EQUITY RESEARCH

7 April 2011

U.S. OIL SERVICES & DRILLING Offshore Rigs: Is the Next Wave of Consolidation on the Horizon?
Ordering Continues Unabated: The new rig construction cycle that began during the fourth quarter of 2010 continues unabated. Since our January update, an additional 19 jackups and 16 floaters have been ordered, bringing the total number of units ordered since the beginning of the cycle to 37 jackups and 28 floaters. Companies have also secured options to build an incremental 26 jackups and 15 floaters, the majority of which we expect to be exercised. Most of the options must be exercised in the next nine to 12 months. For those companies that have mostly shunned the newbuild cycle thus far, consolidation may be the only near-term option for growth or to replace lost earnings power as shipyard slots at established yards have quickly filled. We believe another round of rig company consolidation is highly likely. In addition, some of the major rig operators are likely to divest older assets in the near-term. Newbuild Prices Moving Higher; Shipyard Slots Filling Up: The flurry of recent newbuild rig orders and concerns around shipyard availability have resulted in a tightening of capacity for many traditional shipyards. We believe the majority of slots for deliveries through 2013 are now full. We also believe floater capacity for 2014 at the established yards is now mostly sold out due to recent orders and options. Rig construction costs are also trending higher which is making priced options more valuable. We believe cost increases are primarily due to rising steel prices and price increases for rig equipment. Additional Rig Company Consolidation Likely As Newbuilds Become Less of an Option: Limited near-term shipyard availability and rising construction costs could result in additional rig company consolidation. We believe the traditional drillers are continuing to have difficulty buying one-off assets, which most had expected to become distressed during the downturn, particularly newbuild floaters, and we expect that several new offshore rig companies have likely emerged as attractive acquisition candidates. Some smaller traditional drillers may also be candidates. In our view, a remaking of the offshore rig industry is underway. NOV Remains Our Favorite: We continue to believe that the best way to be positioned for the ongoing new rig construction cycle is through the major equipment providers National Oilwell Varco, Cameron International, Aker Solutions and, to a lesser extent, Rowan Companies (through LTI). For the offshore drillers, we prefer those companies which have premium fleets and are adding to earnings power with newbuilds. Our two favorite offshore drillers are Ensco Plc and Rowan Companies.
Barclays Capital does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. This research report has been prepared in whole or in part by research analysts based outside the US who are not registered/qualified as research analysts with FINRA. PLEASE SEE ANALYST(S) CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 8.

INDUSTRY UPDATE U.S. Oil Services & Drilling 1-POSITIVE Unchanged U.S. Oil Services & Drilling James C. West 1.212.526.8796 james.west1@barcap.com BCI, New York Anthony Walker 1.312.609.8183 anthony.walker@barcap.com BCI, New York European Oil Services & Drilling Mick Pickup +44 (0)20 3134 6695 mick.pickup@barcap.com Barclays Capital, London Tom Ackermans +44 (0)20 7773 4457 tom.ackermans@barcap.com Barclays Capital, London

Barclays Capital | U.S. Oil Services & Drilling

CONTENTS
Rig Ordering Cycle Continues Unabated............................................................................................... 3 Newbuild Prices Ticking Higher; Shipyard Availability Declining .................................................... 5 Further Rig Company Consolidation Likely .......................................................................................... 5 Rig Market Bifurcation Continues........................................................................................................... 6 NOV Raising Prices; Taking Share in BOPs........................................................................................... 7

FIGURES
Figure 1: Current Cycle Floater Orders .................................................................................................. 3 Figure 2: Current Cycle Jackup Orders................................................................................................... 3 Figure 3: Current Cycle Shipyard Options............................................................................................. 4 Figure 4: Noble Corporation Recent Newbuild Construction Costs................................................ 5 Figure 5: Historical Offshore Rig Orders vs. Oil Prices (WTI) ........................................................... 6 Figure 6: Recent Offshore Rig Company Consolidation Activity ..................................................... 6

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Barclays Capital | U.S. Oil Services & Drilling

