Sector Update Fall 2014

Energy Investment Banking North America

Energy Services & Equipment Sector Report In this Issue: – Sector Trends and Insights – M&A Activity – Valuation Analysis

About William Blair Investment Banking

William Blair’s investment banking group combines signi�icant transaction experience, rich industry knowledge, and deep relationships to deliver successful advisory and �inancing solutions to our global base of corporate clients. We serve both publicly traded and privately held companies, executing mergers and acquisitions, growth �inancing, �inancial restructuring, and general advisory projects. This comprehensive suite of services allows us to be a long-term partner to our clients as they grow and evolve. From 2010-2014, the investment banking group completed more than 330 merger-andacquisition transactions worth $73 billion in value, involving parties in 36 countries and �ive continents, was an underwriter on more than 20% of all U.S. initial public offerings, and raised nearly $100 billion in public and private �inancing.

Joseph M. Niemiec Head of Energy Banking [email protected] +1 312 364 5315 Andrew M. Jessen Managing Director [email protected] +1 312 364 5390 Europe

Matthew B. Gooch Head of European Banking [email protected] +44 20 7868 4478

Matthew M. Zimmer Managing Director [email protected] +44 20 7868 4502

William Blair

William Blair’s Energy Services & Equipment Contacts North America Andrew M. Jessen

Joseph M. Niemiec Head of Energy Banking

Managing Director

Education:

Chicago (MBA), Illinois (BS)

Education:

Chicago (MBA), Middlebury (AB)

Contact Info:

[email protected] +1 312 364 5315

Contact Info:

[email protected] +1 312 364 5390

Joined Blair:

2004

Joined Blair:

2004

Europe Matthew B. Gooch

Matthew M. Zimmer

Head of European Banking

Managing Director

Education:

Chicago (MBA), Emory (BA), CFA

Education:

Columbia (MBA), Notre Dame (BA)

Contact Info:

[email protected] +44 20 7868 4478

Contact Info:

[email protected] +44 20 7868 4502

Joined Blair:

2000

Joined Blair:

2007

Energy Services & Equipment Segment Focus Oilfield Services & Equipment

Midstream / Downstream

Alternative / Other



Drilling Products & Services



Engineered Systems



Alternative Energy Services



Oil & Gas Equipment



Engineering & Construction



Energy Efficiency



Infrastructure Installation



Pumps, Valves & Pipes



Ethanol & Biodiesel



Production & Well Maintenance



Testing & Inspection



Smart Grid Technology



Geophysical Services



Transportation, Logistics & Distribution



Solar & Wind Equipment

Energy Services & Equipment William Blair’s Energy Services & Equipment Contacts

William Blair

William Blair Spotlight – Recent Energy Services & Equipment Transactions Not Disclosed has been acquired by Norwest Equity Partners

August 2014

$383,720,581

Follow-on Offerings

August 2014 & April 2014

$401,452,368

Follow-on Offering

June 2014

Not Disclosed has been acquired by

June 2014

 William Blair represented Uintah Engineering & Land Surveying (“UELS”), a portfolio company of Moelis Capital Partners, in connection with its sale to Norwest Equity Partners  Uintah Engineering & Land Surveying is the market-leading provider of information services including surveying, drafting and engineering specializing in the energy industry  Norwest Equity Partners is a leading private equity firm with nearly $5 billion in capital under management that invests in profitable and growing middle market companies

 William Blair acted as a co-manager in the offerings  Hi-Crush Partners is a pure play, low-cost, domestic producer and supplier of premium monocrystalline sand used as a proppant to enhance the recovery rates of hydrocarbons from oil and natural gas wells  Hi-Crush Partners produces a range of frac sand sizes for use in all major U.S. shale basins and is one of the few Northern White sand producers with onsite rail capacity for unit trains

 William Blair acted as a co-manager in the offering  Emerge Energy Services is a diversified energy services company that operates in two key segments of the energy industry: Sand Production and Fuel Processing and Distribution  Emerge Energy Services’ Sand Production subsidiary produces silica sand that is a key input for the hydraulic fracturing of oil and gas wells and Emerge Energy Services’ Fuel Processing and Distribution segment is primarily focused on acquiring, re-refining and selling transportation mixture

 William Blair represented Hobré Instruments B.V., a portfolio company of Parcom Capital Management, in connection with its sale to AAC Capital Benelux  Hobré Instruments is a leading provider of online analyzers, sample systems, and complete turnkey systems and solutions to the oil and gas and process industries  AAC is a leading Benelux mid-market buy-out firm, which has to date completed 27 management buyouts, of which 20 have been realized

$155,000,000

 William Blair represented MEGTEC Holdings, Inc., a portfolio company of Hamilton Robinson Capital Partners and Stephens Capital Partners, in conjunction with its sale to The Babcock & Wilcox Company for $155 million

has been acquired by

 MEGTEC designs, engineers, manufactures and services sophisticated capital equipment for energy efficiency and carbon abatement, as well as for solar panel film and and electric car battery production

June 2014

Not Disclosed has been acquired by

December 2013

 Babcock & Wilcox Company is a $3.0 billion market cap leader in clean energy technology and services, primarily for the nuclear, fossil, and renewable power markets  William Blair represented Dixie Electric, a portfolio company of One Rock Capital Partners, in connection with its sale to First Reserve  Dixie Electric is the market-leading provider of electrical infrastructure materials and services to the energy industry  First Reserve is a premier global energy-focused private equity and infrastructure investment firm with over $24 billion of raised capital since 1983

Energy Services & Equipment William Blair Spotlight – Recent Energy Services & Equipment Transactions

William Blair

Selected Energy Services & Equipment Transactions $383,388,215

$383,720,581

Not Disclosed

Not Disclosed

Not Disclosed

$155,000,000

has been acquired by

has been acquired by

has been acquired by

Norwest Equity Partners

AAC Capital

The Babcock & Wilcox Company

Follow-on Offering

Follow-on Offerings

August 2014

June 2014

June 2014

June 2014

April 2014

Surveying, Drafting & Engineering Services

O&G Analyzers

Capital Equipment

Frac Sand / Midstream Logistics

Frac Sand

Electrification Services

Not Disclosed

Not Disclosed

Not Disclosed

$207,300,000

$485,530,000

Not Disclosed

has been acquired by First Reserve

December 2013

®

has been acquired by

has been acquired by

has been acquired by

has been acquired by

Wellspring Capital Management

Wabtec Corporation

Kelso & Company

CECO Environmental Corporation

Follow-on Offerings

September 2013

September 2013

August 2013

Mar. ‘13 & Jun. ‘13

Staffing Services

Swellable Packers

Mobile Onsite Refueling

Capital Equipment

Frac Sand

Energy-Efficiency Motors

$1,723,872,733

$380,800,000

Not Disclosed

$130,000,000

Not Disclosed

$795,000,000

has been acquired by

has been acquired by

has been recapitalized by

has been acquired by

Charterhouse Capital Partners LLP

Sterling Investment Partners

KRG Capital

Indorama Ventures PLC

September 2012

September 2012

August 2012

Heat Tracing

Explosion Proof Equipment

Energy-Efficiency Services

Security Integration Services

Petrochemicals

Not Disclosed

$251,000,000

Not Disclosed

Not Disclosed

$349,563,000

has been acquired by

has been acquired by

October 2013

Initial Public & Follow-on Offerings Nov. ’12 & Mar. ’13 PVF Distribution

$47,840,000

Initial Public & Follow-on Offering

May ’11 & Sept. ‘12

C O N S U T IL IT Y

has been acquired by Sumitomo Corporation

March 2013

March 2012

L ID A T E D S E R V IC E S , IN C .

has been acquired by

Follow-on Offerings Convertible

US Infrastructure

Follow-on Offering Convertible Notes

DuPont

Aggreko plc

July 2011

November 2010

December 2010

December 2010

Petrochemical Equipment

Utility Services

Solar Products

Capital Equipment

Equipment Rental

Process Optimization Software

$269,107,000

Not Disclosed

$74,997,000

Not Disclosed

Not Disclosed

$778,000,000

has been acquired by

has been acquired by

has been acquired by ValueAct Capital

Follow-on Offering

February 2012

GEN ERAC Initial Public Offering

February 2010 Generators

§363 sale to Valero Renewable Fuels Co.

Follow-on Offering

CST Industries

Nikkiso Co., Ltd.

February 2010

September 2009

September 2009

August 2009

Ethanol Production

Heat Exchangers

Engineering & Construction

O&G Pumps

September 2010

2009 Seismic Services

Energy Services & Equipment Selected Energy Services & Equipment Transactions

William Blair

William Blair Energy Services & Equipment Equity Research Coverage Brandon Dobell – Energy Services

+1 312 364 8773 [email protected]

Chase Jacobson – Engineering & Construction and Engineered Equipment

+1 212 237 2748 [email protected]

Nick Heyman – Diversified Industrials

+1 212 237 2740 [email protected]

To receive research materials on any of the companies or sectors above please contact Jenny Romero ([email protected]).

