Energy Investment Banking€¦ · inancing solutions to our global base of corporate clients. We serve both publicly traded and privately held companies, executing mergers and acquisitions,

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

About William Blair Investment Banking

Sector Update Fall 2014

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

Energy Investment Banking

North America

Joseph M. Niemiec Head of Energy Banking [email protected] +1 312 364 5315

Andrew M. Jessen Managing Director [email protected] +1 312 364 5390

Europe

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

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

William Blair

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

William Blair’s Energy Services & Equipment Contacts

North America

Joseph M. Niemiec Head of Energy Banking

Education: Chicago (MBA), Illinois (BS)

Contact Info: [email protected] +1 312 364 5315

Joined Blair: 2004

Andrew M. Jessen Managing Director

Education: Chicago (MBA), Middlebury (AB)


Joined Blair: 2004

Europe

Matthew B. Gooch Head of European Banking

Education: Chicago (MBA), Emory (BA), CFA


Joined Blair: 2000

Matthew M. Zimmer Managing Director

Education: Columbia (MBA), Notre Dame (BA)


Joined Blair: 2007

Energy Services & Equipment Segment Focus

Oilfield Services & Equipment Midstream / Downstream Alternative / Other

Drilling Products & Services

Oil & Gas Equipment

Infrastructure Installation

Production & Well Maintenance

Geophysical Services

Engineered Systems

Engineering & Construction

Pumps, Valves & Pipes

Testing & Inspection

Transportation, Logistics & Distribution

Alternative Energy Services

Energy Efficiency

Ethanol & Biodiesel

Smart Grid Technology

Solar & Wind Equipment

William Blair

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

William Blair Spotlight – Recent Energy Services & Equipment Transactions

William Blair represented Uintah Engineering & Land Surveying (“UELS”), a portfolio company of Moelis Capital Partners, in connection with its sale to Norwest Equity Partners

Uintah Engineering & Land Surveying is the market-leading provider of information services including surveying, drafting and engineering specializing in the energy industry

Norwest Equity Partners is a leading private equity firm with nearly $5 billion in capital under management that invests in profitable and growing middle market companies

William Blair acted as a co-manager in the offerings

Hi-Crush Partners is a pure play, low-cost, domestic producer and supplier of premium monocrystalline sand used as a proppant to enhance the recovery rates of hydrocarbons from oil and natural gas wells

Hi-Crush Partners produces a range of frac sand sizes for use in all major U.S. shale basins and is one of the few Northern White sand producers with onsite rail capacity for unit trains

William Blair acted as a co-manager in the offering

Emerge Energy Services is a diversified energy services company that operates in two key segments of the energy industry: Sand Production and Fuel Processing and Distribution

Emerge Energy Services’ Sand Production subsidiary produces silica sand that is a key input for the hydraulic fracturing of oil and gas wells and Emerge Energy Services’ Fuel Processing and Distribution segment is primarily focused on acquiring, re-refining and selling transportation mixture

William Blair represented Hobré Instruments B.V., a portfolio company of Parcom Capital Management, in connection with its sale to AAC Capital Benelux

Hobré Instruments is a leading provider of online analyzers, sample systems, and complete turnkey systems and solutions to the oil and gas and process industries

AAC is a leading Benelux mid-market buy-out firm, which has to date completed 27 management buyouts, of which 20 have been realized

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

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

Babcock & Wilcox Company is a $3.0 billion market cap leader in clean energy technology and services, primarily for the nuclear, fossil, and renewable power markets

William Blair represented Dixie Electric, a portfolio company of One Rock Capital Partners, in connection with its sale to First Reserve

Dixie Electric is the market-leading provider of electrical infrastructure materials and services to the energy industry

First Reserve is a premier global energy-focused private equity and infrastructure investment firm with over $24 billion of raised capital since 1983

Not Disclosed

has been acquired by

Norwest Equity Partners

August 2014

$383,720,581

Follow-on Offerings

August 2014 & April 2014

$401,452,368

Follow-on Offering

June 2014

Not Disclosed


June 2014

$155,000,000


June 2014

Not Disclosed


December 2013

William Blair

Energy Services & Equipment Selected Energy Services & Equipment Transactions

Selected Energy Services & Equipment Transactions

Surveying, Drafting & Engineering Services

O&G Analyzers Capital Equipment Frac Sand / Midstream Logistics

Frac Sand Electrification Services

Staffing Services Swellable Packers Mobile Onsite Refueling Capital Equipment Frac Sand Energy-Efficiency Motors

PVF Distribution Heat Tracing Explosion Proof Equipment Energy-Efficiency Services Security Integration Services Petrochemicals

Petrochemical Equipment Utility Services Solar Products Capital Equipment Equipment Rental Process Optimization Software

Generators Ethanol Production Heat Exchangers Engineering & Construction O&G Pumps Seismic Services

Not Disclosed


Norwest Equity Partners

August 2014

Not Disclosed


AAC Capital

June 2014

$155,000,000


The Babcock & Wilcox Company

June 2014

$383,388,215

Follow-on Offering

June 2014

$383,720,581

Follow-on Offerings

April 2014

Not Disclosed


First Reserve

December 2013

Not Disclosed


Wellspring Capital Management

October 2013

Not Disclosed


Wabtec Corporation

September 2013

Not Disclosed


Kelso & Company

September 2013

$207,300,000


CECO Environmental Corporation

August 2013

®

$485,530,000

Follow-on Offerings

Mar. ‘13 & Jun. ‘13

Not Disclosed


Sumitomo Corporation

March 2013

$1,723,872,733

Initial Public &Follow-on OfferingsNov. ’12 & Mar. ’13

$380,800,000

Initial Public &Follow-on Offering

May ’11 & Sept. ‘12

Not Disclosed


Charterhouse Capital Partners LLP

September 2012

$130,000,000


Sterling Investment Partners

September 2012

Not Disclosed

has been recapitalized by

KRG Capital

August 2012

$795,000,000


Indorama Ventures PLC

March 2012

$47,840,000

Follow-on Offering

February 2012

Not Disclosed


US Infrastructure

July 2011

C O N S

U T I L I T Y S E R V I C E S , I N C .

L I D A T E D

$251,000,000

Follow-on OfferingConvertible Notes

November 2010

Not Disclosed


DuPont

December 2010

Not Disclosed


Aggreko plc

December 2010

$349,563,000

Follow-on OfferingsConvertible

September 2010

$269,107,000

Initial Public Offering

February 2010

GEN ERAC

Not Disclosed

§363 sale to

Valero RenewableFuels Co.

February 2010

$74,997,000

Follow-on Offering

September 2009

Not Disclosed


CST Industries

September 2009

Not Disclosed


Nikkiso Co., Ltd.