Rig Ordering Cycle Continues Unabated

The new rig construction cycle that began during the fourth quarter of 2010 continues unabated. Since our January update, an additional 19 jackups and 16 floaters have been ordered, bringing the total number of units ordered since the beginning of the cycle to 37 jackups and 28 floaters. We believe the cycle is being driven by a continued bifurcation towards higher quality assets, an aging of offshore equipment (a significant portion of the existing fleet is at or near retirement age) and increased focus on safety in a post-Macondo world. Concerns over shipyard capacity have also accelerated the ordering process. Figure 1: Current Cycle Floater Orders
Order Date 11-Nov-2010 11-Nov-2010 11-Nov-2010 11-Nov-2010 9-Dec-2010 9-Dec-2010 14-Dec-2010 4-Jan-2011 19-Jan-2011 19-Jan-2011 20-Jan-2011 20-Jan-2011 31-Jan-2011 2-Feb-2011 11-Feb-2011 11-Feb-2011 11-Feb-2011 11-Feb-2011 11-Feb-2011 11-Feb-2011 11-Feb-2011 4-Mar-2011 17-Mar-2011 17-Mar-2011 25-Mar-2011 25-Mar-2011 6-Apr-2011 6-Apr-2011 Rig Name Queiroz Delba Drsh Tbn1 Queiroz Delba Drsh Tbn2 West Auriga West Vela Odebrecht Drsh Tbn5 Odebrecht Semi Tbn1 Pride Drsh Tbn5 Diamond Drsh Tbn1 Noble Drsh Tbn5 Noble Drsh Tbn6 Aker Drsh Tbn1 Aker Drsh Tbn2 Atwood Advantage Ocean BlackHornet Sete Brasil Drsh Tbn1 Sete Brasil Drsh Tbn2 Sete Brasil Drsh Tbn3 Sete Brasil Drsh Tbn4 Sete Brasil Drsh Tbn5 Sete Brasil Drsh Tbn6 Sete Brasil Drsh Tbn7 Noble Drsh Tbn6 Pacific Drilling Tbn1 (Unconfirmed) Pacific Drilling Tbn2 (Unconfirmed) Sevan Marine Tbn1 Sevan Marine Tbn2 Maersk Drsh Tbn1 Maersk Drsh Tbn2 28 Total Contractor Queiroz Galvao/Delba Queiroz Galvao/Delba Seadrill Seadrill Odebrecht Odebrecht Pride Diamond Offshore Noble Noble Aker Drilling Aker Drilling Atwood Diamond Offshore Petrobras Petrobras Petrobras Petrobras Petrobras Petrobras Petrobras Noble Pacific Drilling Pacific Drilling Sevan Marine Sevan Marine Maersk Drilling Maersk Drilling Rig Type Drillship Drillship Drillship Drillship Drillship Semisubmersible Drillship Drillship Drillship Drillship Drillship Drillship Drillship Drillship Drillship Drillship Drillship Drillship Drillship Drillship Drillship Drillship Drillship Drillship Semisubmersible Semisubmersible Drillship Drillship Rig Water Depth 10,000 10,000 12,000 12,000 10,000 10,000 10,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 12,000 12,000 12,000 10,000 10,000 12,000 12,000 Construction Status Under Construction On Order On Order On Order Planned Planned On Order On Order On Order On Order Planned Planned On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order Delivery Date 1-Jul-2012 1-Sep-2012 1-Mar-2013 1-Jun-2013 31-Aug-2013 31-Aug-2013 1-Jul-2013 30-Jun-2013 1-Jun-2013 1-Dec-2013 1-Dec-2013 1-Dec-2013 30-Sep-2013 1-Dec-2013 1-Jan-2015 1-Jan-2015 1-Jan-2016 1-Jan-2016 1-Jan-2017 1-Jan-2017 1-Jan-2018 30-Jun-2014 1-Oct-2013 31-Dec-2013 1-Dec-2013 1-May-2014 15-Aug-2013 15-Nov-2013 Rig Design Samsung 10000 Samsung 10000 Samsung 10000 Samsung 10000 Build Yard Samsung Heavy Industries Samsung Heavy Industries Samsung Heavy Industries Samsung Heavy Industries Daewoo Daewoo Samsung Heavy Industries Hyundai Heavy Industries Hyundai Heavy Industries Hyundai Heavy Industries Daewoo Daewoo Daewoo Hyundai Heavy Industries Estaleiro Atlantico Sul Estaleiro Atlantico Sul Estaleiro Atlantico Sul Estaleiro Atlantico Sul Estaleiro Atlantico Sul Estaleiro Atlantico Sul Estaleiro Atlantico Sul Hyundai Heavy Industries Samsung Heavy Industries Samsung Heavy Industries COSCO Nantong COSCO Nantong Samsung Heavy Industries Samsung Heavy Industries Build Cost First Operator Petrobras Petrobras

595,000,000 595,000,000

Samsung 12000 GustoMSC P10000 GustoMSC P10000 GustoMSC P10000

GustoMSC P10000 Samsung Samsung Samsung Samsung Samsung Samsung Samsung GustoMSC P10000 Samsung 12000 Samsung 12000 Sevan Drilling Sevan 650 Sevan Drilling Sevan 650 Samsung 12000 Samsung 12000

600,000,000 590,000,000 605,000,000 605,000,000 600,000,000 600,000,000 600,000,000 590,000,000 662,400,000 662,400,000 662,400,000 662,400,000 662,400,000 662,400,000 662,400,000 615,000,000 550,000,000 550,000,000 525,000,000 525,000,000 650,000,000 650,000,000

