) ($0.08) ($0.08) ($0.08) ($0.07) ($0.05) ($0.04) ($0.02) $0.01
Prior EPS $0.63 $1.05 $0.10 ($0.19) $0.16 $0.18 $0.02 ($0.05) ($0.06) ($0.07) ($0.06) ($0.04) ($0.02) $0.00 $0.02 $0.05 $0.09
Consensus EPS $0.06 ($0.33) ($0.05) ($0.09) ($0.10) ($0.09) ($0.08) ($0.08) ($0.06) ($0.04) ($0.02) $0.01
Consensus EPS-High $0.10 ($0.18) $0.16 ($0.06) ($0.07) ($0.04) ($0.03) ($0.02) $0.00 $0.02 $0.05 $0.09
Consensus EPS-Low $0.03 ($0.57) ($0.38) ($0.13) ($0.14) ($0.15) ($0.14) ($0.13) ($0.12) ($0.10) ($0.09) ($0.07)
Source: Factset, Company Filings; KLR Group, LLC Forecasts
March 10, 2016 14
North America Rig Count Profile
March 10, 2016 15
1,68
9 1,
775 1,88
6 1
,82
8
1,2
83
8
79
93
0 1
,09
9 1
,28
6 1,
451 1,
587
1,6
48
1
,67
4
1,77
8 1,89
3 1,
954
1,9
47
1
,92
4
1,8
55
1,
759
1,7
06
1,
710
1,6
91
1
,68
2
1,7
05
1,
796
1,8
28
1,
843
1,34
6 8
73
8
31
72
2 55
5 44
5 555 64
0 7
90
950 1,0
10
1,
070
1,1
60
1
,20
5
1,19
5 1
,18
0
1,21
5 1,
235
1,25
5 1,
275
1,29
5 1,
315
1,34
0 1,
360
$20
$40
$60
$80
$100
$120
$140
300 400 500 600 700 800 900
1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 2,000
1Q
082
Q08
3Q
084
Q08
1Q
092
Q09
3Q
094
Q09
1Q
102
Q10
3Q
104
Q10
1Q
112
Q11
3Q
114
Q11
1Q
122
Q12
3Q
124
Q12
1Q
132
Q13
3Q
134
Q13
1Q
142
Q14
3Q
144
Q14
1Q
152
Q15
3Q
154
Q15
1Q
162
Q16
3Q
164
Q16
1Q
172
Q17
3Q
174
Q17
1Q
182
Q18
3Q
184
Q18
1Q
192
Q19
3Q
194
Q19
1Q
202
Q20
3Q
204
Q20
WTI
($/b
bl)
# o
f R
igs
Prevous Forecast US Land Rigs WTI
US Land Rig Forecast Finds Bottom in 2Q/16, Followed by Recovery As Commodity Market Balance Improve
Our forecast implies weakness through 2016, with a bottom in 2Q/16.
We forecast a recovery in activity during 2016, corresponding with a rebound in oil prices to $50+ in 2H/16.
Sources: KLR Group, LLC Forecasts; BHI, Factset
Quarterly US Lang Rig Count
March 10, 2016 16
KLR Forecasts ~2 MMbpd US Production Decline, Even With Continued Rig Productivity Increase
8.0
7.
8 8.0
7.8
7.8
7.7
7.
5 7.
6 7.9
7.9
6.8
6.8
7.2
7
.3
7.4
7.5
7.
4 7.6
7.4 7.5 7.7 7.8
7.
2 7.5
7.
0 7.2 7.
4 7.
4 7.5
7.5
7.
5 7.7
7.6
7
.8
7.7
8.
3 8.6
8.
6 8.8
9.5
9.6 9.
9 10.3
10
.6
10.9
11
.6 12
.0 12
.4
12.6
1
2.8
12
.8
12.7
12
.4
12.2
11
.7
11
.7
11.4
11
.2
10
.9
10.9
11
.1
11.4
11
.5 12
.1
12
.2
12.4
1
2.4
12
.8
12.9
13
.0
13.0
1
3.4
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
14.0
-
500
1,000
1,500
2,000
2,500
1Q0
3
3Q03
1Q0
4
3Q0
4
1Q05
3Q0
5
1Q06
3Q06
1Q0
7
3Q07
1Q0
8
3Q0
8
1Q09
3Q0
9
1Q1
0
3Q10
1Q1
1
3Q11
1Q12
3Q1
2
1Q13
3Q1
3
1Q1
4
3Q14
1Q1
5
3Q1
5
1Q16
3Q1
6
1Q17
3Q17
1Q1
8
3Q18
1Q1
9
3Q1
9
1Q20
3Q2
0
Pro
du
ctoi
n (M
MB
d)
Nu
mb
er
of
Rig
s
US Oil Production (MMBd) US Land
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
22.0
24.0
26.0
28.0
30.0
1Q0
3
3Q0
3
1Q0
4
3Q0
4
1Q0
5
3Q0
5
1Q0
6
3Q0
6
1Q0
7
3Q07
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
1Q1
6
3Q1
6
1Q1
7
3Q1
7
1Q1
8
3Q1
8
1Q1
9
3Q1
9
1Q2
0
3Q2
0
Oil
Pro
du
ctio
n/R
ig (k
bd)
US Oil Production/Land Rig (kbd)
US Supply Response, Support Commodity & Rig Count Recovery Per Rig Efficiency Forecasted to Continue
Collapse in the rig count, far larger and longer than 2008, stresses rig productivity relationships.
We continue to see a trend toward rig efficiency in our forecast.
Sources: KLR Group, LLC Forecasts; BHI, Factset, IEA Sources: KLR Group, LLC Forecasts; BHI, Factset, IEA
March 10, 2016 17
US Oil Production Starting to Show Signs of Decline After Collapse in Drilling Activity
9.08
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
Jan
-05
Jun
-05
No
v-0
5
Ap
r-06
Sep
-06
Feb
-07
Jul-
07
Dec
-07
May
-08
Oct
-08
Mar
-09
Au
g-09
Jan
-10
Jun
-10
No
v-1
0
Ap
r-11
Sep
-11
Feb
-12
Jul-
12
Dec
-12
May
-13
Oct
-13
Mar
-14
Au
g-14
Jan
-15
Jun
-15
No
v-1
5
MM
B/d
US Oil Production
Source: EIA
March 10, 2016 18
-
20
40
60
80
100
120
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
3Q
16
1Q
17
3Q
17
1Q
18
3Q
18
1Q
19
3Q
19
1Q
20
3Q
20
Funding Gap WTI
-
500
1,000
1,500
2,000
2,5001Q
00
1Q0
1
1Q0
2
1Q0
3
1Q0
4
1Q0
5
1Q0
6
1Q0
7
1Q0
8
1Q0
9
1Q1
0
1Q1
1
1Q1
2
1Q1
3
1Q14
1Q15
1Q16
1Q17
1Q18
1Q1
9
1Q2
0
Horizontal Rigs US Land Rigs
US Land Rig Count Bottoms as E&P CAPEX Nears Cash Flow From Operations & Funding Gaps Erode
The period of rising oil prices, borrowing base growth, higher debt, lower cost of capital, and significant funding gaps reverses course as commodity prices fall. In our view, E&P companies may spend more closely within operating cash flow in the near term. Any significant re-leveraging of activity may make our activity forecast conservative.
US Land Rigs Trough in 2016, Greater Recovery in 2017 Falling Funding Gaps: Cyclical Deceleration
The US land rig count bottoms in 2Q/16, as E&Ps return to working closer to organic cash flows. If oil prices sit near the bottom and the industry has deleveraged activity (reduced funding gaps), the negative cash flow headwinds on the US land rigs count have diminished.