August 2009

$778,000,000


ValueAct Capital

2009

William Blair

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

William Blair Energy Services & Equipment Equity Research Coverage

Brandon Dobell – Energy Services

+1 312 364 8773 [email protected]

Chase Jacobson – Engineering & Construction and Engineered Equipment


Nick Heyman – Diversified Industrials


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

William Blair

Energy Services & Equipment Table of Contents

Table of Contents

Energy Services & Equipment Update .................................................................................................................................................................................................. 1

Rig Count & Key Economic Data .............................................................................................................................................................................................................. 3

Selected M&A Activity .................................................................................................................................................................................................................................. 8

M&A Trends .................................................................................................................................................................................................................................................... 13

Public Comps .................................................................................................................................................................................................................................................. 17

Quarterly Market Update – All Industries........................................................................................................................................................................................ 27

Notes .................................................................................................................................................................................................................................................................. 31

Disclosures ...................................................................................................................................................................................................................................................... 32

Energy Services & Equipment Update

William Blair

Energy Services & Equipment Energy Services & Equipment Update 1

Energy Services & Equipment Update

The M&A market for energy services & equipment transactions has been robust in 2014. The year-to-date transaction value of approximately $62 billion represents a 35% increase from the corresponding period in 2013; there have been 331 transactions in the sector thus far this year, which is an increase of 35% over the same period in 2013. The surge in M&A activity is attributable to several factors, including: i) accelerated growth in the energy sector, particularly in North America; ii) increased appetite for energy exposure from buyers; iii) strong access to liquidity; and iv) a continuing economic recovery. The energy sector’s accelerated growth has created what we view as a fundamental change in how buyers are viewing the opportunity to deploy capital in a higher growth and relatively more stable market environment.

The favorable energy services & equipment market backdrop has resulted in a larger universe of strategic buyers and private equity funds pursuing energy exposure. For example, several recent, notable deals have been completed in the testing & inspection segment by ALS, Bureau Veritas, Mistras, and TÜV SÜD, who are all looking for increased energy-related revenue. This trend is also accentuated by B/E Aerospace’s leap into the market with five completed energy services transactions since 2013. Additionally, we have seen accelerated activity across generalist private equity funds in the sector such as Norwest Equity Partners’ acquisition of UELS and AAC Capital’s acquisition of Hobré Instruments. These funds have had impressive returns and will look to replicate their success in the highly attractive energy market.

The trend of generalist private equity funds pursuing energy exposure has resulted in a record number of financial sponsor transactions, which represent 15% of all energy services & equipment transactions year to date, compared to only 6% in 2010. We expect a continued increase in financial sponsor transactions based on: i) a large number of private equity funds that have aggressively pursued energy services & equipment deals, but have not yet completed a transaction; ii) an increase in the number of funds looking for energy exposure; and iii) a significant amount of capital overhang across private equity funds. Additionally, several strategic buyers have been divesting assets to focus on core operations rather than expanding their service offerings, which bodes well for financial buyers to compete in sale processes. For example, Cameron recently agreed to divest its Centrifugal Compression and Reciprocating Compression business divisions, which were viewed as non-core. Additionally, Weatherford has been shedding non-core assets while selectively pursuing M&A opportunities.

While the M&A market has seen strong growth in 2014, valuations have remained in line with historical levels. For the year-to-date period the average EV/LTM revenue multiple is 1.52 times, while the average EV/LTM EBITDA multiple is 8.9 times. Despite a robust M&A market, valuations in the energy services & equipment sector have not ballooned as to stymie deal activity. We believe that current valuations are at a level that will continue to attract strong interest from buyers and will see business owners actively considering or pursuing sale processes.

Multiples for publicly traded energy services & equipment companies are above the long-term median levels and are currently trading at 9.0 times EV/LTM EBITDA. Public company valuations have continued to increase from a trough in Q3 2012 of 7.4 times EV/LTM EBITDA, which is largely attributable to improving operating performance and an increasingly favorable growth outlook. Public comparables have collectively lagged the S&P 500 both recently and in the longer term. However, there have been certain segments of the market that have performed extraordinarily well, such as small cap services companies that have materially outperformed the broader market.

─ Joe Niemiec Head of Energy Banking

William Blair

Energy Services & Equipment 2 Energy Services & Equipment Update

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

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

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

5-Year EV/LTM EBITDA Over Time – ES&E Composite

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Current

2010 2011 2012 2013 2014

Median EV/EBITDA Trading Multiples

Current 6 Months 1 Year 3 Years 5 Years

Oil & Gas Equipment 9.8x 10.2x 9.9x 8.6x 5.6x

Geophysical Services 4.3x 7.3x 5.4x 6.4x 5.6x

Land Drilling 6.7x 6.6x 6.2x 6.8x 5.1x

Offshore Drilling 6.9x 7.2x 9.0x 8.2x 4.2x

Well Services 9.5x 8.2x 7.5x 7.4x 5.1x

Offshore Services 8.6x 9.0x 10.2x 9.3x 4.9x

Large Cap Services 10.7x 9.6x 8.6x 8.8x 7.2x

Small Cap Services 13.9x 14.5x 11.3x 7.4x 6.2x

Engineering & Construction 9.4x 9.7x 8.9x 7.5x 6.0x

Engineered Equipment 12.4x 12.7x 11.1x 8.3x 5.4x

S&P 500 11.0x 10.8x 10.1x 8.3x 8.6x

Source: Capital IQ as of August 28, 2014.

0%

50%

100%

150%

200%

Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14

ES&E +61.4% S&P 500 +94.1%(Indexed Price)

70%

85%

100%

115%

130%

Aug-13 Nov-13 Jan-14 Apr-14 Jun-14 Aug-14

ES&E +13.0% S&P 500 +22.1%

(Indexed Price)

7.1x

7.7x 8.1x9.3x

10.4x 9.9x

8.5x 7.8x 8.5x7.6x 7.4x 7.8x 8.5x 8.5x

9.1x 9.3x 8.9x 9.3x 9.0x

0.0x

5.0x

10.0x

15.0xMedian: 8.5x

Rig Count & Key Economic Data

William Blair

Energy Services & Equipment Rig Count & Key Economic Data 3

Rig Count & Key Economic Data

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

U.S. Rig Count Data

U.S. Rig Count

U.S. Rig Oil / Gas Split U.S. Rig Drilling Type

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

0

500

1,000

1,500

2,000

2,500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

0

500

1,000

1,500

2,000

2,500 Oil Gas

0

300

600

900

1,200

1,500 Directional Horizontal Vertical

William Blair

Energy Services & Equipment 4 Rig Count & Key Economic Data

U.S. Rig Count Data (cont’d)

YTD Change in Major U.S. Basins

U.S. Basin Count Detail

Basin Current(1) Prior Year(2) Jan ‘14(3) YTD Change YoY Change

Ardmore Woodford 6 14 10 (40%) (57%)

Arkoma Woodford 8 2 5 60% 300%

Barnett 26 30 34 (24%) (13%)

Cana Woodford 33 28 36 (8%) 18%

DJ-Niobrara 62 49 50 24% 27%

Eagle Ford 200 234 228 (12%) (15%)

Fayetteville 9 11 9 0% (18%)

Granite Wash 67 72 52 29% (7%)

Haynesville 45 44 43 5% 2%

Marcellus 76 87 85 (11%) (13%)

Mississippian 78 70 75 4% 11%

Permian 555 466 468 19% 19%

Utica 44 35 38 16% 26%

Williston 192 182 185 4% 5%

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

(40%)

+60%

(24%)

(8%)

+24%

(12%)

0%

+29%

5%

(11%)

+16%

+4%

+19%

+4%

William Blair


International Rig Count Data

YTD Change Globally, by Region

Global Rig Count Detail

Region Land Offshore Oil Gas Total YTD Change YoY Change

North America 2,220 61 1,799 479 2,281 12% 9%

Latin America 339 68 354 51 407 1% (3%)

Europe 98 55 90 42 153 21% 10%

Middle East 378 54 349 81 432 7% 14%

Africa 91 46 105 21 137 (1%) 7%

Asia 126 106 174 56 232 (1%) 3%

Australia 14 7 8 13 21 0% 31%

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

+12%

+1%

+21%

+7%

(1%)

(1%)

0%

William Blair

Energy Services & Equipment 6 Rig Count & Key Economic Data

Key Economic Data

Commodity Inputs

WTI and Brent Natural Gas Prices

Source: The Wall Street Journal / Haver Analytics. Source: The Wall Street Journal / Haver Analytics.

