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Current Environment............................................................. ...............................1 Industry Profile................................................................ ....................................16 Industry Trends................................................................. ..................................17 How the Industry Operates....................................................... ........................24 Key Industry Ratios and Statistics.............................................. .....................29 How to Analyze an Oil & Gas Equipment & Services Company.................30 Glossary........................................................................ ........................................35 Industry References............................................................. ..............................40 Comparative Company Analysis.................................................... .....Appendix This issue updates the one dated August 26, 2010.The next update of this Survey is scheduled for September 2011. Industry Surveys Oil & Gas: Equipment & Services Stewart Glickman, CFA, Oilfield Services & Drilling Analyst March 10, 2011 CONTACTS:INQUIRIES & CLIENT RELATIONS800.852.1641clientrelations@standardandpoor s.comSALES877.219.1247msa@standardandpoors.comMEDIAMichael Privitera212.438.6679 michael_privitera@standardandpoors.comStandard & Poor’sEquity Research Services55 Water StreetNew York, NY 10041 Topics Covered by Industry Surveys Aerospace & DefenseAirlinesAlcoholic Beverages & TobaccoApparel & Footwear:Retai lers & BrandsAutos & Auto PartsBanking BiotechnologyBroadcasting, Cable & Satell iteChemicalsCommunications Equipment Computers: Commercial ServicesComputers: Co nsumer Services &the Internet Computers: HardwareComputers: SoftwareComputers: S torage & PeripheralsElectric UtilitiesEnvironmental & Waste Management Financial Services: Diversified Foods & Nonalcoholic BeveragesHealthcare: FacilitiesHealt hcare: Managed CareHealthcare: Products & SuppliesHeavy Equipment & TrucksHomebu ilding Household DurablesHousehold NondurablesIndustrial MachineryInsurance: Lif e & HealthInsurance: Property-CasualtyInvestment ServicesLodging & Gaming Metals : Industrial Movies & Entertainment Natural Gas DistributionOil & Gas: Equipment & ServicesOil & Gas: Production & Marketing Paper & Forest ProductsPharmaceutic alsPublishing & Advertising Real Estate Investment TrustsRestaurantsRetailing: G eneral Retailing: SpecialtySavings & LoansSemiconductor Equipment Semiconductors Supermarkets & DrugstoresTelecommunications: WirelessTelecommunications: Wirelin

eTransportation: Commercial Global Industry Surveys AirlinesAutos & Auto PartsBanking Food Retail Foods & BeveragesMediaOil & GasPha rmaceuticalsTelecommunicationsTobacco Standard & Poor’s Industry Surveys 55 Water Street, New York, NY 10041 E XECUTIVE E DITOR : E ILEEN M. B OSSONG -M ARTINES A SSOCIATE E DITOR : C HARLES M AC V EIGH S TATISTICIAN : S ALLY K ATHRYN N UTTALL C LIENT S UPPORT : 1-800-523-4534. ISSN 0196-4666. USPS N O .