Sources: KLR Group, LLC Forecasts; BHI, Factset Sources: KLR Group, LLC Forecasts; BHI, Factset
March 10, 2016 19
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,0001
Q0
0
4Q
00
3Q
01
2Q
02
1Q
03
4Q
03
3Q
04
2Q
05
1Q
06
4Q
06
3Q
07
2Q
08
1Q
09
4Q
09
3Q
10
2Q
11
1Q
12
4Q
12
3Q
13
2Q
14
1Q
15
4Q
15
Ind
exe
d C
AP
EX &
CFO
CFO Indexed (Rolling 2 Quarter Average) CAPEX Indexed
Our proprietary model distills history to capture the clear relationships between the commodity, cash flows, and US rig counts. Tied to the KLR forecast for oil price recovery, we see a rig count trough in 2016, with a meaningful recovery in activity in 2017, with average oil prices at ~$67.50. Key Relationships Captured: • E&P Cash Flow from Operations (CFO) & WTI (R-Squared>0.90) • E&P Cash Flow from Operations (CFO) & CAPEX (R-Squared>0.80) • Historical & Forecasted Funding Gaps (CFO-CAPEX) • Inflation/deflation • Rig Efficiency (well/rig) • Service Cost Intensity • 60 E&P sample set • 15 years of historical data
Proprietary Model Captures Relationships Between WTI, CFO, CAPEX, Funding Gaps, & Rig Counts
Sources: KLR Group, LLC Forecasts; BHI, Factset Sources: KLR Group, LLC Forecasts; BHI, Factset
Indexed Increase in Capex & Cash Flow from Operations Indexed Capex & Horizontal Rig Changes & Forward Forecast
-
200
400
600
800
1,000
1,200
1,400
1,600
100
300
500
700
900
1,100
1,300
1,500
1,700
1,900
2,100
1Q
00
3Q
00
1Q
01
3Q
01
1Q
02
3Q
02
1Q
03
3Q
03
1Q
04
3Q
04
1Q
05
3Q
05
1Q
06
3Q
06
1Q
07
3Q
07
1Q
08
3Q
08
1Q
09
3Q
09
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
3Q
16
1Q
17
3Q
17
1Q
18
3Q
18
1Q
19
3Q
19
1Q
20
3Q
20
Ho
rizo
nta
l Rig
Co
un
t
Ind
exed
CA
PEX
Sp
end
CAPEX Indexed Horizontal Rigs
March 10, 2016 20
Our Rig Count Forecast Assumes Both Increasing CAPEX/Rig & Inflation Further Out in the Forecast
-
100
200
300
400
500
600
700
800
900
1Q0
03Q
001Q
013Q
011Q
02
3Q0
21Q
033Q
031Q
04
3Q0
41Q
053Q
051Q
063Q
06
1Q07
3Q07
1Q08
3Q0
81Q
09
3Q09
1Q10
3Q1
01Q
11
3Q11
1Q12
3Q12
1Q1
33Q
13
1Q14
3Q14
1Q1
53Q
15
1Q16
3Q16
1Q1
73Q
17
1Q18
3Q18
1Q19
3Q1
91Q
20
3Q20
CAPEX/ US Land Rig Indexed
Sources: KLR Group, LLC Forecasts; BHI, Factset
March 10, 2016 21
$25 $30 $35 $40 $45 $50 $55 $60 $65 $70 $75 $80 $85 $90 $95
50% 550 690 830 960 1,100 1,240 1,380 1,520 1,660 1,800 1,940 2,070 2,210 2,350 2,490
45% 500 620 750 880 1,000 1,130 1,250 1,380 1,510 1,630 1,760 1,890 2,010 2,140 2,260
40% 460 570 690 800 920 1,030 1,150 1,270 1,380 1,500 1,610 1,730 1,840 1,960 2,080
35% 420 530 630 740 850 950 1,060 1,170 1,280 1,380 1,490 1,600 1,700 1,810 1,920
30% 390 490 590 690 790 890 990 1,080 1,180 1,280 1,380 1,480 1,580 1,680 1,780
25% 370 460 550 640 740 830 920 1,010 1,110 1,200 1,290 1,380 1,480 1,570 1,660
20% 340 430 520 600 690 780 860 950 1,040 1,120 1,210 1,300 1,380 1,470 1,560
15% 320 400 490 570 650 730 810 890 980 1,060 1,140 1,220 1,300 1,380 1,460
10% 300 380 460 540 610 690 770 840 920 1,000 1,080 1,150 1,230 1,310 1,380
5% 290 360 430 510 580 650 730 800 870 950 1,020 1,090 1,160 1,240 1,310
0% 270 340 410 480 550 620 690 760 830 900 970 1,040 1,110 1,180 1,250
Fu
nd
ing
Gap
Oil Price
US Land Activity Hinges on Oil Prices & Funding Gaps in the Rig Count Sensitivity Analysis
Note: Assumes 80% Horizontal Rig Count/Total Land Rig Count
Our post-recovery forecast lives here.
Our 4Q/16 forecast lies in this range, as further constrictions on funding gaps offset oil price recovery in our forecast.
Our Proprietary Model Measures Commodity vs. Industry Funding Gap Sensitivities
Sources: KLR Group, LLC Forecasts; Factset
March 10, 2016 22
Land Rig Market Implications
March 10, 2016 23
1,360
1,050
700 660
580
445
355
445
515
630
760 810
855 915 940 920 900
130%
100%
67%63%
55%
43%
34%
43%
49%
60%
73%77%
82%87%
90% 88% 86%
20%
40%
60%
80%
100%
120%
140%
-
200
400
600
800
1,000
1,200
1,400
4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
1,501+ AC 1,500 AC 1,500+ SCR 1,000 - 1,499 SCR Horizontal Rig Count Implied AC Rig Utilization
AC Rig Utilization May Tighten From 2Q/16 Trough With Horizontal Land Rig Count Recovery
Rig Market Utilization Climbs Under Our Horizontal Rig Count Forecast
The high end of the land rig market may come into balance in 2017, if our rig count forecast is correct and fleet growth remains curtailed by the downturn.