Steel Prices U.S. Dollar Exchange Rate and Dollar Index

Source: Bloomberg. Source: Federal Reserve.

$0.00

$40.00

$80.00

$120.00

$160.00

WTI Brent

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

$0.00

$1.50

$3.00

$4.50

$6.00Current: $4.02

$0

$250

$500

$750

$1,000Current: $440

70.0

75.0

80.0

85.0

90.0

$1.10

$1.20

$1.30

$1.40

$1.50

$ / € Dollar Index

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

William Blair


Recent U.S. Economic Data

U.S. GDP Growth Rate U.S. Unemployment Rate

Source: Bureau of Economic Analysis. Source: Bureau of Labor Statistics.

U.S. Average Hours Worked 10-Year U.S. Treasuries Yield and CPI

Source: U.S. Federal Reserve. Source: Bureau of Economic Analysis.

(10.0%)

(5.0%)

0.0%

5.0%

10.0% Current: 4.2%

4.0%

6.0%

8.0%

10.0%

12.0%Current: 6.2%

36.0

37.0

38.0

39.0

40.0

Current: 38.6

(3.0%)

(1.0%)

1.0%

3.0%

5.0%

Yield Inflation

Current Yield: 2.5%Current Inflation: 2.0%

Selected M&A Activity

William Blair

Energy Services & Equipment Selected M&A Activity 8

Selected M&A Activity

Energy Services & Equipment Transactions

($ in millions)

Date Announced Target (Unit Sold) / Business Description Target Nation Buyer

Enterprise Value

Enterprise Value/LTM

Revenue EBITDA

08/28/14 The NACHER Corporation Provides maintenance services to oil, gas, and petrochemical industries

United States Mistras Group - - -

08/26/14 Uintah Engineering & Land Surveying (UELS) Provider of information services specializing in the energy industry

United States Norwest Equity Partners - - -

08/22/14 HDB Provides construction, fabrication, and turnaround services to energy companies in central California

United States Matrix Service $10 0.50x -

08/20/14 RCI Consultants Provides project management and project support services to the energy and petrochemical industry

United States TÜV SÜD - - -

08/18/14 Analysts Provides industrial diagnostic evaluations and maintenance solutions

United States Bureau Veritas - - -

08/18/14 Cameron International (Centrifugal Compression Manufacturing Business) Flow equipment products, systems, and services

United States Ingersoll-Rand $850 2.15x -

08/18/14 Recapture Solutions Provides solutions for power and flare needs of oil and gas production companies

United States Intervale Capital - - -

07/20/14 Compressor Systems Fabricates, sells, rents, and services natural gas compressors

United States Compressco Partners $919 2.96x 11.2x

07/16/14 Cadre Services Produces frac–sand proppants for oil and natural gas applications

United States U.S. Silica Holdings $98 - 8.8x

07/01/14 Hobré Instruments Designs, manufactures, markets, and maintains on-line analyzers

Netherlands AAC Capital - - -

06/26/14 Petrofac FPSO Holding (80% Stake) Acquires and holds floating production storage units

United Kingdom First Reserve $530 - -

06/25/14 EV Offshore Designs and develops cameras for the oil and gas industry in the United Kingdom and internationally

United Kingdom Dunedin $117 3.45x -

06/25/14 Nabors Industries (Completion & Production Services Businesses) Creates completion and production services operations

Bermuda C&J Energy Services $2,919 1.41x 9.1x

06/01/14 Axip Energy Services Contract compression, processing and after-market services business

United States Enerflex $430 3.36x 7.5x

05/28/14 PetroLogistics Operator of a dehydrogenation facility that produces polymer grade and chemical grade propylene

United States Flint Hills Resources $2,098 2.73x 8.8x

05/23/14 KUDU Industries Manufactures progressing cavity pump solutions for the oil and gas industry

Canada Schlumberger $239 - -

05/13/14 MEGTEC Systems Manufactures capital equipment for process and renewable industries

United States The Babcock & Wilcox Company

$155 - -

05/08/14 Desert NDT Provides nondestructive testing solutions

United States ShawCor $260 - 7.9x

04/08/14 Hi-Crush Augusta Engaged in processing frac sand

United States Hi-Crush Partners $224 - 7.5x

Sources: Capital IQ and Merger Market.

William Blair

Energy Services & Equipment 9 Selected M&A Activity

Energy Services & Equipment Transactions (cont’d)

($ in millions)


Enterprise Value


Revenue EBITDA

03/31/14 Vision Oil Tools Provider of fishing services and oilfield rental tools

United States B/E Aerospace $180 - -

03/24/14 Weatherford International (Pipeline and Specialty Services Business) Oil and gas pipeline pigs manufacturing and pipeline cleaning, inspection, and maintenance business

United States Baker Hughes $241 - -

03/18/14 Anchor Drilling Fluids USA Provides integrated fluids management and customized drilling fluids, and related services solutions

United States Calumet Lubricants $337 1.09x 10.1x

03/14/14 PPI Technology Services Provides upstream, midstream, and downstream oilfield services in the United States and internationally

United States Cardno Limited $145 1.09x 6.7x

02/18/14 SeaMex (50% Stake) Owns and manages jack-up drillings units in Mexico, and formed as an equally joint venture between Seadrill and Fintech Advisory

Mexico Fintech Advisory $976 - -

01/20/14 Cameron International (Reciprocating Compression Business Division) Flow equipment products, systems, and services

United States General Electric Company $550 1.82x 11.0x

01/13/14 Foster Wheeler Operates in engineering and construction, as well as power generating equipment businesses worldwide

United Kingdom AMEC $2,752 0.83x 10.6x

01/07/14 Varel International Energy Services Manufactures oilfield tools

United States Sandvik AB $740 2.18x -

01/06/14 Wildcat Wireline Provides cased hole electric wireline services to the oil and gas industry

United States B/E Aerospace $152 - -

12/23/13 Hoover Energy Partners Engaged in the construction, acquisition, and optimization of midstream pipelines and plant assets located in the Permian

United States Regency Energy Partners $290 - -

12/18/13 Dixie Electric Oilfield electrification services

United States First Reserve - - -

12/10/13 Innovative Mag-Drive Designs and manufactures sealless magnetic drive centrifugal pumps

United States Flowserve $79 4.71x 11.7x

12/09/13 Stream Provides solutions in the field of valves, piping, electrical, and instrumentation

Norway MRC Global $260 - -

12/09/13 Valerus Compression Services (Field Solutions Business) An integrated oil and gas surface facility solutions provider

United States Kentz $435 0.88x 8.4x

11/22/13 Aker Well Service and Extreme Trading & Mechanical Equipment Supplies wireline, tractor, and cased hole logging services to the oil and gas industries

Norway EQT Partners $658 - 9.0x

11/12/13 Carmagen Engineering Provides engineering consulting and project management services to the oil and gas industry

United States Mistras Group - - -

11/11/13 Elkhorn Holdings Operates in industrial construction and fabrication businesses

United States John Wood Group $217 0.87x -

11/04/13 Swift Technical Services Provides manpower to the oil and gas industry globally

United Kingdom Wellspring Capital Management

- - -

10/07/13 Outrigger Energy Engaged in providing range of midstream services to crude oil and natural gas producers

