KLR Initiation Report - D. Gacicia

Cyclical Wheel Is Turning
If a Production Response Doesn’t Convince You, Then Multiple Expansion May
Darren Gacicia
Managing Director
Senior Oilfield Services Analyst
KLR Group, LLC
713-352-0887
dfg@klrgroup.com
For definitions and the distribution of analyst ratings, and other disclosures, please refer to pages 230 - 231 of this report

Bullish on Oil Services: Signs of Production Response Herald Turn in Cycle & Multiple Expansion for Shares
Sector Outlook: Bullish Risk/Reward for Oil Services. We are launching coverage on the Oilfield Service sector with a positive outlook. Oilfield Service equities trading at bearish cyclical valuations
represent an attractive risk/reward. In our view, the production response to lower upstream spending and the initial stages of the oil market recovery should provide a positive catalyst for the sector.
Tighter commodity market balances over the course of 2016 may signal a positive turn in upstream activity, oil services capacity utilization, and positive operating leverage for the sector. Leaner oil
services companies, fresh from cost cutting, internal re-alignments, and capacity attrition, may be poised to beat estimates and post outsized returns as the cycle turns. Against a backdrop of bearish
sentiment and trough 2016 consensus estimates, we expect upward revisions to conservative consensus 2017 estimates and multiple expansion to reflect better oilfield service growth prospects.
Preferred Exposure: Premium Franchises & US Land. The market offers investors the opportunity to own premium franchises at meaningful discounts to our view of net present value (NPV). Our NPV
methodology shifts focus from commodity forecast timing to intrinsic values, based on our forecast of average returns over the course of the upstream cycle (pg. 11). As outlined on the following page,
we prefer oil services exposure to North America. In our view, US land activity likely recovers first, given short term availability of established services, equipment, midstream capacity, and
infrastructure. We forecast US market fundamentals should bottom in 4Q15/1Q16 with a migration of E&Ps towards cash flow neutrality (limited funding gaps). We are buyers of US levered service &
equipment stocks as activity levels bottom and downside estimate risks subside. Within North America, we favor the supply/demand outlook for land drillers ((HP, $51.37, B, $78.00PT), (PTEN, $14.80,
B, $23.00PT), (NBR, $8.69, B, $13.00PT)) and pressure pumping companies (CJES, $4.81, B, $7.50PT) over those of proppant companies ((SLCA, $19.61, H, $20.00PT), (FMSA, $2.33, H, $2.30PT), (CRR,
$16.32, H, $15.25PT)). Among services, equipment, and offshore drillers, company preferences become more stock specific. Smaller services companies, like SPN ($13.53, B, $21.00PT) and NR ($4.83,
B, $7.25PT), slightly further out on the risk frontier, screen well to gain market share with industry consolidation. Equipment companies ((NOV, $33.29, B, $52.00PT), (FET, $12.22, B, $19.00PT)) screen
better than diversified services, excluding SLB ($69.82, B, $105.00PT), due to merger concerns for HAL ($36.96, A, $46.00PT) and need for a more consistent returns track record to re-rate WFT
($8.85, A, $10.25PT). Rig oversupply, which hinders recovery of economics for offshore drillers, leads us to prefer equipment & services ((FI, $15.24, B, $23.00PT), (OIS, $28.06, B, $43.00PT), (FTI,
$28.92, B, $43.00PT)) for exposure to the offshore market. As the turn in the cycle accelerates, we see potential upside to NPV valuations, as fundamentals improve and our estimates are de-risked
(lower discount rates/WACC).
Catalyst: Under Investment Turns Commodity Markets. We want to own the oil services group, as the production response from lower oil prices becomes more apparent (negative IEA non-OPEC
supply revisions pg. 28). Currently, oil prices reflect peak negative sentiment, due to concerns surrounding oversupply, incremental production from Iran, and high inventory levels. We expect the oil
market to rebalance as lower crude prices, cash flow and capital spending has a negative impact on production. Negative IEA revisions to US production have begun. In our view, a lack of spending on
larger, longer lead time international projects (~90% of world oil production) may add downside risk to international supply forecasts. Evidence of tighter oil markets should herald the need for more
upstream spending, a positive turn in the outlook for oilfield services fundamentals and stocks.
Structural Theme: Digestion of Upstream Leap Up the Marginal Cost Curve Increases Importance of Oilfield Services Group. The dawn of unconventional plays in North America and transition to
developing deepwater fields shapes the complexion of the oilfield services sector. As a function of trial, error, and cost overruns, the shift to unconventional & deepwater production was a leap up the
marginal cost curve. The market is in the process of moving up the learning curve to lower project breakeven costs in the unconventional and deepwater frontiers. The transition may continue to push
the structural change on oil service & equipment markets. Within the US unconventional market, we see continued themes of well optimization, equipment high-grading, logistics & efficiency, central
procurement for E&Ps, bundled services offerings, and consolidation of oil service providers as the signs of adaptation. Within deepwater, we see more equipment/design standardization, greater
efficiency, and employment of technology brought to bear to lower breakeven costs. The SLB/CAM merger and FTI/Technip JV suggest scale and R&D capabilities may reshape the deepwater supply
chain. Further, the HAL/BHI merger represents a consolidation of market power, which benefits the oil service companies across markets. In our view, the importance of oil service and equipment
providers should improve as upstream operators grow to rely on oil service companies’ scale, bank of knowledge of evolving “best practices” and ability to advance new technologies.
December 15, 2015 2

Coverage Breakdown & Preference Ranking
Sources: KLR Group, LLC Forecasts; Factset
Company Ticker Rating
B/S & Covenant
Risk
Market
Cap. (MM) Price
Price
Target Upside North America International Business Mix
Schlumberger SLB Buy No $ 88,050 $ 69.82 $105.00 50% Minority Majority Diversified Services & Equipment, Subsea Equipment (CAM)
Superior Energy SPN Buy No $ 2,039 $ 13.53 $ 21.00 55% Majority Minority Diversified Services
Core Labs CLB Buy No $ 4,751 $112.14 $155.00 38% Mixed Mixed Reservoir Analysis, Oilfield Consumables
National Oilwell Varco NOV Buy No $ 12,509 $ 33.29 $ 52.00 56% Mixed Mixed Rig Equipment, Diversified Equipment, Diversified Servies, Oilfield Consumables
Patterson-UTI PTEN Buy No $ 2,178 $ 14.80 $ 23.00 55% Majority -- Land Contract Driller
C&J Energy Services CJES Buy Yes $ 579 $ 4.81 $ 7.50 56% Majority -- Pressure Pumping, Oilfield Services
Forum Energy FET Buy No $ 1,105 $ 12.22 $ 19.00 55% Majority Minority Diversified Equipment
Oil States OIS Buy No $ 1,426 $ 28.06 $ 43.00 53% Mixed Mixed Offshore & Onshore Services & Equipment
Helmerich & Payne HP Buy No $ 5,537 $ 51.37 $ 78.00 52% Majority Minority Land Contract Driller
Frank's International FI Buy No $ 2,364 $ 15.24 $ 23.00 51% Mixed Mixed Offshore Services & Equipment
Nabors Industries NBR Buy No $ 2,873 $ 8.69 $ 13.00 50% Mixed Mixed Land Contract Driller
FMC Technologies FTI Buy No $ 6,593 $ 28.92 $ 43.00 49% Mixed Mixed Offshore & Onshore Equipment
Transocean RIG Buy Yes $ 4,616 $ 12.69 $ 19.00 50% Mixed Mixed Offshore Driller
Newpark Resources NR Buy Yes $ 406 $ 4.83 $ 7.25 50% Mixed Mixed Offshore & Onshore Services & Equipment
Ensco ESV Buy No $ 3,523 $ 14.96 $ 20.00 34% Mixed Mixed Offshore Driller
Noble Corp. NE Buy No $ 2,879 $ 11.90 $ 16.00 34% Mixed Mixed Offshore Driller
Rowan Companies RDC Buy No $ 2,184 $ 17.50 $ 25.00 43% Mixed Mixed Offshore Driller
Flotek Industries FTK Buy No $ 577 $ 10.76 $ 14.50 35% Majority Minority Oilfield Consumables
Dril-Quip DRQ Accumulate No $ 2,229 $ 58.11 $ 75.00 29% Mixed Mixed Subsea Equipment, Rig Equipment
Halliburton HAL Accumulate No $ 31,631 $ 36.96 $ 46.00 24% Majority Minority Diversified Services & Equipment
Oceaneering Intl OII Accumulate No $ 3,722 $ 38.04 $ 49.00 29% Mixed Mixed Offshore Services & Equipment
Diamond Offshore DO Accumulate No $ 2,764 $ 20.15 $ 24.00 19% Mixed Mixed Offshore Driller
Weatherford WFT Accumulate Yes $ 6,895 $ 8.85 $ 10.25 16% Mixed Mixed Diversified Services & Equipment
US Silica SLCA Hold No $ 1,047 $ 19.61 $ 20.00 2% Majority -- North American Proppant
Atwood Oceanics ATW Hold Yes $ 850 $ 13.15 $ 12.50 (5%) Mixed Mixed Offshore Driller
Carbo Ceramics CRR Hold Yes $ 380 $ 16.32 $ 15.25 (7%) Majority -- North American Proppant
Pacific Drilling PACD Hold Yes $ 204 $ 0.97 $ 3.00 209% Mixed Mixed Offshore Driller
Fairmount Santrol FMSA Hold Yes $ 376 $ 2.33 $ 2.30 (1%) Majority -- North American Proppant
Seadrill SDRL Reduce Yes $ 2,050 $ 4.16 $ 3.50 (16%) Mixed Mixed Offshore Driller
TopTierMiddleTierBottomTier
December 15, 2015 3

Oil Service Shares in “Sweet Spot” of the Upstream Cycle – Production Response Starts Turn
Commodity Recovery
- Activity Increase Meets Lean OFS Cos.
- Peak Returns to Incentivize Investment
- OFS Stocks See Multiple Expansion
- Price Targets De-Risked (lower WACCs)
- Growth Trajectory Returns to Estimates
Expansion
- OFS Capacity Additions Pressure Returns
- Borrowing Bases & Leverage Increase
- Ests. Extrapolate Growth & Econ. Rents
- Commodity Supply/Demand Balances
- Risk/Reward Shifts Negative
Production Response
- Low Investment Curtails Supply
- Commodity Prices Bottom
- Earnings Estimates Bottom
- Services Overcapacity Leads to Attrition
Commodity Collapse
- Upstream Investment Shrinks
- Negative Operating Leverage
- Negative Earnings Revisions
- De-Leveraging Balance Sheets
Normalized
Mid-Cycle
Returns
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December 15, 2015 4

Key Proprietary Analytical Frameworks: Conclusions & Methodology Synopsis
US Land Rig Forecast
Model
•Conclusion: Land Rig
Market Bottoms in
4Q15/1Q16, Begins
Recovery with Oil Prices
•Links Oil Prices,
Operating Cash Flow, &
CAPEX to Forecast Rig
Count
•High Correlations
Between Variables
•Detail Sensitivity Analysis
•Analysis of 60 North
American E&P
•15 Years of Historical
Data
•Pgs. 38-45
US Land Rig Fleet
Breakdown
•Conclusion: Land Rig
Market More Attractive
in 2016/2017
•Segmentation of US
active and total land rig
fleet, between AC & SCR
•Breakdown of fleet by
horsepower
•Comparisons between
rig fleets
•Pgs. 46-49
Offshore Rig
Supply/Demand Model
•Conclusion: Offshore rig
market continues to
decline in 2016, with
recovery expected in
2017/2018
•Field Level Bottoms Up
Analysis of Development
Demand
•Comparison of
Development Demand
vs. Ordered Subsea
Equipment
•Breakout of Exploration
Demand & History
•Pgs. 61-76
Offshore Rig Attrition
Analysis
•Conclusion: Retirement
of 60-70 floaters and
~125 jackups over the
next two years
•Ranks All Rigs on Multi-
Factory Scoring System
•Forecast List for Floater
Retirements
•Forecast List for Jackup
Retirements
•Focus on Contract
Conclusions & Required
Surveys
•Pgs. 77-93
Offshore Equipment
Market Analysis
•Conclusion: Modest near
term recovery in subsea
tree deliveries, new
order recovery seen in
2016/2017
•Subsea Tree Probability
Weighted Demand
Forecast
•Subsea Tree
Manufacturing Capacity
& Utilization Outlook
•Industry Market Share
Analysis
•Customer Preference
Analysis
•Pgs. 99-106
Pressure Pumping
Framework
•Conclusion: Market
balance tightens in 2H16,
starting new upcycle
•Simplified analysis of
horsepower capacity
•Driven by US land rig
count forecast
•Assumes fleet attrition
through 2016
•Pgs. 50-51
Methodology
December 15, 2015 5

