Oil & Gas Services, Global (BI SERVG)

Oil & Gas Services, Global (BI SERVG)

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Overview > 2014 Outlook: Oil and Gas Services >> Exhibit 1 of 16

Market Share, Pricing, Lower Cost Key to Servicers: 2014 Outlook 12/05/2013

Capital spending may rise4.9% yoy for independentE&Ps in 2014 vs. a 1.6%decline for integrated oilcompanies, according toconsensus. A resurgent U.S.Gulf is offsetting weakeractivity in Mexico andBrazil. The subsea marketis expected to be high, yetlower than the record treeawards this year. Shale wellcomplexity drives servicedemand, as fracking stagesreach record levels. Servicedifferentiation is key tomaintaining market share andpricing

Mehdi MenouarOil & Gas Services Team

--Bloomberg Industries

Oil & Gas Services, Global (BI DRILG)



Crude Price Volatility Keeps E&P Activity in Check: 2014 Outlook 12/04/2013

Oil price volatility mightincrease in 2014 as MiddleEast tensions and tightspare capacity inflate prices,while higher non-OPECsupply and macroeconomicconcerns weigh on prices.WTI averaged $98.10 a barrelin 2013 vs. $108.60 for Brent.Forecasts call for WTI toaverage $100 in 2014, andBrent $105. With break-evenprices for oil sands, deepwaterand unconventional playsestimated to be below $75(PFC Energy), drilling maystay positive in 2014.

For interactive exhibit on Bloomberg, run: Mehdi MenouarBI DRILG MACD |3-2-A|A12<GO> Oil & Gas Services Team





Drillers, Servicers Sales May Rise 11%, EPS 25%: 2014 Outlook 12/04/2013

Oil industry stocks haverisen ytd, with independentE&Ps, oilfield servicers andland drillers up by doubledigits, and offshore drillersand integrated oil companiesproducing gains in the singledigits. Consensus calls forservicers' sales to rise 8.8%vs. 6.9% for land drillers.Offshore drillers are expectedto increase sales 16.5% yoyas more rigs are delivered.EPS is expected to rise mostfor offshore drillers (31.9%)and for servicers (29.9%).






E&P Capex May Grow 4.9%, Led by Noble, Concho: 2014 Outlook 12/04/2013

Spending by independentE&Ps under BloombergIndustries coverage isexpected by consensus torise 4.9% on average in 2014.Concho (21.8%) and Noble(16.2%) are projected to showthe largest increase amongcompanies spending morethan $1.5 billion. Amongcompanies spending less,PDC Energy (up 57%) andWPX Energy (46.2%) areincreasing the most. E&Pscontinue to emphasize drillingefficiencies to lower costs.

For interactive exhibit on Bloomberg, run: Mehdi MenouarBI DRILG CAPEX |1360-1-A-DATA|A16<GO> Oil & Gas Services Team





Integrated Oil Companies May Cut Spending by 1.6%: 2014 Outlook 12/04/2013

Integrated oil companiesunder Bloomberg Industriescoverage are projected byconsensus to cut spendingby 1.6% in 2014. PetroChina,Exxon, Royal Dutch Shelland Total are among thebiggest companies expectedto cut spending. Petrobras,one of the biggest-spendingonshore companies, plansto boost spending 8.7% to$43.1 billion. Integrated oilcompanies drive most of theglobal oil and gas capitalspending, with the top 10companies accounting for$322.3 billion.

For interactive exhibit on Bloomberg, run: Mehdi MenouarBI DRILG CAPEX |1360-1-A-DATA|A16<GO> Oil & Gas Services Team





U.S. Oil Growth Persists, Albeit at Lower Pace: 2014 Outlook 12/05/2013

The U.S. oil revolutionremains on the agenda in2014 as development worktargets liquid rich plays.Using the same technologyemployed to unlock billionsof cubic feet of gas, E&Pshave added 2.9 million barrelsa day of oil since 2010, withthe Bakken, Eagle Fordand Permian plays driving69.3% of the growth. The EIAprojects the U.S. to add 1million daily barrels in 2014to 8.5 MMBPD. Yoy growthof 13% would be lower thanthe 15% achieved in 2012 and2013.






Gas Drilling May Accelerate N. America Recovery: 2014 Outlook 12/05/2013

U.S. natural gas productionis projected to rise 1% in2014, according to the EIA,its lowest level since 2009.While gas rigs fell 59.1% tolows of 384 from a three-yearhigh of 940, gas productionrose, buoyed by bothassociated gas from liquids-rich plays and supportive welleconomics from select gasplays (Marcellus). Falling gasproduction, which is moreservice-intensive than oil,may prompt more drilling, andaccelerate a North Americanrecovery.






Permian Shift to Horizontal Rigs May Boost Demand: 2014 Outlook 12/05/2013

The Bakken, Eagle Ford andMarcellus plays reached acritical production level in2013 as more horizontal rigswere introduced. Horizontalrigs in the Permian grew to42% of the count, from 18%in 2011. Pioneer Naturalprojects Permian productionto quadruple by 2025. Theadoption of horizontal rigsmay spur demand for drillingand oilfield services, asservice intensity tends to bethree to five times that of avertical rig.

