Presentation delivered by Nicholas Assef of Lincoln Crowne & Company at the Excellence in Oil & Gas Industry Conference held at the Hilton Hotel, Sydney on 11th & 12th Marc 2014 Presentation covers Merger & Acquisitions Activity in the Oil & Gas Services sector.

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WWW.LCC.ASIA | © Lincoln Crowne & Company12 March 2014
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Page | 1
Oil & Gas Services M & A
Prepared for 9th Annual Excellence In Oil & Gas Conference, 12th March 2014
Resourceful Events
Nicholas A. Assef LLB (Hons), LLM, MBA

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Workbook Contents
Page | 2
1. Macro Sector & Regional Drivers - Upstream
2. Deal Environment & Drivers
3. Valuation Arbitrage? Cross Border Observations
4. Strategic Due Diligence: Current Deal Challenges
5. Northern Hemisphere Deals: Samples of Specialists
6. Opportunities & Trends
LCC is a specialist M & A Firm that is skilled at leading
Directors and Senior Management through the
complex Strategic, Financial, Governance & Project
Management requirements of Public Transactions
Since 2011 LCC has advised on c. A$500m in closed
M & A transactions, c. A$300m in associated deal
financings and is currently advising on a range of
complex M & A and advisory transactions – including
the renegotiation of a multi decade royalty
arrangement with Life of Royalty value c. A$1.5b
LCC’s weekly market research updates include M & A
activity in the Engineering & Contracting sector in
Australia

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Macro Sector & Regional Drivers - Upstream
Page | 3
Macro Picture Looks Attractive, But Many Challenges………..
0
5000
10000
15000
20000
25000
30000
Australian Energy Exports
LNG Crude Oil
Announced
9%
Feasibility
21%
Commi7ed
66%
Completed
4%
LNG, Gas, Oil Major Project Pipeline
$294 Billion in “Notional” Projects
ü Multiple Gas precincts c. Australia × Capital deployment priority – cheaper taxing nations ?
ü South East Asia demand – effects Fukushima ? × US an advanced cheap producer of Oil & Gas (gas glut ?)
ü Government desire royalties / cashflows × Australian track record hitting timetable / budget ?
Source : BREE, LCC Calculations
Gas Exports Trending Up

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Company Ticker Market
Cap
($A) TEV
/
EBITDA
(A) Deal
Count^
SeaDrill NYSE
:
SDRL 18,381$
12.80x 10
Jacobs
Engineering NYSE
:
JEC 9,194$
11.00x 15 Acquisition
in
2013
of
SKM
Consulting
for
A$1,300m
Quanta
Services NYSE
:
PWR 7,690$
9.20x 6 Acquisition
of
NACAP
for
A$100m
Chicago
Bridge
&
Iron NYSE
:
CBI 8,940$
11.00x 4 Included
US$4.9bln
merger
with
Shaw
Group
in
2012
McDermott
International NYSE
:
MDR 2,146$
9.00x 2 Last
-­‐
DEEPSEA
Group
offshore
Oil
&
Gas
Service
Emcor
Group NYSE
:
EME 3,400$
10.50x 6 Acquisition
of
USM
from
TSE
for
$225m
in
June
2011
10.58xUnweighted
Mean
Specialist
Offshore
Driller.
US$1,06m
merger
with
Scorpion
Offshore
in
2010
12 March 2014
ExcellenceInOil&GasConferencePresentation
Deal Environment & Drivers
Page | 4
Cross Border / Foreign Direct Investment
• Capitalise on market imperfections & expanding market
opportunities
• Follow local Upstream client cross border
• Seek higher margin markets
• Enter / expand on sustainable Projects
• Deal with Regulatory & Union issues efficiently
ü Valuation Arbitrage
ü Abundance of Capital in North America
ü Overall Deal Momentum Lifting
Domestic M & A Rationale
• Geographic balancing (West & East Coast)
• Institutional Investor sentiment (O & G exposure ?)
• Seek higher margin sub markets (not commoditised)
• Diversify Revenue & Client Base
• Liquidity Events For Smaller Players
• Valuation arbitrage
× Limited Debt Financing for M & A
× Bidder Valuations Depressed vs Northern Hemisphere
× “Opportunism” vs Strategic Valuations Prevail
× Strong Balance Sheet The Priority
× PE rotated away from sector – for moment
Mining Boom
Over ?
Large Diversified Engineering & Contractors – Value in A$m
^ Deal Count since 1 January 2010
Source : Company Data, LCC Research
Just Corporate : Also high interest from Offshore PE / Pension Funds M & A back in vogue : In Australia many “Toehold” deals
Distressed Deals