United States Kayne Anderson Energy $200 - -


William Blair



($ in millions)


Enterprise Value


Revenue EBITDA

09/19/13 Wildcat Permian Services Engaged in oil and gas infrastructure development

United States JP Energy Development $213 - -

08/19/13 Kentz Provides engineering, procurement, and construction (EPC) services, as well as construction and technical support services

Channel Islands AMEC $855 0.60x 7.1x

07/27/13 Sevan Drilling (69.5% Stake) Engaged in offshore ultra deepwater drilling contract

Norway Seadrill $1,041 6.00x 19.1x

07/16/13 Reservoir Group Provides drilling, completion, and production technologies and services to the oil and gas industry

United Kingdom ALS Limited $533 2.39x 9.7x

05/22/13 IronGate Energy Services Provides equipment and services to exploration and production operators for land and offshore markets

United States Clearlake Capital Group $244 2.44x 5.4x

05/14/13 D&I Silica Provides rail-based bulk materials handling, transportation, warehouse, and distribution services

United States Hi-Crush Partners $124 1.18x -

05/14/13 Troms Offshore Supply Owns and operates offshore service vessels and other special vessels related to research and sub sea activities worldwide

Norway Tidewater $395 - 7.3x

04/08/13 Lufkin Industries Manufactures and supplies oilfield and power transmission products for use in energy infrastructure and industrial applications

United States GE Oil & Gas $3,323 2.52x 17.0x

02/20/13 Bergen Group Rosenberg Operates as a contractor in the oil and gas industry, marketing the Norwegian continental shelf

Norway WorleyParsons $160 0.60x 5.0x

02/11/13 Seadrill (Tender rigs business in Asia) Offshore drilling services

Singapore SapuraKencana Petroleum Berhad

$2,900 - -

02/06/13 Gulfstar One (49% Stake) Constructing a floating platform to be set into production in the Gulf of Mexico

United States Marubeni $1,001 - -

01/29/13 Enovate Systems Limited Designs, develops, and manufactures well completion and well intervention systems

United Kingdom Aker Solutions $118 5.01x 15.0x

12/20/12 Mathena Manufactures mud-gas pressure solutions for the oil and gas industry

United States The Weir Group $385 - -

11/16/12 Songa Eclipse Ultra-deepwater semi-submersible rig

Norway Seadrill $590 - -

11/12/12 GustoMSC Manufactures and supplies mobile units/vessels for the offshore industry

Netherlands Parcom Capital Management

$185 - -

10/01/12 Thomas Russell Develops skid-mounted modular plant systems to clients in the processing industry

United States UOP $593 - -

09/30/12 Acteon Group Limited (52% Stake) Provides project management, engineering design, equipment and service personnel

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

$788 - -

09/25/12 Union Drilling Provider of contract drilling services for energy industry companies

United States Sidewinder Drilling $244 0.97x 4.9x

09/24/12 Fugro Geoscience Division Provides seismic services and geophysical and geological services

Netherlands CGG $1,549 1.56x 9.7x

09/16/12 R3 Treatment Provides non-hazardous oilfield waste treatment, recovery, and disposal services to oil and gas producers in the United States

United States Waste Connections $1,441 8.83x 21.2x


William Blair

Energy Services & Equipment 11 Selected M&A Activity


($ in millions)

Date Announced Target (Unit Sold) / Target Business Description Target Nation Buyer

Enterprise Value


Revenue EBITDA

08/20/12 Pure Energy Services Provides well completion and production related services to oil and natural gas companies

Canada FMC Technologies $310 1.09x 5.4x

08/14/12 Ulterra Drilling Technologies Provides PDC drill bits for drilling markets worldwide

United States ESCO $325 1.73x -

08/09/12 Robbins & Myers Manufacturer and supplier of engineered equipment and systems for the pharmaceutical, energy, chemical and industrial markets

United States National Oilwell Varco $2,439 2.39x 9.4x

07/30/12 The Shaw Group Provides services to multinational and national oil companies, industrial corporations, regulated utilities, and the United States government agencies worldwide

United States Chicago Bridge & Iron Company

$3,382 0.56x 20.4x

06/29/12 Energy, Safety and Risk Consultants Provides consulting and project solutions to the civil and defense nuclear markets

United Kingdom AMEC $218 1.99x -

06/06/12 Casedhole Holdings Provides various well-site services to oil and gas drilling and producing companies in the United States

United States C&J Spec-Rent Services $324 2.52x 10.0x

05/30/12 CE Franklin Engages in the distribution of pipes, valves, flanges, fittings, production equipment, tubular products, and other general industrial supplies primarily to the oil and gas industry in Canada

Canada National Oilwell Varco $221 0.40x 8.1x

05/21/12 NPS Energy DMCC Provides oilfield services

United Arab Emirates

Aker Solutions $460 3.96x 11.4x

05/21/12 The Shaw Group (Energy & Chemicals Business) Provides project-related services, including design, engineering, construction, procurement, and technology to chemical and refining industry

United States Technip SA $298 1.05x -

04/30/12 Bifold Fluidpower Oil and gas valve manufacturer

United Kingdom LDC $138 3.38x 15.2x

04/18/12 TTS Group (drilling equipment business) Designs, develops, and supplies equipment solutions for the marine and offshore industries worldwide

Norway Cameron International $270 - -

04/10/12 Wilson International Distributes pipes, valve and valve automation, fittings, mill and tool supplies, safety products, and artificial lift systems

United States National Oilwell Varco $800 0.38x -

04/05/12 Production Control Services Designs, engineers, and manufactures well deliquification and production optimization products for oil and gas producers

United States Dover Artificial Lift $222 2.47x -

03/20/12 Expro International (connectors and measurements division) Designs, engineers, and manufactures well deliquification and production optimization products for oil and gas producers

United Kingdom Siemens $610 5.32x 13.1x

03/19/12 Seajacks International Owner and manager of self-propelled jack-up vessels

United Kingdom Marubeni; Innovation Network

$850 - -

02/29/12 Tebodin Provides consulting and engineering services in the Netherlands and internationally

Netherlands Bilfinger $194 0.64x -

02/29/12 Transocean Pacific Drilling (50% Stake) Engaged in operating deepwater drillships

United States Transocean $1,843 - -


William Blair



($ in millions)

Date Announced Target (Unit Sold) / Target Business Description Target Nation Buyer

Enterprise Value


Revenue EBITDA

02/27/12 Zenith Oilfield Technology Developer of monitoring and completion technologies

United Kingdom Lufkin Industries $135 - -

02/23/12 Exterran Holdings (compression and processing assets) Compression and processing assets of Exterran Holdings

United States Exterran Partners $183 - -

02/20/12 Flint Energy Services Provider of integrated products and services for the oil and gas industry

Canada URS $1,489 0.89x 11.0x

02/03/12 NKT Flexibles Engaged in designing and manufacturing flexible pipe products and systems for the offshore oil and gas industry

Denmark National Oilwell Varco $670 2.53x 12.6x


M&A Trends

William Blair

Energy Services & Equipment M&A Trends 13

M&A Trends

Annual M&A Trends

Energy Services & Equipment Industry Transaction Volume – Last 10 Years

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

Energy Services & Equipment Industry Total Disclosed Transaction Value – Last 10 Years