Shell

Petrobras Petrobras Petrobras Petrobras Petrobras Petrobras Petrobras

Source: ODS-Petrodata, Company reports

Figure 2: Current Cycle Jackup Orders

Order Date 5-Oct-2010 5-Oct-2010 18-Oct-2010 18-Oct-2010 18-Oct-2010 2-Nov-2010 2-Nov-2010 15-Nov-2010 15-Nov-2010 24-Nov-2010 2-Dec-2010 2-Dec-2010 14-Dec-2010 14-Dec-2010 21-Dec-2010 21-Dec-2010 22-Dec-2010 19-Jan-2011 23-Jan-2011 23-Jan-2011 24-Jan-2011 24-Jan-2011 9-Feb-2011 9-Feb-2011 15-Feb-2011 15-Feb-2011 16-Feb-2011 16-Feb-2011 22-Feb-2011 7-Mar-2011 15-Mar-2011 21-Mar-2011 28-Mar-2011 28-Mar-2011 3-Apr-2011 4-Apr-2011 4-Apr-2011 Rig Name Atwood Mako Atwood Manta Eurasia Drilling JU Tbn1 West Castor West Tucana Drilling & Offshore JU Tbn1 Drilling & Offshore JU Tbn2 West Oberon West Telesto Standard JU Tbn5 Mermaid JU Tbn1 Mermaid JU Tbn2 Prospector JU Tbn1 Prospector JU Tbn2 Noble JU Tbn1 Noble JU Tbn2 Jasper JU Tbn1 Atwood Orca Clearwater JU Tbn1 Clearwater JU Tbn2 Discovery Offshore Tbn 1 Discovery Offshore Tbn 2 ENSCO JU Tbn1 ENSCO JU Tbn2 Maersk JU Tbn1 Maersk JU Tbn2 Transocean JU Tbn2 Transocean JU Tbn3 Greatship JU Tbn1 Perforada Central JU Tbn1 JDC Tbn1 Seadrill JU Tbn14 Noble JU Tbn3 Noble JU Tbn4 Jasper JU Tbn2 Prospector JU Tbn3 Prospector JU Tbn4 37 Total Contractor Atwood Atwood Eurasia Drilling Seadrill Seadrill Drilling & Offshore Drilling & Offshore Seadrill Seadrill Standard Drilling Mermaid Drilling Mermaid Drilling Prospector Offshore Drilling Prospector Offshore Drilling Noble Noble Jasper Offshore Atwood Contractor TBC Contractor TBC Discovery Offshore Discovery Offshore Ensco Ensco Maersk Drilling Maersk Drilling Transocean Transocean Greatship Global Energy Services Perforadora Certral Japan Drilling Company Seadrill Noble Noble Jasper Offshore Prospector Offshore Drilling Prospector Offshore Drilling Rig Type Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Jackup Rig Water Depth 400 400 250 400 400 350 350 400 400 400 350 350 350 350 400 400 400 400 400 400 400 400 400 400 492 492 350 350 350 375 425 530 400 400 400 350 350 Construction Status On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order Under Construction On Order Under Construction Under Construction On Order On Order Under Construction On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order On Order Delivery Date 30-Sep-2012 31-Dec-2012 1-Apr-2013 1-Dec-2012 1-Mar-2013 2-Nov-2012 2-Nov-2012 1-Mar-2013 1-Dec-2012 1-Jul-2012 1-Dec-2012 1-Mar-2013 16-Aug-2012 16-Aug-2012 20-Dec-2012 20-Jun-2013 15-Nov-2012 30-Jun-2013 1-Mar-2013 1-Jun-2013 1-Jun-2013 1-Sep-2013 1-Apr-2013 1-Oct-2013 1-Dec-2013 1-Jun-2014 1-Dec-2012 1-Jun-2013 1-Dec-2012 1-Mar-2013 1-Mar-2013 30-Sep-2013 30-Sep-2013 31-Dec-2014 1-Jun-2013 30-Sep-2013 30-Sep-2013 Rig Design PPL Shipyard Pacific Class 400 PPL Shipyard Pacific Class 400 LeTourneau Super 116E Class Friede & Goldman JU-2000E Friede & Goldman JU-2000E Friede & Goldman JU-2000A Friede & Goldman JU-2000A Friede & Goldman JU-2000E Friede & Goldman JU-2000E Keppel FELS KFELS B Class Keppel FELS KFELS B Class Keppel FELS KFELS B Class Friede & Goldman JU-2000E Friede & Goldman JU-2000E Friede & Goldman JU-3000N Friede & Goldman JU-3000N Keppel FELS KFELS B Class PPL Shipyard Pacific Class 400 Keppel FELS KFELS B Class Keppel FELS KFELS B Class Keppel FELS KFELS Super A Class Keppel FELS KFELS Super A Class Keppel FELS KFELS Super A Class Keppel FELS KFELS Super A Class GustoMSC CJ70-X150A GustoMSC CJ70-X150A Keppel FELS KFELS Super B Class Bigfoot Keppel FELS KFELS Super B Class Bigfoot LeTourneau Super 116E Class LeTourneau Super 116E Class Keppel FELS KFELS Super B Class Bigfoot GustoMSC CJ70-X150A Friede & Goldman JU-3000N Friede & Goldman JU-3000N Keppel FELS KFELS B Class Friede & Goldman JU-2000E Friede & Goldman JU-2000E Build Yard PPL Shipyard PPL Shipyard Lamprell Jurong Shipyard Pte Ltd Jurong Shipyard Pte Ltd ABG Shipyard ABG Shipyard Dalian Shipbuilding Industry Co. Dalian Shipbuilding Industry Co. Keppel FELS Keppel FELS Keppel FELS Dalian Shipbuilding Industry Co. Dalian Shipbuilding Industry Co. Jurong Shipyard Pte Ltd Jurong Shipyard Pte Ltd Keppel FELS PPL Shipyard Keppel FELS Keppel FELS Keppel FELS Keppel FELS Keppel FELS Keppel FELS Keppel FELS Keppel FELS Keppel FELS Lamprell Keppel FELS Keppel FELS Jurong Shipyard Pte Ltd Jurong Shipyard Pte Ltd Jurong Shipyard Pte Ltd Keppel FELS Dalian Shipbuilding Industry Co. Dalian Shipbuilding Industry Co. Build Cost 190,000,000 190,000,000 210,000,000 200,000,000 200,000,000 220,000,000 220,000,000 190,000,000 190,000,000 180,000,000 First Operator