Energy Services & Equipment William Blair Energy Services & Equipment Equity Research Coverage

William Blair

Table of Contents Energy Services & Equipment Update .................................................................................................................................................................................................. 1 Rig Count & Key Economic Data .............................................................................................................................................................................................................. 3 Selected M&A Activity .................................................................................................................................................................................................................................. 8 M&A Trends.................................................................................................................................................................................................................................................... 13 Public Comps.................................................................................................................................................................................................................................................. 17 Quarterly Market Update – All Industries........................................................................................................................................................................................ 27 Notes .................................................................................................................................................................................................................................................................. 31 Disclosures ...................................................................................................................................................................................................................................................... 32

Energy Services & Equipment Table of Contents

Energy Services & Equipment Update

William Blair

Energy Services & Equipment Update The M&A market for energy services & equipment transactions has been robust in 2014. The year-to-date transaction value of approximately $62 billion represents a 35% increase from the corresponding period in 2013; there have been 331 transactions in the sector thus far this year, which is an increase of 35% over the same period in 2013. The surge in M&A activity is attributable to several factors, including: i) accelerated growth in the energy sector, particularly in North America; ii) increased appetite for energy exposure from buyers; iii) strong access to liquidity; and iv) a continuing economic recovery. The energy sector’s accelerated growth has created what we view as a fundamental change in how buyers are viewing the opportunity to deploy capital in a higher growth and relatively more stable market environment. The favorable energy services & equipment market backdrop has resulted in a larger universe of strategic buyers and private equity funds pursuing energy exposure. For example, several recent, notable deals have been completed in the testing & inspection segment by ALS, Bureau Veritas, Mistras, and TÜV SÜD, who are all looking for increased energy-related revenue. This trend is also accentuated by B/E Aerospace’s leap into the market with five completed energy services transactions since 2013. Additionally, we have seen accelerated activity across generalist private equity funds in the sector such as Norwest Equity Partners’ acquisition of UELS and AAC Capital’s acquisition of Hobré Instruments. These funds have had impressive returns and will look to replicate their success in the highly attractive energy market. The trend of generalist private equity funds pursuing energy exposure has resulted in a record number of financial sponsor transactions, which represent 15% of all energy services & equipment transactions year to date, compared to only 6% in 2010. We expect a continued increase in financial sponsor transactions based on: i) a large number of private equity funds that have aggressively pursued energy services & equipment deals, but have not yet completed a transaction; ii) an increase in the number of funds looking for energy exposure; and iii) a significant amount of capital overhang across private equity funds. Additionally, several strategic buyers have been divesting assets to focus on core operations rather than expanding their service offerings, which bodes well for financial buyers to compete in sale processes. For example, Cameron recently agreed to divest its Centrifugal Compression and Reciprocating Compression business divisions, which were viewed as non-core. Additionally, Weatherford has been shedding non-core assets while selectively pursuing M&A opportunities. While the M&A market has seen strong growth in 2014, valuations have remained in line with historical levels. For the year-to-date period the average EV/LTM revenue multiple is 1.52 times, while the average EV/LTM EBITDA multiple is 8.9 times. Despite a robust M&A market, valuations in the energy services & equipment sector have not ballooned as to stymie deal activity. We believe that current valuations are at a level that will continue to attract strong interest from buyers and will see business owners actively considering or pursuing sale processes. Multiples for publicly traded energy services & equipment companies are above the long-term median levels and are currently trading at 9.0 times EV/LTM EBITDA. Public company valuations have continued to increase from a trough in Q3 2012 of 7.4 times EV/LTM EBITDA, which is largely attributable to improving operating performance and an increasingly favorable growth outlook. Public comparables have collectively lagged the S&P 500 both recently and in the longer term. However, there have been certain segments of the market that have performed extraordinarily well, such as small cap services companies that have materially outperformed the broader market. ─ Joe Niemiec Head of Energy Banking

Energy Services & Equipment Energy Services & Equipment Update 1

William Blair

The following is a summary of public company valuation trends for the energy services & equipment sector over the past 5 years and the last 12 months. The energy services & equipment composite (ES&E) represents the public companies highlighted on pages 16 to 25 of this report.

5-Year ES&E Composite vs. S&P 500 ES&E +61.4%

(Indexed Price) 200%

12-Month ES&E Composite vs. S&P 500

S&P 500 +94.1%

ES&E +13.0% 130%

150%

115%

100%

100%

50%

85%

0% Aug-09

S&P 500 +22.1%

(Indexed Price)

Aug-10

Aug-11

Aug-12

Aug-13

Aug-14

Source: FactSet Research Systems as of August 28, 2014.

70% Aug-13

Nov-13

Jan-14

Apr-14

Jun-14

Aug-14

Source: FactSet Research Systems as of August 28, 2014.

5-Year EV/LTM EBITDA Over Time – ES&E Composite Median: 8.5x

15.0x

10.0x

7.7x

8.1x

Q2

Q3

9.3x

10.4x

9.9x

8.5x

7.8x

8.5x

Q3

Q4

Q1

7.6x

7.4x

7.8x

8.5x

8.5x

Q2

Q3

Q4

Q1

Q2

9.1x

9.3x

8.9x

9.3x

9.0x

Q3

Q4

Q1

Q2

Current

7.1x 5.0x

0.0x Q1

Q4

2010

Q1

Q2

2011

2012

2013

2014

Median EV/EBITDA Trading Multiples Current

6 Months

1 Year

3 Years

5 Years

Oil & Gas Equipment

9.8x

10.2x

9.9x

8.6x

5.6x

Geophysical Services

4.3x

7.3x

5.4x

6.4x

5.6x

Land Drilling

6.7x

6.6x

6.2x

6.8x

5.1x

Offshore Drilling

6.9x

7.2x

9.0x

8.2x

4.2x

Well Services

9.5x

8.2x

7.5x

7.4x

5.1x

Offshore Services

8.6x

9.0x

10.2x

9.3x

4.9x

Large Cap Services

10.7x

9.6x

8.6x

8.8x

7.2x

Small Cap Services

13.9x

14.5x

11.3x

7.4x

6.2x

9.4x

9.7x

8.9x

7.5x

6.0x

Engineered Equipment

12.4x

12.7x

11.1x

8.3x

5.4x

S&P 500

11.0x

10.8x

10.1x

8.3x

8.6x

Engineering & Construction

Source: Capital IQ as of August 28, 2014.

Energy Services & Equipment 2 Energy Services & Equipment Update

Rig Count & Key Economic Data

William Blair

Rig Count & Key Economic Data Oil & gas activity stands at a near record high with rig counts close to levels experienced prior to the recession in 2008. Year-to-date rig count in the U.S. has increased over 9%. Oil prices remain at attractive levels, which have resulted in a large growth in oil rigs of over 14% in 2014. Gas prices, however, have remained at levels that have not encouraged drilling activity and, as such, gas-related rigs have decreased nearly 9% in 2014. Rig count growth has been skewed to oil rich areas, such as the Permian, Williston, and DJNiobrara basins, which collectively have seen over 100 rig additions. We believe that ongoing global conflict will continue to put pressure on oil prices, which will result in continued oil-related drilling activity. We do not foresee a near-term reversal of gasrelated activity, but we do have a bullish view in the longer term as capital investment in petrochemicals and natural-gas-fueled infrastructure help to absorb excess gas supply.

U.S. Rig Count Data U.S. Rig Count 2,500 2,000 1,500 1,000 500 0

2000

2001

2002

2003

2004

2005

2006

U.S. Rig Oil / Gas Split 2,500

2007

2008

2009

2010

2011

2012

2013

2014

U.S. Rig Drilling Type Oil

Gas

1,500

2,000

1,200

1,500

900

1,000

600

500

300

0

0

Directional

Horizontal

Vertical

Source: All U.S. and International rig count data provided by Baker Hughes.

Energy Services & Equipment Rig Count & Key Economic Data 3

William Blair

U.S. Rig Count Data (cont’d) YTD Change in Major U.S. Basins

+4% +16% (11%)

+24% +4% 0% (8%)

+60% +29%

+19%

(40%)

(24%)

5%

(12%)

U.S. Basin Count Detail Basin

Current(1)

YTD Change

YoY Change

Ardmore Woodford

6

14

10

(40%)

(57%)

Arkoma Woodford

8

2

5

60%

300%

Barnett

26

30

34

(24%)

(13%)

Cana Woodford

33

28

36

(8%)

18%

DJ-Niobrara

62

49

50

24%

27%

Eagle Ford

200

234

228

(12%)

(15%)

9

11

9

0%

(18%)

Granite Wash

67

72

52

29%

(7%)

Haynesville

45

44

43

5%

2%

Marcellus

76

87

85

(11%)

(13%)

Mississippian

78

70

75

4%

11%

555

466

468

19%

19%

44

35

38

16%

26%

192

182

185

4%

5%

Fayetteville

Permian Utica Williston

Prior Year(2)

(1): Data as of 8/25/2014. (2): Data as of 8/23/2013. (3): January '14 data as of 1/3/2014. Source: All U.S. and International rig count data provided by Baker Hughes.

