EQUITY RESEARCH 7 April 2011

U.S. OIL SERVICES & DRILLING INDUSTRY UPDATE

U.S. Oil Services & Drilling

Offshore Rigs: Is the Next Wave of 1-POSITIVE
Unchanged
Consolidation on the Horizon? U.S. Oil Services & Drilling
James C. West
Ordering Continues Unabated: The new rig construction cycle that began during the 1.212.526.8796
fourth quarter of 2010 continues unabated. Since our January update, an additional 19 james.west1@barcap.com
jackups and 16 floaters have been ordered, bringing the total number of units ordered BCI, New York
since the beginning of the cycle to 37 jackups and 28 floaters. Companies have also Anthony Walker
secured options to build an incremental 26 jackups and 15 floaters, the majority of 1.312.609.8183
which we expect to be exercised. Most of the options must be exercised in the next nine anthony.walker@barcap.com
to 12 months. For those companies that have mostly shunned the newbuild cycle thus BCI, New York
far, consolidation may be the only near-term option for growth or to replace lost
European Oil Services & Drilling
earnings power as shipyard slots at established yards have quickly filled. We believe
Mick Pickup
another round of rig company consolidation is highly likely. In addition, some of the +44 (0)20 3134 6695
major rig operators are likely to divest older assets in the near-term. mick.pickup@barcap.com
Barclays Capital, London
Newbuild Prices Moving Higher; Shipyard Slots Filling Up: The flurry of recent
newbuild rig orders and concerns around shipyard availability have resulted in a Tom Ackermans
tightening of capacity for many traditional shipyards. We believe the majority of slots +44 (0)20 7773 4457
for deliveries through 2013 are now full. We also believe floater capacity for 2014 at the tom.ackermans@barcap.com
established yards is now mostly sold out due to recent orders and options. Rig Barclays Capital, London

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.
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

