Industry Insights and Happenings Equipment... · Manufactures downhole tubular accessories and support equipment for the oil and gas industry Aterian Investment Partners Nov-16 Top-Co

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February 2017

E n e r g y E q u i p m e n t & S e r v i c e s

Industry Insights and Happenings

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Report SummaryINDUSTRY COMMENTARY

• Crude prices remain range-bound in the low to mid $50s since OPEC’s coordinated production cuts were announced

– Strong compliance (>90%) with cuts so far

– Additional cuts rumored to be possible in summer

• US Rig counts continue to improve

– Total rig count up 87% on lows reached in late May 2016

– EIA now projects a net increase in U.S. production for 2017

• Crude and refined product inventories have begun to re-balance following historic builds in 2016

• General U.S. economic outlook continues to improve, prompting optimism on energy demand

TABLE OF CONTENTS:

• Recent Transactions

• Articles We Enjoyed

• Commodity Prices

• Rig Counts

• Public Comparables

CONTACTS:

Ted KinsmanManaging [email protected](303) 572-6013

Samuel L. Hill Managing Directorhill@headwatersmb. com214.457.4832

Tim McEuenSenior Vice [email protected](303) 962-5778

Luis Moya Senior Vice [email protected]

www.headwatersmb.comSource: Capital IQ

% of High % of Low 6 Mos. Ago Current 2017E 2018P

Oilfield Services & EqupmentLarge-Cap 89% 153% 12.3x 21.3x 19.1x 16.6xMid-and Small-Cap 77% 178% 8.9x 10.8x 11.2x 9.2xOil & Gas Equipment 92% 151% 10.1x 11.5x 13.5x 12.3xLand Drillers 79% 178% 10.1x 15.8x 16.3x 13.5x

Power Services & EqupmentLarge-Cap 96% 129% 9.3x 11.3x 10.9x 11.0xMid- and Small-Cap 95% 125% 9.7x 14.5x 13.5x 12.8xClean Tech and Solar 79% 126% 9.7x 11.0x 10.3x 8.2x

Infrastructure & Industrial ServicesLarge-Cap Infrastructure 90% 130% 6.2x 9.2x 9.5x 8.8xMid- and Small-Cap Infrastructure 87% 137% 7.9x 9.0x 8.5x 7.5xUtility Services 96% 191% 9.2x 9.6x 9.5x 8.0xIndustrial Services 85% 136% 7.2x 9.3x 9.4x 8.2x

Forward MultiplesEV/EBITDA52-Week Perf.

LTM MultiplesEV/LTM EBITDA as of

Stock Performance

SUMMARY SECTOR TRADING STATISTICS

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Industry UpdateRECENT TRANSACTIONS

Source: Capital IQ

Date Seller/Target Description AcquirerFeb-17 Inovus Solar Designs, manufactures, and installs solar outdoor lighting products SolarOne Solutions

Feb-17 Green’s Energy Group Pipeline cleaning and hydrostatic testing business operations for the oil and gas industry.

Brenntag AG

Jan-17 Exclusive Energy Services

Chemical mixing and delivery for coil tubing, work-over, and frac jobs in oil and gas industry

Greenwell Energy Solutions

Jan-17 OilPatch Technologies Focuses on definition, specification, design, analysis, manufacture, and testing of subsea and production development systems

Dril-Quip Inc.

Dec-16 Frontier Integrity Solutions

Offers oil and gas pipeline inspection and integrity services to U.S. pipeline operators

Atar Capital

Dec-16 Seventy Seven Energy Provides a diversified range of wellsite services and equipment to land-based E&P companies

Patterson-UTI Energy

Dec-16 Kemper Valve & Fittings

Manufactures, supplies, and sells pressure pipe unions and related oilfield fluid control products

Caterpillar Oil & Gas

Nov-16 C.I. Agent Solutions Designs, manufactures, and installs secondary containment solutions and oil containment systems

Justrite Manufacturing Co.