Energy Services & Equipment 4 Rig Count & Key Economic Data

Jan ‘14(3)

William Blair

International Rig Count Data YTD Change Globally, by Region

+21% +12%

+7%

(1%)

(1%) +1%

0%

Global Rig Count Detail Region

Land

Offshore

North America

2,220

61

1,799

479

2,281

12%

9%

339

68

354

51

407

1%

(3%)

Latin America Europe Middle East Africa Asia Australia

Oil

Gas

Total

YTD Change

YoY Change

98

55

90

42

153

21%

10%

378

54

349

81

432

7%

14%

91

46

105

21

137

(1%)

7%

126

106

174

56

232

(1%)

3%

14

7

8

13

21

0%

31%

Source: All U.S. and International rig count data provided by Baker Hughes.

Energy Services & Equipment Rig Count & Key Economic Data 5

William Blair

Key Economic Data Commodity Inputs WTI and Brent

Natural Gas Prices WTI

Brent

$160.00

$6.00

$120.00

$4.50

$80.00

$3.00

$40.00 $0.00

Current WTI Price: $94.55 Current Brent Price: $102.42

Current: $4.02

$1.50 $0.00

Source: The Wall Street Journal / Haver Analytics.

Source: The Wall Street Journal / Haver Analytics.

Steel Prices

U.S. Dollar Exchange Rate and Dollar Index Current: $440

$/€

Dollar Index

$1,000

$1.50

90.0

$750

$1.40

85.0

$500

$1.30

80.0

$250

$1.20

$0

Source: Bloomberg.

Energy Services & Equipment 6 Rig Count & Key Economic Data

$1.10

Source: Federal Reserve.

Current $/€: $1.35 Current Dollar Index: 85.0

75.0

70.0

William Blair

Recent U.S. Economic Data U.S. GDP Growth Rate 10.0%

U.S. Unemployment Rate Current: 4.2%

12.0%

Current: 6.2%

10.0%

5.0% 0.0%

8.0%

(5.0%)

6.0%

(10.0%)

4.0%

Source: Bureau of Economic Analysis.

Source: Bureau of Labor Statistics.

U.S. Average Hours Worked

10-Year U.S. Treasuries Yield and CPI Current: 38.6

40.0 39.0

38.0

Yield

3.0% 1.0%

37.0

(1.0%)

36.0

(3.0%)

Source: U.S. Federal Reserve.

Inflation

5.0%

Current Yield: 2.5% Current Inflation: 2.0%

Source: Bureau of Economic Analysis.

Energy Services & Equipment Rig Count & Key Economic Data 7

Selected M&A Activity

William Blair

Selected M&A Activity Energy Services & Equipment Transactions ($ in millions) Date Announced 08/28/14

Enterprise Value -

Target (Unit Sold) / Business Description Target Nation The NACHER Corporation United States Provides maintenance services to oil, gas, and petrochemical industries

Buyer Mistras Group

08/26/14

Uintah Engineering & Land Surveying (UELS) Provider of information services specializing in the energy industry

United States

Norwest Equity Partners

08/22/14

HDB Provides construction, fabrication, and turnaround services to energy companies in central California

United States

Matrix Service

08/20/14

RCI Consultants Provides project management and project support services to the energy and petrochemical industry

United States

08/18/14

Enterprise Value/LTM Revenue -

EBITDA -

-

-

-

$10

0.50x

-

TÜV SÜD

-

-

-

Analysts United States Provides industrial diagnostic evaluations and maintenance solutions

Bureau Veritas

-

-

-

08/18/14

Cameron International (Centrifugal Compression Manufacturing Business) Flow equipment products, systems, and services

United States

Ingersoll-Rand

$850

2.15x

-

08/18/14

Recapture Solutions Provides solutions for power and flare needs of oil and gas production companies

United States

Intervale Capital

-

-

-

07/20/14

Compressor Systems United States Fabricates, sells, rents, and services natural gas compressors

Compressco Partners

$919

2.96x

11.2x

07/16/14

Cadre Services Produces frac–sand proppants for oil and natural gas applications

United States

U.S. Silica Holdings

$98

-

8.8x

07/01/14

Hobré Instruments Designs, manufactures, markets, and maintains on-line analyzers

Netherlands

AAC Capital

-

-

-

06/26/14

Petrofac FPSO Holding (80% Stake) Acquires and holds floating production storage units

United Kingdom First Reserve

$530

-

-

06/25/14

EV Offshore United Kingdom Dunedin Designs and develops cameras for the oil and gas industry in the United Kingdom and internationally

$117

3.45x

-

06/25/14

Nabors Industries (Completion & Production Services Businesses) Creates completion and production services operations

$2,919

1.41x

9.1x

06/01/14

Axip Energy Services United States Contract compression, processing and after-market services business

Enerflex

$430

3.36x

7.5x

05/28/14

PetroLogistics Operator of a dehydrogenation facility that produces polymer grade and chemical grade propylene

United States

Flint Hills Resources

$2,098

2.73x

8.8x

05/23/14

KUDU Industries Manufactures progressing cavity pump solutions for the oil and gas industry

Canada

Schlumberger

$239

-

-

05/13/14

MEGTEC Systems Manufactures capital equipment for process and renewable industries

United States

The Babcock & Wilcox Company

$155

-

-

05/08/14

Desert NDT Provides nondestructive testing solutions

United States

ShawCor

$260

-

7.9x

04/08/14

Hi-Crush Augusta Engaged in processing frac sand

United States

Hi-Crush Partners

$224

-

7.5x

Bermuda

C&J Energy Services

Sources: Capital IQ and Merger Market.

Energy Services & Equipment Selected M&A Activity 8

William Blair

Energy Services & Equipment Transactions (cont’d) ($ in millions) Date Announced 03/31/14

Target (Unit Sold) / Business Description Vision Oil Tools Provider of fishing services and oilfield rental tools

Target Nation United States

Buyer B/E Aerospace

03/24/14

Weatherford International (Pipeline and Specialty Services Business) Oil and gas pipeline pigs manufacturing and pipeline cleaning, inspection, and maintenance business

United States

Baker Hughes

03/18/14

Anchor Drilling Fluids USA Provides integrated fluids management and customized drilling fluids, and related services solutions

United States

03/14/14

PPI Technology Services Provides upstream, midstream, and downstream oilfield services in the United States and internationally

02/18/14

Enterprise Value $180

Enterprise Value/LTM Revenue -

EBITDA -

$241

-

-

Calumet Lubricants

$337

1.09x

10.1x

United States

Cardno Limited

$145

1.09x

6.7x

SeaMex (50% Stake) Owns and manages jack-up drillings units in Mexico, and formed as an equally joint venture between Seadrill and Fintech Advisory

Mexico

Fintech Advisory

$976

-

-

01/20/14

Cameron International (Reciprocating Compression Business Division) Flow equipment products, systems, and services

United States

General Electric Company

$550

1.82x

11.0x

01/13/14

Foster Wheeler Operates in engineering and construction, as well as power generating equipment businesses worldwide

United Kingdom AMEC

$2,752

0.83x

10.6x

01/07/14

Varel International Energy Services Manufactures oilfield tools

United States

Sandvik AB

$740

2.18x

-

01/06/14

Wildcat Wireline Provides cased hole electric wireline services to the oil and gas industry

United States

B/E Aerospace

$152

-

-

12/23/13

Hoover Energy Partners United States Engaged in the construction, acquisition, and optimization of midstream pipelines and plant assets located in the Permian

Regency Energy Partners

$290

-

-

12/18/13

Dixie Electric Oilfield electrification services

United States

First Reserve

-

-

-

12/10/13

Innovative Mag-Drive Designs and manufactures sealless magnetic drive centrifugal pumps

United States

Flowserve

$79

4.71x

11.7x

12/09/13

Stream Provides solutions in the field of valves, piping, electrical, and instrumentation

Norway

MRC Global

$260

-

-

12/09/13

Valerus Compression Services (Field Solutions Business) An integrated oil and gas surface facility solutions provider

United States

Kentz

$435

0.88x

8.4x

11/22/13

Aker Well Service and Extreme Trading & Mechanical Norway Equipment Supplies wireline, tractor, and cased hole logging services to the oil and gas industries

EQT Partners

$658

-

9.0x

11/12/13

Carmagen Engineering Provides engineering consulting and project management services to the oil and gas industry

United States

Mistras Group

-

-

-

11/11/13

Elkhorn Holdings Operates in industrial construction and fabrication businesses

United States

John Wood Group

$217

0.87x

-

11/04/13

Swift Technical Services Provides manpower to the oil and gas industry globally

United Kingdom Wellspring Capital Management

-

-

-

10/07/13

Outrigger Energy Engaged in providing range of midstream services to crude oil and natural gas producers

United States

$200

-

-

Sources: Capital IQ and Merger Market.