7 April 2011 2
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 Rig Name Contractor Rig Type Rig Water Depth Construction Status Delivery Date Rig Design Build Yard Build Cost First Operator
11-Nov-2010 Queiroz Delba Drsh Tbn1 Queiroz Galvao/Delba Drillship 10,000 Under Construction 1-Jul-2012 Samsung 10000 Samsung Heavy Industries Petrobras
11-Nov-2010 Queiroz Delba Drsh Tbn2 Queiroz Galvao/Delba Drillship 10,000 On Order 1-Sep-2012 Samsung 10000 Samsung Heavy Industries Petrobras
11-Nov-2010 West Auriga Seadrill Drillship 12,000 On Order 1-Mar-2013 Samsung 10000 Samsung Heavy Industries 595,000,000
11-Nov-2010 West Vela Seadrill Drillship 12,000 On Order 1-Jun-2013 Samsung 10000 Samsung Heavy Industries 595,000,000
9-Dec-2010 Odebrecht Drsh Tbn5 Odebrecht Drillship 10,000 Planned 31-Aug-2013 Daewoo
9-Dec-2010 Odebrecht Semi Tbn1 Odebrecht Semisubmersible 10,000 Planned 31-Aug-2013 Daewoo
14-Dec-2010 Pride Drsh Tbn5 Pride Drillship 10,000 On Order 1-Jul-2013 Samsung 12000 Samsung Heavy Industries 600,000,000
4-Jan-2011 Diamond Drsh Tbn1 Diamond Offshore Drillship 12,000 On Order 30-Jun-2013 GustoMSC P10000 Hyundai Heavy Industries 590,000,000
19-Jan-2011 Noble Drsh Tbn5 Noble Drillship 12,000 On Order 1-Jun-2013 GustoMSC P10000 Hyundai Heavy Industries 605,000,000 Shell
19-Jan-2011 Noble Drsh Tbn6 Noble Drillship 12,000 On Order 1-Dec-2013 GustoMSC P10000 Hyundai Heavy Industries 605,000,000
20-Jan-2011 Aker Drsh Tbn1 Aker Drilling Drillship 12,000 Planned 1-Dec-2013 Daewoo 600,000,000
20-Jan-2011 Aker Drsh Tbn2 Aker Drilling Drillship 12,000 Planned 1-Dec-2013 Daewoo 600,000,000
31-Jan-2011 Atwood Advantage Atwood Drillship 12,000 On Order 30-Sep-2013 Daewoo 600,000,000
2-Feb-2011 Ocean BlackHornet Diamond Offshore Drillship 12,000 On Order 1-Dec-2013 GustoMSC P10000 Hyundai Heavy Industries 590,000,000
11-Feb-2011 Sete Brasil Drsh Tbn1 Petrobras Drillship 10,000 On Order 1-Jan-2015 Samsung Estaleiro Atlantico Sul 662,400,000 Petrobras
11-Feb-2011 Sete Brasil Drsh Tbn2 Petrobras Drillship 10,000 On Order 1-Jan-2015 Samsung Estaleiro Atlantico Sul 662,400,000 Petrobras
11-Feb-2011 Sete Brasil Drsh Tbn3 Petrobras Drillship 10,000 On Order 1-Jan-2016 Samsung Estaleiro Atlantico Sul 662,400,000 Petrobras
11-Feb-2011 Sete Brasil Drsh Tbn4 Petrobras Drillship 10,000 On Order 1-Jan-2016 Samsung Estaleiro Atlantico Sul 662,400,000 Petrobras
11-Feb-2011 Sete Brasil Drsh Tbn5 Petrobras Drillship 10,000 On Order 1-Jan-2017 Samsung Estaleiro Atlantico Sul 662,400,000 Petrobras
11-Feb-2011 Sete Brasil Drsh Tbn6 Petrobras Drillship 10,000 On Order 1-Jan-2017 Samsung Estaleiro Atlantico Sul 662,400,000 Petrobras
11-Feb-2011 Sete Brasil Drsh Tbn7 Petrobras Drillship 10,000 On Order 1-Jan-2018 Samsung Estaleiro Atlantico Sul 662,400,000 Petrobras
4-Mar-2011 Noble Drsh Tbn6 Noble Drillship 12,000 On Order 30-Jun-2014 GustoMSC P10000 Hyundai Heavy Industries 615,000,000
17-Mar-2011 Pacific Drilling Tbn1 (Unconfirmed) Pacific Drilling Drillship 12,000 On Order 1-Oct-2013 Samsung 12000 Samsung Heavy Industries 550,000,000
17-Mar-2011 Pacific Drilling Tbn2 (Unconfirmed) Pacific Drilling Drillship 12,000 On Order 31-Dec-2013 Samsung 12000 Samsung Heavy Industries 550,000,000
25-Mar-2011 Sevan Marine Tbn1 Sevan Marine Semisubmersible 10,000 On Order 1-Dec-2013 Sevan Drilling Sevan 650 COSCO Nantong 525,000,000
25-Mar-2011 Sevan Marine Tbn2 Sevan Marine Semisubmersible 10,000 On Order 1-May-2014 Sevan Drilling Sevan 650 COSCO Nantong 525,000,000
6-Apr-2011 Maersk Drsh Tbn1 Maersk Drilling Drillship 12,000 On Order 15-Aug-2013 Samsung 12000 Samsung Heavy Industries 650,000,000
6-Apr-2011 Maersk Drsh Tbn2 Maersk Drilling Drillship 12,000 On Order 15-Nov-2013 Samsung 12000 Samsung Heavy Industries 650,000,000
28 Total