285

368

510564

484

186

386420

449

388

245

331

0

100

200

300

400

500

600

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013 YTD 2014 YTD

(# of deals) Median: 404 deals

$39

$61

$136 $138

$77

$15

$110

$88 $87

$62

$46

$62

$0

$20

$40

$60

$80

$100

$120

$140

$160

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013 YTD 2014 YTD

($ in billions) Median: $82 billion

William Blair

Energy Services & Equipment 14 M&A Trends

Quarterly M&A Trends

Quarterly Transaction Volume


2010 2011 2012 2013 2014


Quarterly Transaction Value


2010 2011 2012 2013 2014


86 10993 98 104 101 108 107

126104 95

12496 99 83

110 105

144

82

0

50

100

150

200

(# of deals) Median: 104 deals

$37$33

$20 $20

$28

$14

$24$21

$12 $14

$27

$34

$21 $21

$8$12

$18

$35

$10

$0

$15

$30

$45

($ in billions) Median: $21

William Blair

Energy Services & Equipment M&A Trends 15

Participant Trends

Breakdown of Acquirers by Type

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD

Sponsor 6% 6% 5% 7% 9% 5% 6% 8% 12% 12% 15%

Strategic 94% 94% 95% 93% 91% 95% 94% 92% 88% 88% 85%


Breakdown of Acquirers by Location

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD

Domestic 63% 68% 67% 64% 59% 57% 58% 57% 57% 57% 61%

Cross-Border 37% 32% 33% 36% 41% 43% 42% 43% 43% 43% 39%


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

Percent of DealsSponsor Strategic

0%

20%

40%

60%

80%

100%

Percent of Deals

0%

20%

40%

60%

80%

100%

Percent of Deals Domestic Cross-Border

0%

20%

40%

60%

80%

100%

Percent of Deals

William Blair

Energy Services & Equipment 16 M&A Trends

Valuation Trends

Average Revenue Multiples

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD

Number of Disclosed Deals 26 66 80 105 98 38 76 73 76 57 43

Average EBITDA Multiples

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD

Number of Disclosed Deals 17 35 51 59 44 17 38 47 39 29 25

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

1.69x1.74x

1.86x

1.71x

1.86x

1.40x

1.78x 1.73x

1.54x1.47x 1.52x

0.00x

0.40x

0.80x

1.20x

1.60x

2.00x

EV/Revenue Multiple

9.7x10.1x 9.8x

11.0x

9.8x

7.5x

10.2x11.0x

9.2x 9.0x 8.9x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

EV/EBITDA Multiple

Public Comps

William Blair

Energy Services & Equipment Public Comps 17

Public Comps

Oil & Gas Equipment

($ in millions, except share price data) 52-Week LTM Metrics Valuation

Company Current Stock Price Low High

Equity Value

Enterprise Value (EV) Revenue EBITDA

EBITDA Margin EV/ EBITDA P/E

2015 EV/ EBITDA 2015 P/E

Aker Solutions ASA $95.70 $78.60 $116.80 $26,035 $30,469 $45,741 $3,154 6.9% 9.6x 16.5x 6.5x 12.5x

Cameron International Corporation

74.36 52.50 74.53 15,088 17,975 10,640 1,562 14.7% 11.5x 17.9x 9.3x 14.4x

CIRCOR International, Inc. 71.00 56.88 83.37 1,255 1,182 848 110 12.9% 10.8x 19.3x 8.9x 16.0x

Dril-Quip, Inc. 100.75 94.99 121.07 4,028 3,685 892 273 30.6% 13.5x 20.1x 10.1x 16.7x

FMC Technologies, Inc. 61.59 47.58 63.92 14,465 15,412 7,582 1,167 15.4% 13.2x 21.9x 10.2x 17.9x

Forum Energy Technologies, Inc. 33.43 24.32 37.03 3,138 3,543 1,616 290 17.9% 11.5x 18.4x 8.5x 14.5x

Hunting plc 9.10 7.19 9.20 1,342 1,495 1,366 244 17.9% 10.5x 15.5x 8.4x 14.1x

National Oilwell Varco, Inc. 85.42 72.67 86.41 36,751 36,100 23,957 4,509 18.8% 7.9x 14.2x 7.2x 12.7x

Oceaneering International, Inc. 69.08 66.00 87.64 7,461 7,438 3,516 796 22.6% 9.3x 17.2x 7.5x 14.9x

Schoeller-Bleckmann Oilfield Equipment AG

80.00 70.53 96.57 1,273 1,305 453 133 29.3% 9.8x 19.3x 7.9x 16.1x

Tenaris SA 16.63 14.78 18.45 19,632 18,803 10,330 2,756 26.7% 9.2x 16.3x 7.8x 14.4x

Tesco Corporation 21.03 15.45 22.50 843 737 536 100 18.6% 7.4x 17.4x 4.9x 12.6x

Vallourec SA 33.32 31.25 51.01 4,248 6,360 5,683 922 16.2% 6.9x 18.5x 6.8x 14.4x

Median $69.08 $52.50 $74.53 $4,248 $6,360 $3,516 $796 17.9% 9.8x 17.9x 7.9x 14.4x

Indexed Stock Performance – Last 5 Years Indexed Stock Performance – Last 12 Months


50%

100%

150%

200%

250%

Oil & Gas Equipment +85.0%

S&P 500 +94.1%

(Indexed Price)

90%

100%

110%

120%

130%

Oil & Gas Equipment +8.7%

S&P 500 +22.1%

(Indexed Price)

William Blair

Energy Services & Equipment 18 Public Comps

Geophysical Services



Equity Value




CGG $6.79 $6.43 $19.30 $1,197 $3,126 $3,359 $1,146 34.1% 3.9x NM 3.7x 11.4x

Fugro NV 27.57 26.82 49.72 2,273 3,148 2,443 389 15.9% 8.2x 16.6x 6.5x 11.4x

Geospace Technologies Corporation

40.73 34.01 107.93 535 476 279 92 33.0% 5.2x 12.1x NM NM

ION Geophysical Corporation 3.39 2.81 5.52 556 596 565 173 30.6% 4.5x 39.9x 3.0x 13.0x

Petroleum Geo Services ASA 46.70 46.57 83.80 9,999 17,250 1,355 727 53.7% 4.0x 8.3x 3.2x 6.6x

TGS Nopec Geophysical Co. ASA 173.70 138.90 210.70 17,702 16,397 889 747 84.0% 3.6x 11.1x 3.5x 11.3x

Median $34.15 $30.41 $66.76 $1,735 $3,137 $1,122 $558 33.6% 4.3x 12.1x 3.5x 11.4x



0%

50%

100%

150%

200%

Geophysical Services (15.0%)

S&P 500 +94.1%

(Indexed Price)

50%

75%

100%

125%

150%

Geophysical Services (41.1%)

S&P 500 +22.1

(Indexed Price)

William Blair


Land Drilling



Equity Value




Archer Limited $10.80 $4.48 $12.40 $6,255 $10,913 $2,001 $188 9.4% 9.6x NM 5.7x 16.1x

CanElson Drilling Inc. 7.40 5.91 8.78 685 747 306 95 31.0% 7.6x 13.2x 5.2x 10.3x

Ensign Energy Services Inc. 16.26 15.42 18.44 2,493 3,100 2,215 493 22.3% 6.3x 16.4x 4.8x 12.4x

Helmerich & Payne, Inc. 103.07 62.39 118.95 11,155 10,800 3,599 1,510 42.0% 7.2x 15.9x 5.6x 13.4x

Nabors Industries Ltd. 26.26 15.21 30.24 7,871 11,352 6,365 1,706 26.8% 6.7x 21.5x 5.2x 12.0x