Key Takeaways from Proprietary Analytical Frameworks
Proprietary US Rig Count Model Forecasts US Land Rig Count Bottom in 4Q15/1Q16, with Recovery into 2017. We have built a proprietary US land rig count forecast model to reflect the high
correlations between commodity prices, cash flow, capital expenditures, funding gaps, rig efficiency, inflation/deflation, and service intensity per well. Given an oil price bottom in 4Q15/1Q16, we see
the US land rig count finding a trough in the 600-700 rig range during 4Q15/1Q16. As oil prices recover towards $85 in 2017, we forecast the US land rig count exiting 2016 closer to ~1,000 rigs . At the
bottom, the market may come closer to cash flow neutrality, with funding gaps (CFO-CAPEX) closer to 15%-20%, down from recent highs. In our view, E&Ps living within cash flow at low oil prices marks
the bottom of the North American downturn. Our US land rig forecast provides the engine for pressure pumping and proppant market sub-sector forecasts:
• Pressure Pumping May Begin to Tighten in 2H16. A combination of activity recovery and capacity attrition may tighten the pressure pumping market in 2H16. We see potential for
horsepower utilization levels to cross into the 80%-90% range in 2017. Roughly, 6-9 month lead times for new equipment orders slow the pace of potential capacity expansion to meet
increased demand. Improvement in supply/demand balances may leave the pressure pumping market poised for a new upcycle. (pg. 50)
• Proppant Market Remains Challenged. Proppant demand should exit 2016 at 1H15 demand levels. As a result, proppant economics remain under pressure from high fixed costs and
lower capacity absorption until further out into our forecast. (pg. 52)
Proprietary Floater Market Demand Model Sees ~26% Decline in 2016, Fuller Recovery by 2018. Our field-by-field analysis of floater demand sees significantly lower rig counts in 2016, driven by a
precipitous ~40% Y/Y decline in exploration and ~17% fall in development drilling (methodology outlined in slides below pgs. 61-76). We see little chance for upward revisions to rig demand without a
sustained turn in commodity sentiment before the end of year 2016 budgeting cycle, which may bring investment decisions for new projects for 2017. If operators look to replace reserves and
maintain production profiles, the collapse in exploration spending in our opinion is not sustainable beyond 2016. We see a more accelerated recovery in 2017 and 2018.
Proprietary Rig Attrition Model Targets 67 Floater & 125 Jackup Retirements. As outlined below (pgs. 77-92), we created a multi-factor weighting for each rig in the offshore fleet. In our view, rigs
with lower multi-factor scores, contract expirations, near term regulatory surveys, and/or those in need of significant capital expenditures may screen well for retirement. Ultimately, we believe an
incremental ~60-70 floaters and ~125 jackups may need to retire or exit the market to bring floater and jackup market balances closer to more manageable 80%-90% utilization levels. We anticipate
this process may accelerate in coming quarters, adding to the approximate 40 floaters already retired and limited jackup attrition to date.
Proprietary Subsea Tree Model Forecasts Slight Rebound in 2016 Deliveries, Meaningful Order Recovery Waits for 2017. Leveraging our field-by-field analysis applied to offshore rig demand, we
forecast flat to lower subsea equipment deliveries. Equipment providers may continue to process backlog inventories, as anemic 2015 subsea tree orders appear to trend under low 2014 levels. A
linear relationship, lower order flow from 2014-2016, must impact deliveries beyond 2016, and hamper the economics of the subsea tree business. More manifolds and other equipment elements
from greater project complexity may leave subsea trees alone a conservative benchmarking tool (pg. 103). That said, our probability weighted subsea tree outlook leaves equipment players subject to a
lower run rate of activity. As upstream operators work through project inventories to lower breakeven costs, we maintain a more bullish bias that our outlook may prove conservative. As investor
sentiment towards growth turns positive, investors may expand offshore equipment stock multiples to discount the potential for a greater number of projects to materialize.
International Activity Declines Lagged North America, But Persist Into 2016. International projects are larger in scale, significant capital expenditures, that have long lead times. Once multi-year
development plans pass through final investment decision (FID), the projects push forward. As a result, international activity has more consistency. Projects may be pushed to the right and delays may
drag on activity when the commodity is under pressure, but approved projects generally move forward. Within the process, year end budgeting cycles, when IOCs decide to move forward with
projects, set the tone for international project activity over the coming year. Demonstrated by more stable activity in the Middle East, NOC activity may not closely track the commodity, given varying
priorities, policy issues at the national level, and strategic initiatives at OPEC. We continue to see the Middle East pulling up international activity averages. We remain watchful of persistent high
Middle East rigs counts, drilling to support a quest for OPEC market share, as upstream spending may begin to conflict with budget constraints. With 2015 largely complete, 2015 international rig
counts are down ~10% Y/Y. Looking forward, our international rig count forecast ties together historical relationships between production, rig counts, and exploration spending. Amid IOC’s bleak 2016
budget tones, we forecast international rig counts down another ~5% in 2016. (pgs. 55-60)
December 15, 2015 6

Digestion of Leap Up the Marginal Cost Curve Shapes the Oil Services Sector
Battle to Lower Marginal Cost of Frontier Supply Shapes the Oil Services Industry. The quest to maintain and grow production led the industry up the marginal cost curve to exploit new supply in
unconventional and deepwater plays. Greater technological hurdles, higher oil service intensity, and more required infrastructure defined the higher marginal cost resource. The industry continues to
address the shift to a higher degree of project difficulty, through data analysis, technology, efficiency, and process refinements. Mistakenly, investors apply broad, stagnant generalizations regarding
fixed cost structures, which may place tiers of unconventional plays and deepwater projects out of the money. In our view, the cost curve for these projects remains dynamic, not just due to pricing
concessions, but due to the evolution of solutions and “best practices”. The digestion of the leap up the marginal cost curve equates to the battle to lower marginal project costs to allow E&Ps, OICs,
and NOCs to monetize asset investments. The battle to move the production frontier drives the complexion of the oil service industry in the following ways:
• Focus on Well Optimization. Unconventional development may continue to call on more data and well design iterations to optimize the production per well and the lower per barrel costs. We
continue to see an evolution of well designs, stage intensity, proppant volumes/preferences, pressure pumping horsepower demand, and emphasis on chemistry, in order to expand top tier acreage.
Greater service intensity per well remains the trend, but a shift towards optimal well designs vs. raw service volumes may gain importance.
• Scale, Logistics, Efficiency. As made more apparent by the downturn, oil services companies may need to better leverage their footprints and efficiency of their assets. The trend favors larger
companies with significant scale, who can refine processes and logistics. The heightened level of execution may make these companies the low cost providers of choice. Exiting the downturn, we
believe leaner more cost efficient oil service companies should emerge. As a result, we see modest acceleration in activity driving greater operating leverage. As a function of this efficiency focus, oil
service companies may compete on execution and technology, potentially seeking performance bonus opportunities for solutions versus discrete services as the upstream investment cycle improves.
• Centralized Procurement & Bundled Services. Cyclically upstream operators centralize and tighten spending controls. The current cycle remains the same. Centralized procurement at the E&Ps and
IOCs shifts services demand toward bundled services, as planners find it easier to find price points and coordinate with fewer services providers. In our view, the trend should persist, with oil service
companies consolidating and aligning their offerings (SPN, CJES/NBR) to match the industry trend.
• Oil Service Market Consolidation. The need for scale, efficiency, technology (new solutions), and bundled services may continue to drive consolidation of service and equipment providers. The trend
is evident with the HAL/BHI ($47.80, NR), SLB/CAM ($63.07, NR), FTI/TEC (€46.16, NR) JV combinations. We see providers of commoditized offerings of discrete services as challenged. Capacity
utilization attracts capital, but does not create viable long term franchises in a market competing on execution, not available capacity. We continue to see the exit of return-chasing, capacity
investments in pressure pumping, proppant, and potential offshore rigs market through 2016. While second and third tier services companies struggle and drive equipment attrition, we do expect a
few companies to be sponsored by upstream operators to maintain adequate competition. In our view, small/mid capitalization companies, like SPN, OIS, CJES, NR, and WFT as potential winners
amid consolidation.
• Standardization to Lower Breakeven Costs. Standardization of processes to create efficiency in oil service companies and in project design (deepwater) for upstream operators may accelerate.
Standardized solutions and lower break-even economics may trump design marvels from engineers that have driven deepwater project costs higher. As a rule, over engineering is the enemy of
project profitability. Co-creation of production solutions with oilfield equipment providers may increase the importance of modular solutions. Equipment manufacturers may become more important
and integrated into field development. Lowered development costs should promote higher project throughput, which may boost equipment sales and offshore rig demand.
• Well Cost/Authorization for Expenditures (AFE) vs. Estimated Ultimate Recovery (EUR). Currently, US E&Ps seek lower well cost solutions versus higher cost alternatives, which may offer higher
ultimate recoveries. The trend may continue, as low oil prices drive E&P companies to fight for the title of “low cost producer”. On a longer term per unit basis, the better EUR solution may lower per
barrel costs. We anticipate a migration back to a middle ground in the AFE vs. EUR debate, as potentially beneficial to oil services companies that look to push higher margin technology/products.
• Equipment High Grading to Persist. Modern, higher specification equipment tends to be more efficient and ultimately lower cost than nominally less expensive legacy equipment. Upstream
companies realize the immediate cost/efficiency trade off. In our view, we continue to see the trade to better equipment, especially in the land and offshore drilling markets.
December 15, 2015 7

Coverage Universe, excluding Offshore Drillers: Product & Service Line Breakdown
ArtificialLift
Casing&TubingServices
Cementing
CoiledTubingServices
CompletionEquip.&Services
ContractCompressionServices
DirectionalDrillingServices
DownholeDrillingTools
DrillBits
Drilling&CompletionFluids
FloatingProductionServices
GeophysicalEquip.&Services
HydraulicFracturing
Inspection&Coating
LandContractDrilling
Logging-While-Drilling
OffshoreConstructionServices
OilCountryTubularGoods
ProductionTesting
Rental&FishingServices
RigEquipment
SolidsControl&WasteMgmt
SpecialtyChemicals
SubseaEquipment
SurfaceDataLogging
SurfaceEquipment
WellServicing
WirelineLogging
Proppant
Diversified Oilfield Serivices
Schlumberger (SLB), with CAM X X X X X X X X X X X X X X X X X X X X X X X
Halliburton (HAL), with BHI X X X X X X X X X X X X X X X X X X X
Weatherford (WFT) X X X X X X X X X X X X X X X X
Mid/Small Cap Oilfield Serices
Core Laboratories (CLB) X X
Superior Energy Services (SPN) X X X X X X X X X X X X
Flotek Industries (FTK) X X X X
Franks International (FI) X
Oil States (OIS) X X X X X X X
Newpark (NR) X X
Pressure Pumpers
C&J Services (CJES) X X X X X X X X X X
Proppant
US Silica (SLCA) X
Carbo Ceramics (CRR) X
Fairmount (FMSA) X
Oilfield Equipment & Manufacturers
National Oilwell Varco (NOV) X X X X X X X X X X X X X
FMC Technologies (FTI) X X
Oceaneering (OII) X X X
Forum Energy (FET) X X X X X
Dril-Quip (DRQ) X
Onshore Drilling
Helmerich & Payne (HP) X
Nabors Industries (NBR) X X
Patterson-UTI Energy (PTEN) X X
Source: Factset; KLR Group,
LLC Forecasts; Company
Filings/Disclosures
December 15, 2015 8

Table of Contents
Introduction 1 Segmented Market: Better Demand for AC 1,500+HP Rigs, Tougher Competition for the Rest 48
Bullish on Oil Services: Signs of Production Response Herald Turn in Cycle & Multiple Expansion 2 HP, NBR, PTEN May Be Winners, Representing >60% of AC Rig Fleet Composition 49
Coverage Breakdown & Preference Ranking 3 US Pressure Pumping Market Poised for 2016/2017 Rebound 50
Oil Service Shares in “Sweet Spot” of the Upstream Cycle – Production Response Starts Turn 4 Simplified Model Suggests A Recovery With Capacity Attrition & Horizontal Rig Count Recovery 51
Key Proprietary Analytical Frameworks: Conclusions & Methodology Synopsis 5 US Proppant Market Balances More Opaque 52
Key Takeaways from Proprietary Analytical Frameworks 6 Proppant Companies: Lagging Absorption of High Fixed Costs Translate Into Later Cycle Play 53
Digestion of Leap Up the Marginal Cost Curve Shapes the Oil Services Sector 7 Proppant Volume Recovery Does Not Boost Utilization Until Beyond 2016 54
Coverage Universe, excluding Offshore Drillers: Product & Service Line Breakdown 8 International Markets 55
Table of Contents 9 Larger Projects, Less Infrastructure: Creates Lag in International Decline & Recovery 56
Mid-Cycle Valuation Methodology 11 KLR Rig Count Forecast Sees Further 2016 Downside, With Slow 1Q16 Start & Offshore Decline 57
Focus on Mid-Cycle Returns Within the Oil Services Valuation Cycle 12 International Production (ex FSU) Falls With Rig Decline, Rig Count Recovery May Lag Commodity Uptick 58
Coverage Universe Risk/Reward Map 13 Over 10+ Years, International Oil Production/Rig is Down ~50%, vs. North America Up ~20% 59
Mid-Cycle Valuations Track Average Returns 14 Middle East Rig Count Resilience Reflects OPEC Efforts to Gain Market Share 60
Risk Parameters Differentiate the Oil Services Group (WACC Comparisons) 15 Offshore Rig Markets 61
Leverage Ratios Reflect Reasonable Debt Levels Across Majority of Group 16 Distressed Offshore Drilling Sector Offers Values, But Faces Headwinds 62
OFS Cost of Debt Widens on Rating Scale, Prohibitive at Lower Grades 17 Offshore Equipment & Services Outperform Offshore Drillers, Until Rig Oversupply Abates 63
TBVs Suggest Sentiment, Company Health, Trading Floors, & Potential Write-Downs 18 Offshore Driller Liquidation Values (NAV) Illustrate Investor Bias Toward Stronger Balance Sheets 64
Short Interest Positions & Days to Cover May Lead to “Short Squeeze” Rallies 19 Company Value Composition – Older Assets Drive Little Value in Our Models 65
Industry & Company Comparable Valuation Analysis 20 Dayrate Forecast: Floater Dayrates Inflect in 2017, Jackup Downturn Prolonged Until 2018 66
KLR EPS Estimates vs. Consensus 22 Floater Market Balances Improve With Rig Attrition & Cold Stacking (-67 Floaters) 67
Commodities Factors Start to Turn for Oilfield Services 26 KLR Well Count Forecast Narrows Project Opportunity Set by Probability Weighted Analysis 68
Negative IEA Supply Revisions & Low OPEC Spare Capacity Work in Oil’s Favor 27 Floater Demand Forecast Methodology 69
Mkt Share Quest Leaves OPEC Spare Capacity Low, Potentially Heading Lower 28 Floating Rig & Subsea Equipment Model: Probability Weighting Methodology 70
Negative IEA Non-OPEC Supply Revision Suggest Markets Move Toward Balance 29 Percentage of Equipment Ordered Illustrates Risk to Development Forecast 71
US EIA Weekly Crude Production Data Beginning to Rollover, But Pace & Trajectory Question Marks 30 Recovery of Exploration Demand For Floaters Drives Recovery 72
KLR US Liquids Production Forecast 31 Forecasted Supply of Floaters & Jackups Remains Very Dependent on Attrition 73
IEA Global Demand Forecast Stable, But Economic Growth Concerns May Leave Negative Bias 32 Determination of the Marketed Supply of Offshore Rigs 74
Oil Inventory – OECD and US Inventories Historically High, But Production Response May Reverse Trends 33 Risk/Reward 6G Floater Purchases May Only Support Distressed Asset Deals 75
Natural Gas Markets Remain Enigmatic, But Bright Spots in the Data 34 Jackup Market Needs Attrition & Cold Stacking (-125 Jackups), Fragmented, It May be Sloppy 76
Gas Well Productivity Improvements Challenge Legacy Inventory/Natural Gas Price Paradigms 35 Offshore Rig Supply & Attrition 77
KLR US Natural Gas Production Forecast 36 Historical Addition/Attrition Column Chart - Floaters 78
Natural Gas Productivity Improvements Slow, Potentially Shifting Natural Gas Price Paradigms 37 Historical Addition/Attrition Column Chart - Jackups 79
US Land Market Bottoms 4Q15/1Q16 38 Floater Attrition Methodology: Multi-Factor Scores for Offshore Rigs 80
Positive Backdrop for North American Services Outlook 39 Older Floaters Rank Poorly on Our Spec Factor Scale 81
Investors Favor Leverage to Perceived Lower Marginal Cost Onshore vs. Higher Cost Offshore 40 Floater Retirement Focus List 82
US Land Rig Forecast Finds Bottom in 4Q15/1Q16 41 Jackup Attrition Methodology: Multi-Factor Scores for Offshore Rigs 83
US Land Rig Count Bottoms as E&P CAPEX Nears Cash Flow From Operations & Funding Gaps Erode 42 Similar to Floaters, Older Jackups Rank Poorly on Our Spec Factor Scale 84
Proprietary Model Captures Relationships Between WTI, CFO, CAPEX, Funding Gaps, & Rig Counts 43 Jackup Retirement Focus List 85
High Yield Energy Market Has Choked-Off E&P’s Capacity To Run Funding Gaps 44 Jackup Newbuilds: Risks For the ~85% of Fleet Ordered by Non-Established Offshore Drillers 87
US Land Activity Hinges on Oil Prices & Leverage in the Rig Count Sensitivity Analysis 45 Jackup Newbuilds 88
US Land Drilling Market 46 Floater Newbuilds: Most Delivery Risk From PBR Sponsored New Construction 91
AC Rig Utilization May Tighten Through 2016 With Horizontal Land Rig Count Recovery 47 Floater Newbuilds 92
December 15, 2015 9