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Valuation Arbitrage? Cross Border Observations
Page | 5
North American Public Company Sample
Australian Public Company Sample
Company Ticker Market
Cap
($A) TEV
/
EBITDA
(A)
Southern
Cross
Electrical ASX
:
SXE 130 3.10x Specialist
Electrical
Player.
Valuation
multiple
skewed
because
c$30m
Cash
(Low
Debt)
WDS
ASX
:
WDS 164$
3.90x Valuation
multiple
skewed
because
c.
$45m
Cash
(No
Debt).
LCC
assumes
circa
A$32m
EBITDA
FY14
AJ
Lucas ASX
:
AJL 260$
-­‐ Exploration
&
Production
Drilling,
Pipeline.
division
focussed
CSG
Decmil
Group ASX
:
DCG 362$
4.20x Acquired
Eastcoast
Development
Engineering
for
A$30.12m
in
Feb
2013
Tox
Free
Solutions ASX
:
TOX 446$
7.30x Upstream
&
downstream
Oil
&
Gas
waste
&
industrial
services
Mermaid
Marine ASX
:
MRM 554$
5.50x Marine
Logistics.
Itchtys
Gas
project
2
Platform
Supply
Vessel
deal
@
$145m
contract
Skilled
Group ASX
:
SKE 740$
10.20x Historically
Labour
Hire,
but
acquired
Broadsword
Marine
Contracting
in
Darwin
for
A$72m
in
June
2013
Monadelphous ASX
:
MND 1,615$
6.10x Recently
won
large
Gas
FM
project
-­‐
A$150m
@
Woodside's
Karratha
Gas
Plant
WorleyParsons ASX
:
WOR 4,082$
9.70x Strong
Off
shore
&
Onshore
presence
in
Hydrocarbons
Division
Unweighted
Mean 5.86x
Company Ticker Market
Cap
($A) TEV
/
EBITDA
(A) Deal
Count^
SeaDrill NYSE
:
SDRL 18,381$
12.80x 10
Jacobs
Engineering NYSE
:
JEC 9,194$
11.00x 15 Acquisition
in
2013
of
SKM
Consulting
for
A$1,300m
Quanta
Services NYSE
:
PWR 7,690$
9.20x 6 Acquisition
of
NACAP
for
A$100m
Chicago
Bridge
&
Iron NYSE
:
CBI 8,940$
11.00x 4 Included
US$4.9bln
merger
with
Shaw
Group
in
2012
McDermott
International NYSE
:
MDR 2,146$
9.00x 2 Last
-­‐
DEEPSEA
Group
offshore
Oil
&
Gas
Service
Emcor
Group NYSE
:
EME 3,400$
10.50x 6 Acquisition
of
USM
from
TSE
for
$225m
in
June
2011
10.58xUnweighted
Mean
Specialist
Offshore
Driller.
US$1,06m
merger
with
Scorpion
Offshore
in
2010
Source : Company Data : LCC Research

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EMCOR Group Inc. (NYSE : EME)
Page | 6
Source : Company data, LCC Calculations, CapitalIQ, Bloomberg
Consistent M & A activity since 2010, including acquisition USM from TSE for c. $230m

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Jacobs Engineering Group Inc. (NYSE : JEC)
Page | 7
11 of 15 deals executed when TEV / EBITDA Multiple Higher than 8.0x (A)
TEV/EBITDAx(A)
Rapid Fire Deal Window
7 Deals in c. 8 Months
“Deal Momentum”
Source : Company data, LCC Calculations, CapitalIQ, Bloomberg