Parker Drilling Co. 6.22 5.54 8.67 757 1,294 965 270 28.0% 4.8x 15.3x 3.7x 8.6x

Patterson-UTI Energy Inc. 33.54 18.83 38.43 4,901 5,468 2,825 920 32.6% 5.9x 21.4x 4.5x 14.1x

Pioneer Energy Services Corp. 15.34 6.72 18.40 969 1,440 981 243 24.7% 5.9x 34.4x 4.6x 20.1x

Precision Drilling Corporation 13.61 9.20 15.65 3,984 5,124 2,203 675 30.7% 7.6x 16.8x 5.1x 11.1x

Median $15.34 $9.20 $18.40 $3,984 $5,124 $2,203 $493 28.0% 6.7x 16.6x 5.1x 12.4x



50%

100%

150%

200%

250%

Land Drilling +91.6%

S&P 500 +94.1%

(Indexed Price)

75%

100%

125%

150%

175%

Land Drilling +49.4%

S&P 500 +22.1%

(Indexed Price)

William Blair


Offshore Drilling



Equity Value




Atwood Oceanics, Inc. $48.88 $44.88 $58.46 $3,145 $4,494 $1,078 $532 49.4% 8.4x 9.4x 5.6x 6.6x

Diamond Offshore Drilling, Inc. 43.78 43.04 65.62 6,004 7,168 2,734 1,045 38.2% 6.9x 14.4x 5.5x 11.5x

Ensco plc 49.75 47.85 62.44 11,659 16,218 5,082 2,400 47.2% 6.8x 8.6x 6.8x 8.6x

Fred Olsen Energy ASA 147.70 138.30 300.40 9,787 17,458 1,107 455 41.2% 6.3x 10.4x 4.3x 6.0x

Hercules Offshore, Inc. 3.33 3.10 7.85 535 1,554 960 347 36.1% 4.5x 17.2x 4.4x 9.7x

Noble Corp. 27.94 26.04 40.66 7,104 13,703 4,607 2,306 50.1% 5.9x 8.9x 7.7x 10.1x

Ocean Rig UDW Inc. 18.47 16.12 20.97 2,436 6,413 1,476 730 49.4% 8.8x 10.5x 6.6x 8.1x

Pacific Drilling S.A. 9.85 9.23 12.25 2,141 4,788 880 436 49.5% 11.0x 12.0x 6.3x 8.4x

Rowan Companies plc 29.87 28.43 38.65 3,719 5,280 1,577 549 34.8% 9.6x 14.5x 5.0x 7.6x

SeaDrill Limited 36.90 32.40 48.09 18,195 30,910 4,805 2,416 50.3% 13.5x 11.4x 9.3x 10.1x

Transocean Ltd. 38.41 37.33 55.74 13,912 22,267 9,603 3,897 40.6% 5.7x 8.4x 7.0x 11.9x

Median $36.90 $32.40 $48.09 $6,004 $7,168 $1,577 $730 47.2% 6.9x 10.5x 6.3x 8.6x



0%

50%

100%

150%

200%

Offshore Drilling (9.5%)

S&P 500 +94.1%

(Indexed Price)

60%

80%

100%

120%

140%

Offshore Drilling (18.3%)

S&P 500 +22.1%

(Indexed Price)

William Blair


Well Services



Equity Value




Basic Energy Services, Inc. $23.82 $11.29 $29.84 $1,029 $1,809 $1,329 $265 19.9% 6.8x 43.4x 4.5x 15.6x

C&J Energy Services, Inc. 28.57 19.88 34.93 1,581 1,864 1,212 168 13.8% 11.1x 24.6x 5.8x 13.5x

Calfrac Well Services Ltd. 20.44 14.29 22.57 1,937 2,593 1,902 218 11.5% 11.9x 28.5x 5.9x 11.8x

Canyon Services Group, Inc. 16.43 10.43 20.05 1,125 1,140 384 40 10.3% 28.7x 25.2x 5.9x 11.2x

Frank's International N.V. 19.98 19.89 32.70 3,067 2,872 1,090 382 35.1% 7.5x 18.0x 6.0x 15.2x

Key Energy Services Inc. 6.12 5.96 10.52 940 1,635 1,459 211 14.4% 7.8x NM 5.0x 28.8x

Mullen Group Ltd. 28.85 24.30 31.34 2,643 2,974 1,467 300 20.5% 9.9x 18.4x 8.7x 16.7x

RPC Inc. 22.32 14.22 25.15 4,884 4,994 2,063 547 26.5% 9.1x 19.4x 5.6x 13.0x

Superior Energy Services, Inc. 35.64 22.85 37.05 5,513 6,967 4,603 1,045 22.7% 6.7x 19.6x 4.9x 13.8x

Trican Well Service Ltd. 15.62 11.97 18.19 2,337 2,965 2,278 138 6.0% 21.5x NM 6.3x 15.5x

Median $21.38 $14.26 $27.50 $2,137 $2,732 $1,463 $242 17.2% 9.5x 22.1x 5.8x 14.5x



0%

100%

200%

300%

400%

Well Services +119.4%

S&P 500 +94.1%

(Indexed Price)

85%

100%

115%

130%

145%

Well Services +18.2%

S&P 500 +22.1%

(Indexed Price)

William Blair


Offshore Services



Equity Value




Bourbon $22.35 $17.95 $24.36 $1,600 $3,461 $1,312 $411 31.3% 8.4x 22.6x 8.3x 15.2x

Bristow Group, Inc. 73.56 64.10 85.70 2,616 3,446 1,594 313 19.6% 10.9x 14.0x 8.5x 12.6x

CHC Group Ltd. 6.92 5.88 10.25 563 1,851 1,765 210 11.9% 8.5x NM 3.4x NM

Gulfmark Offshore, Inc. 40.00 37.35 53.89 1,055 1,575 497 193 38.9% 8.1x 12.4x 6.6x 9.4x

Helix Energy Solutions Group, Inc. 26.97 19.44 28.00 2,846 2,905 1,006 321 31.9% 9.0x 15.4x 6.9x 13.9x

Hornbeck Offshore Services, Inc. 43.42 37.44 59.93 1,577 2,381 585 265 45.3% 9.0x 15.8x 5.6x 10.4x

PHI Inc. 41.52 33.50 42.70 652 994 891 161 18.1% 6.1x 7.9x NM 8.3x

SEACOR Holdings Inc. 81.01 75.25 99.00 1,606 2,089 1,303 240 18.5% 8.6x 36.8x 7.5x 25.1x

Tidewater Inc. 50.45 45.51 63.22 2,508 3,973 1,487 442 29.7% 8.7x 12.7x 7.2x 10.7x

Median $41.52 $37.35 $53.89 $1,600 $2,381 $1,303 $265 29.7% 8.6x 14.7x 7.0x 11.6x



50%

100%

150%

200%

250%

Offshore Services +42.2%

S&P 500 +94.1%

(Indexed Price)

80%

100%

120%

140%

160%

Offshore Services (4.2%)

S&P 500 +22.1%

(Indexed Price)

William Blair


Large Cap Services



Equity Value




Baker Hughes Incorporated $69.21 $46.33 $75.64 $30,109 $33,717 $23,313 $4,082 17.5% 8.3x 16.5x 5.8x 12.4x

Halliburton Company 67.38 47.46 74.33 57,309 62,665 30,510 6,428 21.1% 9.7x 16.6x 6.9x 12.6x