Table of Contents (cont.)
Key Offshore Rig Market Metrics 94 Newpark Resources (NR): Buy, $7.25PT 146
Floater Fleet Snapshot 95 Proppant Companies 150
Jackup Fleet Snapshot 96 US Silica (SLCA): Hold, $20.00PT 151
Regional View of Floater Fleet 97 Fairmount (FMSA): Hold, $2.30PT 155
Regional View of Jackup Fleet 98 Carbo Ceramics (CRR): Hold, $15.25PT 159
Subsea Equipment Market: Favorable Offshore Exposure 99 Oilfield Equipment 163
Subsea Equip. Screens Well, As Sentiment & 2016/2017 Orders Return to Chase Project Opportunity Set 100 National Oilwell Varco (NOV): Buy, $52.00PT 164
Forecast Subsea Tree Deliveries Sees Flattish Offshore Activity Given Project Delays 101 FMC Technologies (FTI): Buy, $43.00PT 168
Trees Ordered vs. Forecast Leaves 4Q15 Manageable, but Offers Sluggish Order Recovery Until 2017 102 Oceaneering (OII): Accumulate, $49.00PT 172
Greater Field Complexity Creates the Need for Economies of Learning To Lower Project Costs 103 Forum Energy (FET): Buy, $19.00PT 176
Subsea Equip. Manufacturing Util. Declines May Hurt Fixed Costs Absorption, Pricing, & Economics 104 Dril-Quip (DRQ): Accumulate, $75.00PT 180
Concentration of Deliveries/Demand with Large Customers 105 Land Contract Drillers 184
Top 30 Subsea Tree Orders Customers: One Subsea & FMC Dominate Market Share 106 Helmerich & Payne (HP): Buy, $78.00PT 185
Companies 107 Nabors Industries (NBR): Buy, $13.00PT 189
Large Cap Integrated Oilfield Services 108 Patterson-UTI Energy (PTEN): Buy, $23.00PT 193
Schlumberger (SLB): Buy, $105.00PT 109 Offshore Contract Drillers 197
Halliburton (HAL): Accumulate, $46.00PT 113 Seadrill (SDRL): Reduce, $3.50PT 198
Weatherford (WFT): Accumulate, $10.25PT 117 Transocean (RIG): Buy, $19.00PT 202
Small/Mid Cap Oil Services 121 ENSCO (ESV): Buy, $20.00PT 206
Core Laboratories (CLB): Buy, $155.00PT 122 Diamond Offshore (DO): Accumulate, $24.00PT 210
Superior Energy Services (SPN): Buy, $21.00PT 126 Atwood Oceanics (ATW): Hold, $12.50PT 214
Franks International (FI): Buy, $23.00PT 130 Noble (NE): Buy, $16.00PT 218
Oil States International (OIS): Buy, $43.00PT 134 Rowan (RDC): Buy, $25.00PT 222
C&J Services (CJES): Buy, $7.50PT 138 Pacific Drilling (PACD): Hold, $3.00PT 226
Flotek Industries (FTK): Buy, $14.50PT 142
December 15, 2015 10

Mid-Cycle Valuation Methodology Reveals Value & Removes
Commodity Forecasting Timing Risk

Focus on Mid-Cycle Returns Within the Oil Services Valuation Cycle
Key Valuation Conclusions
• Oil Services in “sweet spot” of valuation cycle
• Focus on long term returns, shifts focus from timing of
commodity recovery, centers our view on risk/reward
• At trough valuations, most of our coverage has
significant upside to mid-cycle valuations
• De-risking of the group, reflected in lower discount
rates, provides the opportunities for price targets to
re-rate higher as balance sheet and credit issues abate
• Attention to company specific risks & issues vs. broad
brush strokes of multiples illustrates company
differentiation
Valuation Methodology
• We mean revert the “normal year” that drives our NPV
to reflect our estimates of average mid-cycle returns
• Mid cycle returns reflect our view of the mid-point or
average return structure for a company over the cycle
• We want to pick stocks with best risk/rewards
• We look to factor risk/reward through adjustments to
the cost of capital, via an analysis of the total capital
structure and risk messaging from credit markets
• WACCs are adjusted to reflect discounts/risk
represented in the yields of corporate bonds. (Yield to
Worst)
• Leverage & covenant issues create a larger spread of
risks calculated in WACCs
• We triangulate our NPV value against Gordon-Growth
Model & Tangible Book Value valuation metrics as a
sanity check
Commodity Recovery Expansion
Production Response Commodity Collapse
Normalized
Mid-Cycle
Returns
Potential for Upward
Revisions to Mid-Cycle
Values as WACC’s De- Risk
DCF Valuations Catches Up with
Company Specific Downside Risk
Linear Extrapolation of
Growth & Economic Rents
Outrun Mid-Cycle Valuations
Mid-Cycle Valuation “Sweet Spot”
– Risks Factored, Upside Bias
WE ARE
HERE

ESV
SLB
CLB
FI NR
OIS
FTK
CJESNOV
FTI
FET
RIG
NE
RDC
HP
NBR
PTEN SPN
HAL
WFT
OIIDRQ
DO
SLCA
FMSA
CRR
ATW
SDRL
REDUCE
HOLD
HOLD
ACCUMULATE
ACCUMULATE
BUY
(20%)
(15%)
(10%)
(5%)
-
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 26% 27% 28% 29% 30% 31%
Upsidevs.Price(%)
WACC (%)
Coverage Universe Risk/Reward Map
Note: PACD not listed on graph with 209% upsideSource: Factset; KLR Group, LLC Forecasts
Buy
Accumulate
Hold
Reduce
Low Return, High Risk with Balance
Sheet & Covenant Overhangs screen
poorly on risk/reward
Best company in a tough
Proppant sub-sector
Looking for counter-cyclical
investment to renew fleet
BHI merger digestion risk
may create entry points
“Show me” story that re-rates higher ,
with execution on better returns
High Return, Further
Out on Risk Frontier,
high probability of
upward price target
revisions with turn in
sentiment
High Return, High Risk
North American play, with
chance to re-rate
significantly higher as
balance sheet de-risks
Great ROV franchise, estimate revision risk overhangs shares
Good offshore equip.
story, screening better
Quality franchise, high
cash flow, high payout,
high leverage outlier
Solid Franchises, trading at
trough valuations, with less
credit / balance sheet risk

Mid-Cycle Valuations Track Average Returns on Assets in a Cyclical Business & Variable Returns
Source: KLR Group, LLC Forecasts; Factset
Return on Assets 10 Year Range vs. KLR “Normal Year” Forecasts
38%
16%
22% 23%
12%
19%
20%
16%
11%
12%
8%
27%
10%
13%
22%
15%
30%
20%
11%
12%
14%
9%
11%
31%
20%
3%
22%
12%
27%
3% 4%
9%
1%
8%
6%
0% 5% 5%
2% 3%
8%
4%
2%
0%
(28%)
(6%)
(5%)
(4%)
(2%)
(24%)
(16%)
(4%) (3%)
(6%)
(1%)
(0%)
(1%)
(0%)
30%
15%
13% 12% 12% 11% 10% 10% 10% 9%
8% 8% 7% 7%
6%
6% 5% 5% 4% 4% 4% 4% 4% 3% 3% 3% 2% 2%
1%
-30%
-20%
-10%
0%
10%
20%
30%
40%
CLB
DRQ
FI
FTK
SLCA
SLB
CRR
HP
FTI
OII
FET
HAL
NR
OIS
FMSA
SDRL
CJES
ESV
NOV
RIG
SPN
WFT
NBR
PTEN
ATW
PACD
NE
RDC
DO
ROA(%)
10yr Range KLR "Normal Period" Returns

24%
17% 17%
17%
16%
15% 15%
14% 13%
13% 13%
12% 12% 11%
11% 10%
10%
4%
16%
12% 12% 11%
10%
32%
25%
21%
19%
13%
30%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
24%
26%
28%
30%
32%
PACD
SDRL
FMSA
CJES
CRR
ATW
RIG
NR
SPN
WFT
NBR
FET
FTK
NE
RDC
SLCA
PTEN
ESV
HP
FTI
DO
HAL
OIS
OII
NOV
SLB
DRQ
FI
CLB
WACC(%)
Risk Parameters Differentiate the Oil Services Group (WACC Comparisons)
Source: KLR Group, LLC Forecasts
High Risk – High Reward. Higher balance sheet risks, likely represented larger
yields on bonds, also translates into higher WACCs. As credit concerns are allayed,
less discounted risk could vault these shares higher. We see these stocks as
potential upgrade candidates as conditions turn and shares are de-risked.
Most Enticing Risk/Reward. Middle of the risk frontier
may offer less credit risk, with greater potential for
company transformations, leverage to recovery, and
small/midcap beta for the group. High Quality Franchises, Trough Valuations. The ranks
of lower risks companies offer some of the highest
quality oilfield franchises trading at “trough” valuations.
Buy
Accumulate
Hold
Reduce

40%
37%
34%
31%
26% 25% 24%
11%
7% 6% 5%
-3%
84%
60%
52%
43%
33% 32% 32%
6% 5%
-5%
106%
48%
20%
4%
1%
2.5X
11.7X
5.7X
6.6X
7.1X
4.7X
3.6X 3.5X
4.0X
5.2X
6.1X
4.2X
3.5X
4.5X
3.2X
2.7X
1.5X
2.4X
1.2X
4.9X
1.5X 1.4X
0.9X 0.9X
10.2X
- 0.0X -
1.0X
2.0X
3.0X
4.0X
5.0X
6.0X
7.0X
8.0X
9.0X
10.0X
11.0X
12.0X
(10%)
-
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
CLB
FMSA
CJES
WFT
SDRL
PACD
NBR
NE
DO
ATW
RIG
SLCA
ESV
SPN
HAL
RDC
PTEN
FTI
NOV
SLB
FET
OII
OIS
FTK
CRR
HP
NR
DRQ
FI
TotalDebt/EBITDA
NetDebt/Capital
Net Debt / Capital (2016) Total Debt/EBITDA (2016)
Leverage Ratio Comparisons Reflect Reasonable Debt Levels Across Majority of Group
Source: KLR Group, LLC Forecast
Debt covenants tend to
center on maximum
Debt/EBITDA ratios at a
maximum of 4.0x
Net debt to capital ratio in the 40%+
range are considered high and may trip
debt covenants that tend to call for
Debt/Capital ratios below 50%-60%.
Investment Grade
Non-Investment Grade
Unrated

OFS Cost of Debt Widens on Rating Scale, Prohibitive at Lower Grades Down the Risk Spectrum
133
307
644
780
725
1,312
1,399
57
34
346
132
193
456
736
95
173
458
582
526
849
1,067
0
200
400
600
800
1,000
1,200
1,400
1,600
AA- A BBB+ BBB BBB- BB+ BB
SpreadOverT-Yield(bps)
Range Avg
0
200
400
600
800
1,000
1,200
1,400
1,600
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
YieldToWorst(bps)
YearsTo Maturity
AA- A BBB+ BBB BBB- BB+ BB B+ T-yield
Source: Factset Source: Factset
OFS Debt Spreads by Rating OFS Debt Spreads by Maturity

TBVs Suggest Investor Sentiment Company Health, Trading Floors, & Potential Write-Downs
5.0X
3.9X
3.9X
3.2X
3.2X
3.0X
2.8X
2.7X
2.4X
2.2X
2.1X
1.7X
1.5X
1.2X
1.1X
0.8X
0.8X
0.6X
0.6X
0.6X
0.5X
0.4X
0.4X
0.3X
0.3X
0.2X
0.1X
(2.5X)
(3.0X)
(2.0X)
(1.0X)
-
1.0X
2.0X
3.0X
4.0X
5.0X
6.0X
SLB
FTK
FTI
SLCA
OII
FET
WFT
FI
HAL
NOV
SPN
DRQ
OIS
CJES
HP
PTEN
NR
DO
NBR
CRR
RDC
NE
ESV
RIG
ATW
SDRL
PACD
FMSA
CLB
Price/TangibleBVperShare
FMSA’s lack
of tangible
book value is
a concern
CLB has
immense
cash flow, low
debt levels,
and high
payout, which
eases
concerns as
an outlier.
Stocks trading below tangible book
value, either imply asset write-
downs, solvency issues, or that
stocks screen as attractive values.
Price to Tangible Book Value Company Comparisons
As expected shares of companies with stable businesses
and balance sheets trade above tangible book value.
Source: Factset, 3Q 2015 Company Earnings Releases