220,000,000 220,000,000 180,000,000 190,000,000 180,000,000 180,000,000 231,000,000 231,000,000 230,000,000 230,000,000 500,000,000 500,000,000 200,000,000 200,000,000 160,000,000 195,000,000 210,000,000 530,000,000 235,000,000 235,000,000 180,000,000 209,000,000 209,000,000

Source: ODS-Petrodata, Company reports

Companies have also secured options to build an incremental 26 jackups and 15 floaters, the majority of which we expect to be exercised. Most of the options must be exercised in the next nine to 12 months. Given declining shipyard availability for new rig orders, we believe existing options held by the major offshore rig companies are becoming increasingly valuable and instead of allowing options to expire on their originally agreed upon termination dates, many companies are electing to negotiate extensions. Discussions are also ongoing for another 14 rigs (seven floaters and seven jackups) by several smaller rig
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Barclays Capital | U.S. Oil Services & Drilling

companies. For those companies that have mostly shunned the newbuild cycle thus far, consolidation may be the only near-term option for growth or to replace lost earnings power. We believe another round of rig company consolidation is highly likely. In addition, some of the major rig operators are likely to divest older assets in the near-term. Figure 3: Current Cycle Shipyard Options

Options - Floaters Operator Seadrill Dryships Pride Diamond Noble Aker Drilling Atwood Maersk Drilling Rig Class 12,000' DP 10,000 DP 12,000' DP 12,000 DP 12,000 DP 12,000 DP 12,000 DP 12,000 DP # of Units 2 4 1 1 1 2 2 2 15 Total Exercise Date 1Q11 4Q11 1Q11 2Q11 3Q11 Undisclosed 3Q11 Undisclosed

Options - Jackups Operator Atwood Seadrill Standard Drilling Mermaid Drilling Noble Clearwater/ Contractor TBC Discovery Ensco Maersk Drilling Transocean Capital Ship Management Corporation (CSMC)
Source: ODS-Petrodata, Company reports

Rig Class 400' IC 400' IC 400' IC 350' IC 400' IC 400' IC 400' IC 400' IC 492' IC 400' IC 400' IC

# of Units 2 6 2 2 2 2 2 2 1 3 2 26 Total

Exercise Date 2Q11/4Q11 Undisclosed Undisclosed Undisclosed Jan-12 Undisclosed Undisclosed 37105 Jul-11 Undisclosed

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Newbuild Prices Ticking Higher; Shipyard Availability Declining

The flurry of recent newbuild rig orders and concerns around shipyard availability have resulted in a tightening of capacity for many traditional shipyards. We believe the majority of slots for deliveries through 2013 are now full and 2014 availability is decreasing. For floaters, 2014 may no longer be an option at established shipyards given recent orders and existing options. Rig construction costs are also trending higher as evidenced by increased prices for several recent rig orders for Noble. We believe this is primarily due to rising steel prices and price increases for rig equipment. Figure 4: Noble Corporation Recent Newbuild Construction Costs
$240,000 $230,000 $220,000 $220,000 $210,000 $200,000 $190,000 $180,000
Noble JUTbn1& Tbn2 (ordered Dec 201 0) Noble JUTbn3 & Tbn4 (ordered Mar 201) 1

$235,000

Source: Noble Corp

Further Rig Company Consolidation Likely

For those companies that have not participated actively in the unfolding new rig construction cycle, consolidation may be the only near-term option for growth or to replace lost earnings power, as shipyard spots at established drillers have quickly filled. We believe the traditional drillers are continuing to have difficulty buying assets which most had expected to become distressed during the downturn, particularly newbuild floaters, and we expect several new offshore rig companies have likely emerged as attractive acquisition candidates. However, we believe valuations for potential acquisition candidates likely remain high due to continued dayrate and utilization strength for high-spec jackups and improvement in the deepwater and ultra-deepwater floater markets. The case for industry consolidation among the offshore rig companies is further strengthened by the aging of the offshore drilling fleet. The majority of the offshore drilling units currently in operation were built during the 1970s to mid 1980s construction cycle.