Simplified land rig
dispatch curve
Sources: KLR Group, LLC Forecasts; RigData; DrillingInfo, Company Filings
March 10, 2016 24
HP, NBR, PTEN May Be Winners, Representing >60% of AC Rig Fleet Composition
US Land Rig Fleet Composition By Company In our view, the land contract drillers with the highest concentration of AC rigs should be the long term winners. Our Coverage: • Helmerich & Payne (HP,
$62.22, B, $83): Play on the highest concentration of AC 1,500+ rigs
• Nabors Industries (NBR, $8.24, B, $12): Leverage to quality fleet, international exposure, and internal transformation story
• Patterson (PTEN, $17.62, B, $24): More lower end rigs in fleet profile, but likely the most stock leverage to a recovery in North American land activity
1 - 999
1,000 -
1,499 1,500 1,501+ Total 1 - 999
1,000 -
1,499 1,500+ Total Total % % %
AC AC AC AC AC SCR SCR SCR SCR Mech TOTAL AC SCR Mech
Helmerich & Payne (HP) - 24 317 - 341 - - 8 8 - 349 33% 1% 0%
Nabors Industries (NBR)* 3 72 101 1 177 4 18 35 57 1 235 17% 9% 0%
Patterson-UTI Energy (PTEN) - 15 102 - 117 2 33 42 77 15 209 11% 12% 2%
Precision Dril l ing (PD-TSX) - 26 19 26 71 1 22 31 54 8 133 7% 9% 1%
Ensign Energy Services (ESI-TSX) 13 1 55 - 69 - 1 - 1 27 98 7% 0% 3%
Seventy Seven Energy (SSN) - 18 16 2 36 12 26 14 52 4 92 3% 8% 0%
Unit Corporation (UNT) - - 8 - 8 4 12 37 53 31 92 1% 8% 3%
Trinidad Drill ing (TDG-TSX) - - 27 6 33 4 2 11 17 21 71 3% 3% 2%
Xtreme Drill ing & Coil Services (XDC-TSX) 3 4 9 - 16 - - - - - 16 2% 0% 0%
Cactus Dril l ing Company, LLC - - 10 2 12 2 15 34 51 - 63 1% 8% 0%
Pioneer Energy Services (PES) - 2 12 1 15 - 4 8 12 3 30 1% 2% 0%
Sidewinder Dril l ing - 2 10 - 12 - 4 6 10 20 42 1% 2% 2%
Independence Drill ing, Inc. - - 14 - 14 - - - - - 14 1% 0% 0%
Oil States International (OIS) - - - - - - - - - 34 34 0% 0% 4%
Global Rig Company (GRIC-NO) - - 3 6 9 - - - - - 9 1% 0% 0%
Felderhoff Brothers Dril l ing - - - 3 3 - 4 1 5 15 23 0% 1% 2%
Cyclone Drill ing Inc. - - 6 - 6 - 9 8 17 3 26 1% 3% 0%
Latshaw Drill ing - 5 5 - 10 5 11 14 30 1 41 1% 5% 0%
Scandrill - - 1 - 1 - 4 11 15 1 17 0% 2% 0%
Savanna Energy Services (SVY-TSX) - 5 3 - 8 - - 1 1 18 28 1% 0% 2%
Other - 38 44 8 89 14 66 86 166 720 975 8% 27% 78%
Marketed Supply (Current) 19 212 762 55 1,047 48 231 347 626 922 2,597
Sources: DrillingInfo; RigData; Quarterly/Annual Rig Operators’ Disclosures
*Assumes all NBR rigs in 1,400 - 1,999hp category are 1,500hp rigs
% of Total Market
March 10, 2016 25
Simplified Model Suggests A Recovery With Capacity Attrition & Horizontal Rig Count Recovery
Assumptions & Potential Incremental Positive Catalysts that Underlie Our Pressure Pumping Supply/Demand Outlook • Industry sources suggest horsepower capacity in the market is closer to 20m HP • Limited disclosures make it difficult to determine the company composition of the fleet, but we assume that Halliburtion (HAL, $34.69, B, $48), Schlumberger (SLB, $72.75, B,
$103), and Weatherford (WFT, $6.50, A, $7.50), RPC, Inc (RES, $14.28, NR), C&J Energy (CJES, $1.84, B, $3), and PTEN comprise the majority of capacity amongst 40+ pressure pumping operators.
• Bankruptcy/auctioning of equipment may likely continue to reduce the number of competitors near term • We assume stacked equipment returns, which may prove optimistic if it is not maintained or if it is cannibalized • Natural “wear & tear” supports our 15% annualized attrition rate, as pressure pumping equipment is worked harder on larger fracs with increasing levels of proppant.
(Transmission life ~1 year, Fluid Ends life 1-2months) • HAL/Baker Hughes (BHI, $44.31, NR) merger may accelerate equipment attrition, as HAL’s transition to Q10 units may see legacy BHI equipment leave the fleet at a faster rate
Source: BHI; Industry sources; KLR Group, LLC Forecasts
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
Horsepower, BOP (m) 20.0 20.2 19.8 18.3 17.8 17.4 16.9 15.5 14.1 13.7 14.5 14.9 15.4 15.8
Stacked (m) (4.0) (4.8) (5.8) (5.8) (5.8) (5.8) (5.8) (4.8) (2.8) (0.8) - - - -
Marketed Horsepower, BOP (m) 16.0 15.4 14.1 12.5 12.1 11.6 11.2 10.8 11.4 12.9 14.5 14.9 15.4 15.8
Additions (m) - (0.8) (1.0) - - - - 1.0 2.0 2.0 1.0 1.0 1.0 1.0
Attrition/Cannibalization (m) (0.6) (0.6) (0.5) (0.5) (0.5) (0.4) (0.4) (0.4) (0.4) (0.5) (0.5) (0.6) (0.6) (0.6)
Marketed Horsepower, EOP (m) 15.4 14.1 12.5 12.1 11.6 11.2 10.8 11.4 12.9 14.5 14.9 15.4 15.8 16.2
Demand (m) 10.5 9.1 6.9 5.5 6.8 7.8 9.4 11.3 11.9 12.4 13.2 13.4 13.0 12.6
Utilization 59% 53% 43% 36% 46% 55% 68% 84% 88% 88% 90% 88% 83% 79%
Attrition Rate (Annual) 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%
KLR - US Horizontal Rig Count Forecast 660 580 445 355 445 515 630 760 810 855 915 940 920 900
Horsepower / Hor. Rig (000) 15.9 15.8 15.6 15.4 15.3 15.1 15.0 14.8 14.7 14.5 14.4 14.2 14.1 14.0
Horsepower / Hor. Rig Efficiency Gains 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%
March 10, 2016 26
International Rig Count Risks Production Forecast
March 10, 2016 27
23.0
23.5
24.0
24.5
25.0
25.5
26.0
26.5
27.0
27.5
28.0
28.5
29.0
29.5
30.0
30.5
450
500
550
600
650
700
750
800
850
900
950
1,000
1Q03
3Q0
3
1Q0
4
3Q04
1Q0
5
3Q0
5
1Q06
3Q06
1Q0
7
3Q07
1Q08
3Q0
8
1Q0
9
3Q09
1Q1
0
3Q1
0
1Q11
3Q1
1
1Q1
2
3Q12
1Q13
3Q1
3
1Q1
4
3Q14
1Q1
5
3Q1
5
1Q16
3Q1
6
1Q1
7
3Q17
1Q18
3Q1
8
1Q19
3Q19
1Q2
0
3Q2
0
Oil
Pro
du
ctio
n (M
MB
d)
Nu
mb
er
of
Rig
s
World Production, ex NA, FSU, & ME World Rigs, ex NA, FSU, & ME
International Production (ex NA, FSU, ME) Decline May Accelerate With ~38% Rig Count Reduction (Peak to Trough)
International production, outside of North America, FSU, and the Middle East production has fallen for the better part of the last decade, despite rising rigs counts. Our production forecast shows the same trajectory of decline, even though rigs counts have come down ~34% from the 2014 peak. These international rig counts do not fully recover to 2014 levels until 2019, as investment decisions for new projects wait for higher commodity prices. Unlike the faster 2008/2009 recovery, we believe the prolonged downturn places higher risk on production estimates that represent ~28% of global production.
Sources: KLR Group, LLC Forecasts; BHI, Factset, IEA
March 10, 2016 28
Rig Count & Production Estimates Test Production/Rig Trends, Likely Unsustainable for Multiple Quarters
2.5 2.6 2.7 2.8 2.9 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 5.0 5.1 5.2 5.3 5.4
1Q
03
3Q
03
1Q
04
3Q
04
1Q
05
3Q
05
1Q
06
3Q
06
1Q
07
3Q
07
1Q
08
3Q
08
1Q
09
3Q
09
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
3Q
16
1Q
17
3Q
17
1Q
18
3Q
18
1Q
19
3Q
19
1Q
20
3Q
20
Oil
Pro
du
ctio
n/R
ig (k
bd)
World Production/Rig , ex NA, FSU, & ME
The market fended off production declines for a ~4 quarter period of rig count decline in 2008/2009. In our view, producers will not be able to “open the spiggots” to maintain production for 2+ years of depressed drilling activity.