Short Interest Positions & Days to Cover May Lead to “Short Squeeze” Rallies
15.4
8.5
9.7
7.4
6.1
4.2 4.4
10.7
6.0 5.8 6.1
7.3
3.8
6.8
4.4
3.6
4.2
5.1
2.8
3.9
2.2 2.3
3.2
7.9
3.1 3.0
5.2
6.5
3.0
0
2
4
6
8
10
12
14
16
18
0%
5%
10%
15%
20%
25%
30%
35%
40%
CRR
SLCA
RIG
FTK
NE
ATW
PTEN
CLB
HP
SDRL
CJES
NOV
ESV
FET
DO
RDC
WFT
OII
SPN
HAL
NBR
OIS
FTI
FMSA
NR
DRQ
SLB
FI
PACD
DaysCoverage(3MonthAvg.DailyTradingVol.)
ShortInterest%ofSharesOutstanding
Short Interest Days Coverage
Source: Factset

Note: Curreny in ($ US), unlessotherwise indicated
Company Ticker
12/11
Price Rating
KLR
Target Upside
Shares Out
(MM)
Mkt Cap
(MM) EV (MM)
2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017
Schlumberger SLB-US 69.82 Buy $105.00 50% 1,261 $88,050 $93,441 $3.36 $2.81 $4.35 20.8X 24.9X 16.1X 9.4X 9.4X 7.2X 1.2X 1.2X 0.9X 19% 15% 14%
Halliburton HAL-US 36.96 Accumulate $46.00 24% 856 $31,631 $44,066 $1.45 $0.87 $2.16 25.5X 42.7X 17.1X 10.9X 9.4X 6.0X 2.0X 4.5X 2.8X 26% 33% 31%
Baker Hughes BHI-US 47.80 NR -- -- 436 $20,845 $22,945 ($0.36) ($0.03) $1.13 -- -- 42.4X 12.0X 11.8X 8.4X 2.1X 2.1X 1.5X 16% 16% 16%
Weatherford WFT-US 8.85 Accumulate $10.25 16% 779 $6,895 $13,578 ($0.29) ($0.34) $0.23 (30.8X) (26.3X) 38.5X 9.8X 10.5X 6.9X 5.6X 5.7X 3.6X 47% 45% 42%
5.1X 13.7X 28.5X 10.5X 10.3X 7.1X 2.7X 3.4X 2.2X 27% 27% 26%
Core Laboratories CLB-US 112.14 Buy $155.00 38% 42 $4,751 $5,237 $3.19 $2.92 $3.89 35.2X 38.4X 28.8X 24.1X 25.8X 20.5X 2.0X 2.5X 2.1X 72% 82% 83%
Superior Energy Services SPN-US 13.53 Buy $21.00 55% 151 $2,039 $3,004 ($1.23) ($1.26) $0.16 (11.0X) (10.8X) 82.7X 6.8X 7.1X 4.0X 3.6X 3.5X 1.8X 31% 31% 29%
Franks International FI-US 15.24 Buy $23.00 51% 155 $2,364 $2,038 $0.61 $0.38 $0.79 24.9X 40.2X 19.4X 6.4X 7.9X 5.3X 0.0X 0.0X 0.0X 0% 0% 0%
Newpark Resources NR-US 4.83 Buy $7.25 50% 84 $406 $372 ($0.18) ($0.29) $0.21 (26.3X) (16.5X) 22.8X 12.2X 21.2X 4.6X 5.9X 10.2X 2.2X 20% 20% 19%
Oil States International OIS-US 28.06 Buy $43.00 53% 51 $1,426 $1,490 $0.70 ($0.20) $1.08 40.3X -- 25.9X 8.2X 13.2X 7.4X 0.9X 1.4X 1.3X 10% 10% 14%
Flotek Industries FTK-US 10.76 Buy $14.50 35% 54 $577 $594 $0.09 $0.50 $1.06 -- 21.7X 10.2X 31.6X 11.5X 5.9X 2.5X 0.9X 0.5X 12% 10% 8%
Tetra Technologies TTI-US 8.22 NR -- -- 80 $659 $1,913 $0.28 $0.16 $0.37 29.9X 51.1X 22.3X 8.0X 8.1X 7.2X 4.1X 3.9X 3.5X 49% 48% 46%
Tesco Corp. TESO-US 7.01 NR -- -- 39 $273 $216 ($0.93) ($0.81) ($0.16) (7.5X) (8.7X) (44.6X) 26.1X 35.1X 6.0X -- -- -- -- -- --
Basic Energy Services BAS-US 2.84 NR -- -- 43 $121 $954 ($4.53) ($4.67) ($3.20) (0.6X) (0.6X) (0.9X) 39.9X 86.4X 9.5X 36.5X 78.3X 8.7X 72% 83% 89%
Key Energy Services KEG-US 0.50 NR -- -- 158 $79 $845 ($1.07) ($0.93) ($0.60) (0.5X) (0.5X) (0.8X) (78.7X) 30.8X 8.8X (89.6X) 35.1X -- 51% 56% --
RPC RES-US 12.37 NR -- -- 217 $2,684 $2,696 ($0.45) ($0.47) $0.05 (27.2X) (26.5X) -- 22.2X 24.1X 9.7X 0.3X 0.4X 0.2X 3% 4% 4%
C&J Services CJES-US 4.81 Buy $7.50 56% 120 $579 $1,717 ($1.96) ($1.54) $0.60 (2.5X) (3.1X) 8.0X 40.3X 17.2X 3.8X 27.4X 11.7X 2.5X 45% 47% 43%
Calfrac Well Services CFW-CA 1.47 NR -- -- 95 $140 $958 ($1.28) ($1.25) ($0.77) (1.2X) (1.2X) (1.9X) 33.4X 15.3X 6.9X 31.3X 15.4X 6.9X 48% 52% 53%
Trican Well Service TCW-CA 0.63 NR -- -- 149 $94 $581 ($3.29) ($0.71) ($0.49) (0.2X) (0.9X) (1.3X) (23.9X) 8.4X 4.9X (19.1X) 7.1X 3.7X 29% 32% 32%
4.1X 6.4X 13.1X 11.2X 22.3X 7.5X 0.4X 12.2X 2.6X 31% 34% 32%
Proppant
US Silica SLCA-US 19.61 Hold $20.00 2% 53 $1,047 $1,364 $0.27 ($0.09) $0.87 73.5X -- 22.5X 13.5X 16.8X 8.9X 4.9X 6.1X 3.2X 44% 47% 47%
Fairmount FMSA-US 2.33 Hold $2.30 (1%) 161 $376 $1,426 $0.10 ($0.19) $0.16 23.9X (12.5X) 14.5X 11.1X 25.3X 8.3X 9.6X 22.0X 7.2X 86% 86% 83%
Carbo Ceramics CRR-US 16.32 Hold $15.25 (7%) 23 $380 $386 ($1.71) ($2.37) ($1.08) (9.6X) (6.9X) (15.0X) -- (27.6X) 14.0X -- (6.3X) 3.3X 10% 10% 11%
Emerge Energy EMES-US 5.42 NR -- -- 24 $131 $398 ($0.03) ($0.78) $0.32 -- (7.0X) 17.0X 8.0X 12.6X 7.7X 5.4X 8.8X 5.7X 66% 69% 74%
Hi-Crush Partners HCLP-US 6.19 NR -- -- 37 $229 $478 $1.04 $0.20 $0.73 6.0X 30.4X 8.5X 7.0X 13.2X 7.9X 3.6X 6.5X -- 61% 57% --
23.4X 1.0X 9.5X 9.9X 8.0X 9.4X 5.9X 7.4X 4.8X 53% 54% 54%
National Oilwell Varco NOV-US 33.29 Buy $52.00 56% 376 $12,509 $13,882 $2.93 $1.41 $1.87 11.4X 23.6X 17.8X 5.6X 8.4X 6.9X 1.6X 2.4X 2.0X 13% 13% 13%
Cheneire LNG-US 41.29 NR -- -- 236 $9,746 $26,094 ($2.70) ($0.99) $1.46 (15.3X) (41.5X) 28.3X -- 50.2X 22.1X -- -- -- -- -- --
Aker Solutions AKSO-NO 34.36 NR -- -- 272 $9,347 $8,990 $3.33 $2.69 $2.39 10.3X 12.8X 14.4X 4.0X 4.5X 4.8X 4.4X 5.0X -- 36% 37% --
Cameron International CAM-US 63.07 NR -- -- 191 $12,054 $13,756 $3.62 $2.51 $2.82 17.4X 25.1X 22.4X 9.3X 11.9X 11.1X 1.9X 2.4X 2.2X 25% 24% 22%
FMC Technologies FTI-US 28.92 Buy $43.00 49% 228 $6,593 $7,071 $2.26 $1.69 $1.85 12.8X 17.1X 15.6X 6.7X 8.2X 7.9X 1.2X 1.5X 1.5X 19% 20% 19%
Oceaneering OII-US 38.04 Accumulate $49.00 29% 98 $3,722 $3,841 $2.86 $1.87 $1.98 13.3X 20.3X 19.2X 5.6X 7.1X 6.8X 1.2X 1.5X 1.4X 23% 23% 22%
Dril-Quip DRQ-US 58.11 Accumulate $75.00 29% 38 $2,229 $1,619 $4.90 $3.02 $3.22 11.9X 19.2X 18.0X 5.8X 8.9X 8.7X -- -- -- -- -- --
Exterran Holdings AROC-US 7.56 NR -- -- 69 $525 $2,651 $0.06 $0.21 $0.38 -- 36.4X 19.9X 7.0X 7.5X 6.8X 0.5X -- -- 6% -- --
Forum Energy FET-US 12.22 Buy $19.00 55% 90 $1,105 $1,208 $0.48 ($0.08) $0.56 25.4X -- 21.8X 7.8X 14.7X 7.9X 2.6X 4.9X 2.6X 19% 19% 18%
Schoeller-Bleckmann Oilfield SBO-AT 49.54 NR -- -- 16 $793 $780 $0.59 $0.99 $2.39 83.8X 50.0X 20.8X 11.1X 10.5X 7.5X -- -- -- -- -- --
Gulf Island Fabrication GIFI-US 8.95 NR -- -- 15 $130 $85 $0.27 $0.20 $0.30 33.1X 44.8X 29.8X 2.6X 2.9X 2.9X -- -- -- -- -- --
Willbros Group WG-US 2.35 NR -- -- 62 $146 $314 ($1.24) $0.04 $0.13 (1.9X) 53.4X 18.8X (41.9X) 10.8X 9.9X -- -- -- -- -- --
18.4X 23.7X 20.6X 2.2X 12.1X 8.6X 1.7X 2.2X 1.4X 18% 17% 14%
KLR / Consensus EPS P/E EV/EBITDA Total Debt/EBITDA Total Debt/Assets
Industry & Company Comparable Valuation Analysis
Source: Factset, KLR Group, LLC Estimates; Company Filings/Disclosures