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Figure 5: Historical Offshore Rig Orders vs. Inflation Adjusted Oil Prices (WTI)
150 125 100 75 50 40 25 0 20 - Iraq, Saudi Arabia and Kuwait nationalizations (1974 - 1975) - Iranian Revolution (1979) 100 Prices collapse as OPEC quotas fail to prevent oversupply Second Gulf war followed by emerging market growth (2003 - 2008)

80

60

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Jackups

Semisubmersibles

Drillships

Inflation Adjusted WTI

Source: ODS-Petrodata, Bloomberg , Company data and Barclays Capital estimates

As a result, a significant portion of the offshore rig fleet (notably jackups) is at or close to the end of their useful lives. Increasingly, operators are also requiring that new drilling programs be completed using new-generation equipment, effectively forcing older assets into retirement. With newbuild capacity dwindling and the major offshore rig companies looking for ways to renew their fleets and replace lost earnings power, we believe acquisitions are becoming a more likely outcome. Figure 6: Recent Offshore Rig Company Consolidation Activity
Value Implied by Seller Acquisition Skeie Drilling $1.2 billion Scorpion Offshore $1.35 billion Frontier Drilling $2.16 billion Seahawk Drilling $106 million Pride International $8.6 billion Implied EBITDA Value per Rig Multiple $410 million NA $193 million NA $309 million 5x 2012E EBITDA $5 million NA $430 million 8x 2012E EBITDA Jackups/ Floaters Jackups Jackups Floaters Jackups Both

Date 3Q10 3Q10 3Q10 1Q11 1Q11

Buyer Rowan Companies Seadrill Noble Corp Hercules Offshore ENSCO PLC

Source: Company data

Rig Market Bifurcation Continues

The bifurcation between high-spec and lower-quality rigs in both the jackup and floater markets continues. In the jackup market, utilization for high-spec assets remains 90%+, while utilization for conventional equipment is in the mid 70% range. Although we expect demand for standard equipment to increase somewhat in the coming quarters due to a pickup in tendering activity and as the economics of operating older equipment improves further, we believe there is a significant amount of older equipment that is likely to be retired given a renewed focus on safety, increased complexity of drilling and the reality that a number of units are nearing the end of their useful lives. For floaters, activity levels for ultra-deepwater assets remains elevated; however, the deepwater and midwater markets remain somewhat challenging as overcapacity in the market has resulted in increased competition from higher-quality assets. We believe the low-spec portion of the offshore rig fleet will continue to face a challenging demand environment.

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Barclays Capital | U.S. Oil Services & Drilling

NOV Raising Prices; Taking Share in BOPs

We continue to believe that National Oilwell Varco will be the primary beneficiary of the new rig construction cycle. New rig orders represent a significant revenue opportunity for the company and we expect NOV to capture a high market share of new rig equipment orders, consistent with historical levels. We believe the company is also selectively raising prices for components with high steel content in light of rising steel prices. Historically, the revenue potential on a new jackup is $50 million to $75 million and NOV captured roughly 70% market share for rig packages on new jackups last cycle. NOVs revenue potential on a floating rig order is $200 million to $250 million and NOV secured a dominant amount of rig packages on new drillships and semisubmersibles last cycle. This cycle, we believe NOVs revenue per rig order could be toward the higher end of the range as rig companies are increasingly packaging orders for critical rig components, in contrast to prior cycles where a higher percentage of equipment (particularly BOPs) was separately bid. For recent floater awards, Cameron Internationals market share for BOPs (considered by many to be the leader in offshore BOP manufacturing) has moved down to 35-40% compared to its historical average of 50%. Other equipment manufacturers with leverage to the ongoing new rig construction cycle include Cameron International, Aker Solutions and to a lesser extent Rowan Companies (through LTI). For the offshore drillers, we prefer those companies which have premium fleets and are adding to earnings power with newbuilds. Our two favorite offshore drillers are Ensco Plc and Rowan Companies.

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Barclays Capital | U.S. Oil Services & Drilling

ANALYST(S) CERTIFICATION(S)
We, James C. West, Mick Pickup and Tom Ackermans, hereby certify (1) that the views expressed in this research report accurately reflect our personal views about any or all of the subject securities or issuers referred to in this research report and (2) no part of our compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report.