Energy Services & Equipment 9 Selected M&A Activity

Kayne Anderson Energy

William Blair

Energy Services & Equipment Transactions (cont’d) ($ in millions) Date Announced 09/19/13

Target (Unit Sold) / Business Description Wildcat Permian Services Engaged in oil and gas infrastructure development

Target Nation United States

Enterprise Value $213

Buyer JP Energy Development

Enterprise Value/LTM Revenue -

EBITDA -

$855

0.60x

7.1x

$1,041

6.00x

19.1x

08/19/13

Kentz Channel Islands AMEC Provides engineering, procurement, and construction (EPC) services, as well as construction and technical support services

07/27/13

Sevan Drilling (69.5% Stake) Engaged in offshore ultra deepwater drilling contract

Norway

07/16/13

Reservoir Group Provides drilling, completion, and production technologies and services to the oil and gas industry

United Kingdom ALS Limited

$533

2.39x

9.7x

05/22/13

IronGate Energy Services Provides equipment and services to exploration and production operators for land and offshore markets

United States

Clearlake Capital Group

$244

2.44x

5.4x

05/14/13

D&I Silica United States Provides rail-based bulk materials handling, transportation, warehouse, and distribution services

Hi-Crush Partners

$124

1.18x

-

05/14/13

Troms Offshore Supply Owns and operates offshore service vessels and other special vessels related to research and sub sea activities worldwide

Norway

Tidewater

$395

-

7.3x

04/08/13

Lufkin Industries Manufactures and supplies oilfield and power transmission products for use in energy infrastructure and industrial applications

United States

GE Oil & Gas

$3,323

2.52x

17.0x

02/20/13

Bergen Group Rosenberg Operates as a contractor in the oil and gas industry, marketing the Norwegian continental shelf

Norway

WorleyParsons

$160

0.60x

5.0x

02/11/13

Seadrill (Tender rigs business in Asia) Offshore drilling services

Singapore

SapuraKencana Petroleum Berhad

$2,900

-

-

02/06/13

Gulfstar One (49% Stake) United States Constructing a floating platform to be set into production in the Gulf of Mexico

Marubeni

$1,001

-

-

01/29/13

Enovate Systems Limited Designs, develops, and manufactures well completion and well intervention systems

$118

5.01x

15.0x

12/20/12

Mathena United States Manufactures mud-gas pressure solutions for the oil and gas industry

The Weir Group

$385

-

-

11/16/12

Songa Eclipse Ultra-deepwater semi-submersible rig

Norway

Seadrill

$590

-

-

11/12/12

GustoMSC Manufactures and supplies mobile units/vessels for the offshore industry

Netherlands

Parcom Capital Management

$185

-

-

10/01/12

Thomas Russell Develops skid-mounted modular plant systems to clients in the processing industry

United States

UOP

$593

-

-

09/30/12

Acteon Group Limited (52% Stake) Provides project management, engineering design, equipment and service personnel

United Kingdom Kohlberg Kravis Roberts & Co.; White Deer Energy

$788

-

-

09/25/12

Union Drilling Provider of contract drilling services for energy industry companies

United States

Sidewinder Drilling

$244

0.97x

4.9x

09/24/12

Fugro Geoscience Division Provides seismic services and geophysical and geological services

Netherlands

CGG

$1,549

1.56x

9.7x

09/16/12

R3 Treatment Provides non-hazardous oilfield waste treatment, recovery, and disposal services to oil and gas producers in the United States

United States

Waste Connections

$1,441

8.83x

21.2x

Seadrill

United Kingdom Aker Solutions

Sources: Capital IQ and Merger Market.

Energy Services & Equipment Selected M&A Activity 10

William Blair

Energy Services & Equipment Transactions (cont’d) ($ in millions) Date Announced 08/20/12

Target (Unit Sold) / Target Business Description Target Nation Pure Energy Services Canada Provides well completion and production related services to oil and natural gas companies

Buyer FMC Technologies

08/14/12

Ulterra Drilling Technologies Provides PDC drill bits for drilling markets worldwide

United States

ESCO

08/09/12

Robbins & Myers Manufacturer and supplier of engineered equipment and systems for the pharmaceutical, energy, chemical and industrial markets

United States

07/30/12

The Shaw Group Provides services to multinational and national oil companies, industrial corporations, regulated utilities, and the United States government agencies worldwide

United States

06/29/12

Energy, Safety and Risk Consultants Provides consulting and project solutions to the civil and defense nuclear markets

United Kingdom AMEC

06/06/12

Casedhole Holdings United States Provides various well-site services to oil and gas drilling and producing companies in the United States

05/30/12

CE Franklin Engages in the distribution of pipes, valves, flanges, fittings, production equipment, tubular products, and other general industrial supplies primarily to the oil and gas industry in Canada

05/21/12

Enterprise Value $310

Enterprise Value/LTM Revenue 1.09x

EBITDA 5.4x

$325

1.73x

-

National Oilwell Varco

$2,439

2.39x

9.4x

Chicago Bridge & Iron Company

$3,382

0.56x

20.4x

$218

1.99x

-

C&J Spec-Rent Services

$324

2.52x

10.0x

Canada

National Oilwell Varco

$221

0.40x

8.1x

NPS Energy DMCC Provides oilfield services

United Arab Emirates

Aker Solutions

$460

3.96x

11.4x

05/21/12

The Shaw Group (Energy & Chemicals Business) Provides project-related services, including design, engineering, construction, procurement, and technology to chemical and refining industry

United States

Technip SA

$298

1.05x

-

04/30/12

Bifold Fluidpower Oil and gas valve manufacturer

United Kingdom LDC

$138

3.38x

15.2x

04/18/12

TTS Group (drilling equipment business) Norway Designs, develops, and supplies equipment solutions for the marine and offshore industries worldwide

Cameron International

$270

-

-

04/10/12

Wilson International Distributes pipes, valve and valve automation, fittings, mill and tool supplies, safety products, and artificial lift systems

United States

National Oilwell Varco

$800

0.38x

-

04/05/12

Production Control Services Designs, engineers, and manufactures well deliquification and production optimization products for oil and gas producers

United States

Dover Artificial Lift

$222

2.47x

-

03/20/12

Expro International (connectors and measurements division) Designs, engineers, and manufactures well deliquification and production optimization products for oil and gas producers

United Kingdom Siemens

$610

5.32x

13.1x

03/19/12

Seajacks International Owner and manager of self-propelled jack-up vessels

United Kingdom Marubeni; Innovation Network

$850

-

-

02/29/12

Tebodin Provides consulting and engineering services in the Netherlands and internationally

Netherlands

Bilfinger

$194

0.64x

-

02/29/12

Transocean Pacific Drilling (50% Stake) Engaged in operating deepwater drillships

United States

Transocean

$1,843

-

-

Sources: Capital IQ and Merger Market.

Energy Services & Equipment 11 Selected M&A Activity

William Blair

Energy Services & Equipment Transactions (cont’d) ($ in millions) Date Announced 02/27/12

Target (Unit Sold) / Target Business Description Zenith Oilfield Technology Developer of monitoring and completion technologies

Target Nation Buyer United Kingdom Lufkin Industries

02/23/12

Exterran Holdings (compression and processing assets) Compression and processing assets of Exterran Holdings

United States

Exterran Partners

02/20/12

Flint Energy Services Provider of integrated products and services for the oil and gas industry

Canada

URS

02/03/12

NKT Flexibles Engaged in designing and manufacturing flexible pipe products and systems for the offshore oil and gas industry

Denmark

National Oilwell Varco

Enterprise Value $135

Enterprise Value/LTM Revenue -

EBITDA -

$183

-

-

$1,489

0.89x

11.0x

$670

2.53x

12.6x

Sources: Capital IQ and Merger Market.

Energy Services & Equipment Selected M&A Activity 12

M&A Trends

William Blair

M&A Trends Annual M&A Trends Energy Services & Equipment Industry Transaction Volume – Last 10 Years (# of deals)

Median: 404 deals 564

600

510

484

500 368

400 300

386

420

449

388 331

285

245 186

200 100 0 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2013 YTD 2014 YTD

Data as of August 28, 2014. Sources: Capital IQ, Merger Market and William Blair.

Energy Services & Equipment Industry Total Disclosed Transaction Value – Last 10 Years ($ in billions) $160

Median: $82 billion $136

$140

$138 $110

$120

$100 $60 $40

$88

$77

$80

$87

$62

$62

$61

$46

$39 $15

$20

$0 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2013 YTD 2014 YTD

Data as of August 28, 2014. Sources: Capital IQ, Merger Market and William Blair.

Energy Services & Equipment M&A Trends 13

William Blair

Quarterly M&A Trends Quarterly Transaction Volume Median: 104 deals

(# of deals) 200 150

86

109

100

93

98

Q3

Q4

104

101

108

107

Q2

Q3

Q4

126

104

95

Q2

Q3

124

144 96

99

83

110

105

82

50

0 Q1 2010

Q2

Q1 2011

Q1 2012

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Current

Data as of August 28, 2014. Sources: Capital IQ, Merger Market and William Blair.

Quarterly Transaction Value ($ in billions) $45 $37

Median: $21 $33

$30

$34

$28

$20

$21

$21

$20 $14

$15

$35

$27

$24

$12

$21

$18

$14 $8

$12

$10

$0 Q1 2010

Q2

Q3

Q4

Q1 2011

Data as of August 28, 2014. Sources: Capital IQ, Merger Market and William Blair.