Source: ODS-Petrodata, Company reports

Figure 2: Current Cycle Jackup Orders

Order Date Rig Name Contractor Rig Type Rig Water Depth Construction Status Delivery Date Rig Design Build Yard Build Cost First Operator
5-Oct-2010 Atwood Mako Atwood Jackup 400 On Order 30-Sep-2012 PPL Shipyard Pacific Class 400 PPL Shipyard 190,000,000
5-Oct-2010 Atwood Manta Atwood Jackup 400 On Order 31-Dec-2012 PPL Shipyard Pacific Class 400 PPL Shipyard 190,000,000
18-Oct-2010 Eurasia Drilling JU Tbn1 Eurasia Drilling Jackup 250 On Order 1-Apr-2013 LeTourneau Super 116E Class Lamprell 210,000,000
18-Oct-2010 West Castor Seadrill Jackup 400 On Order 1-Dec-2012 Friede & Goldman JU-2000E Jurong Shipyard Pte Ltd 200,000,000
18-Oct-2010 West Tucana Seadrill Jackup 400 On Order 1-Mar-2013 Friede & Goldman JU-2000E Jurong Shipyard Pte Ltd 200,000,000
2-Nov-2010 Drilling & Offshore JU Tbn1 Drilling & Offshore Jackup 350 On Order 2-Nov-2012 Friede & Goldman JU-2000A ABG Shipyard 220,000,000
2-Nov-2010 Drilling & Offshore JU Tbn2 Drilling & Offshore Jackup 350 On Order 2-Nov-2012 Friede & Goldman JU-2000A ABG Shipyard 220,000,000
15-Nov-2010 West Oberon Seadrill Jackup 400 On Order 1-Mar-2013 Friede & Goldman JU-2000E Dalian Shipbuilding Industry Co. 190,000,000
15-Nov-2010 West Telesto Seadrill Jackup 400 On Order 1-Dec-2012 Friede & Goldman JU-2000E Dalian Shipbuilding Industry Co. 190,000,000
24-Nov-2010 Standard JU Tbn5 Standard Drilling Jackup 400 On Order 1-Jul-2012 Keppel FELS KFELS B Class Keppel FELS 180,000,000
2-Dec-2010 Mermaid JU Tbn1 Mermaid Drilling Jackup 350 Under Construction 1-Dec-2012 Keppel FELS KFELS B Class Keppel FELS
2-Dec-2010 Mermaid JU Tbn2 Mermaid Drilling Jackup 350 On Order 1-Mar-2013 Keppel FELS KFELS B Class Keppel FELS
14-Dec-2010 Prospector JU Tbn1 Prospector Offshore Drilling Jackup 350 Under Construction 16-Aug-2012 Friede & Goldman JU-2000E Dalian Shipbuilding Industry Co.
14-Dec-2010 Prospector JU Tbn2 Prospector Offshore Drilling Jackup 350 Under Construction 16-Aug-2012 Friede & Goldman JU-2000E Dalian Shipbuilding Industry Co.
21-Dec-2010 Noble JU Tbn1 Noble Jackup 400 On Order 20-Dec-2012 Friede & Goldman JU-3000N Jurong Shipyard Pte Ltd 220,000,000
21-Dec-2010 Noble JU Tbn2 Noble Jackup 400 On Order 20-Jun-2013 Friede & Goldman JU-3000N Jurong Shipyard Pte Ltd 220,000,000
22-Dec-2010 Jasper JU Tbn1 Jasper Offshore Jackup 400 Under Construction 15-Nov-2012 Keppel FELS KFELS B Class Keppel FELS 180,000,000
19-Jan-2011 Atwood Orca Atwood Jackup 400 On Order 30-Jun-2013 PPL Shipyard Pacific Class 400 PPL Shipyard 190,000,000
23-Jan-2011 Clearwater JU Tbn1 Contractor TBC Jackup 400 On Order 1-Mar-2013 Keppel FELS KFELS B Class Keppel FELS 180,000,000
23-Jan-2011 Clearwater JU Tbn2 Contractor TBC Jackup 400 On Order 1-Jun-2013 Keppel FELS KFELS B Class Keppel FELS 180,000,000
24-Jan-2011 Discovery Offshore Tbn 1 Discovery Offshore Jackup 400 On Order 1-Jun-2013 Keppel FELS KFELS Super A Class Keppel FELS 231,000,000
24-Jan-2011 Discovery Offshore Tbn 2 Discovery Offshore Jackup 400 On Order 1-Sep-2013 Keppel FELS KFELS Super A Class Keppel FELS 231,000,000
9-Feb-2011 ENSCO JU Tbn1 Ensco Jackup 400 On Order 1-Apr-2013 Keppel FELS KFELS Super A Class Keppel FELS 230,000,000
9-Feb-2011 ENSCO JU Tbn2 Ensco Jackup 400 On Order 1-Oct-2013 Keppel FELS KFELS Super A Class Keppel FELS 230,000,000
15-Feb-2011 Maersk JU Tbn1 Maersk Drilling Jackup 492 On Order 1-Dec-2013 GustoMSC CJ70-X150A Keppel FELS 500,000,000
15-Feb-2011 Maersk JU Tbn2 Maersk Drilling Jackup 492 On Order 1-Jun-2014 GustoMSC CJ70-X150A 500,000,000
16-Feb-2011 Transocean JU Tbn2 Transocean Jackup 350 On Order 1-Dec-2012 Keppel FELS KFELS Super B Class Bigfoot Keppel FELS 200,000,000
16-Feb-2011 Transocean JU Tbn3 Transocean Jackup 350 On Order 1-Jun-2013 Keppel FELS KFELS Super B Class Bigfoot Keppel FELS 200,000,000
22-Feb-2011 Greatship JU Tbn1 Greatship Global Energy Services Jackup 350 On Order 1-Dec-2012 LeTourneau Super 116E Class Lamprell 160,000,000
7-Mar-2011 Perforada Central JU Tbn1 Perforadora Certral Jackup 375 On Order 1-Mar-2013 LeTourneau Super 116E Class Keppel FELS 195,000,000
15-Mar-2011 JDC Tbn1 Japan Drilling Company Jackup 425 On Order 1-Mar-2013 Keppel FELS KFELS Super B Class Bigfoot Keppel FELS 210,000,000
21-Mar-2011 Seadrill JU Tbn14 Seadrill Jackup 530 On Order 30-Sep-2013 GustoMSC CJ70-X150A Jurong Shipyard Pte Ltd 530,000,000
28-Mar-2011 Noble JU Tbn3 Noble Jackup 400 On Order 30-Sep-2013 Friede & Goldman JU-3000N Jurong Shipyard Pte Ltd 235,000,000
28-Mar-2011 Noble JU Tbn4 Noble Jackup 400 On Order 31-Dec-2014 Friede & Goldman JU-3000N Jurong Shipyard Pte Ltd 235,000,000
3-Apr-2011 Jasper JU Tbn2 Jasper Offshore Jackup 400 On Order 1-Jun-2013 Keppel FELS KFELS B Class Keppel FELS 180,000,000
4-Apr-2011 Prospector JU Tbn3 Prospector Offshore Drilling Jackup 350 On Order 30-Sep-2013 Friede & Goldman JU-2000E Dalian Shipbuilding Industry Co. 209,000,000
4-Apr-2011 Prospector JU Tbn4 Prospector Offshore Drilling Jackup 350 On Order 30-Sep-2013 Friede & Goldman JU-2000E Dalian Shipbuilding Industry Co. 209,000,000
37 Total