Nov-16 Smartworks Oilfield Maintenance

Operates oilfield service trucks and provides maintenance services for oil and gas drilling rigs and pumping and hydraulic equipment

Petrocapita Processing

Nov-16 Stewart Tubular Products

Manufactures downhole tubular accessories and support equipment for the oil and gas industry

Aterian Investment Partners

Nov-16 Top-Co Products Designs, manufactures, and distributes float equipment, casing cementing equipment, and accessories for the oil and gas industry

Rubicon OilfieldInternational

Oct-16 Animas Well Services Workover rigs, fishing tools, coiled-tubing units, and P&A services Cogent Energy Solutions

Oct-16 Blackhawk Group Designs, manufactures, rents, and sells cementing equipment and products

Frank’s International

Sep-16 Kel-Tech and X-Chem Manufacturer and supplier of specialty chemical products and specialty oilfield chemicals

Clariant

Sep-16 US Rotary Drilling Tools

Processing of oil and gas tubular goods Tubos Reunidos

Sep-16 John Crane Production Solutions

Designs, installs, services, and repairs downhole rod pumps and fiberglass and steel sucker rods

Endurance Lift Solutions

Sep-16 Extreme Plastics Plus Environmental linings, above-ground storage tanks, secondary steel wall containment systems, rig mats, and rig vacs

BW EPP Holdings

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Rig Counts | U.S. Drilling Continues to Rally

“U.S. drillers added oil rigs for a sixth consecutive week, ex-tending a nine-month recovery as shale producers ramp up spending to take advantage of a recovery in oil prices. Drillers added five oil rigs in the week to Feb. 24, bringing the total count up to 602, the most rigs since October 2015, energy services firm Baker Hughes Inc said on Friday. During the same week a year ago, there were 400 active oil rigs.”

Reuters | U.S. Drillers Add Oil Rigs for Sixth Week in a Row

LNG Exports | Exports to Drive Growth in U.S. Natural Gas

“The Sabine Pass facility in Louisiana became the first oper-ating LNG export facility in the Lower 48 states in 2016. By 2021, four LNG export facilities currently under construction are expected to be completed. Combined, these five plants are expected to have an operational export capacity of 9.2 billion cubic feet per day. After 2021, projected U.S. exports of LNG grow at a more modest rate as U.S. natural gas faces growing competition from other global LNG suppliers. U.S. exports of natural gas by pipeline to Mexico are also expected to increase.”

EIA | Liquefied Natural Gas Exports Expected to Drive Growth in U.S. Natural Gas Trade

Renewables Investment | Saudi Arabia Funds Renewables Push

“Saudi Arabia is kicking off its $50 billion renewable-energy push as the world’s top crude exporter turns to solar and wind power to temper domestic oil use in meeting growing energy demand… Middle Eastern countries like Saudi Arabia, the United Arab Emirates, Jordan and Morocco are devel-oping renewable energy to either curb their fuel imports or conserve more valuable oil that could otherwise be exported. Saudi Arabia plans to develop almost 10 gigawatts of renew-able energy by 2023, requiring investment of $30 billion to $50 billion, Al-Falih said last month in Abu Dhabi.”

Bloomberg | Saudis Kick Off $50 Billion Renewable Energy Plan to Cut Oil Use

Wind Energy | More Tech Breakthroughs on the Way

“Researchers at Lawrence Berkeley National Laboratory con-ducted the largest-ever survey of experts on energy last year, asking them to predict whether wind energy would continue to get cheaper toward 2030 and beyond. “Our experts are somewhat more optimistic about future cost reduction po-tential than much of the existing literature,” LBL Senior Scien-tist Ryan Wiser said in Chicago last week. “That suggests our experts are not simply basing their estimates on the existing literature, but are bringing some new information—hopefully insightful information—to the table.”

Power Engineering | Power Prices Fall in 2016 Due to Lower Natural Gas Prices

U.S. Oil Production | Production Projected to Increase in 2017

“U.S. crude oil production fell by 6% in 2016 to below 9 mil-lion b/d. Yet, with OPEC compliance at a reported 90% and above, and with oil prices range bound at $51-57, U.S. oil out-put should rebound this year. At nearly $54, EIA expects oil prices in 2017 to be about $10 higher per barrel than they were last year. n fact, the U.S. oil and gas industry is expected to boost spending this year by about 35%, and rig counts con-tinue to climb. Since the OPEC production cut deal end-No-vember, our oil rig counts have increased by 125, and at 602, are at their highest levels since October 2015. The feeling is that OPEC and its non-OPEC partners will agree to another cut starting in July.”