Schlumberger Limited 110.16 80.68 118.76 142,815 149,527 46,808 12,707 27.1% 11.6x 19.3x 9.3x 16.1x

Weatherford International plc 23.34 13.07 24.88 18,052 26,979 14,865 2,138 14.4% 12.6x 20.3x 6.9x 13.2x

Median $68.30 $46.90 $74.99 $43,709 $48,191 $26,912 $5,255 19.3% 10.7x 18.0x 6.9x 12.9x



50%

100%

150%

200%

250%

Large Cap Energy Services +95.0%

S&P 500 +94.1%

(Indexed Price)

80%

100%

120%

140%

160%

Large Cap Energy Services +37.2%

S&P 500 +22.1%

(Indexed Price)

William Blair


Small Cap Services



Equity Value




CARBO Ceramics Inc. $108.59 $81.01 $156.00 $2,509 $2,463 $691 $185 26.7% 13.3x 26.3x 9.7x 19.4x

Core Laboratories NV 156.38 143.14 221.00 6,947 7,256 1,080 366 33.9% 19.8x 26.7x 17.2x 23.7x

Emerge Energy Services LP 140.46 27.63 140.49 3,332 3,496 1,040 99 9.5% 35.4x 39.3x 15.4x 19.4x

Exterran Holdings, Inc. 44.89 26.50 45.90 3,008 4,989 2,897 601 20.8% 8.0x 55.0x 6.5x 28.3x

Hi-Crush Partners LP 65.94 23.08 69.25 2,437 2,605 233 92 39.2% 28.5x 20.8x 13.1x 15.3x

Oil States International Inc. 63.98 59.66 113.64 3,460 3,584 2,765 803 29.0% 4.5x 17.5x 7.5x 15.1x

Pason Systems Inc. 35.04 21.01 35.51 2,897 2,753 438 173 39.4% 15.9x 23.7x 9.3x 19.5x

RigNet, Inc. 46.83 34.24 59.06 825 850 272 61 22.5% 13.9x 34.2x 8.8x 23.7x

ShawCor Ltd. 58.69 37.01 60.63 3,535 3,887 1,856 373 20.1% 10.6x NM 8.3x NM

TETRA Technologies, Inc. 11.61 9.25 13.43 924 1,344 935 96 10.3% 13.9x 23.5x 4.6x 12.5x

U.S. Silica Holdings, Inc. 70.72 22.88 71.29 3,808 4,000 680 170 25.1% 23.5x 32.1x 12.5x 21.5x

Median $63.98 $27.63 $69.25 $3,008 $3,496 $935 $173 25.1% 13.9x 26.5x 9.3x 19.4x



0%

100%

200%

300%

400%

Small Cap Energy Services +245.2%

S&P 500 +94.1%

(Indexed Price)

75%

100%

125%

150%

175%

Small Cap Energy Services +49.2%

S&P 500 +22.1%

(Indexed Price)

William Blair


Engineering & Construction



Equity Value




AMEC plc $11.38 $9.95 $12.71 $3,395 $3,369 $3,841 $302 7.9% 10.5x 13.8x 8.0x 12.1x

Bilfinger SE 57.91 52.00 92.86 2,557 2,807 8,476 425 5.0% 6.3x 12.8x 5.3x 10.5x

Chicago Bridge & Iron Company N.V.

63.75 57.54 89.22 6,897 8,976 12,215 1,046 8.6% 8.4x 12.5x 7.1x 10.8x

Fluor Corporation 74.48 63.17 83.93 11,732 10,058 23,612 1,336 5.7% 7.5x 17.5x 6.6x 14.6x

Foster Wheeler AG 32.54 22.92 34.95 3,257 2,891 3,238 237 7.3% 12.0x 18.0x 7.8x 14.8x

Jacobs Engineering Group Inc. 54.31 49.57 66.88 7,226 7,316 12,619 707 5.6% 10.3x 15.9x 7.6x 13.5x

John Wood Group PLC 7.82 6.10 8.39 2,842 3,111 6,815 559 8.2% 9.4x 12.9x 8.0x 11.7x

KBR, Inc. 22.24 20.42 36.70 3,230 2,335 6,727 149 2.2% 15.7x NM 5.5x 14.9x

Matrix Service Company 28.00 15.52 38.71 740 726 1,154 76 6.6% 9.6x 17.6x 6.7x 14.4x

McDermott International Inc. 7.35 6.58 9.36 1,747 1,976 2,284 (222) (9.7%) NM NM 8.0x 37.8x

Petrofac Limited 11.23 10.57 15.25 3,821 4,526 6,070 968 15.9% 8.0x 10.9x 5.9x 9.0x

Saipem SpA 17.79 14.81 21.00 7,818 13,026 12,976 1,209 9.3% 10.6x 24.7x 7.1x 12.8x

SBM Offshore N.V. 11.57 9.10 16.18 2,426 6,121 5,436 817 15.0% 9.8x 6.6x 8.3x 6.7x

Subsea 7 SA 103.30 101.50 132.50 34,043 34,624 6,723 1,198 17.8% 4.4x 8.3x 4.0x 8.9x

Technip SA 70.01 60.20 92.49 7,885 7,277 10,009 1,011 10.1% 7.2x 15.5x 5.3x 11.4x

Tecnicas Reunidas, S.A. 41.69 33.00 46.62 2,240 1,572 2,930 160 5.4% 10.1x 16.4x 8.2x 14.4x

Willbros Group Inc. 10.71 7.66 13.69 541 776 2,149 100 4.7% 7.7x 16.8x 5.7x 10.2x

WorleyParsons Limited 17.08 14.72 24.54 4,216 4,730 9,561 503 5.3% 9.1x 14.6x 8.1x 13.6x

Median $25.12 $17.97 $35.83 $3,326 $3,947 $6,725 $531 6.9% 9.4x 15.5x 7.1x 12.5x



50%

100%

150%

200%

250%

Engineering & Construction +22.3%

S&P 500 +94.1%

(Indexed Price)

85%

100%

115%

130%

145%

Engineering & Construction (4.6%)

S&P 500 +22.1%

(Indexed Price)

William Blair


Engineered Equipment



Equity Value




Chart Industries Inc. $66.34 $64.05 $130.85 $2,022 $2,159 $1,179 $178 15.1% 12.1x 22.9x 9.9x 18.1x

Flowserve Corp. 75.99 55.64 82.24 10,396 11,449 4,911 859 17.5% 13.2x 19.6x 11.1x 17.2x

Global Power Equipment Group Inc.