Sources: KLR Group, LLC Forecasts; BHI, IEA
March 10, 2016 29
27.0
29.0
31.0
33.0
35.0
37.0
39.0
41.0
43.0
200
250
300
350
400
450
500
1Q0
3
3Q03
1Q04
3Q0
4
1Q05
3Q05
1Q0
6
3Q0
6
1Q07
3Q07
1Q0
8
3Q08
1Q09
3Q0
9
1Q1
0
3Q10
1Q11
3Q1
1
1Q1
2
3Q12
1Q1
3
3Q1
3
1Q14
3Q14
1Q1
5
3Q1
5
1Q16
3Q1
6
1Q1
7
3Q17
1Q18
3Q1
8
1Q1
9
3Q19
1Q20
3Q2
0
Pro
du
ctio
n (
MM
Bd
)
Nu
mb
er o
f RIg
s
OPEC Production OPEC Rigs
OPEC commentary on production “freezes” may speak to production growth limits amid spending/rig count declines.
OPEC Rig Count Declines Challenge Prod. Growth Forecast: Consciously “Freezed” or “Capped” by Spending?
70.0
80.0
90.0
100.0
110.0
120.0
130.0
140.0
150.0
160.0
1Q
03
3Q
03
1Q
04
3Q
04
1Q
05
3Q
05
1Q
06
3Q
06
1Q
07
3Q
07
1Q
08
3Q
08
1Q
09
3Q
09
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
Oil
Pro
du
ctio
n/R
ig (k
bd)
OPEC Production/Rig
OPEC Rig Declines Question Production Growth Forecast OPEC Oil Production/Rig Begins to Resist Decline
OPEC rig count decline runs contrary to rising production forecast.
Sources: KLR Group, LLC Forecasts; BHI, IEA Sources: KLR Group, LLC Forecasts; BHI, IEA
March 10, 2016 30
Middle East Oil Production & Rig Market Dynamics
20.0
21.0
22.0
23.0
24.0
25.0
26.0
27.0
28.0
175
225
275
325
375
425
475
525
1Q0
3
3Q0
3
1Q0
4
3Q04
1Q05
3Q0
5
1Q0
6
3Q0
6
1Q0
7
3Q07
1Q08
3Q0
8
1Q0
9
3Q0
9
1Q1
0
3Q10
1Q11
3Q1
1
1Q1
2
3Q1
2
1Q1
3
3Q13
1Q14
3Q1
4
1Q1
5
3Q1
5
1Q1
6
3Q16
1Q17
3Q1
7
1Q1
8
3Q1
8
1Q1
9
3Q19
1Q20
3Q2
0
Pro
du
ctoi
n (M
MB
d)
Nu
mb
er
of
Rig
s
Middle East Oil Production (MMBd) Middle East Rigs
40.0
50.0
60.0
70.0
80.0
90.0
100.0
110.0
120.0
1Q03
3Q03
1Q0
4
3Q04
1Q05
3Q0
5
1Q06
3Q06
1Q0
7
3Q0
7
1Q08
3Q0
8
1Q0
9
3Q09
1Q1
0
3Q1
0
1Q11
3Q11
1Q1
2
3Q12
1Q13
3Q1
3
1Q14
3Q14
1Q1
5
3Q15
1Q16
3Q1
6
1Q1
7
3Q17
1Q1
8
3Q1
8
1Q19
3Q1
9
1Q2
0
3Q20
Oil
Pro
du
ctio
n/R
ig (k
bd)
Middle East Rigs Oil Production/Rig (kbd)
20
30
40
50
60
70
80
90
100
110
150
200
250
300
350
400
4501Q
03
3Q03
1Q0
4
3Q0
4
1Q0
5
3Q05
1Q06
3Q06
1Q0
7
3Q0
7
1Q0
8
3Q08
1Q09
3Q0
9
1Q1
0
3Q1
0
1Q11
3Q11
1Q12
3Q1
2
1Q1
3
3Q1
3
1Q14
3Q14
1Q1
5
3Q1
5
1Q1
6
3Q16
1Q17
3Q1
7
1Q1
8
3Q1
8
1Q19
3Q19
1Q20
3Q2
0
Off
sho
re R
ig C
ou
nt
Lan
d R
ig C
ou
nt
Middle East Land rigs Middle East Offshore rigs
Middle East Oil Production vs. Rig Count Middle East Oil Production per Rig
Middle East Land & Offshore Rig Count
Sources: KLR Group, LLC Forecasts; BHI, IEA
March 10, 2016 31
Over 10+ Years, International Oil Production/Rig is Down ~31%, vs. North America Up ~34%
100 99 96 97 97 95 93 96 97
106
115
127 134
129 125
129 137
142
100 96
91 89
80 77 79
72 68 65
60 59
69
82 78
64 60 59
40
60
80
100
120
140
160
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
E
2017
E
2018
E
2019
E
2020
E
Pro
du
ctio
n /
Rig
Ind
exed
North America InternationalThe boom in unconventional plays in North America has vaulted well, and therefore rig productivity.
Field maturity, the need for greater exploration efforts to replace production, slower technology penetration, and a lack of unconventional activity continues to drive down rig productivity in international markets.
Need for greater service intensity to improve production
Need for greater rig and service intensity to improve production. If unconventional techniques or greater use of technology emerges on larger scales, international service companies that possess the technology and intellectual property, may prove the beneficiaries.
North America vs. International Indexed Oil Production / Rig
Source: EIA; IEA; BHI; KLR Group, LLC Forecasts
March 10, 2016 32
-
50
100
150
200
250
300
350
400
450
500
600
650
700
750
800
850
900
950
1,000
Jan
-05
Ap
r-0
5Ju
l-0
5O
ct-0
5Ja
n-0
6A
pr-
06
Jul-
06
Oct
-06
Jan
-07
Ap
r-0
7Ju
l-0
7O
ct-0
7Ja
n-0
8A
pr-
08
Jul-
08
Oct
-08
Jan
-09
Ap
r-0
9Ju
l-0
9O
ct-0
9Ja
n-1
0A
pr-
10
Jul-
10
Oct
-10
Jan
-11
Ap
r-1
1Ju
l-1
1O
ct-1
1Ja
n-1
2A
pr-
12
Jul-
12
Oct
-12
Jan
-13
Ap
r-1
3Ju
l-1
3O
ct-1
3Ja
n-1
4A
pr-
14
Jul-
14
Oct
-14
Jan
-15
Ap
r-1
5Ju
l-1
5O
ct-1
5Ja
n-1
6
ME
Rig
Co
un
ts
Inte
rna
tio
na
l, Le
ss M
E R
ig C
ou
nts
International, Less ME Middle East
-
20
40
60
80
100
120
Jan
-13
Mar
-13
May
-13
Jul-
13
Se
p-1
3
Nov
-13
Jan
-14
Mar
-14
May
-14
Jul-
14
Sep-
14
Nov
-14
Jan
-15
Mar
-15
May
-15
Jul-
15
Sep-
15
Nov
-15
Jan
-16
Iraq Kuwait Oman Saudi Arabia
Middle East Rig Count Resilience Reflects OPEC (Saudi Arabian) Efforts to Gain Market Share
Middle East rig count stability masks ~35% decline in international activity outside of the region.