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

7 April 2011 3
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 Rig Class # of Units Exercise Date
Seadrill 12,000' DP 2 1Q11
Dryships 10,000 DP 4 4Q11
Pride 12,000' DP 1 1Q11
Diamond 12,000 DP 1 2Q11
Noble 12,000 DP 1 3Q11
Aker Drilling 12,000 DP 2 Undisclosed
Atwood 12,000 DP 2 3Q11
Maersk Drilling 12,000 DP 2 Undisclosed
15 Total

Options - Jackups

Operator Rig Class # of Units Exercise Date

Atwood 400' IC 2 2Q11/4Q11
Seadrill 400' IC 6 Undisclosed
Standard Drilling 400' IC 2 Undisclosed
Mermaid Drilling 350' IC 2 Undisclosed
Noble 400' IC 2 Jan-12
Clearwater/ Contractor TBC 400' IC 2 Undisclosed
Discovery 400' IC 2 Undisclosed
Ensco 400' IC 2 37105
Maersk Drilling 492' IC 1 Jul-11
Transocean 400' IC 3 Undisclosed
Capital Ship Management
Corporation (CSMC) 400' IC 2
26 Total
Source: ODS-Petrodata, Company reports

7 April 2011 4
Barclays Capital | U.S. Oil Services & Drilling

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 $235,000

$230,000
$220,000
$220,000

$210,000

$200,000

$190,000

$180,000
Noble JUTbn1& Tbn2 (ordered Dec 2010) Noble JUTbn3 & Tbn4 (ordered Mar 2011)

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 1970’s to mid 1980’s construction cycle.