Industry & Company Comparable Valuation Analysis (Cont.)
Note: Curreny in ($ US), unlessotherwise indicated
Company Ticker
12/11
Price Rating
KLR
Target Upside
Shares Out
(MM)
Mkt Cap
(MM) EV (MM)
2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017
Offshore Contract Drillers
Seadrill SDRL-US 4.16 Reduce $3.50 (16%) 493 $2,050 $13,548 $1.85 $1.08 $0.73 2.2X 3.8X 5.7X 5.8X 7.6X 8.0X 4.8X 6.6X 7.0X 48% 47% 45%
Transocean RIG-US 12.69 Buy $19.00 50% 364 $4,616 $11,972 $3.70 $0.47 $0.78 3.4X 26.8X 16.2X 3.9X 8.0X 7.3X 2.9X 5.2X 4.3X 34% 32% 29%
ENSCO ESV-US 14.96 Buy $20.00 34% 235 $3,523 $9,248 $4.37 $2.22 $2.29 3.4X 6.7X 6.5X 4.6X 6.6X 6.5X 2.9X 4.2X 4.3X 36% 36% 37%
Diamond Offshore DO-US 20.15 Accumulate $24.00 19% 137 $2,764 $5,204 $2.66 $0.65 $0.29 7.6X 30.8X 70.1X 5.2X 6.9X 7.4X 2.5X 3.5X 3.8X 32% 33% 33%
Noble NE-US 11.90 Buy $16.00 34% 242 $2,879 $7,942 $2.62 $1.15 $0.70 4.5X 10.4X 17.0X 4.7X 6.3X 6.7X 2.7X 3.6X 3.8X 34% 34% 34%
Rowan RDC-US 17.50 Buy $25.00 43% 125 $2,184 $4,017 $3.29 $2.42 $0.58 5.3X 7.2X 29.9X 4.0X 4.6X 6.3X 2.8X 3.2X 4.4X 33% 32% 32%
Atwood Oceanics ATW-US 13.15 Hold $12.50 (5%) 65 $850 $2,471 $7.74 $2.64 ($0.07) 1.7X 5.0X -- 3.2X 5.3X 8.0X 2.2X 4.0X 6.1X 35% 36% 36%
Seadrill Partners SDLP-US 4.31 NR -- -- 75 $324 $5,171 $3.11 $3.29 $2.06 1.4X 1.3X 2.1X 4.8X 4.8X 6.5X -- -- -- -- -- --
Pacific Drilling PACD-US 0.97 Hold $3.00 209% 211 $204 $2,509 $0.75 ($0.54) ($0.33) 1.3X (1.8X) (2.9X) 4.2X 6.9X 6.6X 4.8X 7.1X 6.7X 48% 45% 45%
Ocean Rig ORIG-US 1.57 NR -- -- 161 $253 $4,029 $2.24 $1.19 ($0.49) 0.7X 1.3X (3.2X) 3.9X 4.8X 6.9X 4.3X 5.3X 7.4X 52% 52% 52%
Transocean Partners RIGP-US 8.98 NR -- -- 41 $372 $1,350 $1.79 $1.85 $1.27 5.0X 4.9X 7.1X 4.5X 4.1X 5.3X -- -- -- -- -- --
Hercules Offshore HERO-US 2.80 NR -- -- 20 $56 $0 ($2.39) ($6.26) ($5.81) (1.2X) (0.4X) (0.5X) -- -- -- -- (22.9X) -- -- 9% --
Vantage VTGDF-US 0.00 NR -- -- 311 $1 $2,469 ($0.01) ($0.70) ($0.95) (0.5X) (0.0X) (0.0X) 6.5X 13.6X 29.9X -- -- -- -- -- --
2.7X 7.4X 12.3X 4.2X 6.1X 8.1X 3.0X 2.0X 5.3X 35% 36% 38%
Onshore Drilling
Helmerich & Payne HP-US 51.37 Buy $78.00 52% 108 $5,537 $5,406 $2.99 ($0.26) $1.60 17.2X -- 32.1X 4.9X 9.6X 6.3X 0.5X 0.9X 0.6X 7% 8% 8%
Nabors Industries NBR-US 8.69 Buy $13.00 50% 331 $2,873 $5,974 ($0.40) ($1.32) $0.46 (21.6X) (6.6X) 19.0X 5.3X 7.5X 5.1X 3.3X 4.7X 3.2X 38% 40% 38%
Patterson-UTI Energy PTEN-US 14.80 Buy $23.00 55% 147 $2,178 $2,811 ($0.71) ($1.71) ($0.24) (20.9X) (8.7X) (61.3X) 4.9X 8.8X 4.9X 1.5X 2.7X 1.5X 19% 20% 19%
Unit UNT-US 12.43 NR -- -- 50 $627 $1,546 ($0.19) ($0.51) $1.15 (66.4X) (24.3X) 10.9X 4.2X 4.8X 3.0X 2.6X 3.3X -- 28% 30% --
Seventy Seven Energy SSE-US 1.03 NR -- -- 57 $58 $1,497 ($3.30) ($3.54) ($2.29) (0.3X) (0.3X) (0.5X) 8.4X 11.3X 6.9X 9.0X 12.0X 6.7X 82% 90% 89%
(18.4X) (9.9X) 0.0X 5.6X 8.4X 5.2X 3.4X 4.7X 3.0X 35% 38% 38%
OCTG
Tenaris TS-US 23.78 NR -- -- 590 $14,037 $12,354 $0.85 $0.93 $1.40 27.8X 25.6X 16.9X 9.1X 9.0X 6.7X 0.8X 0.8X 0.6X 7% 7% 7%
Vallourec VK-FR 8.33 NR -- -- 134 $1,114 $3,114 ($3.81) ($2.28) $0.08 (2.2X) (3.7X) -- (46.6X) 43.3X 6.8X -- -- -- -- -- --
12.8X 11.0X 16.9X (18.7X) 26.1X 6.7X 0.8X 0.8X 0.6X 7% 7% 7%
Offshore Supply Chain
Bristow Group BRS-US 25.55 NR -- -- 35 $893 $1,795 $1.98 $2.67 $3.30 12.9X 9.6X 7.7X 5.9X 4.9X 3.4X 3.5X 3.3X -- 31% 35% --
Rignet RNET-US 19.36 NR -- -- 18 $344 $358 ($0.23) $0.59 $0.84 (85.4X) 32.8X 23.0X 5.3X 7.0X 6.6X -- -- -- -- -- --
Tidewater TDW-US 7.36 NR -- -- 47 $346 $1,762 ($0.78) ($1.91) ($1.36) (9.5X) (3.8X) (5.4X) 8.2X 12.4X 10.9X 6.9X 10.4X 8.9X 33% 34% 35%
Seacor Holdings CKH-US 54.53 NR -- -- 17 $946 $1,533 $1.60 $2.71 $3.25 34.0X 20.1X 16.8X 9.6X 7.7X 7.3X -- -- -- -- -- --
Hornbeck Offshore Services HOS-US 9.58 NR -- -- 36 $343 $1,122 $1.15 ($0.29) ($0.02) 8.3X (33.4X) -- 5.1X 7.2X 6.6X 4.9X 6.9X 6.3X 36% 36% 36%
Gulfmark Offshore GLF-US 5.43 NR -- -- 26 $140 $632 ($1.61) ($2.13) ($1.72) (3.4X) (2.6X) (3.2X) 13.6X 25.1X 14.8X 11.2X 20.8X -- 36% 36% --
(7.2X) 3.8X 7.8X 8.0X 10.7X 8.3X 6.6X 10.4X 7.6X 34% 35% 35%
Engineering & Construction
Petrofac PFC-GB 7.60 NR -- -- 346 $2,627 $3,831 $0.34 $0.94 $1.00 22.3X 8.1X 7.6X 9.4X 6.1X 5.7X 3.0X 1.5X 1.4X 21% 15% 14%
Wood Group WG-GB 5.77 NR -- -- 379 $2,184 $2,370 $0.51 $0.43 $0.47 11.4X 13.3X 12.2X 7.3X 8.2X 7.9X 1.0X 1.2X 1.1X 12% 12% 11%
Technip TEC-FR 46.16 NR -- -- 117 $5,405 $4,082 $4.91 $4.44 $3.78 9.4X 10.4X 12.2X 3.3X 3.6X 4.2X 1.9X 1.8X 1.9X 16% 14% 13%
Saipem SPM-IT 7.47 NR -- -- 441 $3,297 $7,447 ($1.68) $0.44 $0.52 (4.5X) 17.1X 14.3X 15.7X 5.8X 5.5X 14.1X 2.6X 2.4X 40% 19% 19%
Worley Parsons WOR-AU 4.62 NR -- -- 245 $1,132 $1,986 $0.80 $0.74 $0.75 5.8X 6.2X 6.2X 4.4X 4.6X 4.6X 2.7X -- -- 23% -- --
Tecnicas Reunidas TRE-ES 33.90 NR -- -- 56 $1,895 $1,540 $2.77 $2.96 $3.15 12.2X 11.5X 10.8X 7.3X 6.9X 6.5X -- -- -- -- -- --
Helix Energy Solutions HLX-US 5.01 NR -- -- 106 $532 $839 $0.18 ($0.04) $0.28 27.5X -- 17.7X 5.0X 5.3X 3.8X 4.8X 5.0X 3.5X 28% 27% 25%
Mcdermott MDR-US 3.62 NR -- -- 239 $865 $1,008 ($0.14) ($0.08) $0.12 (26.1X) (47.3X) 29.9X 5.3X 4.3X 3.4X 4.5X 3.6X 2.9X 24% 25% 24%
7.3X 2.8X 13.9X 7.2X 5.6X 5.2X 4.6X 2.6X 2.2X 23% 19% 18%
KLR / Consensus EPS P/E EV/EBITDA Total Debt/EBITDA Total Debt/Assets

KLR EPS Estimates vs. Consensus
Company Category 2013 2014 2015E 2016E 2017E 1Q15 2Q15 3Q15 4Q15E 1Q16E 2Q16E 3Q16E 4Q16E 1Q17E 2Q17E 3Q17E 4Q17E
Schlumberger EPS $4.80 $5.56 $3.36 $2.81 $4.35 $1.06 $0.88 $0.78 $0.65 $0.66 $0.64 $0.71 $0.80 $0.88 $0.99 $1.17 $1.31
Consensus EPS $3.37 $2.70 $3.62 $0.65 $0.61 $0.63 $0.69 $0.77 $0.76 $0.84 $0.93 $1.03
Consensus EPS-High $3.43 $3.26 $4.45 $0.72 $0.70 $0.77 $0.82 $0.95 $0.90 $1.05 $1.18 $1.32
Consensus EPS-Low $3.28 $2.15 $2.65 $0.57 $0.53 $0.50 $0.51 $0.58 $0.61 $0.60 $0.68 $0.76
Halliburton EPS $2.45 $4.01 $1.45 $0.87 $2.16 $0.49 $0.44 $0.31 $0.20 $0.19 $0.19 $0.27 $0.35 $0.44 $0.53 $0.64 $0.70
Consensus EPS $1.49 $1.11 $2.09 $0.24 $0.18 $0.22 $0.31 $0.40 $0.40 $0.48 $0.59 $0.70
Consensus EPS-Low $1.44 $0.65 $1.60 $0.19 ($0.04) $0.07 $0.14 $0.21 $0.29 $0.32 $0.45 $0.58
Weatherford EPS $0.60 $1.01 ($0.29) ($0.34) $0.23 ($0.04) ($0.10) ($0.05) ($0.09) ($0.11) ($0.10) ($0.08) ($0.05) ($0.02) $0.03 $0.08 $0.14
Consensus EPS ($0.32) ($0.33) $0.19 ($0.12) ($0.12) ($0.11) ($0.07) ($0.03) ($0.03) ($0.01) $0.05 $0.10
Consensus EPS-High ($0.26) $0.01 $0.83 ($0.06) ($0.09) ($0.03) $0.04 $0.10 $0.06 $0.04 $0.09 $0.15
Consensus EPS-Low ($0.37) ($0.65) ($0.38) ($0.17) ($0.18) ($0.20) ($0.16) ($0.13) ($0.08) ($0.07) ($0.02) $0.04
National Oilwell Varco EPS $5.52 $6.48 $2.90 $1.41 $1.87 $1.14 $0.77 $0.61 $0.38 $0.36 $0.34 $0.35 $0.36 $0.37 $0.42 $0.49 $0.58
Consensus EPS $2.98 $1.45 $1.90 $0.46 $0.38 $0.35 $0.37 $0.40 $0.41 $0.45 $0.49 $0.52
FMC Technologies EPS $2.17 $2.94 $2.26 $1.69 $1.85 $0.63 $0.52 $0.61 $0.50 $0.45 $0.42 $0.40 $0.41 $0.39 $0.41 $0.47 $0.58
Consensus EPS $2.26 $1.57 $1.64 $0.50 $0.41 $0.41 $0.38 $0.38 $0.36 $0.38 $0.42 $0.47
Oceaneering EPS $3.44 $4.00 $2.86 $1.87 $1.98 $0.70 $0.76 $0.82 $0.59 $0.48 $0.48 $0.51 $0.40 $0.41 $0.46 $0.59 $0.52
Consensus EPS $2.86 $2.14 $2.31 $0.59 $0.50 $0.56 $0.58 $0.54 $0.54 $0.58 $0.60 $0.58
Forum Energy EPS $1.46 $1.84 $0.48 ($0.08) $0.56 $0.30 $0.16 $0.08 ($0.05) ($0.05) ($0.04) ($0.01) $0.02 $0.06 $0.11 $0.16 $0.23
Consensus EPS $0.50 $0.10 $0.56 ($0.03) ($0.02) $0.00 $0.04 $0.08 $0.08 $0.11 $0.14 $0.19
Consensus EPS-Low $0.41 ($0.35) $0.06 ($0.13) ($0.13) ($0.12) ($0.08) ($0.02) $0.02 $0.03 $0.07 $0.14
Dril-Quip EPS $4.23 $5.09 $4.90 $3.02 $3.22 $1.25 $1.24 $1.32 $1.09 $0.88 $0.75 $0.71 $0.68 $0.67 $0.75 $0.83 $0.96
Consensus EPS $4.87 $2.98 $2.61 $1.06 $0.91 $0.76 $0.70 $0.65 $0.67 $0.70 $0.70 $0.73

Core Laboratories EPS $5.32 $5.79 $3.19 $2.92 $3.89 $0.86 $0.82 $0.83 $0.67 $0.65 $0.68 $0.75 $0.83 $0.88 $0.94 $1.00 $1.07
Consensus EPS $3.17 $2.94 $3.77 $0.65 $0.64 $0.69 $0.77 $0.81 $0.77 $0.83 $0.91 $0.99
Superior Energy Services EPS $1.56 $1.79 ($1.22) ($1.26) $0.16 ($0.01) ($0.31) ($0.46) ($0.44) ($0.43) ($0.38) ($0.28) ($0.17) ($0.10) $0.01 $0.10 $0.15
Consensus EPS ($1.29) ($1.61) ($0.49) ($0.51) ($0.48) ($0.43) ($0.37) ($0.31) ($0.28) ($0.20) ($0.14) ($0.09)
Consensus EPS-High ($1.20) ($1.00) $0.62 ($0.42) ($0.36) ($0.29) ($0.20) ($0.08) ($0.05) $0.06 $0.15 $0.24
Consensus EPS-Low ($1.36) ($2.01) ($1.98) ($0.58) ($0.62) ($0.58) ($0.51) ($0.50) ($0.50) ($0.50) ($0.50) ($0.50)
Flotek Industries EPS $0.67 $0.97 $0.09 $0.50 $1.06 ($0.04) $0.01 $0.04 $0.08 $0.08 $0.11 $0.14 $0.17 $0.21 $0.25 $0.29 $0.31
Consensus EPS ($0.00) $0.18 $0.79 ($0.01) ($0.00) $0.02 $0.04 $0.05 $0.16 $0.21 $0.28 $0.29
Consensus EPS-Low ($0.02) ($0.03) $0.47 ($0.03) ($0.04) ($0.02) $0.00 ($0.01) $0.13 $0.17 $0.22 $0.24
Franks International EPS $1.99 $1.09 $0.61 $0.38 $0.79 $0.25 $0.15 $0.12 $0.10 $0.09 $0.08 $0.09 $0.11 $0.14 $0.18 $0.21 $0.25
Consensus EPS $0.62 $0.45 $0.58 $0.10 $0.10 $0.10 $0.11 $0.11 $0.12 $0.12 $0.14 $0.15
Oil States International EPS $0.71 $3.74 $0.69 ($0.20) $1.08 $0.45 $0.15 $0.11 ($0.02) ($0.06) ($0.07) ($0.07) ($0.01) $0.09 $0.21 $0.33 $0.45
Consensus EPS $0.70 ($0.14) $0.43 ($0.01) ($0.06) ($0.07) ($0.05) ($0.00) $0.02 $0.05 $0.13 $0.24
Consensus EPS-Low $0.66 ($0.50) $0.03 ($0.05) ($0.12) ($0.15) ($0.15) ($0.12) ($0.03) ($0.03) $0.02 $0.09
Newpark Resources EPS $0.50 $0.78 ($0.18) ($0.29) $0.21 $0.01 ($0.03) ($0.06) ($0.11) ($0.11) ($0.07) ($0.06) ($0.05) ($0.02) $0.02 $0.07 $0.14
Consensus EPS ($0.16) ($0.19) $0.20 ($0.08) ($0.08) ($0.08) ($0.05) ($0.03) ($0.07) ($0.07) ($0.05) ($0.04)
Consensus EPS-High ($0.15) ($0.07) $0.50 ($0.07) ($0.05) ($0.03) $0.00 $0.01 ($0.07) ($0.07) ($0.05) ($0.04)
C&J Services EPS $1.21 $1.51 ($1.78) ($1.54) $0.60 ($0.12) ($0.46) ($0.65) ($0.54) ($0.52) ($0.44) ($0.35) ($0.22) ($0.03) $0.10 $0.21 $0.32
Consensus EPS ($1.95) ($2.13) ($1.15) ($0.71) ($0.64) ($0.58) ($0.49) ($0.45) ($0.45) ($0.39) ($0.34) ($0.29)
Consensus EPS-High ($1.81) ($1.75) ($0.31) ($0.57) ($0.54) ($0.50) ($0.40) ($0.32) ($0.32) ($0.23) ($0.14) ($0.04)
KLR EPS Estimates vs. Consensus (cont.)