Forbes | U.S. Oil Production to Increase in 2017

ARTICLES WE ENJOYED

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COMMENTARY: • WTI continues to be range-bound in the

mid to low $50s since OPEC’s November announcement of a production-limiting deal

– Concerns remain on U.S. unconventional mobilization, as rig counts continue higher, up 87% from their low in May 2016

– EIA projects a net increase in U.S. production from 2017, after a nearly 5% decline in 2016

– Market has begun to price in expectations for further OPEC cuts over the summer, with high levels of compliance with existing cuts so far

– On the demand side, refiner inputs show gasoline demand flat year-over-year, with distillate demand up 5%

– NatGas prices have begun to diverge from crude and are down substantially from their December highs

1 Year WTI and Henry Hub Prices

Source: Capital IQ

• Inventory reports for the week ended Feb. 24 were surprisingly strong, with a smaller-than-expected build in crude stocks and larger-than-expected draws on gasoline and distillate stocks

• Traders were net buyers of both WTI and Brent – combined net length has more than doubled since November

COMMODITY PRICE UPDATE

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Crude (left) Natural Gas (right)

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U.S. Rig Count International Rig Count

U.S. Directional vs. VerticalU.S. Oil vs. Gas Rig Count

U.S. Rig Count by Play

Source: Baker Hughes

RIG COUNT UPDATE

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Other Permian Williston Marcellus-Utica Eagle Ford Haynesville

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Public ComparablesLARGE-CAP OILFIELD SERVICES

5-Year Trading vs. S&P 5001-Year Trading vs. S&P 500

Historical EV/LTM EBITDA (Annual Averages)

Source: Capital IQ

Market Data

Stock Performance LTM Multiple Evolution Forward Multiples

$000s Change From 52-Week Performance EV/LTM EBITDA as of EV/EBITDA

Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Large-Cap Oilfield Services

Schlumberger Limited $112,028 $122,436 (6%) 11% 91% 112% 11.5x 12.1x 18.9x 19.1x 16.3x Halliburton Company $46,017 $54,329 (8%) 63% 90% 165% 10.6x 12.5x 23.6x na 15.5x Baker Hughes Incorporated $25,476 $23,922 (6%) 43% 87% 157% 18.6x na na na 17.5x Weatherford International plc $5,477 $12,022 3% (8%) 66% 149% 22.9x na na na 16.9x

Min (8%) (8%) 66% 112% 10.6x 12.1x 18.9x 19.1x 15.5x Median (6%) 27% 89% 153% 15.0x 12.3x 21.3x 19.1x 16.6x Max 3% 63% 91% 165% 22.9x 12.5x 23.6x 19.1x 17.5x

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La rge-Cap Oilfield Services +32.5% S&P 500 +22.7%

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La rge-Cap Oilfield Services +0.4% S&P 500 +73.3%

10-year avg: 11.5x 5-year avg: 12.9x 2-year avg: NM

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Market Data



Source: Capital IQ

MID-CAP OILFIELD SERVICES



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Mid-Cap Oilfield Services

Superior Energy Services, Inc. $2,511 $3,608 (8%) 79% 83% 178% 11.6x 22.1x na na 21.1x TETRA Technologies, Inc. $564 $1,357 (8%) (17%) 57% 104% 7.8x 8.9x 12.2x 11.9x 9.2x Ensign Energy Services Inc. $1,230 $1,900 (17%) 56% 77% 169% 5.7x 7.3x 9.5x 10.5x 8.2x Calfrac Well Services Ltd. $545 $1,422 (16%) 250% 75% 350% na na na na na Trican Well Service Ltd. $1,024 $1,189 2% 265% 93% 489% na na na na na


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Mid-Cap Oilfie ld Services +95.1% S&P 500 +22.7%

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Mid-Cap Oilfie ld Services -47 .5% S&P 500 +73.3%


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Source: Capital IQ

OIL & GAS EQUIPMENT

Market DataStock Performance LTM Multiple Evolution Forward Multiples


Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Oil & Gas Equipment

National Oilwell Varco, Inc. $15,119 $16,925 0% 41% 91% 148% 9.8x na na na na FMC Corporation $7,780 $9,609 (7%) 57% 93% 158% 14.6x 10.1x 13.9x 13.4x 12.3x Oil States International, Inc. $1,852 $1,829 (12%) 57% 86% 154% 11.7x 14.3x na na na Dril-Quip, Inc. $2,445 $1,902 2% 27% 94% 138% 7.9x 7.3x 9.1x 13.5x na