7 April 2011 5
Barclays Capital | U.S. Oil Services & Drilling

Figure 5: Historical Offshore Rig Orders vs. Inflation Adjusted Oil Prices (WTI)

150 - Iraq, Saudi Arabia and 100

Kuwait nationalizations Second Gulf war
125 (1974 - 1975) Prices collapse as OPEC followed by emerging
quotas fail to prevent market growth 80
100 - Iranian Revolution oversupply (2003 - 2008)
(1979)
75 60

50
40
25

0 20
1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010
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 Implied EBITDA Jackups/
Date Buyer Seller Acquisition Value per Rig Multiple Floaters
3Q10 Rowan Companies Skeie Drilling $1.2 billion $410 million NA Jackups
3Q10 Seadrill Scorpion Offshore $1.35 billion $193 million NA Jackups
3Q10 Noble Corp Frontier Drilling $2.16 billion $309 million 5x 2012E EBITDA Floaters
1Q11 Hercules Offshore Seahawk Drilling $106 million $5 million NA Jackups
1Q11 ENSCO PLC Pride International $8.6 billion $430 million 8x 2012E EBITDA Both
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. NOV’s
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 NOV’s 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 BOP’s) was separately
bid. For recent floater awards, Cameron International’s market share for BOP’s (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.

7 April 2011 7
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 analyst’s 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 3-
Negative (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 12-
month 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) AMEC plc (AMEC.L) CGGVeritas (GEPH.PA)
Dockwise (DOCK.OL) Maire Tecnimont (MTCM.MI) Petrofac (PFC.L)
Petroleum Geo-Services (PGS.OL) Saipem (SPMI.MI) SBM Offshore (SBMO.AS)

7 April 2011 8
Barclays Capital | U.S. Oil Services & Drilling

IMPORTANT DISCLOSURES CONTINUED

Subsea 7 SA (SUBC.OL) Technip (TECF.PA) Tecnicas Reunidas (TRE.MC)
Wood Group (WG.L)
U.S. Oil Services & Drilling
Baker Hughes (BHI) Basic Energy Services (BAS) Bristow Group Inc. (BRS)
Cameron International (CAM) CARBO Ceramics (CRR) Chart Industries Inc. (GTLS)
Core Laboratories (CLB) Diamond Offshore Drilling (DO) Dresser-Rand Group Inc. (DRC)
Dril-Quip Inc. (DRQ) Ensco plc (ESV) Exterran Holdings Inc. (EXH)
FMC Technologies (FTI) Global Geophysical Services (GGS) Global Industries, Ltd. (GLBL)
GulfMark Offshore, Inc. (GLF) Halliburton Co. (HAL) Helmerich & Payne Inc. (HP)
Hercules Offshore (HERO) Hornbeck Offshore Services (HOS) ION Geophysical Corp. (IO)
Key Energy Services (KEG) Nabors Industries (NBR) National Oilwell Varco (NOV)
Noble Corp. (NE) Oceaneering International (OII) Parker Drilling (PKD)
Patterson-UTI Energy (PTEN) Rowan Companies (RDC) Schlumberger Ltd. (SLB)
SEACOR Holdings, Inc. (CKH) Seadrill Limited (SDRL) Superior Energy Services Inc. (SPN)
Tenaris S.A. (TS) Tetra Technologies Inc. (TTI) Tidewater Inc. (TDW)
Transocean Ltd. (RIG) Weatherford International (WFT)

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)
São Paulo
Banco Barclays S.A. (BBSA, São 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)

7 April 2011 9
Barclays Capital | U.S. Oil Services & Drilling

IMPORTANT DISCLOSURES CONTINUED

Aker Solutions (AKSO NO / AKSO.OL) Stock Rating Sector View
NOK 127.70 (06-Apr-2011) 3-UNDERWEIGHT 1-POSITIVE
Rating and Price Target Chart - NOK (as of 06-Apr-2011) Currency=NOK