Offshore Contract Drillers
Seadrill EPS $3.03 $2.69 $1.85 $1.08 $0.73 $0.48 $0.77 $0.21 $0.39 $0.34 $0.34 $0.23 $0.17 $0.07 $0.06 $0.19 $0.40
Consensus EPS $1.90 $1.48 $0.63 $0.44 $0.40 $0.43 $0.31 $0.25 $0.18 $0.15 $0.23 $0.19
Consensus EPS-Low $1.73 $0.20 ($0.23) $0.27 $0.30 $0.29 $0.15 $0.09 $0.09 $0.12 $0.15 $0.10
Transocean EPS $3.73 $5.03 $3.70 $0.47 $0.78 $1.10 $1.12 $0.85 $0.62 $0.44 $0.04 $0.02 ($0.04) $0.11 $0.17 $0.19 $0.32
Consensus EPS $3.71 $0.62 ($0.56) $0.64 $0.45 $0.11 $0.06 $0.00 $0.03 ($0.03) ($0.23) ($0.24)
Consensus EPS-Low $3.49 ($0.57) ($1.84) $0.42 $0.15 ($0.22) ($0.33) ($0.42) ($0.24) ($0.34) ($0.60) ($0.66)
ENSCO EPS $6.16 $6.21 $4.37 $2.22 $2.29 $1.38 $1.16 $1.09 $0.73 $0.66 $0.62 $0.51 $0.43 $0.36 $0.58 $0.67 $0.69
Consensus EPS $4.38 $2.39 $1.13 $0.74 $0.76 $0.69 $0.45 $0.40 $0.28 $0.30 $0.28 $0.25
Consensus EPS-Low $4.12 $1.58 ($0.40) $0.48 $0.43 $0.44 $0.19 $0.23 $0.10 $0.10 ($0.02) $0.00
Diamond Offshore EPS $4.77 $3.17 $2.66 $0.65 $0.29 $0.49 $0.66 $1.05 $0.45 $0.03 $0.20 $0.28 $0.14 $0.06 $0.05 $0.10 $0.08
Consensus EPS $2.69 $0.70 $0.71 $0.48 $0.20 $0.13 $0.22 $0.21 $0.21 $0.11 $0.05 $0.05
Consensus EPS-Low $2.47 $0.06 ($0.27) $0.26 ($0.07) ($0.16) ($0.00) $0.03 $0.08 ($0.06) ($0.20) ($0.18)
Noble EPS $2.92 $3.04 $2.62 $1.15 $0.70 $0.72 $0.66 $0.72 $0.52 $0.38 $0.27 $0.27 $0.23 $0.19 $0.18 $0.17 $0.16
Consensus EPS $2.66 $1.26 $0.19 $0.56 $0.35 $0.33 $0.28 $0.28 $0.14 $0.06 $0.03 ($0.00)
Consensus EPS-Low $2.45 $0.50 ($0.92) $0.35 $0.19 $0.20 $0.10 $0.04 $0.08 ($0.13) ($0.10) ($0.11)
Rowan EPS $1.96 $2.11 $3.29 $2.42 $0.58 $0.99 $0.70 $0.89 $0.71 $0.68 $0.62 $0.56 $0.56 $0.41 $0.11 $0.06 $0.00
Consensus EPS $3.30 $2.36 $0.66 $0.72 $0.65 $0.64 $0.55 $0.53 $0.50 $0.29 $0.15 $0.09
Consensus EPS-Low $3.09 $1.57 ($0.45) $0.51 $0.46 $0.44 $0.18 $0.12 $0.25 ($0.14) ($0.21) ($0.10)
Atwood Oceanics EPS $5.32 $4.89 $7.74 $2.64 ($0.07) $1.71 $1.97 $1.73 $2.32 $0.85 $1.07 $0.68 $0.04 ($0.11) ($0.15) ($0.02) $0.21
Consensus EPS $3.69 ($0.22) $0.96 $1.35 $0.86 $0.53 ($0.04) $0.01 $0.07 $0.01
Consensus EPS-High $5.58 $2.03 $1.40 $1.73 $1.20 $1.20 $0.50 $0.27 $0.70 $0.55
Consensus EPS-Low $2.45 ($2.50) $0.76 $1.00 $0.35 ($0.13) ($0.29) ($0.37) ($0.43) ($0.49)
Pacific Drilling EPS $0.42 $0.86 $0.75 ($0.54) ($0.33) $0.24 $0.22 $0.19 $0.09 ($0.11) ($0.11) ($0.15) ($0.17) ($0.17) ($0.14) ($0.05) $0.03
Consensus EPS $0.79 ($0.37) ($0.88) $0.13 ($0.06) ($0.06) ($0.07) ($0.17) ($0.14) ($0.19) ($0.22) ($0.27)
Consensus EPS-High $0.91 $0.12 ($0.11) $0.25 ($0.03) ($0.01) $0.06 $0.01 ($0.10) ($0.17) ($0.21) ($0.23)
Consensus EPS-Low $0.69 ($0.78) ($1.76) $0.03 ($0.16) ($0.15) ($0.24) ($0.29) ($0.18) ($0.22) ($0.24) ($0.32)

Onshore Drilling
Helmerich & Payne EPS $5.67 $6.25 $2.98 ($0.26) $1.60 $1.70 $0.97 $0.27 $0.04 ($0.13) ($0.13) ($0.06) $0.06 $0.20 $0.32 $0.48 $0.61
Consensus EPS ($0.30) $0.21 ($0.07) ($0.10) ($0.08) ($0.06) ($0.02) $0.00 $0.07 $0.15
Consensus EPS-High $0.32 $1.14 $0.01 ($0.01) $0.02 $0.17 $0.21 $0.18 $0.29 $0.46
Consensus EPS-Low ($0.72) ($1.18) ($0.13) ($0.20) ($0.20) ($0.21) ($0.20) ($0.27) ($0.32) ($0.39)
Nabors Industries EPS $1.35 $1.14 ($0.40) ($1.32) $0.46 $0.20 ($0.15) ($0.07) ($0.40) ($0.41) ($0.38) ($0.31) ($0.22) ($0.11) $0.05 $0.22 $0.29
Consensus EPS ($0.28) ($1.30) ($0.69) ($0.27) ($0.32) ($0.36) ($0.31) ($0.28) ($0.21) ($0.19) ($0.09) ($0.06)
Consensus EPS-High ($0.09) ($0.34) $0.45 ($0.08) ($0.13) ($0.13) ($0.07) ($0.01) ($0.05) ($0.01) $0.24 $0.21
Patterson-UTI Energy EPS $1.46 $1.26 ($0.71) ($1.71) ($0.24) $0.06 ($0.13) ($0.27) ($0.37) ($0.46) ($0.47) ($0.42) ($0.35) ($0.25) ($0.11) $0.00 $0.12
Consensus EPS ($0.82) ($1.97) ($1.21) ($0.49) ($0.51) ($0.52) ($0.48) ($0.44) ($0.39) ($0.36) ($0.28) ($0.24)
Consensus EPS-High ($0.76) ($1.40) $0.05 ($0.42) ($0.37) ($0.38) ($0.27) ($0.16) ($0.11) ($0.04) $0.07 $0.13
Proppant
US Silica EPS $1.45 $2.41 $0.27 ($0.09) $0.87 $0.27 $0.08 ($0.03) ($0.07) ($0.08) ($0.05) ($0.01) $0.05 $0.11 $0.16 $0.25 $0.35
Consensus EPS $0.14 ($0.19) $0.68 ($0.19) ($0.14) ($0.05) $0.00 $0.01 $0.08 $0.14 $0.16 $0.15
Consensus EPS-High $0.25 $0.10 $2.05 ($0.08) ($0.03) $0.03 $0.11 $0.17 $0.08 $0.19 $0.20 $0.18
Consensus EPS-Low ($0.05) ($0.64) $0.08 ($0.38) ($0.29) ($0.16) ($0.11) ($0.11) $0.08 $0.09 $0.11 $0.12
Carbo Ceramics EPS $3.70 $3.39 ($1.71) ($2.37) ($1.08) ($0.28) ($0.41) ($0.35) ($0.67) ($0.63) ($0.60) ($0.57) ($0.57) ($0.47) ($0.35) ($0.21) ($0.05)
Consensus EPS ($1.93) ($2.21) ($0.82) ($0.89) ($0.69) ($0.55) ($0.50) ($0.46) $0.01 $0.01 $0.01 $0.01
Consensus EPS-High ($1.77) ($1.50) $0.04 ($0.73) ($0.51) ($0.40) ($0.31) ($0.26) $0.01 $0.01 $0.01 $0.01
Consensus EPS-Low ($2.04) ($2.86) ($1.65) ($1.00) ($0.87) ($0.69) ($0.77) ($0.74) $0.01 $0.01 $0.01 $0.01
Fairmount EPS $0.63 $1.05 $0.09 ($0.19) $0.16 $0.18 $0.02 ($0.05) ($0.06) ($0.07) ($0.06) ($0.04) ($0.02) $0.00 $0.02 $0.05 $0.09
Consensus EPS $0.06 ($0.24) $0.08 ($0.10) ($0.09) ($0.06) ($0.05) ($0.04) ($0.04) ($0.01) $0.01 $0.02
Consensus EPS-High $0.11 $0.00 $0.56 ($0.05) ($0.02) $0.02 $0.02 $0.00 ($0.02) $0.02 $0.05 $0.06
Consensus EPS-Low $0.01 ($0.40) ($0.15) ($0.15) ($0.15) ($0.12) ($0.09) ($0.08) ($0.05) ($0.04) ($0.03) ($0.03)

Commodities Factors Start to Turn for Oilfield Services

Negative IEA Supply Revisions & Low OPEC Spare Capacity Work in Oil’s Favor
BULLISH ON OIL MARKET. The oil market remains out of balance, but we see the second derivative of supply/demand dynamics moving in the right direction. We track four variables as a measure of
the health of the oil market as an indicator for oilfield service activity. In our view, evidence of a production response to low oil prices and reduced upstream spending remains the most important.
FOUR OILMARKET VARIABLES KEY TO TRAJECTORY OF COMMODITY
BULLISH: OPEC Spare Capacity Remains Near Multi-Year Lows. As a percentage of total supply, OPEC spare capacity sits at historically low levels. Given OPEC’s quest to regain market shares, we
anticipate that spare capacity should remain low. Reduced cushion in the market supports a shift to risk premiums in oil prices if non-OPEC supply revisions continue to trend lower, global demand
numbers revise higher, or geopolitical issues pose a risk to supply estimates. (pg. 27)
BULLISH: Negative Non-OPEC Supply Revisions. The IEA has begun negative supply revisions for 2016 non-OPEC supply estimates. Rapid upstream spending cuts in the North America and accelerating
spending reductions in international markets, likely continues the negative estimate revision trend and potentially accelerate. Lowered supply estimates in combination with low OPEC spare capacity
may prove bullish for oil prices. (pg. 28)
NEUTRAL/BEARISH: Global Demand Growth Appears Stable for Now. The trajectory of global oil demand remains positive. Recent market concerns regarding global economic growth, particularly in
China, may overhang global demand estimates. We view that variable as neutral to negative for oil prices in the near term. (pg. 31)
BEARISH: Inventories Remain High. Global oil inventories remain high, but appear to have leveled off above recent averages. Continued builds in inventories may remain bearish for oil prices. The oil
market needs global inventory numbers to begin to draw, as a signal of better supply/demand balances. We do note, that inventory level surpluses are small on a “days demand” basis. Even in the US,
we are only carrying inventories approximately seven days of demand above the typical 55-60 days in stock. If demand remains healthy and supply revisions remain negative, inventories may begin to
draw. (pg. 31)
2014 1Q15 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 4Q16 2016 2017 2018 2019 2020
KLR Group $99.55A $55.38A $63.39A $51.37A $54.00 $56.03 $59.00 $66.50 $72.50 $80.00 $69.50 $90.00 $90.00 $90.00 $90.00
Futures Market $99.55A $55.38A $63.39A $51.37A $46.64 $54.19 $45.75 $47.87 $49.70 $51.41 $48.68 $54.58 $57.81 $59.90 $61.24
Consensus Forecast $99.55A $55.38A $63.39A $51.37A $50.40 $55.13 $56.00 $56.00 $56.00 $56.00 $56.00 $65.00 $70.00 $70.00 $70.00
Brent Crude Oil ($/bbl)1
2014 1Q15 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 4Q16 2016 2017 2018 2019 2020
KLR Group $93.00A $48.80A $57.80A $46.70A $50.00 $50.83 $55.00 $62.50 $67.50 $75.00 $65.00 $85.00 $85.00 $85.00 $85.00
Futures Market $93.00A $48.80A $57.80A $46.70A $43.61 $49.23 $43.80 $45.95 $47.31 $48.57 $46.41 $50.74 $53.37 $55.52 $57.02
Consensus Forecast $93.00A $48.80A $57.80A $46.70A $47.40 $50.18 $50.29 $50.29 $50.29 $50.29 $53.50 $61.00 $67.25 $67.50 $69.00
NYMEX WTI Crude Oil ($/bbl)1
1Based on daily average price
Sources: Bloomberg; KLR Group, LLC Forecasts

Mkt Share Quest Leaves OPEC Spare Capacity Low, Potentially Headed Lower as Iran Ramps
$15
$35
$55
$75
$95
$115
$135
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
BrentCrudeOilPrice($/bbl)
OPECSpareCapacity%ofGlobalSupply
OPEC Spare Capacity Brent Crude Price
Source: IEA
Non-OPEC Supply Revisions Boost Call Spare Capacity: Bullish

Negative IEA Non-OPEC Supply Revision Suggest Markets Move Toward Balance
$40
$50
$60
$70
$80
$90
$100
$110
$120
$130
$140
50
51
52
53
54
55
56
57
58
59
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
ActualBrentCrudeOilPrice($/bbl)
AnnualNon-OPECSupplyForecast(mmb/d)
Vintage of Forecast
2009 IEA Supply 2010 IEA Supply 2011 IEA Supply 2012 IEA Supply 2013 IEA Supply
2014 IEA Supply 2015 IEA Supply 2016 IEA Supply Brent Crude
Source: IEA
Negative Non-OPEC Supply Revisions: Bullish for Oil
Note: We maintain an extensive catalogue of the IEA’s monthly changes to its supply and demand forecasts. Annual estimates are typically initiated the summer before
the year tracked and end the summer after the tracking year has ended.
Recent history sees negative
revisions for non-OPEC oil supply as
a leading indicator of oil price
recovery.