Min (12%) 27% 86% 138% 7.9x 7.3x 9.1x 13.4x 12.3x Median (3%) 49% 92% 151% 10.8x 10.1x 11.5x 13.5x 12.3x Max 2% 57% 94% 158% 14.6x 14.3x 13.9x 13.5x 12.3x

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Oil & Ga s Equipment +44.0% S&P 500 +22.7%

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Oil & Ga s Equipment -24.3% S&P 500 +73.3%


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Source: Capital IQ

LAND DRILLERS

Market Data



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Land Drillers

Nabors Industries Ltd. $4,162 $7,446 (15%) 111% 79% 218% 7.3x 11.9x 18.3x 12.2x 10.2x Helmerich & Payne, Inc. $7,370 $6,991 (17%) 32% 79% 130% 7.1x 7.3x 14.1x 18.2x 20.0x Patterson-UTI Energy, Inc. $4,480 $5,043 (6%) 79% 90% 178% 6.3x 8.0x na na 15.3x Precision Drilling Corporation $1,909 $3,700 (17%) 51% 79% 153% 11.4x 15.7x 15.8x 16.3x 10.7x Pioneer Energy Services Corp. $420 $750 (13%) 343% 76% 429% 7.0x 10.1x na na 13.5x

Min (17%) 32% 76% 130% 6.3x 7.3x 14.1x 12.2x 10.2x Median (15%) 79% 79% 178% 7.1x 10.1x 15.8x 16.3x 13.5x Max (6%) 343% 90% 429% 11.4x 15.7x 18.3x 18.2x 20.0x

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La nd Drillers +91.2% S&P 500 +22.7%

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La nd Drillers -7.7% S&P 500 +73.3%


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Source: Capital IQ

LARGE-CAP POWER SERVICES & EQUIPMENT



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Large-Cap Power Services & Equipment

Siemens Aktiengesellschaft $98,731 $111,250 2% 47% 97% 145% 9.9x 8.8x 10.8x 10.8x 9.6x Honeywell International Inc. $96,831 $102,755 6% 21% 100% 123% 10.5x 9.3x 13.3x 13.0x 12.0x ABB Ltd $48,378 $49,491 (4%) 31% 95% 129% 10.4x 9.3x 11.5x 11.0x 10.1x Schneider Electric S.E. $35,566 $40,360 (7%) 24% 92% 129% 12.0x 9.2x 10.8x 10.3x 9.6x Emerson Electric Co. $39,099 $39,017 0% 25% 94% 125% 15.9x 12.8x 11.1x 10.5x 12.5x Eaton Corporation plc $32,767 $40,306 2% 27% 99% 133% 12.0x 10.1x 12.7x 12.3x 12.0x

Min (7%) 21% 92% 123% 9.9x 8.8x 10.8x 10.3x 9.6x Median 1% 26% 96% 129% 11.3x 9.3x 11.3x 10.9x 11.0x Max 6% 47% 100% 145% 15.9x 12.8x 13.3x 13.0x 12.5x

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La rge-Cap Power Services & Equipment +34.2%

S&P 500 +22.7%

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La rge-Cap Power Services & Equipment +52.8%

S&P 500 +73.3%

10-year avg: 9.9x 5-year avg: 10.6x 2-year avg: 10.9x

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Source: Capital IQ

MID-CAP POWER SERVICES & EQUIPMENT



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Mid-Cap Power Services & Equipment

AMETEK, Inc. $12,687 $14,311 4% 20% 98% 126% 12.8x 13.3x 14.2x 14.5x 13.6x Hubbell Incorporated $6,718 $7,263 1% 24% 96% 124% 10.6x 8.8x 12.1x 12.6x 12.0x Valmont Industries, Inc. $3,558 $3,914 7% 39% 96% 140% 11.1x 8.7x 11.8x 11.8x 10.7x Littelfuse, Inc. $3,718 $3,893 5% 43% 98% 154% 11.3x 9.1x 17.7x 16.8x 15.0x AZZ incorporated $1,550 $1,848 (1%) 19% 88% 121% 9.1x 9.2x 11.3x 11.0x 11.9x Badger Meter, Inc. $1,064 $1,095 (6%) 11% 92% 125% 14.9x 12.4x 14.9x 15.1x 12.9x ESCO Technologies Inc. $1,428 $1,556 (2%) 58% 94% 159% 12.0x 10.2x 15.2x 15.6x 12.6x Thermon Group Holdings, Inc. $659 $664 (2%) 22% 92% 123% 12.4x 12.3x 15.2x 10.5x 15.5x