Energy Services & Equipment 14 M&A Trends

Q2

Q3

Q4

Q1 2012

Q2

Q3

Q4

Q1 2013

Q2

Q3

Q4

Q1 2014

Q2

Current

William Blair

Participant Trends Breakdown of Acquirers by Type Percent of Deals

Sponsor

Strategic

Percent of Deals

100% 80% 60% 40% 100% 80% 60% 40% 20% 0% 20% 0% 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Sponsor

6%

6%

5%

7%

9%

5%

6%

8%

12%

12%

2014 YTD 15%

Strategic

94%

94%

95%

93%

91%

95%

94%

92%

88%

88%

85%

Data as of August 28, 2014. Sources: Capital IQ, Merger Market and William Blair.

Breakdown of Acquirers by Location Percent of Deals

Domestic

Cross-Border

100% Percent of Deals 100% 80% 80% 60% 60% 40% 40% 20%

20% 0% 0% 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Domestic

63%

68%

67%

64%

59%

57%

58%

57%

57%

57%

2014 YTD 61%

Cross-Border

37%

32%

33%

36%

41%

43%

42%

43%

43%

43%

39%

Data as of August 28, 2014. Sources: Capital IQ, Merger Market and William Blair.

Energy Services & Equipment M&A Trends 15

William Blair

Valuation Trends Average Revenue Multiples

EV/Revenue Multiple

2.00x

1.86x

1.86x 1.69x

1.78x

1.71x

1.74x

1.73x 1.54x

1.60x

1.40x

1.47x

1.52x

2014 YTD

1.20x

0.80x

0.40x

0.00x Number of Disclosed Deals

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

26

66

80

105

98

38

76

73

76

57

9.2x

9.0x

43

Average EBITDA Multiples

EV/EBITDA Multiple 12.0x 10.0x

11.0x

11.0x

9.7x

10.1x

10.2x

9.8x

9.8x

8.9x

7.5x

8.0x 6.0x 4.0x 2.0x 0.0x Number of Disclosed Deals

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

17

35

51

59

44

17

38

47

39

29

Note: Data represents global transactions announced in the respective sectors. Note: Transactions with multiples that are not meaningful are categorized as undisclosed. Data as of August 28, 2014. Sources: Capital IQ, Merger Market and William Blair.

Energy Services & Equipment 16 M&A Trends

2014 YTD 25

Public Comps

William Blair

Public Comps Oil & Gas Equipment ($ in millions, except share price data) 52-Week Company

Current Stock Price

LTM Metrics Equity Value

Valuation Enterprise Value (EV)

High

$95.70

$78.60

$116.80

$26,035

$30,469

$45,741

$3,154

6.9%

9.6x

16.5x

6.5x

12.5x

Cameron International Corporation

74.36

52.50

74.53

15,088

17,975

10,640

1,562

14.7%

11.5x

17.9x

9.3x

14.4x

CIRCOR International, Inc.

71.00

56.88

83.37

1,255

1,182

848

110

12.9%

10.8x

19.3x

8.9x

16.0x

Dril-Quip, Inc.

EBITDA

EV/ EBITDA

P/E

2015 EV/ EBITDA

Low

Aker Solutions ASA

Revenue

EBITDA Margin

2015 P/E

100.75

94.99

121.07

4,028

3,685

892

273

30.6%

13.5x

20.1x

10.1x

16.7x

FMC Technologies, Inc.

61.59

47.58

63.92

14,465

15,412

7,582

1,167

15.4%

13.2x

21.9x

10.2x

17.9x

Forum Energy Technologies, Inc.

33.43

24.32

37.03

3,138

3,543

1,616

290

17.9%

11.5x

18.4x

8.5x

14.5x

Hunting plc

9.10

7.19

9.20

1,342

1,495

1,366

244

17.9%

10.5x

15.5x

8.4x

14.1x

National Oilwell Varco, Inc.

85.42

72.67

86.41

36,751

36,100

23,957

4,509

18.8%

7.9x

14.2x

7.2x

12.7x

Oceaneering International, Inc.

69.08

66.00

87.64

7,461

7,438

3,516

796

22.6%

9.3x

17.2x

7.5x

14.9x

Schoeller-Bleckmann Oilfield Equipment AG

80.00

70.53

96.57

1,273

1,305

453

133

29.3%

9.8x

19.3x

7.9x

16.1x

Tenaris SA

16.63

14.78

18.45

19,632

18,803

10,330

2,756

26.7%

9.2x

16.3x

7.8x

14.4x

Tesco Corporation

21.03

15.45

22.50

843

737

536

100

18.6%

7.4x

17.4x

4.9x

12.6x

Vallourec SA

33.32

31.25

51.01

4,248

6,360

5,683

922

16.2%

6.9x

18.5x

6.8x

14.4x

$69.08

$52.50

$74.53

$4,248

$6,360

$3,516

$796

17.9%

9.8x

17.9x

7.9x

14.4x

Median

Indexed Stock Performance – Last 5 Years

Indexed Stock Performance – Last 12 Months

(Indexed Price)

Oil & Gas Equipment +85.0%

(Indexed Price)

Oil & Gas Equipment +8.7%

250%

S&P 500 +94.1%

130%

S&P 500 +22.1%

200%

120%

150%

110%

100%

100%

50%

90%

Source: FactSet Research Systems as of August 28, 2014.

Source: FactSet Research Systems as of August 28, 2014.

Energy Services & Equipment Public Comps 17

William Blair

Geophysical Services ($ in millions, except share price data) 52-Week Company

Current Stock Price

LTM Metrics Low

High

Equity Value

Valuation Enterprise Value (EV)

Revenue

EBITDA Margin

EBITDA

EV/ EBITDA

2015 EV/ EBITDA

P/E

2015 P/E

CGG

$6.79

$6.43

$19.30

$1,197

$3,126

$3,359

$1,146

34.1%

3.9x

NM

3.7x

11.4x

Fugro NV

27.57

26.82

49.72

2,273

3,148

2,443

389

15.9%

8.2x

16.6x

6.5x

11.4x

Geospace Technologies Corporation

40.73

34.01

107.93

535

476

279

92

33.0%

5.2x

12.1x

NM

NM

ION Geophysical Corporation

3.39

2.81

5.52

556

596

565

173

30.6%

4.5x

39.9x

3.0x

13.0x

Petroleum Geo Services ASA

46.70

46.57

83.80

9,999

17,250

1,355

727

53.7%

4.0x

8.3x

3.2x

6.6x

TGS Nopec Geophysical Co. ASA

173.70

138.90

210.70

17,702

16,397

889

747

84.0%

3.6x

11.1x

3.5x

11.3x

Median

$34.15

$30.41

$66.76

$1,735

$3,137

$1,122

$558

33.6%

4.3x

12.1x

3.5x

11.4x

Indexed Stock Performance – Last 5 Years

Indexed Stock Performance – Last 12 Months

(Indexed Price)

Geophysical Services (15.0%)

(Indexed Price)

Geophysical Services (41.1%)

200%

S&P 500 +94.1%

150%

S&P 500 +22.1

150%

125%

100%

100%

50%

75%

0%

50%

Source: FactSet Research Systems as of August 28, 2014.

Energy Services & Equipment 18 Public Comps

Source: FactSet Research Systems as of August 28, 2014.

William Blair

Land Drilling ($ in millions, except share price data) 52-Week Company Archer Limited CanElson Drilling Inc.

LTM Metrics

Current Stock Price

Low

High

$10.80

$4.48

$12.40

Equity Value

Valuation Enterprise Value (EV)

$6,255

$10,913

Revenue $2,001

EBITDA Margin

EBITDA

EV/ EBITDA

2015 EV/ EBITDA

P/E

2015 P/E

$188

9.4%

9.6x

NM

5.7x

16.1x

7.40

5.91

8.78

685

747

306

95

31.0%

7.6x

13.2x

5.2x

10.3x

16.26

15.42

18.44

2,493

3,100

2,215

493

22.3%

6.3x

16.4x

4.8x

12.4x

Helmerich & Payne, Inc.

103.07

62.39

118.95

11,155

10,800

3,599

1,510

42.0%

7.2x

15.9x

5.6x

13.4x

Nabors Industries Ltd.

26.26

15.21

30.24

7,871

11,352

6,365

1,706

26.8%

6.7x

21.5x

5.2x

12.0x

6.22

5.54

8.67

757

1,294

965

270

28.0%

4.8x

15.3x

3.7x

8.6x

Patterson-UTI Energy Inc.

33.54

18.83

38.43

4,901

5,468

2,825

920

32.6%

5.9x

21.4x

4.5x

14.1x

Pioneer Energy Services Corp.

15.34

6.72

18.40

969

1,440

981

243

24.7%

5.9x

34.4x

4.6x

20.1x

Precision Drilling Corporation

13.61

9.20

15.65

3,984

5,124

2,203

675

30.7%

7.6x

16.8x

5.1x

11.1x

$15.34

$9.20

$18.40

$3,984

$5,124

$2,203

$493

28.0%

6.7x

16.6x

5.1x

12.4x

Ensign Energy Services Inc.

Parker Drilling Co.

Median

Indexed Stock Performance – Last 5 Years

Indexed Stock Performance – Last 12 Months

(Indexed Price)

Land Drilling +91.6%

(Indexed Price)

Land Drilling +49.4%

250%

S&P 500 +94.1%

175%

S&P 500 +22.1%

200%

150%

150%

125%

100%

100%

50%

75%

Source: FactSet Research Systems as of August 28, 2014.