IMPORTANT DISCLOSURES CONTINUED

For current important disclosures, including, where relevant, price target charts, regarding companies that are the subject of this research report, please send a written request to: Barclays Capital Research Compliance, 745 Seventh Avenue, 17th Floor, New York, NY 10019 or refer to http://publicresearch.barcap.com or call 1-212-526-1072. The analysts responsible for preparing this research report have received compensation based upon various factors including the firm's total revenues, a portion of which is generated by investment banking activities. Research analysts employed outside the US by affiliates of Barclays Capital Inc. are not registered/qualified as research analysts with FINRA. These analysts may not be associated persons of the member firm and therefore may not be subject to NASD Rule 2711 and incorporated NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analysts account. On September 20, 2008, Barclays Capital acquired Lehman Brothers' North American investment banking, capital markets, and private investment management businesses. All ratings and price targets prior to this date relate to coverage under Lehman Brothers Inc. Barclays Capital produces a variety of research products including, but not limited to, fundamental analysis, equity-linked analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ from recommendations contained in other types of research products, whether as a result of differing time horizons, methodologies, or otherwise. Materially Mentioned Stocks (Ticker, Date, Price) Aker Solutions (AKSO.OL, 06-Apr-2011, NOK 127.70), 3-Underweight/1-Positive Cameron International (CAM, 06-Apr-2011, USD 55.30), 1-Overweight/1-Positive Ensco plc (ESV, 06-Apr-2011, USD 58.32), 1-Overweight/1-Positive National Oilwell Varco (NOV, 06-Apr-2011, USD 78.57), 1-Overweight/1-Positive Rowan Companies (RDC, 06-Apr-2011, USD 42.79), 1-Overweight/1-Positive Guide to the Barclays Capital Fundamental Equity Research Rating System: Our coverage analysts use a relative rating system in which they rate stocks as 1-Overweight, 2-Equal Weight or 3-Underweight (see definitions below) relative to other companies covered by the analyst or a team of analysts that are deemed to be in the same industry sector (the sector coverage universe). In addition to the stock rating, we provide sector views which rate the outlook for the sector coverage universe as 1-Positive, 2-Neutral or 3Negative (see definitions below). A rating system using terms such as buy, hold and sell is not the equivalent of our rating system. Investors should carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone. Stock Rating 1-Overweight - The stock is expected to outperform the unweighted expected total return of the sector coverage universe over a 12-month investment horizon. 2-Equal Weight - The stock is expected to perform in line with the unweighted expected total return of the sector coverage universe over a 12month investment horizon. 3-Underweight - The stock is expected to underperform the unweighted expected total return of the sector coverage universe over a 12-month investment horizon. RS-Rating Suspended - The rating and target price have been suspended temporarily due to market events that made coverage impracticable or to comply with applicable regulations and/or firm policies in certain circumstances including when Barclays Capital is acting in an advisory capacity in a merger or strategic transaction involving the company. Sector View 1-Positive - sector coverage universe fundamentals/valuations are improving. 2-Neutral - sector coverage universe fundamentals/valuations are steady, neither improving nor deteriorating. 3-Negative - sector coverage universe fundamentals/valuations are deteriorating. Below is the list of companies that constitute the "sector coverage universe": European Oil Services & Drilling Aker Solutions (AKSO.OL) Dockwise (DOCK.OL) Petroleum Geo-Services (PGS.OL) AMEC plc (AMEC.L) Maire Tecnimont (MTCM.MI) Saipem (SPMI.MI) CGGVeritas (GEPH.PA) Petrofac (PFC.L) SBM Offshore (SBMO.AS)

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Barclays Capital | U.S. Oil Services & Drilling

IMPORTANT DISCLOSURES CONTINUED

Subsea 7 SA (SUBC.OL) Wood Group (WG.L) U.S. Oil Services & Drilling Baker Hughes (BHI) Cameron International (CAM) Core Laboratories (CLB) Dril-Quip Inc. (DRQ) FMC Technologies (FTI) GulfMark Offshore, Inc. (GLF) Hercules Offshore (HERO) Key Energy Services (KEG) Noble Corp. (NE) Patterson-UTI Energy (PTEN) SEACOR Holdings, Inc. (CKH) Tenaris S.A. (TS) Transocean Ltd. (RIG) Distribution of Ratings: Barclays Capital Inc. Equity Research has 1709 companies under coverage. 43% have been assigned a 1-Overweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Buy rating; 52% of companies with this rating are investment banking clients of the Firm. 42% have been assigned a 2-Equal Weight rating which, for purposes of mandatory regulatory disclosures, is classified as a Hold rating; 44% of companies with this rating are investment banking clients of the Firm. 12% have been assigned a 3-Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Sell rating; 35% of companies with this rating are investment banking clients of the Firm. Guide to the Barclays Capital Price Target: Each analyst has a single price target on the stocks that they cover. The price target represents that analyst's expectation of where the stock will trade in the next 12 months. Upside/downside scenarios, where provided, represent potential upside/potential downside to each analyst's price target over the same 12-month period. Barclays Capital offices involved in the production of equity research: London Barclays Capital, the investment banking division of Barclays Bank PLC (Barclays Capital, London) New York Barclays Capital Inc. (BCI, New York) Tokyo Barclays Capital Japan Limited (BCJL, Tokyo) So Paulo Banco Barclays S.A. (BBSA, So Paulo) Hong Kong Barclays Bank PLC, Hong Kong branch (Barclays Bank, Hong Kong) Toronto Barclays Capital Canada Inc. (BCC, Toronto) Johannesburg Absa Capital, a division of Absa Bank Limited (Absa Capital, Johannesburg) Basic Energy Services (BAS) CARBO Ceramics (CRR) Diamond Offshore Drilling (DO) Ensco plc (ESV) Global Geophysical Services (GGS) Halliburton Co. (HAL) Hornbeck Offshore Services (HOS) Nabors Industries (NBR) Oceaneering International (OII) Rowan Companies (RDC) Seadrill Limited (SDRL) Tetra Technologies Inc. (TTI) Weatherford International (WFT) Bristow Group Inc. (BRS) Chart Industries Inc. (GTLS) Dresser-Rand Group Inc. (DRC) Exterran Holdings Inc. (EXH) Global Industries, Ltd. (GLBL) Helmerich & Payne Inc. (HP) ION Geophysical Corp. (IO) National Oilwell Varco (NOV) Parker Drilling (PKD) Schlumberger Ltd. (SLB) Superior Energy Services Inc. (SPN) Tidewater Inc. (TDW) Technip (TECF.PA) Tecnicas Reunidas (TRE.MC)

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IMPORTANT DISCLOSURES CONTINUED

Aker Solutions (AKSO NO / AKSO.OL)

NOK 127.70 (06-Apr-2011) Rating and Price Target Chart - NOK (as of 06-Apr-2011)
175