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Mid-Cap Power Services & Equipment +2 8.1%

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Mid-Cap Power Services & Equipment +87.9%

S&P 500 +73.3%


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Historical EV/LTM Revenue (Annual Averages)

Source: Capital IQ

ENERGY EFFICIENCY & CLEANTECH

Market Data



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Energy Efficiency & CleanTech

Silver Spring Networks, Inc. $664 $545 (4%) 4% 83% 126% 3.3x 6.1x na na na Ameresco, Inc. $229 $456 (10%) 3% 79% 128% 11.7x 10.1x 9.7x 8.6x 8.2x Sunworks, Inc. $43 $38 (3%) (15%) 59% 111% na 16.7x na 10.3x 2.9x EnerNOC, Inc. $165 $197 8% 13% 72% 116% na na na na na


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-16

Dec

-16

Jan-

17

Feb-

17

Energy Efficiency & CleanTech -19.4% S&P 500 +22.7%

0%50%

100%150%

200%250%

Feb-

12

Jul-1

2

Dec

-12

May

-13

Oct

-13

Mar

-14

Aug-

14

Jan-

15

Jun-

15

Nov

-15

Apr-

16

Sep-

16

Energy Efficiency & CleanTech -14.8% S&P 500 +73.3%

5-year avg: 1.4x 2-year avg: 1.0x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

2012 2013 2014 2015 2016 2017 YTD

14


Historical EV/LTM EBITDA

Source: Capital IQ

LARGE-CAP INFRASTRUCTURE SERVICES

Market Data



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Large-Cap Infrastructure Services

Chicago Bridge & Iron Company N.V. $3,398 $5,181 (2%) (2%) 82% 130% 5.6x 5.3x 5.0x 5.4x 5.6x Fluor Corporation $7,680 $7,319 (3%) 19% 94% 125% 6.7x 5.1x 8.2x 9.3x 8.1x Jacobs Engineering Group Inc. $6,821 $6,475 (9%) 45% 88% 146% 8.3x 7.1x 10.1x 9.7x 9.8x SNC-Lavalin Group Inc. $8,228 $7,603 (5%) 29% 92% 129% 12.3x 8.2x 12.4x 13.1x 9.6x

Min (9%) (2%) 82% 125% 5.6x 5.1x 5.0x 5.4x 5.6x Median (4%) 24% 90% 130% 7.5x 6.2x 9.2x 9.5x 8.8x Max (2%) 45% 94% 146% 12.3x 8.2x 12.4x 13.1x 9.8x

0%

50%

100%

150%

Feb-

16

Mar

-16

Apr-

16

May

-16

Jun-

16

Jul-1

6

Aug-

16

Sep-

16

Oct

-16

Nov

-16

Dec

-16

Jan-

17

Feb-

17

La rge-Cap Infrastructure Services +9.4%

S&P 500 +22.7%

0%

50%

100%

150%

200%

Feb-

12

Jul-1

2

Dec

-12

May

-13

Oct

-13

Mar

-14

Aug-

14

Jan-

15

Jun-

15

Nov

-15

Apr-

16

Sep-

16

La rge-Cap Infrastructure Services -5.0% S&P 500 +73.3%


19.9x 17.1x

7.9x 7.9x 10.0x

7.7x

10.8x 10.8x

6.9x 7.8x 9.3x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD

15



Source: Capital IQ

MID-CAP INFRASTRUCTURE SERVICES

Market Data



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Mid-Cap Infrastructure Services