Date Closing Price Rating Price Target

175
26-Oct-2010 89.50 3-Underweight 109.00
19-Mar-2010 88.40 2-Equal Weight 112.00
150
18-Feb-2010 80.25 88.00

125
17-Aug-2009 50.50 83.00
15-Jun-2009 56.00 1-Overweight 85.00
100 23-Feb-2009 32.55 3-Underweight 49.00

75

50

25

Jul- 08 Jan- 09 Jul- 09 Jan- 10 Jul- 10 Jan- 11

Closing Price Target Price Rating Change

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) Stock Rating Sector View
USD 55.30 (06-Apr-2011) 1-OVERWEIGHT 1-POSITIVE
Rating and Price Target Chart - USD (as of 06-Apr-2011) Currency=USD

Date Closing Price Rating Price Target

03-Feb-2011 56.99 64.00
68
15-Dec-2010 49.24 57.00
60 03-Nov-2010 43.66 54.00
06-Aug-2010 39.07 51.00
52
17-Feb-2010 41.16 49.00
45 04-Nov-2009 38.47 46.00
05-Aug-2009 34.69 41.00
38
27-Mar-2009 23.32 33.00

30
04-Feb-2009 21.66 34.00
18-Nov-2008 20.92 38.00
22
31-Oct-2008 24.26 43.00
14-Oct-2008 29.41 45.00
15
31-Jul-2008 47.76 63.00
Jul- 08 Jan- 09 Jul- 09 Jan- 10 Jul- 10 Jan- 11 20-May-2008 55.20 67.00
Closing Price Target Price 05-May-2008 48.44 54.00
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) Stock Rating Sector View
USD 58.32 (06-Apr-2011) 1-OVERWEIGHT 1-POSITIVE
Rating and Price Target Chart - USD (as of 06-Apr-2011) Currency=USD

Date Closing Price Rating Price Target

70 15-Mar-2011 56.18 68.00
10-Feb-2011 53.41 1-Overweight 65.00
65
08-Feb-2011 51.27 55.00
60 15-Dec-2010 51.20 53.00
02-Jul-2010 40.76 43.00
55
08-Apr-2010 47.06 45.00
50 09-Mar-2010 45.57 46.00
26-Oct-2009 48.93 49.00
45
24-Apr-2009 32.58 44.00

40
02-Mar-2009 22.11 45.00
18-Nov-2008 31.66 56.00
35
24-Oct-2008 32.34 59.00
14-Oct-2008 41.20 61.00
30
Jan- 10 Jul- 10 Jan- 11 25-Jul-2008 69.60 80.00
Closing Price Target Price Rating Change 20-May-2008 76.03 78.00
25-Apr-2008 66.32 71.00
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) Stock Rating Sector View
USD 78.57 (06-Apr-2011) 1-OVERWEIGHT 1-POSITIVE
Rating and Price Target Chart - USD (as of 06-Apr-2011) Currency=USD

125 Date Closing Price Rating Price Target

04-Feb-2011 76.45 94.00
24-Jan-2011 68.25 81.00
100
15-Dec-2010 62.22 78.00
24-Nov-2010 63.30 71.00
75 27-Oct-2010 54.00 62.00
30-Jul-2010 39.16 52.00
08-Apr-2010 42.43 48.00
50
04-Feb-2010 42.54 49.00
27-Oct-2009 43.08 47.00

25
24-Apr-2009 31.50 38.00
05-Feb-2009 28.02 42.00
09-Jan-2009 27.06 46.00
0
18-Nov-2008 25.35 50.00
Jul- 08 Jan- 09 Jul- 09 Jan- 10 Jul- 10 Jan- 11 24-Oct-2008 25.50 58.00
Closing Price Target Price 14-Oct-2008 29.87 69.00
20-May-2008 80.87 100.00
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) Stock Rating Sector View
USD 42.79 (06-Apr-2011) 1-OVERWEIGHT 1-POSITIVE
Rating and Price Target Chart - USD (as of 06-Apr-2011) Currency=USD