Middle East Seeks Mkt Share, Holds Rigs Amid Intl. Decline Saudi Arabia Clearly Pushing to Grow Production Capacity
Instability has taken its toll on Iraq, but discussion of budget restrictions amid falling oil-driven cash flows may curtail activity entering 2016.
Source: BHI IEA; KLR Group, LLC Forecasts Source: BHI IEA; KLR Group, LLC Forecasts
March 10, 2016 33
International Rig Counts Continue to Slide L A N D
R e g io n 1 Q 1 5 2 Q 1 5 3 Q 1 5 4 Q 1 5 1 Q 1 6
Q /Q %
C h a n g e
Y /Y %
C h a n g e
E u ro p e 8 0 6 9 6 2 7 2 7 2 0 % (1 0 % )
M id d le E a s t 3 6 5 3 5 5 3 4 4 3 5 9 3 5 3 (2 % ) (3 % )
A fric a 8 7 7 5 7 0 6 4 6 8 6 % (2 2 % )
L a t in A m e ric a 2 8 0 2 5 7 2 6 4 2 2 8 1 9 0 (1 7 % ) (3 2 % )
A s ia P a c ific 1 3 2 1 2 6 1 2 4 1 2 3 1 1 6 (6 % ) (1 3 % )
T o ta l 9 4 3 8 8 2 8 6 4 8 4 5 7 9 8 (6 %) (1 5 %)
O F F S H O R E
R e g io n 1 Q 1 5 2 Q 1 5 3 Q 1 5 4 Q 1 5 1 Q 1 6
Q /Q %
C h a n g e
Y /Y %
C h a n g e
E u ro p e E x -N S 5 2 4 7 4 6 3 8 3 6 (7 % ) (3 2 % )
M id d le E a s t 4 8 4 8 4 9 5 6 5 3 (6 % ) 1 0 %
A fric a 4 3 3 3 2 5 2 7 2 3 (1 6 % ) (4 7 % )
L a t in A m e ric a 7 3 6 5 5 4 5 5 5 1 (8 % ) (3 1 % )
A s ia P a c ific 1 0 3 9 4 9 2 8 3 7 2 (1 4 % ) (3 0 % )
T o ta l 3 1 8 2 8 7 2 6 7 2 6 0 2 3 4 (1 0 %) (2 7 %)
T O T A L
R e g io n 1 Q 1 5 2 Q 1 5 3 Q 1 5 4 Q 1 5 1 Q 1 6
Q /Q %
C h a n g e
Y /Y %
C h a n g e
E u ro p e 1 3 2 1 1 6 1 0 9 1 1 0 1 0 8 (2 % ) (1 9 % )
M id d le E a s t 4 1 2 4 0 3 3 9 3 4 1 5 4 0 6 (2 % ) (2 % )
A fric a 1 3 0 1 0 8 9 5 9 1 9 1 (0 % ) (3 0 % )
L a t in A m e ric a 3 5 2 3 2 2 3 1 8 2 8 3 2 4 0 (1 5 % ) (3 2 % )
A s ia P a c ific 2 3 5 2 2 0 2 1 7 2 0 6 1 8 8 (9 % ) (2 0 % )
T o ta l 1 ,2 6 1 1 ,1 6 9 1 ,1 3 2 1 ,1 0 5 1 ,0 3 2 (7 %) (1 8 %)
L A N D
R e g io n F e b -1 5 N o v -1 5 D e c -1 5 J a n -1 6 F e b -1 6
M /M %
C h a n g e
Y /Y %
C h a n g e
E u ro p e 7 7 7 1 7 9 7 3 7 1 (3 % ) (8 % )
M id d le E a s t 3 6 7 3 6 0 3 6 7 3 5 2 3 5 4 1 % (4 % )
A fric a 8 8 6 4 6 4 6 8 6 8 0 % (2 3 % )
L a t in A m e ric a 2 8 3 2 3 2 2 1 3 1 9 2 1 8 7 (3 % ) (3 4 % )
A s ia P a c ific 1 3 6 1 2 3 1 2 2 1 1 8 1 1 3 (4 % ) (1 7 % )
T o ta l 9 5 1 8 5 0 8 4 5 8 0 3 7 9 3 (1 %) (1 7 %)
O F F S H O R E
R e g io n F e b -1 5 N o v -1 5 D e c -1 5 J a n -1 6 F e b -1 6
M /M %
C h a n g e
Y /Y %
C h a n g e
E u ro p e E x -N S 5 6 3 7 3 5 3 5 3 6 3 % (3 6 % )
M id d le E a s t 4 8 5 9 5 5 5 5 5 0 (9 % ) 4 %
A fric a 4 4 2 6 2 7 2 6 2 0 (2 3 % ) (5 5 % )
L a t in A m e ric a 7 2 5 2 5 7 5 1 5 0 (2 % ) (3 1 % )
A s ia P a c ific 1 0 4 8 5 7 6 7 5 6 9 (8 % ) (3 4 % )
T o ta l 3 2 4 2 5 9 2 5 0 2 4 2 2 2 5 (7 %) (3 1 %)
T O T A L
R e g io n F e b -1 5 N o v -1 5 D e c -1 5 J a n -1 6 F e b -1 6
M /M %
C h a n g e
Y /Y %
C h a n g e
E u ro p e 1 3 3 1 0 8 1 1 4 1 0 8 1 0 7 (1 % ) (2 0 % )
M id d le E a s t 4 1 5 4 1 9 4 2 2 4 0 7 4 0 4 (1 % ) (3 % )
A fric a 1 3 2 9 0 9 1 9 4 8 8 (6 % ) (3 3 % )
L a t in A m e ric a 3 5 5 2 8 4 2 7 0 2 4 3 2 3 7 (2 % ) (3 3 % )
A s ia P a c ific 2 4 0 2 0 8 1 9 8 1 9 3 1 8 2 (6 % ) (2 4 % )
T o ta l 1 ,2 7 5 1 ,1 0 9 1 ,0 9 5 1 ,0 4 5 1 ,0 1 8 (3 %) (2 0 %)
Source: BHI, KLR Group, LLC Forecasts
March 10, 2016 34
International Breakdown, excl. Middle East & FSU
March 10, 2016 35
North America Oil Production & Rig Market Dynamics
10.0
12.0
14.0
16.0
18.0
20.0
22.0
-
500
1,000
1,500
2,000
2,500
3,0001Q
03
3Q03
1Q0
4
3Q0
4
1Q05
3Q0
5
1Q06
3Q06
1Q0
7
3Q07
1Q0
8
3Q0
8
1Q09
3Q0
9
1Q1
0
3Q10
1Q1
1
3Q11
1Q12
3Q1
2
1Q13
3Q1
3
1Q1
4
3Q14
1Q1
5
3Q1
5
1Q16
3Q1
6
1Q17
3Q17
1Q1
8
3Q18
1Q1
9
3Q1
9
1Q20
3Q2
0
Pro
du
ctoi
n (M
MB
d)
Nu
mb
er
of
Rig
s
North America Oil Production (MMBd) North America Rigs
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
1Q0
3
3Q0
3
1Q04
3Q04
1Q05
3Q0
5
1Q0
6
3Q0
6
1Q07
3Q07
1Q08
3Q0
8
1Q0
9
3Q09
1Q10
3Q10
1Q1
1
3Q1
1
1Q1
2
3Q12
1Q13
3Q13
1Q1
4
3Q1
4
1Q1
5
3Q15
1Q16
3Q1
6
1Q1
7
3Q1
7
1Q18
3Q18
1Q19
3Q1
9
1Q2
0
3Q2
0
Oil
Pro
du
ctio
n/R
ig (k
bd)
North America Rigs Oil Production/Rig (kbd)
-
20
40
60
80
100
120
-
500
1,000
1,500
2,000
2,500
3,000
1Q
03
3Q
03
1Q
04
3Q
04
1Q
05
3Q
05
1Q
06
3Q
06
1Q
07
3Q
07
1Q
08
3Q
08
1Q
09
3Q
09
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
3Q
16
1Q
17
3Q
17
1Q
18
3Q
18
1Q
19
3Q
19
1Q
20
3Q
20
Off
sho
re R
ig C
ou
nt
Lan
d R
ig C
ou
nt
North American Land North American Offshore
North America Oil Production vs. Rig Count North America Oil Production per Rig
North America Land & Offshore Rig Count
Sources: KLR Group, LLC Forecasts; BHI, IEA
March 10, 2016 36
Asia Pacific Oil Production & Rig Market Dynamics
7.4
7.6
7.8
8.0
8.2
8.4
8.6
-
50
100
150
200
250
3001Q
03
3Q03
1Q0
4
3Q04
1Q0
5
3Q0
5
1Q06
3Q0
6
1Q07
3Q0
7
1Q08
3Q08
1Q0
9
3Q09
1Q1
0
3Q10
1Q11
3Q1
1
1Q12
3Q1
2
1Q13
3Q1
3
1Q1
4
3Q14
1Q1
5
3Q15
1Q1
6
3Q1
6
1Q17
3Q1
7
1Q18
3Q1
8
1Q1
9
3Q19
1Q2
0
3Q20
Pro
du
ctoi
n (M
MB
d)
Nu
mb
er
of
Rig
s
Asia Pacific Oil Production (MMBd) Asia Pacific Rigs
25.0
30.0
35.0
40.0
45.0
50.0
1Q0
3
3Q0
3
1Q04
3Q04
1Q05
3Q0
5
1Q0
6
3Q0
6
1Q07
3Q07
1Q08
3Q0
8
1Q0
9
3Q09
1Q10
3Q10
1Q1
1
3Q1
1
1Q1
2
3Q12
1Q13
3Q13
1Q1
4
3Q1
4
1Q1
5
3Q15
1Q16
3Q1
6
1Q1
7
3Q1
7
1Q18
3Q18
1Q19