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Strategic Due Diligence: Current Deal Challenges
Page | 8
Each Deal Is Different : On High Alert For Areas That Can Cause Margin Collapse
Client Lists
Recent CAPEX
Spend
Contract Waterfall
Technology vs
Plain Vanilla
Union & Personnel
Issues
Health & Safety
Issues
Variations &
Claims
Outstanding
• Spread of Clients
• Project Lifecycle
• Client Pedigree
• CAPEX Starved ?
• CAPEX Bubbles
• Current Competitiveness
of Kit – Technology Shift
• Term of Contracts
• Style of Contract
- Fixed
- Open Book
- Cost Reimburse
• How Technical Work ?
• Competitors for Work ?
• Cost of Technology ?
• How Easy To Replace
Contractor on Site ?
1
2
3
45
6
7
• Delays in Payment
• % of Actual Claim or
Variation
• Track record of Sponsor in
Resolving
• Who the Sponsor is
• Safety Standards
• Effect On Insurances
• Harmonisation of Work
Standards
• Union Presence On Site
• Key Personnel - Roles
• Relationships With Client
• Employee Benefits
- Accommodations
• Schedules where FIFO
1
2
3
4
5
6
7

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International Deals : Samples of Specialists
Page | 9
Natural Gas
Partners LLC
www.msenergyservices.com 6.86x **
Onshore gas field Horizontal
Directional Driller (USA)
Alta Disposal www.altadisposal.com 7.00x **
Oilfield Waste Disposal – including
Fracing Water (Canada)
Intertek Group PLC www.int-inspec.com 6.17x
Onshore & Offshore Non Destructive
Testing & Inspection Services
(Norway)
EQT Partners AB www.akersolutions.com 6.9x
Well intervention services including
well casing, testing, metering &
wireline services (Norway)
** Minority Interest Deals
Business Growth Fund
PLC
www.spex-innovation.com 6.14x
Offshore recovery, severing &
explosives operator
(Scotland)
HitecVision AS www.reefsubsea.com 7.81x
Offshore Construction, trenching &
cabling Fleet Operator
(Norway)
OnshoreTransactionsOffshoreTransactions
CSG, Shale & LNG Driven DemandACQUIRER TEV / EBITDA

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Opportunities & Trends
Page | 10
Deal Activity Will Continue – In Particular Cross Border Deal Activity In Marine & Unconventional Gas
Planets are aligned for ongoing Cross Border activity
ü Weak AUD compared to 12 months ago
ü Ongoing strong Onshore & Offshore Project Pipeline
ü Unconventionals (CSG, Shale Oil)
ü High International Valuations
ü M & AActivity Warming Up In Northern Hemisphere
ü High Access To Capital In Northern Hemisphere
ü Good Pipeline of Potential Projects
ü Weak Domestic Valuations
ü Difficulty in Deal Financing (Debt and Equity)
ü Reasonable “Public” Domestic Balance Sheets (Targets ?)
ü Deal “Challenges” May Go To Value/Structure or Kill Deals
Baytex Energy acquires Aurora Oil & Gas for
A2,316m. Assets include Eagle Ford Shale Belt
in South Texas
(Both complex service delivery areas)

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PHILANTHROPY lincolncrownefoundation.org
The Lincoln Crowne Foundation is an extension of the Firm’s corporate social
responsibility arm that director, Nicholas Assef initiated.The foundation’s main
purpose is to support and extend partnership development to grass roots
charities.
GOVERNANCE unglobalcompact.org
We are governed by our commitment as a signatory to the UN Global
Compact. The UN Global Compact is a strategic policy initiative for
businesses that are committed to aligning their operations and strategies to
ten universally accepted principles in the areas of human rights, labour,
environment and anti-corruption.
ACADEMIA bond.edu.au
LCC and Bond University has established a relationship around the
importance of success, academic integrity and outstanding performance. To
this end, LCC has sponsored various faculty awards in both the Business and
Law Schools.
SPORT lincolncrownesailing.com.au
LCC has sponsored 12 and 16ft skiffs in Sydney, over numerous sailing
seasons and championships.
In partnership with Variety the Children’s Charity, Nicholas Assef proudly
supported the Variety Port Jackson 12ft Skiff Championships. This event
marked the launch of a series of projects committed to raising support for
Alopecia Areata, which is a medical condition of which there is no known cure.
12 March 2014
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Page | 11
LCC’s Community Focus

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Contact us
Page | 12
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Correspondence
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T: +612 9262 2121
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PRESENTER
Nicholas Assef
naa@lcc.asia
T: +612 8288 8688
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HONG KONG
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