Amec Foster Wheeler plc $1,686 $2,762 (5%) 32% 69% 127% 12.4x 10.4x 7.9x 8.2x 8.7x Tutor Perini Corporation $1,520 $2,134 (7%) 133% 91% 227% 12.7x 8.2x 7.9x 7.6x 6.9x Granite Construction Incorporated $2,136 $1,879 (10%) 37% 87% 137% 7.4x 6.3x 12.2x 11.2x 8.8x Primoris Services Corporation $1,307 $1,426 3% 25% 98% 156% 7.5x 7.7x 11.5x 10.6x 8.2x KBR, Inc. $2,229 $2,386 (12%) 23% 87% 129% 3.3x 5.1x 21.1x 14.5x 7.5x Great Lakes Dredge & Dock Corporation $274 $656 (11%) 32% 83% 148% 8.5x 9.1x 9.0x 8.5x 6.4x Aecon Group Inc. $931 $1,076 (4%) 12% 84% 123% 5.9x 7.9x 7.9x 7.1x 6.2x


0%

50%

100%

150%

200%

Feb-

16

Mar

-16

Apr-

16

May

-16

Jun-

16

Jul-1

6

Aug-

16

Sep-

16

Oct

-16

Nov

-16

Dec

-16

Jan-

17

Feb-

17

Mid-Cap Infrastructure Services +36.0% S&P 500 +22.7%

0%

50%

100%

150%

200%

Feb-

12

Jul-1

2

Dec

-12

May

-13

Oct

-13

Mar

-14

Aug-

14

Jan-

15

Jun-

15

Nov

-15

Apr-

16

Sep-

16

Mid-Cap Infrastructure Services +15.2 % S&P 500 +73.3%

10-year avg: 8.7x 5-year avg: 9.5x 2-year avg: 10.1x12.6x

7.2x

4.8x 6.3x

8.7x

7.0x

9.1x 10.5x

12.1x

8.3x 9.8x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD

16



Source: Capital IQ

UTILITY SERVICES



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Utility Services

Quanta Services, Inc. $5,710 $5,958 0% 104% 97% 191% 11.8x 12.1x 11.1x 10.4x 9.0x MasTec, Inc. $3,312 $4,300 (2%) 182% 96% 253% 10.8x 9.2x 9.6x 9.5x 7.8x MYR Group Inc. $647 $685 (2%) 80% 95% 187% 6.4x 6.8x 9.5x 9.2x 8.0x


0%50%

100%150%

200%250%

Feb-

16

Mar

-16

Apr-

16

May

-16

Jun-

16

Jul-1

6

Aug-

16

Sep-

16

Oct

-16

Nov

-16

Dec

-16

Jan-

17

Feb-

17

Utility Services +117.2% S&P 500 +22.7%

0%50%

100%150%

200%250%

Feb-

12

Jul-1

2

Dec

-12

May

-13

Oct

-13

Mar

-14

Aug-

14

Jan-

15

Jun-

15

Nov

-15

Apr-

16

Sep-

16

Utility Services +101.5% S&P 500 +73.3%

10-year avg: 9.4x 5-year avg: 8.3x 2-year avg: 8.8x15.6x

11.5x

9.0x 8.4x 9.1x 8.1x 7.6x 7.6x

6.8x 8.8x

10.9x

0.0x2.0x4.0x6.0x8.0x

10.0x12.0x14.0x16.0x18.0x

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD

17



Source: Capital IQ

INDUSTRIAL SERVICES



Mkt. Cap EV 1 Month 1 Year % of High % of Low 1 Yr. Ago 6 Mos. Ago Current 2017E 2018P Industrial Services

EMCOR Group, Inc. $3,713 $3,671 (13%) 33% 84% 140% 7.9x 7.2x 9.3x 9.2x 8.7x Bilfinger SE $1,627 $1,097 (7%) (6%) 83% 147% na na na 10.2x 7.7x Team, Inc. $975 $1,325 (6%) 40% 86% 147% 10.2x 10.0x 20.0x 13.4x 8.7x Aegion Corporation $733 $1,000 (5%) 23% 86% 131% 7.0x 6.6x 9.2x 9.5x 6.9x Mistras Group, Inc. $684 $768 (2%) 6% 87% 117% 10.4x 6.2x 10.6x 9.1x 9.5x Matrix Service Company $441 $447 (26%) (4%) 71% 118% 7.8x 8.1x 7.4x 7.2x 7.0x

Min (26%) (6%) 71% 117% 7.0x 6.2x 7.4x 7.2x 6.9x Median (6%) 15% 85% 136% 7.9x 7.2x 9.3x 9.4x 8.2x Max (2%) 40% 87% 147% 10.4x 10.0x 20.0x 13.4x 9.5x