3Q1
9
1Q2
0
3Q2
0
Oil
Pro
du
ctio
n/R
ig (k
bd)
Asia Pacific Rigs Oil Production/Rig (kbd)
60
70
80
90
100
110
120
130
80
90
100
110
120
130
140
150
160
1701Q
03
3Q03
1Q0
4
3Q0
4
1Q0
5
3Q05
1Q06
3Q06
1Q0
7
3Q0
7
1Q0
8
3Q08
1Q09
3Q0
9
1Q1
0
3Q1
0
1Q11
3Q11
1Q12
3Q1
2
1Q1
3
3Q1
3
1Q14
3Q14
1Q1
5
3Q1
5
1Q1
6
3Q16
1Q17
3Q1
7
1Q1
8
3Q1
8
1Q19
3Q19
1Q20
3Q2
0
Off
sho
re R
ig C
ou
nt
Lan
d R
ig C
ou
nt
Asia Pacific Land rigs Asia Pacific Offshore rigs
Asia Pacific Oil Production vs. Rig Count Asia Pacific Oil Production per Rig
Asia Pacific Land & Offshore Rig Count
Sources: KLR Group, LLC Forecasts; BHI, IEA
March 10, 2016 37
Europe Oil Production & Rig Market Dynamics
2.0
3.0
4.0
5.0
6.0
7.0
8.0
50
60
70
80
90
100
110
120
130
140
1501Q
03
3Q03
1Q04
3Q04
1Q05
3Q05
1Q06
3Q06
1Q07
3Q07
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
1Q17
3Q17
1Q18
3Q18
1Q19
3Q19
1Q20
3Q20
Pro
du
ctoi
n (M
Mb
d)
Nu
mb
er
of
Rig
s
Europe Oil Production (MMBd) Europe Rigs
-
20.0
40.0
60.0
80.0
100.0
120.0
1Q03
3Q03
1Q0
4
3Q04
1Q05
3Q0
5
1Q06
3Q06
1Q0
7
3Q0
7
1Q08
3Q0
8
1Q0
9
3Q09
1Q1
0
3Q1
0
1Q11
3Q11
1Q1
2
3Q12
1Q13
3Q1
3
1Q14
3Q14
1Q1
5
3Q15
1Q16
3Q1
6
1Q1
7
3Q17
1Q1
8
3Q1
8
1Q19
3Q1
9
1Q2
0
3Q20
Oil
Pro
du
ctio
n/R
ig (k
bd)
Europe Rigs Oil Production/Rig (kbd)
20
25
30
35
40
45
50
55
60
20
30
40
50
60
70
80
90
100
110
1Q0
3
3Q0
3
1Q0
4
3Q0
4
1Q0
5
3Q0
5
1Q0
6
3Q0
6
1Q0
7
3Q07
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
1Q1
2
3Q1
2
1Q1
3
3Q1
3
1Q1
4
3Q1
4
1Q1
5
3Q1
5
1Q1
6
3Q1
6
1Q1
7
3Q17
1Q18
3Q18
1Q19
3Q19
1Q20
3Q20
Off
sho
re R
ig C
ou
nt
Lan
d R
ig C
ou
nt
Europe Land rigs Europe Offshore rigs
Europe Oil Production vs. Rig Count Europe Oil Production per Rig
Europe Land & Offshore Rig Count
Sources: KLR Group, LLC Forecasts; BHI, IEA
March 10, 2016 38
Africa Oil Production & Rig Market Dynamics
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
-
20
40
60
80
100
120
140
160
1Q0
3
3Q0
3
1Q0
4
3Q04
1Q05
3Q0
5
1Q0
6
3Q0
6
1Q0
7
3Q07
1Q08
3Q0
8
1Q0
9
3Q0
9
1Q1
0
3Q10
1Q11
3Q1
1
1Q1
2
3Q1
2
1Q1
3
3Q13
1Q14
3Q1
4
1Q1
5
3Q1
5
1Q1
6
3Q16
1Q17
3Q1
7
1Q1
8
3Q1
8
1Q1
9
3Q19
1Q20
3Q2
0
Pro
du
ctoi
n (M
MB
d)
Nu
mb
er
of
Rig
s
Africa Oil Production (MMBd) Africa Rigs
25.0
45.0
65.0
85.0
105.0
125.0
145.0
165.0
185.0
205.0
1Q03
3Q03
1Q0
4
3Q04
1Q05
3Q0
5
1Q06
3Q06
1Q0
7
3Q07
1Q08
3Q0
8
1Q0
9
3Q09
1Q1
0
3Q1
0
1Q11
3Q1
1
1Q1
2
3Q12
1Q13
3Q1
3
1Q14
3Q14
1Q1
5
3Q15
1Q16
3Q1
6
1Q1
7
3Q17
1Q1
8
3Q1
8
1Q19
3Q1
9
1Q2
0
3Q20
Oil
Pro
du
ctio
n/R
ig (k
bd)
Africa Rigs Oil Production/Rig (kbd)
10
15
20
25
30
35
40
45
20
30
40
50
60
70
80
90
100
110
1201Q
03
3Q0
3
1Q0
4
3Q0
4
1Q0
5
3Q0
5
1Q0
6
3Q0
6
1Q07
3Q07
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q1
1
3Q1
1
1Q1
2
3Q1
2
1Q1
3
3Q1
3
1Q1
4
3Q1
4
1Q1
5
3Q1
5
1Q16
3Q16
1Q17
3Q17
1Q18
3Q18
1Q19
3Q19
1Q2
0
3Q2
0
Off
sho
re R
ig C
ou
nt
Lan
d R
ig C
ou
nt
Africa Land rigs Africa Offshore rigs
Africa Oil Production vs. Rig Count Africa Oil Production per Rig
Africa Land & Offshore Rig Count
Sources: KLR Group, LLC Forecasts; BHI, IEA
March 10, 2016 39
Offshore Rig Markets
March 10, 2016 40
Floater Market Balances Improve With Rig Attrition & Cold Stacking (-67 Floaters)
162
194 199 206
221 235
254
279 288
305
285
266 269
281 290 292
141
167 173 181
191 199
211
244
258 262
241
168
204
238 251
266
87% 86% 87% 88% 87%85%
83%
87%90%
86% 85%
59%
77%
88% 89%92%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-
50
100
150
200
250
300
350
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Uti
lizat
ion
Nu
mb
er o
f Rig
s
Market Supply, EOP Contracted / Demand Implied Utilization
We forecast floater demand to fall another ~26% in 2016, without recovery to 2005 levels until 2018
We see more material pricing power emerge as the utilization of marketed supply crosses into the 85%+ range
Source: IHS Petrodata; Company Disclosuers; KLR Group, LLC Forecast
March 10, 2016 41
377 392
409 408 408 411 423
456
491 485 492 480 476 478 479
280
346 368
325 316 327
356
401 418
379
299
327
396
423 442
74%
88% 90%
80%78%
80%
84%88%
85%
78%
61%
68%
83% 88%92%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-
100
200
300
400
500
600
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Uti
lizat
ion
Nu
mb
er
of R
igs
Market Supply, EOP Contracted / Demand Implied Utilization
Jackup Market Needs Attrition & Cold Stacking (-125 Jackups), Fragmented, It May be Sloppy
We forecast jackup activity to decline ~7% in 2016. Without the same granularity of data, we assume the jackup market tracks broader market trends. In our view, lower average project break-even levels and heavier weighting of development work may make the downturn less severe for jackups.
We forecast the market tightens into 2018, but it requires an exit of 125 rigs from the marketed supply to make room for 91 newbuild arrivals from 2016 forward. The amount of attrition needed to balance the market may decline if rigs under construction are not delivered.
Sources: KLR Group, LLC Forecast; Company Filings/Disclosures; IHS Petrodata
March 10, 2016 42
KLR Well Count Forecast Narrows Project Opportunity Set by Probability Weighted Analysis