16.37 14.54 20.98 280 296 471 33 7.0% 9.0x 28.7x 7.1x 14.6x

Graham Corporation 30.24 26.20 41.94 306 245 102 15 14.5% 16.5x 27.9x 8.5x 19.0x

The Babcock & Wilcox Company 29.16 27.52 36.00 3,134 3,198 2,926 516 17.7% 5.5x 16.5x 7.3x 12.1x

The Weir Group PLC 26.50 20.36 28.48 5,654 6,412 2,375 497 20.9% 12.7x 18.7x 11.1x 16.7x

Median $29.70 $26.86 $38.97 $2,578 $2,678 $1,777 $337 16.3% 12.4x 21.2x 9.2x 16.9x



0%

100%

200%

300%

400%

Engineered Equipment +181.6%

S&P 500 +94.1%

(Indexed Price)

90%

100%

110%

120%

130%

Engineered Equipment +13.5%

S&P 500 +22.1%

(Indexed Price)

Quarterly Market Update – All Industries

William Blair

Energy Services & Equipment Quarterly Market Update – All Industries 27

Quarterly Market Update – All Industries

Domestic M&A Market Summary

U.S. Activity Trends

M&A Activity

Number of Deals

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM

>$750M 147 233 281 362 460 228 156 287 262 312 312 347

Middle Market 4,239 4,527 4,453 4,548 4,537 4,766 4,144 6,224 5,360 5,155 4,203 4,051

Undisclosed 4,406 5,174 5,353 7,510 8,343 6,494 5,075 6,238 7,775 9,167 7,574 7,772

Deal Value $688 $992 $1,297 $1,647 $1,750 $1,075 $886 $1,048 $1,174 $1,104 $1,294 $1,712

Middle-Market M&A Activity

Number of Deals

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM

$250M-$750M 314 402 424 536 627 417 269 457 475 467 512 563

$50M-$250M 1,065 1,218 1,265 1,294 1,333 1,195 791 1,138 1,148 1,151 1,095 1,096

<$50M 2,860 2,907 2,764 2,718 2,577 3,154 3,084 4,629 3,737 3,537 2,596 2,392

Deal Value $292 $351 $364 $421 $466 $355 $239 $370 $383 $380 $387 $406

Private-Equity Activity

Number of Deals

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM

>$750M 33 61 84 106 149 64 34 94 88 95 88 106

Middle Market 626 906 859 998 826 788 742 869 698 660 507 564

Undisclosed 541 679 869 1,143 1,341 969 686 1,013 1,249 1,336 1,154 1309

Deal Value $120.4 $224.6 $287.6 $523.7 $644.3 $243.7 $149.3 $272.3 $268.6 $264.5 $282.6 $319.0

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

8,792 9,934 10,08712,420 13,340 11,488

9,37512,749 13,397 14,634

12,089 12,170

$0

$600

$1,200

$1,800

0

6,000

12,000

18,000

Deal Value($ in billions)

Number of Deals

4,239 4,527 4,453 4,548

4,537 4,7664,144 6,224 5,360 5,155 4,203 4,051

$0

$200

$400

$600

0

5,000

10,000

Deal Value($ in millions)

Number of Deals

1,2001,646 1,812

2,2472,316 1,821

1,462 1,976 2,035 2,0911,749 1,979

$0

$400

$800

$0

$1,000

$2,000

$3,000

Deal Value($ in billions)

Number of Deals

William Blair

Energy Services & Equipment 28 Quarterly Market Update – All Industries

U.S. Valuation Trends

Median EV/EBITDA Multiples

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM

Middle Market 7.5x 7.4x 8.7x 10.1x 10.0x 9.5x 7.9x 6.4x 9.3x 10.0x 9.1x 9.9x 9.7x

Overall Market 7.9x 8.0x 9.1x 10.3x 11.0x 11.2x 9.0x 7.4x 9.9x 10.8x 9.6x 10.0x 10.1x

Median EV/EBITDA Middle-Market Multiples

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM

< $50M 4.1x 7.1x 6.4x 7.2x 10.2x 7.8x 4.9x 3.9x 8.8x 9.0x 6.8x 8.1x 8.0x

$50M-$250M 7.5x 6.9x 8.7x 11.3x 9.5x 10.4x 9.1x 7.1x 9.3x 10.0x 9.2x 11.3x 11.3x

$250M-$750M 9.7x 9.2x 9.1x 10.0x 11.0x 9.4x 8.3x 7.9x 9.7x 10.7x 10.2x 12.9x 12.5x

Average Acquisition Premiums

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM

1-Week Premium 36% 32% 28% 26% 26% 27% 36% 38% 34% 36% 36% 23% 24%

4-Week Premium 38% 40% 32% 31% 31% 29% 37% 41% 38% 39% 39% 30% 31%

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

3.0x

6.0x

9.0x

12.0x

15.0x

Middle Market Overall Market

0.0x

4.0x

8.0x

12.0x

16.0x< $50M $50M-$250M $250M-$750M

20%

30%

40%

50%

1-Week Premium 4-Week Premium

William Blair

Energy Services & Equipment Quarterly Market Update – All Industries 29

U.S. Equity Capital Markets Summary

Historical IPO Issuance

Historical Follow-On Issuance

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

IPO Pricings by Sector – Last 4 Quarters:

237 Total Deals

Follow-on Pricings by Sector – Last 4 Quarters:

746 Total Deals

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

54

139

95105

175

71

133

28 3513 19

3925 20 21 21

50 48 56 63 70

0

50

100

150

200

2009 2010 2011 2012 2013 2013YTD

2014YTD

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

564506

394470

657

292

380

135 128

5086

13098 115 127 152 140

173 193 198 182

0

100

200

300

400

500

600

700

2009 2010 2011 2012 2013 2013YTD

2014YTD

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

19

24

21

85

29

59Business Services

Consumer

Financial

Healthcare

Industrial

Technology

77

58

67

191

207

146 Business Services

Consumer

Financial

Healthcare

Industrial

Technology

William Blair

Energy Services & Equipment 30 Quarterly Market Update – All Industries

Debt Capital Markets Summary

Average Equity Contribution

Quarterly LBO Debt Multiples – Less Than $50 Million EBITDA

Quarterly LBO Debt Multiples – Greater Than $50 Million EBITDA

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

36%

41%38%

40%35% 34%

32%

40%

46% 45%41% 41%

46%43%

31%

37%32% 32% 30% 29% 30%

38%

47%

40%37% 37%

33% 34%

0%

10%

20%

30%

40%

50%

60%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD

Less than $50 million EBITDA More than $50 million EBITDA

3.8x 4.0x 3.6x3.5x 3.9x 4.1x 4.4x 5.0x 4.9x 5.3x 4.4x3.4x

4.1x

3.1x 3.2x 3.0x

3.3x

3.4x 2.4x

3.9x4.4x

4.8x

4.6x3.3x

3.1x3.4x

2.0x3.0x4.0x5.0x6.0x7.0x

2.0x3.0x4.0x5.0x6.0x7.0x

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total Debt/EBITDA Senior Debt/EBITDA

(1)

3.6x3.8x

3.7x

4.0x4.2x

4.2x4.9x

4.8x

4.4x

3.4x

3.8x 4.4x

5.0x 5.1x

3.0x

3.8x

3.7x

2.2x

4.0x3.8x

4.5x4.8x

3.3x3.1x

3.7x3.2x

5.0x 5.1x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20143.8x 4.0x 3.6x

3.5x 3.9x 4.1x 4.4x 5.0x 4.9x 5.3x 4.4x3.4x4.1x

3.1x 3.2x 3.0x

3.3x

3.4x 2.4x

3.9x4.4x

4.8x

4.6x3.3x

3.1x3.4x

2.0x3.0x4.0x5.0x6.0x7.0x

2.0x3.0x4.0x5.0x6.0x7.0x

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total Debt/EBITDA Senior Debt/EBITDA

(1)

4.1x4.5x 4.4x

4.8x 4.9x

5.0x

5.7x

6.8x

4.0x

4.8x

5.3x

4.3x

5.1x

5.5x

3.1x2.6x

2.6x2.9x

2.9x

3.5x

4.4x

6.6x

3.1x

3.9x

5.3x

4.0x

4.9x

5.5x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

William Blair

Energy Services & Equipment Notes 31

Notes

William Blair

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

September 9, 2014

Energy Services & Equipment 32 Disclosures

Disclosures

Documents

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