Source: FactSet Research Systems as of August 28, 2014.

Energy Services & Equipment Public Comps 19

William Blair

Offshore Drilling ($ in millions, except share price data) 52-Week Company

Current Stock Price

LTM Metrics Equity Value

Low

High

$48.88

$44.88

$58.46

Diamond Offshore Drilling, Inc.

43.78

43.04

65.62

Ensco plc

49.75

47.85

62.44

147.70

138.30

300.40

9,787

Atwood Oceanics, Inc.

Fred Olsen Energy ASA Hercules Offshore, Inc.

$3,145

Valuation Enterprise Value (EV)

Revenue

EBITDA Margin

EBITDA

EV/ EBITDA

P/E

2015 EV/ EBITDA

2015 P/E

$4,494

$1,078

$532

49.4%

8.4x

9.4x

5.6x

6.6x

6,004

7,168

2,734

1,045

38.2%

6.9x

14.4x

5.5x

11.5x

11,659

16,218

5,082

2,400

47.2%

6.8x

8.6x

6.8x

8.6x

17,458

1,107

455

41.2%

6.3x

10.4x

4.3x

6.0x

3.33

3.10

7.85

535

1,554

960

347

36.1%

4.5x

17.2x

4.4x

9.7x

Noble Corp.

27.94

26.04

40.66

7,104

13,703

4,607

2,306

50.1%

5.9x

8.9x

7.7x

10.1x

Ocean Rig UDW Inc.

18.47

16.12

20.97

2,436

6,413

1,476

730

49.4%

8.8x

10.5x

6.6x

8.1x

Pacific Drilling S.A.

9.85

9.23

12.25

2,141

4,788

880

436

49.5%

11.0x

12.0x

6.3x

8.4x

Rowan Companies plc

29.87

28.43

38.65

3,719

5,280

1,577

549

34.8%

9.6x

14.5x

5.0x

7.6x

SeaDrill Limited

36.90

32.40

48.09

18,195

30,910

4,805

2,416

50.3%

13.5x

11.4x

9.3x

10.1x

Transocean Ltd. Median

38.41

37.33

55.74

13,912

22,267

9,603

3,897

40.6%

5.7x

8.4x

7.0x

11.9x

$36.90

$32.40

$48.09

$6,004

$7,168

$1,577

$730

47.2%

6.9x

10.5x

6.3x

8.6x

Indexed Stock Performance – Last 5 Years

Indexed Stock Performance – Last 12 Months

(Indexed Price)

Offshore Drilling (9.5%)

(Indexed Price)

Offshore Drilling (18.3%)

200%

S&P 500 +94.1%

140%

S&P 500 +22.1%

150%

120%

100%

100%

50%

80%

0%

60%

Source: FactSet Research Systems as of August 28, 2014.

Energy Services & Equipment 20 Public Comps

Source: FactSet Research Systems as of August 28, 2014.

William Blair

Well Services ($ in millions, except share price data) 52-Week Company

Current Stock Price

LTM Metrics Equity Value

Valuation Enterprise Value (EV)

High

$23.82

$11.29

$29.84

$1,029

$1,809

$1,329

$265

19.9%

6.8x

43.4x

4.5x

15.6x

C&J Energy Services, Inc.

28.57

19.88

34.93

1,581

1,864

1,212

168

13.8%

11.1x

24.6x

5.8x

13.5x

Calfrac Well Services Ltd.

20.44

14.29

22.57

1,937

2,593

1,902

218

11.5%

11.9x

28.5x

5.9x

11.8x

Canyon Services Group, Inc.

16.43

10.43

20.05

1,125

1,140

384

40

10.3%

28.7x

25.2x

5.9x

11.2x

Frank's International N.V.

19.98

19.89

32.70

3,067

2,872

1,090

382

35.1%

7.5x

18.0x

6.0x

15.2x

Key Energy Services Inc.

6.12

5.96

10.52

940

1,635

1,459

211

14.4%

7.8x

NM

5.0x

28.8x

Mullen Group Ltd.

28.85

24.30

31.34

2,643

2,974

1,467

300

20.5%

9.9x

18.4x

8.7x

16.7x

RPC Inc.

22.32

14.22

25.15

4,884

4,994

2,063

547

26.5%

9.1x

19.4x

5.6x

13.0x

Superior Energy Services, Inc.

35.64

22.85

37.05

5,513

6,967

4,603

1,045

22.7%

6.7x

19.6x

4.9x

13.8x

Trican Well Service Ltd.

15.62

11.97

18.19

2,337

2,965

2,278

138

6.0%

21.5x

NM

6.3x

15.5x

$21.38

$14.26

$27.50

$2,137

$2,732

$1,463

$242

17.2%

9.5x

22.1x

5.8x

14.5x

Median

Indexed Stock Performance – Last 5 Years

EBITDA

EV/ EBITDA

2015 EV/ EBITDA

Low

Basic Energy Services, Inc.

Revenue

EBITDA Margin

P/E

2015 P/E

Indexed Stock Performance – Last 12 Months

(Indexed Price)

Well Services +119.4%

(Indexed Price)

Well Services +18.2%

400%

S&P 500 +94.1%

145%

S&P 500 +22.1%

300%

130%

200%

115%

100%

100%

0%

85%

Source: FactSet Research Systems as of August 28, 2014.

Source: FactSet Research Systems as of August 28, 2014.

Energy Services & Equipment Public Comps 21

William Blair

Offshore Services ($ in millions, except share price data) 52-Week Company

Current Stock Price

LTM Metrics Equity Value

Valuation Enterprise Value (EV)

High

$22.35

$17.95

$24.36

$1,600

$3,461

$1,312

$411

31.3%

8.4x

22.6x

8.3x

15.2x

73.56

64.10

85.70

2,616

3,446

1,594

313

19.6%

10.9x

14.0x

8.5x

12.6x

6.92

5.88

10.25

563

1,851

1,765

210

11.9%

8.5x

NM

3.4x

NM

Gulfmark Offshore, Inc.

40.00

37.35

53.89

1,055

1,575

497

193

38.9%

8.1x

12.4x

6.6x

9.4x

Helix Energy Solutions Group, Inc.

26.97

19.44

28.00

2,846

2,905

1,006

321

31.9%

9.0x

15.4x

6.9x

13.9x

Hornbeck Offshore Services, Inc.

43.42

37.44

59.93

1,577

2,381

585

265

45.3%

9.0x

15.8x

5.6x

10.4x

PHI Inc.

41.52

33.50

42.70

652

994

891

161

18.1%

6.1x

7.9x

NM

8.3x

SEACOR Holdings Inc.

81.01

75.25

99.00

1,606

2,089

1,303

240

18.5%

8.6x

36.8x

7.5x

25.1x

Tidewater Inc.

50.45

45.51

63.22

2,508

3,973

1,487

442

29.7%

8.7x

12.7x

7.2x

10.7x

$41.52

$37.35

$53.89

$1,600

$2,381

$1,303

$265

29.7%

8.6x

14.7x

7.0x

11.6x

Bristow Group, Inc. CHC Group Ltd.

Median

Indexed Stock Performance – Last 5 Years

EBITDA

EV/ EBITDA

2015 EV/ EBITDA

Low

Bourbon

Revenue

EBITDA Margin

P/E

2015 P/E

Indexed Stock Performance – Last 12 Months

(Indexed Price)

Offshore Services +42.2%

(Indexed Price)

Offshore Services (4.2%)

250%

S&P 500 +94.1%

160%

S&P 500 +22.1%

200%

140%

150%

120%

100%

100%

50%

80%

Source: FactSet Research Systems as of August 28, 2014.

Energy Services & Equipment 22 Public Comps

Source: FactSet Research Systems as of August 28, 2014.

William Blair

Large Cap Services ($ in millions, except share price data) 52-Week Company

Current Stock Price

LTM Metrics Low

High

$69.21

$46.33

$75.64

Halliburton Company

67.38

47.46

74.33

Schlumberger Limited

110.16

80.68

118.76

23.34

13.07

24.88

$68.30

$46.90

$74.99

Baker Hughes Incorporated

Weatherford International plc Median

Equity Value $30,109

Valuation Enterprise Value (EV)

Revenue

$33,717

$23,313

57,309

62,665

142,815

149,527

18,052 $43,709

EBITDA

EBITDA Margin

$4,082

17.5%

30,510

6,428

46,808

12,707

26,979

14,865

$48,191

$26,912

Indexed Stock Performance – Last 5 Years

EV/ EBITDA

P/E

2015 EV/ EBITDA

2015 P/E

8.3x

16.5x

5.8x

12.4x

21.1%

9.7x

16.6x

6.9x

12.6x

27.1%

11.6x

19.3x

9.3x

16.1x

2,138

14.4%

12.6x

20.3x

6.9x

13.2x

$5,255

19.3%

10.7x

18.0x

6.9x

12.9x

Indexed Stock Performance – Last 12 Months

(Indexed Price)

Large Cap Energy Services +95.0%

(Indexed Price)

Large Cap Energy Services +37.2%

250%

S&P 500 +94.1%

160%

S&P 500 +22.1%

200%

140%

150%

120%

100%

100%

50%

80%

Source: FactSet Research Systems as of August 28, 2014.