186
243
280 293
315
168
204
238 251
266
-
50
100
150
200
250
300
350
2016 2017 2018 2019 2020
TOTAL RAW FLOATER DEMAND TOTAL FLOATER DEMAND (KLR Forecast)
Consultant data may look very bullish when un-refined. Understanding which projects have reached FID, have equipment ordered, or may be lower probability potential projects provides a better calibration of demand.
We see a larger opportunity set as potential upside to our forecast. In our view, current iterations of raw data consultants also look far more conservative over the last 12 months.
Source: Inflied, KLR Group, LLC Forecast
March 10, 2016 43
Floating Rig & Subsea Equipment Model: Probability Weighting Methodology
Category Definitions:
• Field in Production : Field is on-stream producing oil, gas or condensate.
• Field Development in Progress: Platform or subsea completions are being constructed and pipelines laid.
• Firm Plan (FID) Early Stage Development: Development plan (PDO) submitted to relevant authority.
• Probable : Development planning stage at company level.
• Possible : Very early stage of field evaluation.
Probability Weights by Categories
Reached FID, so are approved projects, but delays remain variable
We assumed delayed or not executed projects remain in the inventory of future projects, as we probability weight demand, we assume a percentage of the “carried inventory” is completed in the following year. Carried demand does not have a meaningful impact on demand until 2018.
Categories 2015 2016 2017 2018 2019 2020
Ordered 100% 100% 100% 100% 100% 100%
Field in Production - Not Ordered 0% 80% 90% 100% 100% 100%
Field Development in Progress - Not Ordered 0% 80% 90% 100% 100% 100%
Firm Plan (FID) Early Stage Development - Not Ordered 0% 70% 75% 80% 85% 85%
Probable 0% 0% 20% 40% 60% 60%
Possible 0% 0% 15% 35% 45% 45%
Carried Inventory 0% 50% 50% 55% 60% 65%
Further out in the forecast, where less FID projects are known, we assume a greater number of potential projects reach FID and move forward. Our forecast, follows historical trends in the data.
March 10, 2016 44
Percentage of Equipment Ordered Illustrates Risk to Development Forecast
335
387
454 457
490
296
229
155
94
34
88%
59%
34%
21%
7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-
100
200
300
400
500
600
2016 2017 2018 2019 2020
Total Development Wells (KLR Forecast) Total Development Wells Equipment Ordered
% KLR Forecast - Equipment Ordered
Further out in the forecast, where less FID projects are known, we assume a greater number of potential projects reach FID and move forward.
Source: Infield, KLR Group, LLC Forecast
March 10, 2016 45
Recovery of Exploration Demand For Floaters Drives Recovery
58
73 69
74 78
83 87
105
136 144
134
112 118
137 135 141
50
60
70
80
90
100
110
120
130
140
150
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
E
2017
E
2018
E
2019
E
2020
E
69
80 82
107 113 114
122
137
123 118
94
56
86
101
116 125
50
60
70
80
90
100
110
120
130
140
150
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
E
2017
E
2018
E
2019
E
2020
E
Floater Development Demand Forecast Floater Exploration Demand Forecast
We do not see North American unconventional production stopping the trend of offshore field development. A move up the learning curve and cost efficiencies may continue to yield economic offshore projects.
Exploration may take a break, as capital may focus on efforts to create cash flow from development work.
Source: IHS Petrodata, Company Filings/Disclosures; KLR Group, LLC Forecast Source: IHS Petrodata, Company Filings/Disclosures; KLR Group, LLC Forecast
March 10, 2016 46
IMPORTANT DISCLOSURES
Rating SystemKLR Group, LLC employs a five tier rating system for evaluating the potential return associated with owning common equity shares of rated firms. The expectedreturn of any given equity is measured on a quantitative basis in relation to our target price. Since stock prices are volatile on a daily basis KLR will utilize atleast a +/- 5% variance tolerance in determining our ratings. Descriptions of the ratings are as follows:Buy - The common stock of the company is estimated to have over 30% upside to our target price.Accumulate - The common stock of the company is estimated to have 10%-30% upside to our target price.Hold - The common stock of the company is estimated to be within +/-10% of our target price.Reduce - The common stock of the company is estimated to have 10%-30% downside to our target price.Sell - The common stock of the company is estimated to have over 30% downside to our target price.
Risk FactorsMacro:
Sustained weakness in commodity prices. Persistent weakness in commodity prices may negatively impact oilfield service company returns. This risk is magnifiedfor companies with weaker balance sheets and higher near term liabilities.
Access to capital markets: The ability of many oilfield service companies to withstand the downturn hinges on their access to capital. If capital markets beginto close off to the industry it would be difficult for many companies to maintain their existing operating plans.