517-780.V ISIT THE S TANDARD & P OOR ’ S W EBSITE : http://www.standardandpoors.com STANDARD & POOR’S INDUSTRY SURVEYS (ISSN 0196-4666) is published weekly. Annual su bscription: $10,500. Please call for special pricing: 1-800-852-1641,option 2. R eproduction in whole or in part (including inputting into a computer) prohibited except by permission of Standard & Poor’s. Executive and EditorialOffice: Standar d & Poor’s, 55 Water Street, New York, NY 10041. Officers of The McGraw-Hill Compa nies, Inc.: Harold McGraw III, Chairman, President, andChief Executive Officer; Kenneth M. Vittor, Executive Vice President and General Counsel; Jack F. Callaha n, Jr., Executive Vice President and Chief FinancialOfficer; John Weisenseel, Se nior Vice President, Treasury Operations. Periodicals postage paid at New York, NY 10004 and additional mailing offices.Postmaster: Send address changes to Stan dard & Poor’s, Industry Surveys, Attn: Mail Prep, 55 Water Street, New York, NY 10 041. Information has been obtainedby Standard & Poor’s INDUSTRY SURVEYS from sourc es believed to be reliable. However, because of the possibility of human or mech anical error by our sources,INDUSTRY SURVEYS, or others, INDUSTRY SURVEYS does n ot guarantee the accuracy, adequacy, or completeness of any information and is n ot responsible forany errors or omissions or for the results obtained from the u se of such information.Copyright © 2011 Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved.STANDARD & POOR’S, S&P and S&P 500 are registered trademarks o f Standard & Poor’s Financial Services LLC. S&P MIDCAP 400 and S&P SMALLCAP 600 ar etrademarks of Standard & Poor’s Financial Services LLC. INDUSTRY SURVEYS OIL & GAS: EQUIPMENT & SERVICES / MARCH 10, 2011 1 CURRENT ENVIRONMENT US Gulf of Mexico: red tape replaces black gold The Macondo field well explosion and oil spill in the US Gulf of Mexico was a wa tershed event in thehistory of the oil and gas drilling industry, one from which the industry is still in the process of recovering.The explosion occurred on Ap ril 20, 2010, and the well was finally sealed in mid-August. An article in the New York Times in early August noted that federal scientists determined that the Macondo spill was theworld’s largest accidental release of “black gold” into marine waters. Estimate d at 4.9 million barrels of oil(with a 10% confidence interval), this spill clea rly dwarfed the previous record of 3.3 million barrels, whichspilled into Mexico’s Bay of Campeche in 1979 due to an accident with the Mexican rig Ixtoc I.Not sur prisingly, the Macondo disaster has spawned a massive amount of debate in the le gal, environmental,and regulatory arenas—and little has been resolved. Legal skirm ishing looks likely to go on for years,barring settlements. Environmental debate is likely to continue as well, given the fact that Macondoinadvertently has bec ome a participant in one of the biggest uncontrolled science experiments ever. S

ince thespill occurred, scientists have been seeking to answer this question: wh at happens when one releases chemicaldispersants far below the surface of the wa ter? In the regulatory area, a clear and consistent set of rules tobe followed—one of the former benefits of operating in US waters, as opposed to certain interna tionallocations—has been replaced by a pervasive sense of the unknown. THE REGULATORY SITUATION In late May 2010, the Obama Administration placed a moratorium on deepwater dril ling that was laterstruck down by the courts. On July 12, the administration rep laced the original deepwater ban with a newmoratorium, which it unilaterally lif ted on October 12. Meanwhile, the Minerals Management Service(MMS)—the former regu latory body in charge of domestic drilling—was renamed the Bureau of EnergyManagem ent, Regulation, and Enforcement (BOEMRE).In early January 2011, the presidentia l commission on the spill issued its final report (discussed below),citing a ser ies of systemic problems with numerous parties (including both the industry and the regulators)and making a number of recommendations. However, this is hardly t he end of the debate. Despite the liftingof the deepwater drilling moratorium on October 12 and some implementation of the commission’srecommendations, legal wran gling continues and not a single deepwater exploration drilling permit hasbeen i ssued to date (although a handful of other kinds of permits have been issued). T he reason is two-fold:regulators aren’t sure what rules they should impose, and th e industry is not sure how to comply. As the oldproverb goes, if you don’t know wh ere you’re going, no road will take you there. NTLs issued BOEMRE did issue a series of so-called “Notices to Lessees” (NTLs), which are intend ed to lay out therules for all industry participants. In June 2010, the agency i ssued two NTLs. The first, NTL-5, requiresoffshore drillers to get third-party c ertification that their blowout preventers (BOPs) are working correctly.The seco nd, NTL-6, requires operators to provide plans on how to handle an oil spill and what measureswould be taken to remediate them. NTL-10, issued in November, requ ires offshore drillers to explain howprecisely they would contain a subsea leak in the event that it got past a blowout preventer.NTL-5 has been relatively easy to handle, and most offshore drillers are now well along in the process of gett ing their BOPs certified. The other two requirements, however, are more ambiguou s. How is one toknow that prospective measures to control a spill on the surface (NTL-6) or a subsea leak (NTL-10) willwork, when such events are both highly in frequent and potentially very difficult to handle?One typical way to handle a su rface spill is to corral it with boom (such as the orange snake-like materiallyi ng on the water near the Louisiana beaches) before skimming it off the water. Bu t how much boom does Leave a Comment Submit Characters: 400 Follow Us! scribd.com/scribd twitter.com/scribd facebook.com/scribd About Press Blog Partners Scribd 101 Web Stuff Support FAQ Developers / API Jobs Terms Copyright

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