For interactive exhibit on Bloomberg, run: Mehdi MenouarAVAT 116481108<GO> Oil & Gas Services Team





Maintaining Share, Pricing Key in Flat Rig Count: 2014 Outlook 12/05/2013

Drilling may be muted in2014, with 1,660 rigs, or 15below 2013, according toPacWest. Lower gas drilling,increased competition andovercapacity in liquid playsare weighing on servicers'pricing and margins. Tomaintain pricing leverageand market share, drillersand oilfield servicerswill increasingly have toemphasize technology tohelp E&Ps achieve higherefficiencies, lower costs andimprove wells' estimatedultimate recovery and initialproduction rates.

For interactive exhibit on Bloomberg, run: Mehdi MenouarBI SERVG DRUGP |1201-A-VALUE|12|||R29032448<GO> Oil & Gas Services Team





Record Multistage Fracking With Shale Development: 2014 Outlook 12/17/2013

Improved drilling efficiencies,achieved through pad drilling,are helping E&Ps drill morewells faster and at a lowercost. PacWest estimatesU.S. E&Ps will frack a record15,826 horizontal wells in2014, 4.6% higher yoy evenas horizontal rigs rise a mere0.9% in 2014. Multistagefracking is also projectedto jump 9.4% to a record322,100 stages, as E&Pfocus turns to full shale-development mode andmaximizing production out ofeach drilled well.






Well Complexity to Drive Shale Servicers' Growth: 2014 Outlook 12/17/2013

Horizontal wells are morecomplex to drill than verticalwells, making them moreservice intensive. Thesheer volume of productsand services rendered perwell drilled and fracked ispropelling sales of a selectfew shale servicers to records,even as North America reelsfrom overcapacity and weakpricing (pressure pumping,coiled tubing). Consensuspoints to a recovery in 2014,with shale servicers' salesprojected to rise 9.3%,compared with an average of1.8% in 2013.






Pressure Pumping Improves, Yet 25% of Fleet Idle: 2014 Outlook 12/05/2013

U.S. pressure pumpingremains oversupplied with25% of capacity idle in2014, according to PacWestestimates. The marketreached $44 billion in sales in2012 to become the largestof 31 oilfield segmentstracked by Spears. Oil drillingrequires less horsepowerthan gas, which exacerbatesthe oversupply and weakenspricing. Rising frackingstages per well and 24-houroperations combined withcost efficiencies are helpingservicers improve revenueand margins.

For interactive exhibit on Bloomberg, run: Mehdi MenouarBI SERVG DRUGP |1201-A-VALUE|12|||R29818880,29884416<GO> Oil & Gas Services Team





International Markets to Drive Oil Servicer Growth: 2014 Outlook 12/05/2013

Oilfield servicers are seekinginternational growth asNorth America's recoveryslowly improves. NorthAmerican revenue for thefour top companies fell3.2% on average in thefirst three quarters of 2013,compared with a 9.2% gaininternationally. Revenueper rig tends to be higherinternationally on moreservices rendered. Landdrillers such as Nabors arealso looking internationallyfor underutilized legacy rigs,with more AC-powered rigsdisplacing mechanical ones.

For interactive exhibit on Bloomberg, run: Mehdi MenouarBI SERVG 1090 |1098-2-Q|Q12|||R3418,<GO> Oil & Gas Services Team





Gulf Drilling Resumption May Spur Services Demand: 2014 Outlook 12/05/2013

U.S. Gulf drilling is expectedto rise in 2014 and beyond asmore E&Ps return followingthe 2010 Macondo disaster.While new well permittinghas been slower ytd vs.2012, deepwater drilling isstrengthening, with floatersexpected to reach 58 unitsfrom 38. Rising explorationand development is boostingutilization and dayrates foroffshore rigs and supportvessels. Oilfield servicesdemand has picked up,helping offset weaker marketsin Brazil and Mexico.






Cost Control Key Focus for Subsea Equipment Makers: 2014 Outlook 12/05/2013

The subsea equipmentmarket may stay strong in2014, yet cool from 2013,when an estimated record583 contracts for "trees," adevice used to control oiland gas, will be granted.Questoffshore expects 519awards, 41% more than the2009-12 average. Brazil,which made up 33% of 2013awards, may order 84 fewertrees. The backlog amongequipment makers (FMC,Cameron) is at a record, yetaggressive top-line growth ishurting margins. Cost controlwill be key.






Oilfield Services & Drilling Global 2014 Outlook: Video 01/14/2014

The major themes for thedrilling and oilfield servicesindustry in 2014 include amodest increase in E&Pspending, supported by acrude oil price above $100.Offshore, ultradeepwaterfloater rates may be at aninflection point. Onshore,the U.S. oil renaissance isexpected to remain on track,with U.S. rigs expected tobe flat as E&Ps emphasizedrilling efficiencies. Click onthe image at the left for avideo of Bloomberg AnalystMehdi Menouar's outlook forthe industry.

For interactive exhibit on Bloomberg, run: Mehdi MenouarPLYR VOD 116892220<GO> Oil & Gas Services Team


Oil & Gas Services, Global (BI SERVG)

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