Stock Rating 3-UNDERWEIGHT Currency=NOK Date 26-Oct-2010 19-Mar-2010 18-Feb-2010 17-Aug-2009 15-Jun-2009 23-Feb-2009 Closing Price 89.50 88.40 80.25 50.50 56.00 32.55 1-Overweight 3-Underweight Rating 3-Underweight 2-Equal Weight

Sector View 1-POSITIVE

Price Target 109.00 112.00 88.00 83.00 85.00 49.00

150

125

100

75

50

25

Jul- 08

Jan- 09 Closing Price

Jul- 09

Jan- 10

Jul- 10 Rating Change

Jan- 11

Target Price

Link to Barclays Capital Live for interactive charting

Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from Aker Solutions in the past 12 months. Barclays Bank PLC and/or an affiliate trades regularly in the shares of Aker Solutions. Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from Aker Solutions within the past 12 months. Aker Solutions is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate. Aker Solutions is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC and/or an affiliate. Valuation Methodology: Our price target for Aker Solutions is derived from a DCF-based methodology. We have used our forecasted cash flows for the 2010-2013F period and thereafter assumed a cyclical growth (10% pa) until a turn in 2015 when revenues fall (10% pa) until 2016. Margins used for 2014-17F period are comparable to those over the 2004-2008 period. Our terminal value is then taken on a (WACC-g) basis assuming 3% long-term growth. Our discount rate used is 10%, in line with the 10% that we use for the sector. We then apply a 10% premium based on historical trading patterns and compared to the 0-30% that we use for the sector. The valuation is then checked against historical trading multiples. Risks which May Impede the Achievement of the Price Target: All our estimates are based on Barclays Capital European Oil & Gas equity research teams estimates for future energy supply-demand patterns, exchange rates, commodity prices and the availability of assets within the oils service industry. These estimates are subject to revision and may be materially different from eventual out comes. In addition workload is executed on a global basis in many regions with unstable regimes. All estimates assume no marked changes in the current political landscape. For Aker Solutions specifically, some earnings are exposed to lump sum contracts, which if executed incorrectly can produce significant negative margins. In addition backlog award can be lumpy and profit recognition on projects is often in a non-linear fashion. As a result there may be periodic swings in profitability.

7 April 2011

10

Barclays Capital | U.S. Oil Services & Drilling

IMPORTANT DISCLOSURES CONTINUED

Cameron International (CAM)

USD 55.30 (06-Apr-2011) Rating and Price Target Chart - USD (as of 06-Apr-2011)

Stock Rating 1-OVERWEIGHT Currency=USD Date 03-Feb-2011 Closing Price 56.99 49.24 43.66 39.07 41.16 38.47 34.69 23.32 21.66 20.92 24.26 29.41 47.76 55.20 48.44 Rating

Sector View 1-POSITIVE

Price Target 64.00 57.00 54.00 51.00 49.00 46.00 41.00 33.00 34.00 38.00 43.00 45.00 63.00 67.00 54.00

68

15-Dec-2010
60

03-Nov-2010 06-Aug-2010 17-Feb-2010 04-Nov-2009 05-Aug-2009 27-Mar-2009 04-Feb-2009 18-Nov-2008 31-Oct-2008 14-Oct-2008 31-Jul-2008
Jul- 08 Jan- 09 Jul- 09 Closing Price Jan- 10 Jul- 10 Jan- 11

52

45

38

30

22

15

20-May-2008 05-May-2008

Target Price

Link to Barclays Capital Live for interactive charting

Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by Cameron International or one of its affiliates. Barclays Bank PLC and/or an affiliate trades regularly in the shares of Cameron International. Barclays Bank PLC is associated with specialist firm Barclays Capital Market Makers, which makes a market in Cameron International stock. At any given time, the associated specialist may have "long" or "short" inventory position in the stock; and the associated specialist may be on the opposite side of orders executed on the Floor of the Exchange in the stock. Valuation Methodology: Our $64 price target is based on 18x our 2012 EPS estimate of $3.55. Risks which May Impede the Achievement of the Price Target: A material change in commodity prices would alter our earnings outlook and potentially our stance on the entire oil service and drilling sector. Commodity price changes could be affected by a change in the economic climate, gas storage levels, OPEC behavior, increasing non-OPEC oil production, and international political and economic risks.

7 April 2011

11

Barclays Capital | U.S. Oil Services & Drilling

IMPORTANT DISCLOSURES CONTINUED

Ensco plc (ESV)

USD 58.32 (06-Apr-2011) Rating and Price Target Chart - USD (as of 06-Apr-2011)

Stock Rating 1-OVERWEIGHT Currency=USD Date Closing Price 56.18 53.41 51.27 51.20 40.76 47.06 45.57 48.93 32.58 22.11 31.66 32.34 41.20 69.60 76.03 66.32 1-Overweight Rating

Sector View 1-POSITIVE

Price Target 68.00 65.00 55.00 53.00 43.00 45.00 46.00 49.00 44.00 45.00 56.00 59.00 61.00 80.00 78.00 71.00