US EIA Weekly Crude Production Data Beginning to Rollover, But Pace & Trajectory Question Marks
Source: EIA as of 11/20/15
9.2
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
Jan-05
Jun-05
Nov-05
Apr-06
Sep-06
Feb-07
Jul-07
Dec-07
May-08
Oct-08
Mar-09
Aug-09
Jan-10
Jun-10
Nov-10
Apr-11
Sep-11
Feb-12
Jul-12
Dec-12
May-13
Oct-13
Mar-14
Aug-14
Jan-15
Jun-15
Nov-15
MMB/d
Weekly US Crude Production

KLR US Liquids Production Forecast
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
U.S.LiquidsSupply(Mmbpd)
Other Alaska GOM NGLs Permian Williston Eagle Ford Top-Down Forecast
Source: Baker Hughes, HPDI, EIA, KLR Group LLC.

$40
$50
$60
$70
$80
$90
$100
$110
$120
$130
$140
83
84
85
86
87
88
89
90
91
92
93
94
95
96
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
ActualBrentCrudeOilPrice($/bbl)
GlobalDemandForecast(mmb/d)
Vintage of Forecast
2009 IEA Demand 2010 IEA Demand 2011 IEA Demand 2012 IEA Demand 2013 IEA Demand
2014 IEA Demand 2015 IEA Demand 2016 IEA Demand Brent Crude
IEA Global Demand Forecast Stable, But Economic Growth Concerns May Leave Negative Bias
Source: IEA
Negative Global Demand Revisions : Bearish for Oil

51
56
61
66
71
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
DaysofInventory
5yr Range 2013 2014 2015
Oil Inventory – OECD and US Inventories Historically High, But Production Response May Reverse Trends
54
56
58
60
62
64
66
DaysofInventory
'10-'14 Range 2013 2014 2015
OECD Inventory / OECD Daily Demand
Source: IEA
US Inventory / US Daily Demand
Source: EIA, as of 11/20/15

Natural Gas Markets Remain Enigmatic, But Bright Spots in the Data
NATURAL GAS MARKET REMAINS UNECONOMIC, YET ENIGMATIC. Productivity growth per well/rig continues to keep a lid on natural gas prices, despite our view that production is not economic at
current levels. In the longer term, we see a correction in this relationship. From the oil services perspective, gas represent ~20% of the rig count, so a meaningful shift in activity may be required to
move the needle in our forecasts.
BEARISH: Storage Levels Remain High. High storage levels and healthy production continue to make it difficult for natural gas prices to rally. KLR continues to see current spending and ultimately
production unsustainable at current economics.
BULLISH: Productivity Per Well & RIG Slowing. The bearish natural gas argument hinges in part on continued productivity growth per rig/well driving down the marginal cost of gas. Recent EIA data
suggests the upwards productivity trend is ending. Whether it is less associated gas volumes from reduced spending at oil plays or something more material in natural gas spending/drilling, the turn in
the data may prove bullish.
2014 1Q15 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 4Q16 2016 2017 2018 2019 2020
KLR Group $4.41A $2.99A $2.64A $2.77A $2.28A $2.67A $3.00 $3.25 $3.50 $3.75 $3.38 $4.25 $4.25 $4.25 $4.25
Futures Market $4.41A $2.99A $2.64A $2.77A $2.28A $2.67A $2.28 $2.39 $2.49 $2.62 $2.45 $2.78 $2.89 $2.96 $3.07
Consensus Forecast $4.41A $2.99A $2.64A $2.77A $2.28A $2.67A $3.25 $3.25 $3.25 $3.25 $3.25 $3.43 $3.50 $3.39 $3.52
NYMEX Natural Gas ($/mmbtu)2
1Based on settlement price on last trading day each month
Sources: Bloomberg; KLR Group, LLC Forecasts

Gas Well Productivity Improvements Challenge Legacy Inventory/Natural Gas Price Paradigms
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
TrillionsofCubicFeet
5yr Range 2015 2013 2014
Natural Gas Storage (% of 5yr Avg) vs. Henry Hub PriceUSA Natural Gas In Storage
40%
60%
80%
100%
120%
140%
160%
$2
$4
$6
$8
$10
$12
$14
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Storage%of5yrAverage
NaturalGasPrice
Gas Price Storage % of 5 Year Rolling Average

KLR US Natural Gas Production Forecast
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
U.S.GasSupply(Bcfpd)
Other/GOM Associated Gas Barnett Haynesville Marcellus/Utica Total Top-Down Forecast
Source: Baker Hughes, HPDI, EIA, KLR Group LLC.

Natural Gas Productivity Improvements Slow, Potentially Shifting Natural Gas Price Paradigms
Natural Gas Production Per RigNatural Gas Production Per Well
Source: EIASource: EIA
100
120
140
160
180
200
220 1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
mcfd/well
500
700
900
1,100
1,300
1,500
1,700
1,900
2,100
2,300
2,500
Mar-07
Sep-07
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
mcfd/rig
Note: Based on EIA monthly estimates for drilling productivity within Haynesville, Eagle Ford, Permian,
Niobrara, Bakken, Utica, and Marcellus geographical regions. These seven regions accounted for 100% of
the natural gas production growth during 2011 – 2014.

US Land Market Bottoms 4Q15/1Q16

Positive Backdrop for North American Services Outlook
Proprietary US Rig Count Model See US Land Rig Count Bottom in 4Q15/1Q16. We have built a proprietary US land rig count forecast model to reflect the high correlations between commodity
prices, cash flow, capital expenditures, funding gaps, rig efficiency, inflation/deflation, and service intensity per well. Given an oil price bottom in 4Q15/1Q16, we see the US land rig count finding a
trough in the 600-700 rig range during 4Q15/1Q16. As oil prices recover towards $85 in 2017, we see the US land rig count exiting 2016 closer to ~1,000 rigs . As activities’ bottom, the market may
come closer to cash flow neutrality, with funding gaps (CFO less CAPEX) closer to 15-20%, down from recent highs. The value of borrowing bases potentially revised down as a function of current lower
oil and natural gas outlooks, banks and debt markets may continue to close the lending spigot. Meanwhile, equity markets may not give E&Ps credit for growth achieved through funding gaps.
Narrowed funding gaps and lowered cash flow from depressed commodity prices may mark the bottom of rig and oil services activity. We are buyers of US levered oil service stocks at the nadir of
activity, especially as negative global oil supply revisions begin to appear. From a bottom activity from financially deleveraged producers with more anemic cash flows, may only improve with a
recovery of oil prices and more receptive capital markets.
North American Activity Responds First to Market Inflection. A well established infrastructure in the US, created by years of “spot” market conditions and a plethora of E&Ps, allows for both a more
rapid decline and rapid increase in activity. As a result, the North American market is more volatile than international and offshore markets, with larger scale projects and greater supply chain lead
times. As oil prices rise and fall, US land rig counts can increased ~60% (2009/2010) or fall ~60% (2014/2015) year over year. As the commodity and activity find a bottom in 1H16, we see the potential
for an accelerated recovery in land rig counts and completions activity (DUC inventory) in 2017/2016.
Oil Services Companies Poised for Rapid Improvement in Returns. After over four quarters of cost cutting, process realignment, and other streamlining exercises, North American oil services providers
are poised for tremendous operating leverage with the inflection of activity. Since we predict the inflection of activity in 2016, we want to own the group in front of the turn. Natural equipment
attrition, stacking, and exit of weaker, often smaller competitors, in addition to the consolidation of larger competitors creates a strong tail wind for improvement in North American service and
equipment market balances. Thus, the highest returns may come at the beginning of a cyclical turn, in part to incentivize incremental investment in front of more significant activity growth. In our
view, more spot-oriented infrastructure, related to US activity creates an opportunity for faster capacity absorption relative to international and offshore markets.
Winners
• Oil Service/Equipment Companies Tied to North American Service & Consumables Demand. Several diversified and niche oil services providers may benefit from an uptick of US land activity. HAL
remains the biggest beneficiary amongst the diversified, large cap names, but risks around the digestion of BHI may create more attractive entry points. SPN, CLB, OIS, and FTK ($10.76, B,
$14.50PT) stand out amongst small/mid caps. NOV and FET are the largest beneficiaries within the large and mid cap equipment group, respectively.
• Land Contract Drillers. HP, PTEN, and to a lesser extent NBR, may all have leverage to the high end of the land contract drilling market, positioned to improve with a modest recovery in US land rig
counts. The pricing of higher tier rigs has shown resilience in that segment of the market, but higher utilizations may greatly improve economics.
• Pressure Pumping Companies (pg. 50). Equipment attrition matched with demand recovery for horsepower may rapidly improve pressure pumping economics. Pressure pumping companies may
also benefit from an accelerated completion of DUCs, driving a faster demand recovery relative to land rigs. HAL benefits the most amongst large cap diversified service companies (others: SLB,
WFT), while SPN is a safe way to play the small/mid cap group. Further out on the risk frontier, we like CJES among small cap names.
More Challenged
• Proppant Companies. The proppant companies may clearly benefit from a US land recovery. An abundance of excess capacity and high fixed costs structures may lead the recovery in proppant
economics to lag the other sub-sectors. We view SLCA, FMSA, and CRR as later cycle plays to be revisited as their risk/reward improves. In the interim, we look to SLCA as a potential consolidator
of capacity. We are more cautious on FMSA and CRR in light of balance sheet risks.

-64%
-55%
(65%)
(60%)
(55%)
(50%)
(45%)
(40%)
(35%)
(30%)
(25%)
(20%)
(15%)
(10%)
(5%)
-
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
IndexedSharePerformance(%) Offshore Onshore
Investors Favor Leverage to Perceived Lower Marginal Cost Onshore vs. Higher Cost Offshore
Note: Offshore index includes FI, OIS, FTI, OII, DRQ, SDRL, RIG, ESV, DO, NE, RDC, ATW, and PACD equally weighted performance from 1/1/14 to 12/9/15
Onshore index includes SLCA, CRR, HP, NBR, and PTEN equally weighted performance from 1/1/14 to 12/9/15
Belief in a structural shift towards lower cost onshore projects from higher cost
deepwater plays, combined with the offshore rig oversupply drove stock
performance variance between onshore and offshore levered shares in 2014
The bounce in oil prices in mid-2015 illustrate that the bias towards oil
services companies with greater onshore exposure persists. We
believe investor sub-sector preferences may shift as the offshore rig
market comes into balance and investors see evidence of lower break-
even levels for large scale offshore projects. Thus, we believe onshore
levered stocks may lead the initial stages of recovery in the group.
Source: Factset
Indexed Return For Onshore vs. Offshore Levered Stocks Drillers

US Land Rig Forecast Finds Bottom in 4Q15/1Q16
1,689
1,775
1,886
1,828
1,283
879
930
1,099
1,286
1,451
1,587
1,648
1,674
1,778
1,893
1,954
1,947
1,924
1,855
1,759
1,706
1,710
1,691
1,682
1,705
1,796
1,828
1,843
1,346
873
832
630
699
825
930
1,024
1,230
1,305
1,306
1,308
1,310
1,312
1,314
1,316
1,345
1,375
1,405
1,437
1,453
1,468
1,483
1,498
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
1Q17
3Q17
1Q18
3Q18
1Q19
3Q19
1Q20
3Q20
#ofRigs
Our forecast implies a steep decline
in rig activity through the course of
4Q15
We forecast a recovery in activity during 2016, corresponding
with a rebound in oil prices. A risk to our forecast remains a
front end weighted 2016 spending profile, which may pause,
dependent on the progression of commodity prices. As a
result our front end rig count forecast may prove low, the
progression of recovery in 2016 may pause or reverse.
Sources: KLR Group, LLC Forecasts; BHI, Factset
Quarterly US Lang Rig Count

-
20
40
60
80
100
120
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
1Q17
3Q17
1Q18
3Q18
1Q19
3Q19
1Q20
3Q20
Funding Gap WTI
-
200
400
600
800
1,000
1,200
1,400
1,600
-
500
1,000
1,500
2,000
2,500
1Q00
1Q01
1Q02
1Q03
1Q04
1Q05
1Q06
1Q07
1Q08
1Q09
1Q10
1Q11
1Q12
1Q13
1Q14
1Q15
1Q16
1Q17
1Q18
1Q19
1Q20
US Land Rigs Horizontal Rigs
US Land Rig Count Bottoms as E&P CAPEX Nears Cash Flow From Operations & Funding Gaps Erode
The period of rising oil prices, borrowing base growth, higher debt,
lower cost of capital, and significant funding gaps reverses course as
commodity prices fall. In our view, E&P companies may spend more
closely within operating cash flow in the near term. Any significant
re-leveraging of activity may make our activity forecast conservative.
US Land Rigs Trough in 2016, Greater Recovery in 2017 Falling Funding Gaps: Cyclical Deceleration
The US land rig count bottoms in 4Q15/1Q16, as E&Ps return to
working closer to organic cash flows. If oil prices sit near the
bottom and the industry has deleveraged activity (reduced
funding gaps), the negative cash flow headwinds on the US land
rigs count have diminished.
Sources: KLR Group, LLC Forecasts; BHI, Factset Sources: KLR Group, LLC Forecasts; BHI, Factset

-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1Q00
1Q01
1Q02
1Q03
1Q04
1Q05
1Q06
1Q07
1Q08
1Q09
1Q10
1Q11
1Q12
1Q13
1Q14
1Q15
1Q16
1Q17
1Q18
1Q19
1Q20
IndexedCAPEX&CFO
CFO Indexed (Rolling 2 Quarter Average) CAPEX Indexed
-
200
400
600
800
1,000
1,200
1,400
1,600
100
300
500
700
900
1,100
1,300
1,500
1,700
1,900
2,100
1Q00
1Q01
1Q02
1Q03
1Q04
1Q05
1Q06
1Q07
1Q08
1Q09
1Q10
1Q11
1Q12
1Q13
1Q14
1Q15
1Q16
1Q17
1Q18
1Q19
1Q20
HorizontalRigCount
IndexedCAPEXSpend
CAPEX Indexed Horizontal Rigs
Our proprietary model distills history to capture the clear relationships between the commodity, cash flows, and US rig counts. Tied to the KLR
forecast for oil price recovery, we see a rig count trough in 2016, with a more meaningful recovery in activity in 2017, with oil prices at $85.
Key Relationships Captured:
• E&P Cash Flow from Operations (CFO) & WTI (R-Squared>0.90)
• E&P Cash Flow from Operations (CFO) & CAPEX (R-Squared>0.80)
• Historical & Forecasted Funding Gaps (CFO-CAPEX)
• Inflation/deflation
• Rig Efficiency (well/rig)
• Service Cost Intensity
• 60 E&P sample set
• 15 years of historical data
Proprietary Model Captures Relationships Between WTI, CFO, CAPEX, Funding Gaps, & Rig Counts
Sources: KLR Group, LLC Forecasts; BHI, Factset Sources: KLR Group, LLC Forecasts; BHI, Factset
Indexed Increase in Capex & Cash Flow from Operations Indexed Capex & Horizontal Rig Changes & Forward Forecast

High Yield Energy Market Has Choked-Off E&P’s Capacity To Run Funding Gaps
12.6
5
7
9
11
13
15
17
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Dec-14
Jun-15
Dec-15
ImpliedYield(%)
Source: Factset
BofA Merrill Lynch US High Yield Energy Index (MLH0EN)
Prohibitive costs of capital may send a message that debt capital
markets are largely closed to E&P operators. With debt markets
closing, funding gaps may need to narrow and E&Ps may need to tap
equity markets to fund growth or fix balance sheets.