Source: FactSet Research Systems as of August 28, 2014.

Energy Services & Equipment Public Comps 23

William Blair

Small Cap Services ($ in millions, except share price data) 52-Week Company

Current Stock Price

LTM Metrics Low

High

Equity Value

Valuation Enterprise Value (EV)

Revenue

EBITDA Margin

EBITDA

EV/ EBITDA

2015 EV/ EBITDA

P/E

2015 P/E

CARBO Ceramics Inc.

$108.59

$81.01

$156.00

$2,509

$2,463

$691

$185

26.7%

13.3x

26.3x

9.7x

19.4x

Core Laboratories NV

156.38

143.14

221.00

6,947

7,256

1,080

366

33.9%

19.8x

26.7x

17.2x

23.7x

Emerge Energy Services LP

140.46

27.63

140.49

3,332

3,496

1,040

99

9.5%

35.4x

39.3x

15.4x

19.4x

Exterran Holdings, Inc.

44.89

26.50

45.90

3,008

4,989

2,897

601

20.8%

8.0x

55.0x

6.5x

28.3x

Hi-Crush Partners LP

65.94

23.08

69.25

2,437

2,605

233

92

39.2%

28.5x

20.8x

13.1x

15.3x

Oil States International Inc.

63.98

59.66

113.64

3,460

3,584

2,765

803

29.0%

4.5x

17.5x

7.5x

15.1x

Pason Systems Inc.

35.04

21.01

35.51

2,897

2,753

438

173

39.4%

15.9x

23.7x

9.3x

19.5x

RigNet, Inc.

46.83

34.24

59.06

825

850

272

61

22.5%

13.9x

34.2x

8.8x

23.7x

ShawCor Ltd.

58.69

37.01

60.63

3,535

3,887

1,856

373

20.1%

10.6x

NM

8.3x

NM

TETRA Technologies, Inc.

11.61

9.25

13.43

924

1,344

935

96

10.3%

13.9x

23.5x

4.6x

12.5x

U.S. Silica Holdings, Inc. Median

70.72

22.88

71.29

3,808

4,000

680

170

25.1%

23.5x

32.1x

12.5x

21.5x

$63.98

$27.63

$69.25

$3,008

$3,496

$935

$173

25.1%

13.9x

26.5x

9.3x

19.4x

Indexed Stock Performance – Last 5 Years

Indexed Stock Performance – Last 12 Months

(Indexed Price)

Small Cap Energy Services +245.2%

(Indexed Price)

Small Cap Energy Services +49.2%

400%

S&P 500 +94.1%

175%

S&P 500 +22.1%

300%

150%

200%

125%

100%

100%

0%

75%

Source: FactSet Research Systems as of August 28, 2014.

Energy Services & Equipment 24 Public Comps

Source: FactSet Research Systems as of August 28, 2014.

William Blair

Engineering & Construction ($ in millions, except share price data) 52-Week

LTM Metrics Low

High

$11.38

$9.95

$12.71

$3,395

$3,369

$3,841

$302

7.9%

10.5x

13.8x

8.0x

12.1x

Bilfinger SE

57.91

52.00

92.86

2,557

2,807

8,476

425

5.0%

6.3x

12.8x

5.3x

10.5x

Chicago Bridge & Iron Company N.V.

63.75

57.54

89.22

6,897

8,976

12,215

1,046

8.6%

8.4x

12.5x

7.1x

10.8x

Fluor Corporation

74.48

63.17

83.93

11,732

10,058

23,612

1,336

5.7%

7.5x

17.5x

6.6x

14.6x

Foster Wheeler AG

32.54

22.92

34.95

3,257

2,891

3,238

237

7.3%

12.0x

18.0x

7.8x

14.8x

Jacobs Engineering Group Inc.

54.31

49.57

66.88

7,226

7,316

12,619

707

5.6%

10.3x

15.9x

7.6x

13.5x

7.82

6.10

8.39

2,842

3,111

6,815

559

8.2%

9.4x

12.9x

8.0x

11.7x

KBR, Inc.

22.24

20.42

36.70

3,230

2,335

6,727

149

2.2%

15.7x

NM

5.5x

14.9x

Matrix Service Company

28.00

15.52

38.71

740

726

1,154

76

6.6%

9.6x

17.6x

6.7x

14.4x

7.35

6.58

9.36

1,747

1,976

2,284

(222)

(9.7%)

NM

NM

8.0x

37.8x

Petrofac Limited

11.23

10.57

15.25

3,821

4,526

6,070

968

15.9%

8.0x

10.9x

5.9x

9.0x

Saipem SpA

17.79

14.81

21.00

7,818

13,026

12,976

1,209

9.3%

10.6x

24.7x

7.1x

12.8x

SBM Offshore N.V.

11.57

9.10

16.18

2,426

6,121

5,436

817

15.0%

9.8x

6.6x

8.3x

6.7x

Subsea 7 SA

103.30

101.50

132.50

34,043

34,624

6,723

1,198

17.8%

4.4x

8.3x

4.0x

8.9x

Technip SA

70.01

60.20

92.49

7,885

7,277

10,009

1,011

10.1%

7.2x

15.5x

5.3x

11.4x

Tecnicas Reunidas, S.A.

41.69

33.00

46.62

2,240

1,572

2,930

160

5.4%

10.1x

16.4x

8.2x

14.4x

Willbros Group Inc.

10.71

7.66

13.69

541

776

2,149

100

4.7%

7.7x

16.8x

5.7x

10.2x

Company AMEC plc

John Wood Group PLC

McDermott International Inc.

WorleyParsons Limited Median

Equity Value

Valuation

Current Stock Price

Enterprise Value (EV)

Revenue

EBITDA Margin

EBITDA

EV/ EBITDA

2015 EV/ EBITDA

P/E

2015 P/E

17.08

14.72

24.54

4,216

4,730

9,561

503

5.3%

9.1x

14.6x

8.1x

13.6x

$25.12

$17.97

$35.83

$3,326

$3,947

$6,725

$531

6.9%

9.4x

15.5x

7.1x

12.5x

Indexed Stock Performance – Last 5 Years

Indexed Stock Performance – Last 12 Months

(Indexed Price)

Engineering & Construction +22.3%

(Indexed Price)

Engineering & Construction (4.6%)

250%

S&P 500 +94.1%

145%

S&P 500 +22.1%

200%

130%

150%

115%

100%

100%

50%

85%

Source: FactSet Research Systems as of August 28, 2014.

Source: FactSet Research Systems as of August 28, 2014.

Energy Services & Equipment Public Comps 25

William Blair

Engineered Equipment ($ in millions, except share price data) 52-Week Company

Current Stock Price

LTM Metrics Equity Value

Valuation Enterprise Value (EV)

High

$66.34

$64.05

$130.85

$2,022

$2,159

$1,179

$178

15.1%

12.1x

22.9x

9.9x

18.1x

Flowserve Corp.

75.99

55.64

82.24

10,396

11,449

4,911

859

17.5%

13.2x

19.6x

11.1x

17.2x

Global Power Equipment Group Inc.

16.37

14.54

20.98

280

296

471

33

7.0%

9.0x

28.7x

7.1x

14.6x

Graham Corporation

30.24

26.20

41.94

306

245

102

15

14.5%

16.5x

27.9x

8.5x

19.0x

The Babcock & Wilcox Company

29.16

27.52

36.00

3,134

3,198

2,926

516

17.7%

5.5x

16.5x

7.3x

12.1x

The Weir Group PLC Median

EBITDA

EV/ EBITDA

P/E

2015 EV/ EBITDA

Low

Chart Industries Inc.

Revenue

EBITDA Margin

2015 P/E

26.50

20.36

28.48

5,654

6,412

2,375

497

20.9%

12.7x

18.7x

11.1x

16.7x

$29.70

$26.86

$38.97

$2,578

$2,678

$1,777

$337

16.3%

12.4x

21.2x

9.2x

16.9x

Indexed Stock Performance – Last 5 Years

Indexed Stock Performance – Last 12 Months

(Indexed Price)

Engineered Equipment +181.6%

(Indexed Price)

Engineered Equipment +13.5%

400%

S&P 500 +94.1%

130%

S&P 500 +22.1%

300%

120%

200%

110%

100%

100%

0%

90%

Source: FactSet Research Systems as of August 28, 2014.

Energy Services & Equipment 26 Public Comps

Source: FactSet Research Systems as of August 28, 2014.