70

15-Mar-2011 10-Feb-2011 08-Feb-2011 15-Dec-2010 02-Jul-2010 08-Apr-2010 09-Mar-2010 26-Oct-2009 24-Apr-2009 02-Mar-2009 18-Nov-2008 24-Oct-2008 14-Oct-2008
Jan- 10 Closing Price Jul- 10 Target Price Jan- 11 Rating Change

65

60

55

50

45

40

35

30

25-Jul-2008 20-May-2008 25-Apr-2008

Link to Barclays Capital Live for interactive charting

Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from Ensco plc in the past 12 months. Barclays Bank PLC and/or an affiliate trades regularly in the shares of Ensco plc. Ensco plc is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate. Valuation Methodology: Our price target is based on 8x 2012E EV/EBITDA (EV of $19.1 billion and EBITDA of $2.4 billion). Risks which May Impede the Achievement of the Price Target: A material change in commodity prices would alter our earnings outlook and potentially our stance on the entire oil service and drilling sector. Commodity price changes could be affected by a change in the economic climate, gas storage levels, OPEC behavior, increasing non-OPEC oil production, and international political and economic risks.

7 April 2011

12

Barclays Capital | U.S. Oil Services & Drilling

IMPORTANT DISCLOSURES CONTINUED

National Oilwell Varco (NOV)

USD 78.57 (06-Apr-2011) Rating and Price Target Chart - USD (as of 06-Apr-2011)
125

Stock Rating 1-OVERWEIGHT Currency=USD Date 04-Feb-2011 24-Jan-2011 Closing Price 76.45 68.25 62.22 63.30 54.00 39.16 42.43 42.54 43.08 31.50 28.02 27.06 25.35 25.50 29.87 80.87 Rating

Sector View 1-POSITIVE

Price Target 94.00 81.00 78.00 71.00 62.00 52.00 48.00 49.00 47.00 38.00 42.00 46.00 50.00 58.00 69.00 100.00

100

15-Dec-2010 24-Nov-2010 27-Oct-2010 30-Jul-2010 08-Apr-2010

75

50

04-Feb-2010 27-Oct-2009 24-Apr-2009 05-Feb-2009 09-Jan-2009

25

0 Jul- 08 Jan- 09 Jul- 09 Closing Price Jan- 10 Jul- 10 Jan- 11

18-Nov-2008 24-Oct-2008 14-Oct-2008 20-May-2008

Target Price

Link to Barclays Capital Live for interactive charting

Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from National Oilwell Varco in the past 12 months. Barclays Bank PLC and/or an affiliate trades regularly in the shares of National Oilwell Varco. National Oilwell Varco is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate. Valuation Methodology: Our price target of $94 is based on 18.8x our 2012 earnings estimate of $5.00. Risks which May Impede the Achievement of the Price Target: A material change in commodity prices would alter our earnings outlook and potentially our stance on the entire oil service and drilling sector. Commodity price changes could be affected by a change in the economic climate, gas storage levels, OPEC behavior, increasing non-OPEC oil production, and international political and economic risks.

7 April 2011

13

Barclays Capital | U.S. Oil Services & Drilling

IMPORTANT DISCLOSURES CONTINUED

Rowan Companies (RDC)

USD 42.79 (06-Apr-2011) Rating and Price Target Chart - USD (as of 06-Apr-2011)

Stock Rating 1-OVERWEIGHT Currency=USD Date Closing Price 42.67 30.76 32.27 28.19 27.20 28.81 29.81 27.41 24.68 21.37 13.20 10.84 12.91 16.05 22.25 20.76 30.55 36.85 47.34 2-Equal Weight 1-Overweight Rating

Sector View 1-POSITIVE

Price Target 46.00 40.00 37.00 33.00 30.00 29.00 27.00 28.00 24.00 21.00 18.00 23.00 30.00 32.00 35.00 38.00 46.00 48.00 53.00

55 50 45 40 35 30 25

28-Feb-2011 29-Nov-2010 04-Nov-2010 07-Sep-2010 05-Aug-2010 05-May-2010 08-Apr-2010 02-Mar-2010 04-Nov-2009

20 15 10

04-Aug-2009 27-Mar-2009 02-Mar-2009 20-Jan-2009

Jul- 08 Jan- 09 Closing Price Jul- 09 Jan- 10 Jul- 10 Rating Change Jan- 11

18-Nov-2008 04-Nov-2008 14-Oct-2008 30-Sep-2008 05-Aug-2008 20-May-2008

Target Price

Link to Barclays Capital Live for interactive charting

Barclays Bank PLC and/or an affiliate trades regularly in the shares of Rowan Companies. Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from Rowan Companies within the past 12 months. Rowan Companies is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC and/or an affiliate. Valuation Methodology: Our 12-month price target of $46 is based on 7.75x our 2012 EV/EBITDA estimate (Enterprise Value of $7,140 million and 2012 EBITDA of $921 million). Our $46 PT coincides with the upper range of our sumo-of-the-parts (SOTP) NAV analysis. Risks which May Impede the Achievement of the Price Target: A material change in commodity prices would alter our earnings outlook and potentially our stance on the entire oil service and drilling sector. Commodity price changes could be affected by a change in the economic climate, gas storage levels, OPEC behavior, increasing non-OPEC oil production, and international political and economic risks.

7 April 2011

14

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