Date Closing Price Rating Price Target

55
28-Feb-2011 42.67 46.00
50 29-Nov-2010 30.76 1-Overweight 40.00
04-Nov-2010 32.27 37.00
45
07-Sep-2010 28.19 33.00
40
05-Aug-2010 27.20 30.00
35 05-May-2010 28.81 29.00

30 08-Apr-2010 29.81 27.00

02-Mar-2010 27.41 28.00
25
04-Nov-2009 24.68 24.00
20
04-Aug-2009 21.37 21.00
15 27-Mar-2009 13.20 2-Equal Weight 18.00
02-Mar-2009 10.84 23.00
10
20-Jan-2009 12.91 30.00
Jul- 08 Jan- 09 Jul- 09 Jan- 10 Jul- 10 Jan- 11 18-Nov-2008 16.05 32.00
Closing Price Target Price Rating Change 04-Nov-2008 22.25 35.00
14-Oct-2008 20.76 38.00
30-Sep-2008 30.55 46.00
05-Aug-2008 36.85 48.00
20-May-2008 47.34 53.00
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
This publication has been prepared by Barclays Capital, the investment banking division of Barclays Bank PLC, and/or one or more of its affiliates as provided below. It is
provided to our clients for information purposes only, and Barclays Capital makes no express or implied warranties, and expressly disclaims all warranties of
merchantability or fitness for a particular purpose or use with respect to any data included in this publication. Barclays Capital will not treat unauthorized recipients of
this report as its clients. Prices shown are indicative and Barclays Capital is not offering to buy or sell or soliciting offers to buy or sell any financial instrument.
Without limiting any of the foregoing and to the extent permitted by law, in no event shall Barclays Capital, nor any affiliate, nor any of their respective officers, directors,
partners, or employees have any liability for (a) any special, punitive, indirect, or consequential damages; or (b) any lost profits, lost revenue, loss of anticipated savings
or loss of opportunity or other financial loss, even if notified of the possibility of such damages, arising from any use of this publication or its contents.
Other than disclosures relating to Barclays Capital, the information contained in this publication has been obtained from sources that Barclays Capital believes to be
reliable, but Barclays Capital does not represent or warrant that it is accurate or complete. The views in this publication are those of Barclays Capital and are subject to
change, and Barclays Capital has no obligation to update its opinions or the information in this publication.
The analyst recommendations in this publication reflect solely and exclusively those of the author(s), and such opinions were prepared independently of any other
interests, including those of Barclays Capital and/or its affiliates. This publication does not constitute personal investment advice or take into account the individual
financial circumstances or objectives of the clients who receive it. The securities discussed herein may not be suitable for all investors. Barclays Capital recommends that
investors independently evaluate each issuer, security or instrument discussed herein and consult any independent advisors they believe necessary. The value of and
income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The
information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future
results.
This communication is being made available in the UK and Europe primarily to persons who are investment professionals as that term is defined in Article 19 of the
Financial Services and Markets Act 2000 (Financial Promotion Order) 2005. It is directed at, and therefore should only be relied upon by, persons who have professional
experience in matters relating to investments. The investments to which it relates are available only to such persons and will be entered into only with such persons.
Barclays Capital is authorized and regulated by the Financial Services Authority ('FSA') and member of the London Stock Exchange.
Barclays Capital Inc., U.S. registered broker/dealer and member of FINRA (www.finra.org), is distributing this material in the United States and, in connection therewith
accepts responsibility for its contents. Any U.S. person wishing to effect a transaction in any security discussed herein should do so only by contacting a representative
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Non-U.S. persons should contact and execute transactions through a Barclays Bank PLC branch or affiliate in their home jurisdiction unless local regulations permit
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any other financial, investment, trading, tax, legal, accounting, retirement, actuarial or other professional advice or service whatsoever. Any South African person or
entity wishing to effect a transaction in any security discussed herein should do so only by contacting a representative of Absa Capital in South Africa, 15 Alice Lane,
Sandton, Johannesburg, Gauteng 2196. Absa Capital is an affiliate of Barclays Capital.
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Barclays Bank PLC, Australia Branch (ARBN 062 449 585, AFSL 246617) is distributing this material in Australia. It is directed at 'wholesale clients' as defined by
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regarding this publication will be furnished upon request.
US08-000001