Quarterly Market Update – All Industries

William Blair

Quarterly Market Update – All Industries Domestic M&A Market Summary U.S. Activity Trends M&A Activity Number of Deals 18,000 12,000 6,000 0

12,420

13,340

11,488

12,749

13,397

14,634

12,089

Deal Value ($ in billions) 12,170 $1,800

8,792

9,934

10,087

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

LTM

147

233

281

362

460

228

156

287

262

312

312

347

Middle Market

4,239

4,527

4,453

4,548

4,537

4,766

4,144

6,224

5,360

5,155

4,203

4,051

Undisclosed

4,406

5,174

5,353

7,510

8,343

6,494

5,075

6,238

7,775

9,167

7,574

7,772

Deal Value

$688

$992

$1,297

$1,647

$1,750

$1,075

$886

$1,048

$1,174

$1,104

$1,294

$1,712

9,375

$1,200 $600 $0

Number of Deals >$750M

Middle-Market M&A Activity Deal Value ($ in millions)

Number of Deals 4,537

10,000

5,000

4,239

4,527

4,453

4,766

4,548

4,144

6,224

5,360

5,155

4,203

4,051

$600

$400 $200

0

$0 2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

LTM

Number of Deals $250M-$750M

314

402

424

536

627

417

269

457

475

467

512

563

$50M-$250M

1,065

1,218

1,265

1,294

1,333

1,195

791

1,138

1,148

1,151

1,095

1,096

$750M

33

61

84

106

149

64

34

94

88

95

88

Middle Market

626

906

859

998

826

788

742

869

698

660

507

564

Undisclosed

541

679

869

1,143

1,341

969

686

1,013

1,249

1,336

1,154

1309

Deal Value

$120.4

$224.6

$287.6

$523.7

$644.3

$243.7

$149.3

$272.3

$268.6

$264.5

$282.6

$319.0

Note: Year-to-date as of June 30, 2014. Sources: Dealogic and William Blair’s mergers-and-acquisitions market analysis. Data represents announced deals only.

Energy Services & Equipment Quarterly Market Update – All Industries 27

William Blair

U.S. Valuation Trends Median EV/EBITDA Multiples Middle Market

Overall Market

15.0x 12.0x 9.0x 6.0x 3.0x

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

LTM

Middle Market

7.5x

7.4x

8.7x

10.1x

10.0x

9.5x

7.9x

6.4x

9.3x

10.0x

9.1x

9.9x

9.7x

Overall Market

7.9x

8.0x

9.1x

10.3x

11.0x

11.2x

9.0x

7.4x

9.9x

10.8x

9.6x

10.0x

10.1x

LTM

Median EV/EBITDA Middle-Market Multiples < $50M

16.0x

$50M-$250M

$250M-$750M

12.0x 8.0x 4.0x

0.0x 2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

< $50M

4.1x

7.1x

6.4x

7.2x

10.2x

7.8x

4.9x

3.9x

8.8x

9.0x

6.8x

8.1x

8.0x

$50M-$250M

7.5x

6.9x

8.7x

11.3x

9.5x

10.4x

9.1x

7.1x

9.3x

10.0x

9.2x

11.3x

11.3x

$250M-$750M

9.7x

9.2x

9.1x

10.0x

11.0x

9.4x

8.3x

7.9x

9.7x

10.7x

10.2x

12.9x

12.5x

Average Acquisition Premiums 1-Week Premium

4-Week Premium

50% 40% 30%

20% 2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

LTM

1-Week Premium

36%

32%

28%

26%

26%

27%

36%

38%

34%

36%

36%

23%

24%

4-Week Premium

38%

40%

32%

31%

31%

29%

37%

41%

38%

39%

39%

30%

31%

Notes: Data limited to a range of 1 to 100 and LTM is as of June 30, 2014. Sources: Dealogic and William Blair’s mergers-and-acquisitions market analysis. Data represents announced deals only.

Energy Services & Equipment 28 Quarterly Market Update – All Industries

William Blair

U.S. Equity Capital Markets Summary Historical IPO Issuance 200

175 139

150

133 95

100

105 71

54

50

28

35 13

19

39

50

25

21

20

48

56

63

70

21

0 2009 2010 2011 2012 2013 2013 2014 YTD YTD

1Q 11 2Q 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

Historical Follow-On Issuance 700 600

657

564

500

506

470

394

400

380 292

300

135

200

128 50

100

86

130

98

152

127

115

140

173

193

198

182

0 2009 2010 2011 2012 2013 2013 2014 YTD YTD

1Q 11 2Q 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

Note: Excludes follow-on offerings for CLEFs, REITs, and SPACs.

IPO Pricings by Sector – Last 4 Quarters: 237 Total Deals

19 59

Follow-on Pricings by Sector – Last 4 Quarters: 746 Total Deals

Business Services

24

146

Consumer 21

77

Business Services 58 67

Financial

Industrial 85

Technology

Financial Healthcare

Healthcare

29

Consumer

207

Industrial 191

Technology

Sources: Dealogic and William Blair’s mergers-and-acquisitions market analysis.

Energy Services & Equipment Quarterly Market Update – All Industries 29

William Blair

Debt Capital Markets Summary Average Equity Contribution Less than $50 million EBITDA

60%

More than $50 million EBITDA

50% 41% 40% 40% 38% 37% 38% 36% 35% 34% 32% 32% 32% 31% 30% 30% 29%

40% 30%

46%47% 45% 40% 41%

46%

43%

41% 37%

37%

34%

33%

20% 10%

0% 7.0x 6.0x 3.8x2001 4.0x2002 5.0x 4.0x 3.0x 2.0x 1999 2000 3.2x 3.1x

3.6x 2003

2004 3.5x

2001 3.0x

3.3x 2002

2005 3.9x

4.4x 2007 3.9x 2005

2006 4.1x

2003 3.4x

2004 2.4x

5.0x 2008

4.9x 2009

4.4x 2006

4.8x

5.3x 2010

20114.4x3.4x 2012

4.6x 2008

2007

3.1x 2010

2009 3.3x

4.1x 7.0x 6.0x 2013 2014 YTD 5.0x 4.0x 3.0x 2.0x

2011 3.4x

(1)

Quarterly LBO Debt Multiples – Less Than $50 Million EBITDA Total Debt/EBITDA

Senior Debt/EBITDA

7.0x

7.0x

6.0x 5.0x 4.0x

3.6x

3.8x

3.7x

4.2x

4.0x

4.0x

3.8x

3.7x

3.0x

3.0x 2.0x 2001 7.0x 6.0x 3.8x 5.0x 4.0x 3.0x 2.0x 1999 3.1x

4.2x

4.9x

6.0x

4.8x

5.0x 4.4x

4.5x

4.8x

2000 3.2x

2003 3.6x 2001 3.0x

4.4x

5.1x

5.0x

3.3x

3.7x 3.1x

3.0x

3.2x

2.0x

2004 2005 2006 2007 2008 2009 2010 2011 2012 5.0x 5.3x 4.9x 4.4x 4.4x3.4x 3.5x 4.1x 3.9x 4.8x 3.9x 3.3x 4.4x 4.6x 2002 2003 2004 2005 2006 2007 2008 2009 3.4x 3.3x 2.4x

2013 3.1x 2010

2014 4.1x 2011 3.4x

Total Debt/EBITDA

Senior Debt/EBITDA 6.8x

7.0x

7.0x 6.6x

6.0x 4.1x

4.5x

4.8x

5.3x

5.7x

4.9x

4.8x

5.0x

4.4x

4.4x

3.1x 3.0x 2.0x 2001

5.3x

2.6x

4.3x

2.6x 2002

2003

2004

5.5x 4.9x

3.9x

3.5x 2.9x

5.5x 6.0x

5.1x

4.0x

4.0x

Sources: Dealogic and Standard & Poor’s as of June 30, 2014.

Energy Services & Equipment 30 Quarterly Market Update – All Industries

5.0x 4.0x

4.0x 3.0x

3.1x

2.9x 2005

7.0x 6.0x 5.0x 4.0x 3.0x 2.0x

(1)

Quarterly LBO Debt Multiples – Greater Than $50 Million EBITDA

5.0x

5.0x 4.0x

3.4x

3.8x

2.2x 2002 4.0x

3.8x

5.1x

2.0x 2006

2007

2008

2009

2010

2011

2012

2013

2014

William Blair

Notes

Energy Services & Equipment Notes 31

William Blair

Disclosures

“William Blair” is a trade name for William Blair & Company, L.L.C., William Blair Investment Management, LLC and William Blair International, Ltd. William Blair & Company, L.L.C. and William Blair Investment Management, LLC are each a Delaware company and regulated by the Securities and Exchange Commission. William Blair & Company, L.L.C. is also regulated by The Financial Industry Regulatory Authority and other principal exchanges. William Blair International, Ltd is authorized and regulated by the Financial Conduct Authority (“FCA”) in the United Kingdom. William Blair only offers products and services where it is permitted to do so. Some of these products and services are only offered to persons or institutions situated in the United States and are not offered to persons or institutions outside the United States. This material has been approved for distribution in the United Kingdom by William Blair International, Ltd. Regulated by the Financial Conduct Authority (FCA), and is directed only at, and is only made available to, persons falling within COB 3.5 and 3.6 of the FCA Handbook (being “Eligible Counterparties” and Professional Clients). This Document is not to be distributed or passed on at any “Retail Clients.” No persons other than persons to whom this document is directed should rely on it or its contents or use it as the basis to make an investment decision. William Blair & Company | 222 West Adams Street | Chicago, Illinois 60606 | +1 312 236 1600 | williamblair.com September 9, 2014

Energy Services & Equipment 32 Disclosures