0%

50%

100%

150%

Feb-

16

Mar

-16

Apr-

16

May

-16

Jun-

16

Jul-1

6

Aug-

16

Sep-

16

Oct

-16

Nov

-16

Dec

-16

Jan-

17

Feb-

17

Industrial Services +17.0% S&P 500 +22.7%

0%

50%

100%

150%

200%

Feb-

12

Jul-1

2

Dec

-12

May

-13

Oct

-13

Mar

-14

Aug-

14

Jan-

15

Jun-

15

Nov

-15

Apr-

16

Sep-

16

Industrial Services +23.5% S&P 500 +73.3%


11.5x

9.5x

7.8x 7.3x 7.9x 8.0x

9.3x 10.0x 9.4x 9.1x

10.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD

18

Recent Successes

WE ACTED AS SOLE ADVISOR TO THE SELLER

HAS BEEN ACQUIRED BY

A PORTFOLIO COMPANY OF



TO BE COMBINED WITH


WE ACTED AS SOLE ADVISOR TO THE COMPANY

HAS SECURED SENIOR TERM FINANCING

$6,300,000

Oilfield ServicesFuel Distribution

Transaction Type:Sale of SubsidiaryBuyer DescriptionPE-backed strategic

Oilfield ServicesWaste & Container Solutions

Transaction Type:Private saleBuyer DescriptionPE-backed strategic

Industrial/OFSIndustrial tools and lighting

Transaction Type:PE SaleBuyer DescriptionPrivate Equity

Oil & GasOffshore E&P

Transaction Type:Capital RaiseBuyer DescriptionInstitutional Investor



Energy Equipment & Services Update

Energy Equipment & Services Transactions Currently in Market

Testing/ diagnostic service provider serving the oil & gas, power, and petrochemsectors.

Closing expected 3Q16.

Equipment Rental and Technical/Diagnostic

Services

Oilfield Services

ProjectBlue

SOLE ADVISOR TO THE SELLER

Capabilities and Experience

M&A Capital Formation Project Finance

– Sell-side advisory– Buy-side advisory– Strategic alternatives

– Debt / Equity / Mezz– Recapitalization– Restructuring

– Infrastructure development– Construction/term finance

The professionals in Headwaters Energy & Services practice have collectively closed more than $10 billion intransactions across the upstream, midstream, downstream, services, and P&U sectors. This experience helps our teamunderstand market dynamics and consistently achieve outlier results for our clients.

Landman Services and Proprietary Land

Management Software

Oilfield Services

ProjectPurple


Residential Solar Installation

Power Services

ProjectOrange


Landman services and land management software for use in O&G exploration.


Residential and commercial solar panel distribution and installation services.


Energy Equipment & Services Update

Energy Equipment & Services Transactions Currently in Market

Testing/ diagnostic service provider serving the oil & gas, power, and petrochemsectors.


Equipment Rental and Technical/Diagnostic

Services

Oilfield Services

ProjectBlue


Capabilities and Experience

M&A Capital Formation Project Finance

– Sell-side advisory– Buy-side advisory– Strategic alternatives

– Debt / Equity / Mezz– Recapitalization– Restructuring

– Infrastructure development– Construction/term finance

The professionals in Headwaters Energy & Services practice have collectively closed more than $10 billion intransactions across the upstream, midstream, downstream, services, and P&U sectors. This experience helps our teamunderstand market dynamics and consistently achieve outlier results for our clients.

Landman Services and Proprietary Land

Management Software

Oilfield Services

ProjectPurple


Residential Solar Installation

Power Services

ProjectOrange


Landman services and land management software for use in O&G exploration.


Residential and commercial solar panel distribution and installation services.


Recent Successes






TO BE COMBINED WITH


WE ACTED AS SOLE ADVISOR TO THE COMPANY

HAS SECURED SENIOR TERM FINANCING

$6,300,000

Oilfield ServicesFuel Distribution

Transaction Type:Sale of SubsidiaryBuyer DescriptionPE-backed strategic

Oilfield ServicesWaste & Container Solutions

Transaction Type:Private saleBuyer DescriptionPE-backed strategic

Industrial/OFSIndustrial tools and lighting

Transaction Type:PE SaleBuyer DescriptionPrivate Equity

Oil & GasOffshore E&P

Transaction Type:Capital RaiseBuyer DescriptionInstitutional Investor



ENERGY EQUIPMENT & SERVICES UPDATE

Testing/ diagnostic service provider serving the oil & gas, power, and petrochem sectors.