Foreign exchange volatility. The sector’s international component leaves earnings exposed to foreign exchange volatility.
Climate change regulation. The increased attention on climate change and greenhouse gas (GHG) emissions could lead to new regulations aimed at limitingfuture GHG emissions. If enacted these regulations could impose additional costs for both operators and service providers.
Company Centric:
Contracting risk: The new and rolling contracts across the oil services business may perpetuate lower dayrates and falling contract pricing, even if renegotiationsoccur during the initial phases of a recovery.
Continued oversupply in rig market: Day rates could remain depressed if the rig market remains oversaturated resulting from fewer rig retirements thanforecasted.
Rig productivity gains: If onshore rigs continue to achieve new productivity gains, the demand for onshore rigs could continue to deteriorate, particularly inthe lower end of the onshore rig market. Greater levels of efficiency and productivity gains may
Lumpy Cash Flows: The lumpy nature of the equipment & manufacturing industry could cause a significant lag between the recovery in the oil and gas industryand the improvement in the equipment & manufacturing industry’s cash flow position.
Cost Escalation: Fixed price long term contracts common in the oilfield equipment & manufacturing leave industry participants particularly vulnerable to costincreases. This risk could be magnified for contracts entered into during a low price environment.
Adoption of new technologies: Many proppant providers are relying on new technologies to improve margins. However, there is a risk that the industry maycontinue to prefer lower cost options. Alternatively, the industry could select a single new technology winner with the losers going the way of the Beta Max video.
Other Companies Mentioned in this ReportAtwood Oceanics, Inc.(ATW) - Rating: Accumulate; Price Target: 6.75; Price: 9.19C&J Energy Services, Ltd.(CJES) - Rating: Buy; Price Target: 4.00; Price: 1.84Core Laboratories N.V.(CLB) - Rating: Buy; Price Target: 150.00; Price: 115.70CARBO Ceramics Inc.(CRR) - Rating: Hold; Price Target: 15.25; Price: 19.83Diamond Offshore Drilling Inc(DO) - Rating: Accumulate; Price Target: 21.00; Price: 21.33Dril-Quip, Inc.(DRQ) - Rating: Accumulate; Price Target: 68.00; Price: 58.32ENSCO PLC(ESV) - Rating: Buy; Price Target: 14.00; Price: 10.48Forum Energy Technologies Inc(FET) - Rating: Buy; Price Target: 15.00; Price: 12.77Franks International NV(FI) - Rating: Buy; Price Target: 20.00; Price: 15.44Fairmount Santrol Holdings Inc(FMSA) - Rating: Hold; Price Target: 2.30; Price: 2.53FMC Technologies, Inc.(FTI) - Rating: Buy; Price Target: 40.00; Price: 25.27Flotek Industries Inc(FTK) - Rating: Buy; Price Target: 8.75; Price: 7.60Halliburton Company(HAL) - Rating: Buy; Price Target: 44.00; Price: 34.69Helmerich & Payne, Inc.(HP) - Rating: Buy; Price Target: 75.00; Price: 62.22Nabors Industries Ltd.(NBR) - Rating: Buy; Price Target: 11.00; Price: 8.24Noble Corp plc(NE) - Rating: Buy; Price Target: 11.50; Price: 11.34National-Oilwell Varco, Inc.(NOV) - Rating: Buy; Price Target: 48.00; Price: 31.38Newpark Resources Inc(NR) - Rating: Buy; Price Target: 5.25; Price: 4.10Oceaneering International(OII) - Rating: Accumulate; Price Target: 32.00; Price: 28.68Oil States International, Inc.(OIS) - Rating: Buy; Price Target: 43.00; Price: 29.34Pacific Drilling SA(PACD) - Rating: Hold; Price Target: 0.55; Price: 0.61
March 10, 2016 47
Patterson-UTI Energy, Inc.(PTEN) - Rating: Buy; Price Target: 22.00; Price: 17.62Rowan Companies PLC(RDC) - Rating: Buy; Price Target: 17.00; Price: 15.78Transocean LTD(RIG) - Rating: Buy; Price Target: 15.00; Price: 11.17Seadrill Ltd(SDRL) - Rating: Reduce; Price Target: 1.85; Price: 3.95Schlumberger Limited.(SLB) - Rating: Buy; Price Target: 91.00; Price: 72.75U.S. Silica Holdings Inc(SLCA) - Rating: Hold; Price Target: 17.00; Price: 19.97Superior Energy Services, Inc.(SPN) - Rating: Buy; Price Target: 14.00; Price: 12.19Unit Corporation(UNT) - Rating: Buy; Price Target: 14.00; Price: 9.02Weatherford International Plc(WFT) - Rating: Accumulate; Price Target: 8.00; Price: 6.50
For ratings and price target history please visit http://www.klrgroup.com/research/disclosure/.
Distribution of RatingsIB Serv./Past 12 Mos.
Rating Count Percent Count PercentBuy 54 72.97 0 0Accumulate 7 9.46 0 0Hold 10 13.51 0 0Reduce 1 1.35 0 0Sell 2 2.70 0 0
Additional DisclosuresKLR Group, LLC is a member of FINRA and SIPC and a registered U.S. Broker-Dealer.
Investment Banking services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financialadvisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.
Analyst CertificationI, Darren Gacicia, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject company(ies) and its(their) securities and that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressedby me in this research report.The Firm and/or its affiliates intend(s) to seek compensation from Atwood Oceanics, Inc., C&J Energy Services, Ltd., Core Laboratories N.V., CARBO CeramicsInc., Diamond Offshore Drilling Inc, Dril-Quip, Inc., ENSCO PLC, Forum Energy Technologies Inc, Franks International NV, Fairmount Santrol Holdings Inc,FMC Technologies, Inc., Flotek Industries Inc, Halliburton Company, Helmerich & Payne, Inc., Nabors Industries Ltd., Noble Corp plc, National-Oilwell Varco,Inc., Newpark Resources Inc, Oceaneering International, Oil States International, Inc., Pacific Drilling SA, Patterson-UTI Energy, Inc., Rowan Companies PLC,Transocean LTD, Seadrill Ltd, Schlumberger Limited., U.S. Silica Holdings Inc, Superior Energy Services, Inc., Unit Corporation and Weatherford InternationalPlc for investment banking services within three months, following publication of the research report.
Any opinions expressed herein are statements of our judgment as of the date of publication and are subject to change without notice.
Reproduction without written permission is prohibited.
The closing prices of securities mentioned in this report are as of Mar 9 2016. Additional information is available to clients upon written request.For completeresearch report on Atwood Oceanics, Inc., C&J Energy Services, Ltd., Core Laboratories N.V., CARBO Ceramics Inc., Diamond Offshore Drilling Inc, Dril-Quip,Inc., ENSCO PLC, Forum Energy Technologies Inc, Franks International NV, Fairmount Santrol Holdings Inc, FMC Technologies, Inc., Flotek Industries Inc,Halliburton Company, Helmerich & Payne, Inc., Nabors Industries Ltd., Noble Corp plc, National-Oilwell Varco, Inc., Newpark Resources Inc, OceaneeringInternational, Oil States International, Inc., Pacific Drilling SA, Patterson-UTI Energy, Inc., Rowan Companies PLC, Transocean LTD, Seadrill Ltd, SchlumbergerLimited., U.S. Silica Holdings Inc, Superior Energy Services, Inc., Unit Corporation and Weatherford International Plc, please call (713) 654-8080.
Readers are advised that this report is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy.The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport tobe a complete statement or summary of the available data. Past performance is no guarantee of future results.
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