US Land Activity Hinges on Oil Prices & Leverage in the Rig Count Sensitivity Analysis
Oil Price
$30 $40 $50 $60 $70 $80 $90 $100 $110 $120
50% 609 863 1,117 1,371 1,625 1,879 2,133 2,387 2,640 2,894
45% 554 785 1,016 1,246 1,477 1,708 1,939 2,170 2,400 2,631
40% 508 719 931 1,142 1,354 1,566 1,777 1,989 2,200 2,412
35% 469 664 859 1,055 1,250 1,445 1,641 1,836 2,031 2,226
30% 435 617 798 979 1,161 1,342 1,523 1,705 1,886 2,067
25% 406 575 745 914 1,083 1,253 1,422 1,591 1,760 1,930
20% 381 540 698 857 1,016 1,174 1,333 1,492 1,650 1,809
15% 358 508 657 806 956 1,105 1,255 1,404 1,553 1,703
10% 339 480 621 762 903 1,044 1,185 1,326 1,467 1,608
5% 321 454 588 722 855 989 1,122 1,256 1,390 1,523
0% 305 432 559 685 812 939 1,066 1,193 1,320 1,447
FundingGap
Note: Assumes 80% Horizontal Rig Count/Total Land Rig Count
Our post-recovery
forecast lives here.
Our 4Q15/1Q16 forecast lies in this range,
further constrictions on funding gaps or oil
prices see risks of activity trending down
and to the left on the table.
Our Proprietary Model Measures Commodity vs. Industry Funding Gap Sensitivities
Sources: KLR Group, LLC Forecasts; Factset

US Land Drilling Market

1,359
1,055
701
658
498
553
653
736
810
973
1,032 1,033 1,035 1,036 1,038 1,039 1,041
132%
102%
68%
64%
48%
54%
63%
71%
79%
94%
100% 100% 100% 100% 101% 101% 101%
0%
20%
40%
60%
80%
100%
120%
140%
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
1,500+ AC 1,000 - 1,499 AC 1,500+ SCR 1,000 - 1,499 SCR Horizontal Rig Count Implied AC Rig Utilization
AC Rig Utilization May Tighten Through 2016 With Horizontal Land Rig Count Recovery
Rig Market Utilization Climbs Under Our Horizontal Rig Count Forecast
The high end of the land rig
market may come into balance
in 2H16, if our rig count
forecast is correct and fleet
growth remains curtailed by
the downturn.
Simplified
land
rig
dispatch
curve
Sources: KLR Group, LLC Forecasts; RigData; DrillingInfo

Segmented Market: Better Demand for AC 1,500+HP Rigs, Tougher Competition for the Rest
19 212
820
58
252
371
922
4
46
389
7 57 100
135
21% 22%
47%
12%
23%
27%
15%
-
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
-
100
200
300
400
500
600
700
800
900
1,000
AC
(1 - 999hp)
AC
(1,000 -
1,499hp)
AC
(1,500+hp)
SCR
(1 - 999hp)
SCR
(1,000 -
1,499hp)
SCR
(1,500+hp)
Mech
Total
Marketed Supply (Current) Working/Active Utilization
1,051
681
922
439
164 135
42%
24%
15%
-
5%
10%
15%
20%
25%
30%
35%
40%
45%
-
200
400
600
800
1,000
1,200
1,400
AC
Total
SCR
Total
Mech
Total
Marketed Supply (Current) Working/Active Utilization
Non-AC Rigs Most Hurt By Downturn AC 1,500+ HP Rigs Remain in Highest Demand
Sources: KLR Group, LLC Forecasts; DrillingInfo; RigData; Quarterly/Annual Rig Operators’ Disclosures Sources: KLR Group, LLC Forecasts; DrillingInfo; RigData; Quarterly/Annual Rig Operators’ Disclosures

HP, NBR, PTEN May Be Winners, Representing >60% of AC Rig Fleet Composition
1 - 999
1,000 -
1,499 1,500+ Total 1 - 999
1,000 -
1,499 1,500+ Total Total % % %
AC AC AC AC SCR SCR SCR SCR Mech TOTAL AC SCR Mech
Helmerich & Payne (HP) - 24 317 341 - - 8 8 - 349 32% 1% 0%
Nabors Industries (NBR) 3 72 103 178 11 33 53 97 1 276 17% 14% 0%
Patterson-UTI Energy (PTEN) - 15 102 117 2 33 42 77 15 209 11% 11% 2%
Precision Drilling (PD-TSX) - 26 45 71 1 22 31 54 8 133 7% 8% 1%
Ensign Energy Services (ESI-TSX) 13 1 55 69 - 1 - 1 27 98 7% 0% 3%
Seventy Seven Energy (SSN) - 18 18 36 12 26 14 52 4 92 3% 8% 0%
Unit Corporation (UNT) - - 10 10 4 12 37 53 31 94 1% 8% 3%
Trinidad Drilling (TDG-TSX) - - 33 33 4 2 11 17 21 71 3% 2% 2%
Xtreme Drilling & Coil Services 3 4 9 16 - - - - - 16 2% 0% 0%
Cactus Drilling Company, LLC - - 12 12 2 15 34 51 - 63 1% 7% 0%
Pioneer Energy Services (PES) - 2 13 15 - 4 8 12 3 30 1% 2% 0%
Sidewinder Drilling - 2 10 12 - 4 6 10 20 42 1% 1% 2%
Independence Drilling, Inc. - - 14 14 - - - - - 14 1% 0% 0%
Oil States International (OIS) - - - - - - - - 34 34 0% 0% 4%
Global Rig Company (GRIC-NO) - - 9 9 - - - - - 9 1% 0% 0%
Felderhoff Brothers Drilling - - 3 3 - 4 1 5 15 23 0% 1% 2%
Cyclone Drilling Inc. - - 6 6 - 9 8 17 3 26 1% 2% 0%
Latshaw Drilling - 5 5 10 5 11 14 30 1 41 1% 4% 0%
Scandrill - - 1 1 - 4 11 15 1 17 0% 2% 0%
Savanna Energy Services (SVY-TSX) - 5 3 8 - - 1 1 18 28 1% 0% 2%
Other - 38 52 90 17 72 92 181 720 991 9% 27% 78%
Marketed Supply (Current) 19 212 820 1,051 58 252 371 681 922 2,656
% of Total Market
US Land Rig Fleet Composition By Company
In our view, the land contract drillers
with the highest concentration of AC rigs
should be the long term winners.
Our Coverage:
• HP: Play on the highest
concentration of AC 1,500+ rigs
• NBR: Leverage to quality fleet,
international exposure, and internal
transformation story
• PTEN: More lower end rigs in fleet
profile, but likely the most stock
leverage to a recovery in North
American land activity
Sources: DrillingInfo; RigData; Quarterly/Annual Rig Operators’ Disclosures

US Pressure Pumping Market Poised for 2016/2017 Rebound

Simplified Model Suggests A Recovery With Capacity Attrition & Horizontal Rig Count Recovery
Assumptions & Potential Incremental Positive Catalysts that Underlie Our Pressure Pumping Supply/Demand Outlook
• Industry sources suggest horsepower capacity in the market is closer to 20m HP
• Limited disclosures make it difficult to determine the company composition of the fleet, but we assume that HAL, SLB, and WFT, RES, CJES, and PTEN comprise the majority of
capacity amongst 40+ pressure pumping operators.
• Bankruptcy/auctioning of equipment may likely continue to reduce the number of competitors near term
• We assume stacked equipment returns, which may prove optimistic if it is not maintained or if it is cannibalized
• Natural “wear & tear” supports our 15% annualized attrition rate, as pressure pumping equipment is worked harder on larger fracs with increasing levels of proppant.
(Transmission life ~1 year, Fluid Ends life 1-2months)
• HAL/BHI merger may accelerate equipment attrition, as HAL’s transition to Q10 units may see legacy BHI equipment leave the fleet at a faster rate
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
Horsepower, BOP (m) 20.0 19.4 18.9 18.3 16.8 16.4 14.9 15.3 16.8 17.1 17.5 17.8 18.2 18.5
Stacked (m) (4.0) (5.0) (5.0) (5.0) (4.0) (3.0) (1.0) - - - - - - -
Marketed Horsepower, BOP (m) 16.0 14.4 13.9 13.3 12.8 13.4 13.9 15.3 16.8 17.1 17.5 17.8 18.2 18.5
Additions (m) - - - - 1.0 1.0 2.0 2.0 1.0 1.0 1.0 1.0 1.0 1.0
Attrition/Cannibalization (m) (0.6) (0.5) (0.5) (0.5) (0.5) (0.5) (0.5) (0.6) (0.6) (0.6) (0.7) (0.7) (0.7) (0.7)
Marketed Horsepower, EOP (m) 15.4 13.9 13.3 12.8 13.4 13.9 15.3 16.8 17.1 17.5 17.8 18.2 18.5 18.8
Marketed Hoursepower, Per. Avg. (m) 17.7 16.6 16.1 15.6 15.1 15.1 15.1 16.1 16.9 17.3 17.7 18.0 18.3 18.6
Demand (m) 10.5 7.9 8.6 10.1 11.3 12.3 14.6 15.3 15.2 15.1 14.9 14.8 14.7 14.6
Utilization 59% 47% 54% 65% 75% 81% 97% 96% 90% 87% 85% 82% 80% 78%
Attrition Rate (Annual) 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%
KLR - US Horizontal Rig Count Forecast 658 498 553 653 736 810 973 1,032 1,033 1,035 1,036 1,038 1,039 1,041
Horsepower / Hor. Rig (000) 15.9 15.8 15.6 15.5 15.3 15.2 15.0 14.9 14.7 14.6 14.4 14.3 14.1 14.0
Horsepower / Hor. Rig Efficiency Gains 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%
Source: BHI; Industry sources; KLR Group, LLC Forecasts

US Proppant Market Balances More Opaque

Proppant Companies: Lagging Absorption of High Fixed Costs Translate Into Later Cycle Play
Delayed Recovery for the Proppant Market. The proppant market may recover with an increase in US land drilling activity, but a number of factors likely delay a fuller recovery of capacity utilization. In
our view, more visibility for a recovery within land drilling and pressure pumping markets create a better risk/reward for exposure to a recovery in US activity. We acknowledge proppant names may
remain high beta, which may lead the group to outperform other sub-segments with exposure to the North American market. Given a number of drivers outlined below, we continue to seek a better
entry point, once the risk/reward balance tips more favorably.
Key Drivers & Concerns
• Negative Operating Leverage. High fixed costs business models continue to suffer from adverse operating leverage in the near term without a meaningful improvement in volumes, which we do
not see until 2017. In our forecast, proppant demand does not recover to 1H15 run rates until the end of 2016.
• Logistics Asset Overhang. Ownership and leases of rail cars, once a competitive advantage in a tight market, may continue weigh on operating results, as pressure pumping companies prefer to
utilize their rail cars to improve operating leverage. A perceived shift in the absorption of logistics infrastructure should prove an important turning point for proppant shares, but we do not
foresee the transition in the near to medium term.
• Fragmented Market. Given a fragmented market, we do not have good visibility into capacity coming offline to balance the market. We also suspect that mothballed plants may return to service
with relative ease, perpetuating an overhang an industry that is capitalized to service activity closer to the recent US peak.
• Tougher Company Differentiation. Ultimately, the companies with the lowest cost and best operating footprint (scale) may be the longer term winners amongst the proppant group. At the peak,
SLCA and FMSA, with the largest logistics networks across key basins, were able to differentiate on service capabilities. In the trough, reduced strain on logistics has limited the focus on this
competitive advantage.
• Potential for Consolidation. Given fragmentation of the market, higher cost producers may ultimately exit the market and other companies may be consolidated. Both of these outcomes may be
positive catalysts of the group. We have Emerge (EMES) and Hi-Crush (HCLP) as potential M&A targets. In our view, the suspension of distributions for both may translate into a failure of their MLP
models. If so, depressed valuations and tougher individual company prospects may see assets better exploited within a larger entity.

Proppant Volume Recovery Does Not Boost Utilization Until Beyond 2016
0
20
40
60
80
100
120
140
160
180
-
200
400
600
800
1,000
1,200
1,400
1,600
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
US Horizontal Rig Count (Forecast)
US Horizontal Rig Count
Indexed Average Proppant Volumes Forecast 55.0%
51.0%
50.6%
48.0%
44.0%
46.0%
48.0%
50.0%
52.0%
54.0%
56.0%
SLCA FMSA HCLP CRR
Anemic Volumes Strain High Fixed Cost Operations
Source: Volumes based on CRR; SLCA; FMSA; & KLR Group, LLC Forecasts
Current Capacity Utilization by Public Company
A modest rig count recovery in 2016 likely leaves proppant production capacity
under utilized, especially in a fragmented market where we have little visibility
into capacity attrition. Balances may improve in 2017, which should prove
positive for proppant shares closer to the turn. In our view, evidence of improving
market balances may prove too far away and overhang shares near term.
A modest rig count recovery in 2016, but proppant sales volumes
only exit the year near 3Q15 levels, in our view. As a result, we do
not see a material improvement in utilization and economics, which
may delay the recovery proppant shares relative to Land Contract
Drillers and Pressure Pumping companies.
Source: Volumes based on CRR; SLCA; FMSA; EMES; HCLP; KLR Group, LLC Forecasts

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