Residential and com-mercial solar panel engineering and instal-lation services.


Retail fuel distribution equipment distributor and installer.



H A S B E E N A C Q U I R E D B Y


A P O R T F O L I O C O M PA N Y O F


T O B E C O M B I N E D W I T H



A P O R T F O L I O C O M PA N Y O F

SEN IOR TERM NOTE

WE ACTED AS SOLE ADVISOR

19

Our team has extensive operational and transaction experience for middle-market companies in the Energy sector.

Ricardo CampoyManaging DirectorMining, Minerals & Natural [email protected]

Ian H. FayManaging [email protected]

CJ HummelManaging [email protected]

Ray McCormickManaging DirectorMining, Minerals & Natural [email protected]

David CharlesManaging [email protected]

John GaensbauerManaging DirectorMining, Minerals & Natural [email protected]

Frank HundleyManaging [email protected]

Joel SchneyerManaging DirectorMining, Minerals & Natural [email protected]

Randy EpplerManaging DirectorMining, Minerals & Natural [email protected]

Samuel HillManaging [email protected]

Ted KinsmanManaging [email protected]

Michael SwartzManaging [email protected]

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Disclosure: This newsletter is a periodic compilation of certain economic and corporate information, as well as completed and announced merger and acquisition activity. Information contained in this newsletter should not be construed as a recommendation to sell or buy any security. Any reference to or omission of any reference to any company in this newsletter should not be construed as a recommendation to buy, sell or take any other action with respect to any security of any such company. We are not soliciting any action with respect to any security or company based on this newsletter. The newsletter is published solely for the general information of clients and friends of Headwaters MB, LLC. It does not take into account the particular investment objectives, financial situation or needs of individual recipients. Certain transactions, including those involving early-stage companies, give rise to substantial risk and are not suitable for all investors. This newsletter is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Prediction of future events is inherently subject to both known and unknown risks and other factors that may cause actual results to vary materially. We are under no obligation to update the information contained in this news-letter. Opinions expressed are our present opinions only and are subject to change without notice. Additional information is available upon request. The companies mentioned in this newsletter may be clients of Headwaters MB, LLC. The decisionsto include any company in this newsletter is unrelat-ed in all respects to any service that Headwaters MB, LLC may provide to such company. This newsletter may not be copied or reproduced in any form, or redistributed without the prior written consent of Headwaters MB, LLC. The information contained herein should not be construed as legal advice.

About Headwaters MB:Headwaters MB is an independent, middle-market investment banking firm providing strategic merger and acquisition, corporate finance, and merchant banking services through proprietary sources of capital. Named “Investment Bank of the Year” by the M&A Advisor in 2014 - 2016, Headwaters MB is headquartered in Denver, CO, with eight regional offices across the United States and partnerships with 18 firms covering 30 countries. For more information, visit www.headwatersmb.com

To learn more about how the Headwaters MB team can help you grow from opportunities in the Energy Equipment & Services sector, please contact:

Te d K i n s m a n | M a n a g i n g D i re c t o rE n e rg y E q u i p m e n t & S e r v i c e s3 0 3 .5 7 2 .6 01 3 t k i n s m a n @ h e a d w a t e r s m b. c o m

Ti m M c E u e n | S e n i o r V i c e P re s i d e n tE n e rg y E q u i p m e n t & S e r v i c e s3 0 3 .9 6 2 .5 7 7 8 t m c e u e n @ h e a d w a t e r s m b. c o m

S a m u e l L . H i l l | M a n a g i n g D i re c t o rE n e rg y E q u i p m e n t & S e r v i c e s2 1 4 . 4 5 7. 4 8 3 2 h i l l @ h e a d w a t e r s m b. c o m

L u i s M o y a | S e n i o r V i c e P re s i d e n tE n e rg y E q u i p m e n t & S e r v i c e s2 1 4 . 8 1 4 .5 6 8 4 l m o y a @ h e a d w a t e r s m b. c o m

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Industry Insights and Happenings Equipment... · Manufactures downhole tubular accessories and support equipment for the oil and gas industry Aterian Investment Partners Nov-16 Top-Co