Oilfield Services Newsletter | November 2017

Oilfield Services Update OFS Newsletter | November 2017

Introduction Energy & Industrials Team As we wrap up 2017, we aim to provide a recap of the year behind us, and insights into the Duane Donner trends developing in the oilfield. We will discuss a number of the developments in the energy [email protected] markets over the last 12 months, and ultimately how they impact service companies as we Matt Carrington head into the new year. [email protected] 2017 WTI Crude Oil Prices John Sullivan [email protected] $58.00 “OPEC, non-OPEC “WTI hits $56.00 compliance with Evan Klisares cuts hits highest in 24 month high” $54.00 [email protected] May” $52.00 David Szell $50.00 [email protected] “U.S. $48.00 Inventories and $46.00 Production Rise “U.S. Shale $44.00 Again” Production $42.00 Growth Slows” $40.00

“2017 was a year of

10-Jul-17 20-Jul-17 30-Jul-17

01-Jan-17 11-Jan-17 21-Jan-17 31-Jan-17

10-Jun-17 20-Jun-17 30-Jun-17

08-Oct-17 18-Oct-17 28-Oct-17

01-Apr-17 11-Apr-17 21-Apr-17

10-Feb-17 20-Feb-17 08-Sep-17 18-Sep-17 28-Sep-17

09-Aug-17 19-Aug-17 29-Aug-17

07-Nov-17

12-Mar-17 22-Mar-17

02-Mar-17 recovery, and we’re

31-May-17 01-May-17 11-May-17 21-May-17 looking forward to 2017 In the Rearview YTD - Nov. Rig Count Growth by Basin a very active M&A The top Energy story in 2017 will be the precipitous rise in oil prices in the back half of *Other 55 market in 2018” the year. Since hitting a low price of $42.53 in Williston 16 June, WTI has risen 36% to $57.69 in November. The rise has perpetuated a strong Permian 112 Duane Donner drilling environment for U.S. domestic shale Managing Partner, plays. Rig counts have risen commensurately in Marcellus 2 2017 – topping 958 at the peak, a 137% Founders Advisors Haynesville 12 increase from 2016 lows. The majority of the drilling activity continues to be in low cost Eagle Ford 18 basins, as E&P operators prepare for a “lower for longer” oil price energy environment. Cana Woodford 29 0 50 100 150

*Other Basins includes: Woodford, Barnett, DJ-Niobrara, Fayetteville, Granite Wash, Mississippian, Utica; YTD November 3, 1027 Oilfield Services Newsletter | November 2017

2017 in the Rearview Mirror…

Lower Breakeven Prices Are Driving Activity The United States – The Production Juggernaut $140.00 2013 breakeven 2014 breakeven Permian Eagle Ford Bakken Other WTI Price $120.00 2015 breakeven 2016 breakeven 6,000 $120.00 Avg 2013 Breakeven Avg 2016 Breakeven $100.00 5,000 $100.00

$80.00 4,000 $80.00

$60.00 3,000 $60.00 WTI WTI Price 2,000 $40.00

Breakeven Breakeven Price $40.00 (000’s) (000’s) Barrel per Day 1,000 $20.00 $20.00 - $- $-

Permian Permian Bakken Eagle Ford Niobrara

Jan-09 Jan-11 Jan-13 Jan-15 Jan-17

Sep-09 Sep-11 Sep-13 Sep-15 Sep-17

May-12 May-14 May-16 Midland Delaware May-10

Energy extraction efficiencies enabled by lower service Shale production efficiencies have allowed U.S. producers to prices and improved processes have lowered wellhead keep production volumes strong, despite energy prices breakeven prices from an estimated average of $80/bbl in being ~60% off 2014 highs. Low cost geographies such as 2013, to less than $35/bbl in 2016. The Permian Midland has the Permian have seen the greatest increase in production experienced the largest decrease, falling by over 60%, from activity, growing 36% from levels achieved in 2014. $98/bbl in 2013 to $38/bbl in 2016.

Drilled but Uncompleted Wells (DUC) – 10 Year High Crude Oil Inventories Normalizing in 2017

5 Year Inventory Range 2017 Average Inventory Total Niobrara Bakken Eagle Ford 180,000 Marcellus Permian Other 170,000 2,500 8,000 160,000 2,000 6,000 150,000 1,500 140,000 4,000 1,000 130,000

500 2,000 120,000 Thousands Barrels of - - 110,000 100,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

A lack of completion equipment, personnel, and a need to Crude oil inventories are a leading indicator for global oil meet lease obligations has led to a rise in DUC in 2017. The consumption; higher inventories indicate weaker consumption, Permian basin currently has 2,416 DUCs, which represents and lower inventories indicate stronger consumption. Despite roughly 30% of the total DUC inventory, and 76% of the growth inventories starting at an all time high in 2017, strong global in 2017. Overall, DUC counts have risen over 40% since the demand for the commodity has eaten into inventories in the beginning of 2017. Operators are waiting for higher energy back half of the year. Part of this trend can be explained by prices to rationalize spending the capital required to work production disruptions caused by hurricanes in the United through this inventory. States, but industry professionals largely point to strong YoY consumption growth out of China and India.

2

Source: Rystad Energy, EIA Oilfield Services Newsletter | November 2017

The Look Ahead…

Wall Street Journal Price Targets $110 ING Bank $100 J.P. Morgan $90 RBC $80 Standard Chartered $70 UBS $60 Societe Generale $50 Citigroup $40 Deutsche Bank $30 Commerzbank $20 Morgan Stanley $10 BNP Paribas $0 Barclays Bank of America Merrill Lynch

In October, a group of investment banks surveyed by WSJ raised their price target for 2018 WTI for the first time in six months. Consensus among the group is that production cuts by OPEC are finally starting to have an impact on the market. Saudi Arabia and Russia, two of the top three oil producers in the world, have been vocal about continuing to make production cuts into the future. With OPEC & non-OPEC compliance at 120% (the highest it has been in nearly 3 years), and strong demand coming out of emerging markets, the global energy market may find equilibrium in 2018. Rig Count Outlook - 2018 Strong Capex Outlook Operating Cash Flow Total Capex 2,000 $175,000 1,800 1,600 $150,000 1,400 $125,000 1,200 Average Capex 1,000 $100,000

800 $75,000 Rig Count Rig 600 $50,000 400 200 Cash in Flow Millions $25,000

- $0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

2017E 2018E

Q3 2014 Q3 2017 Q4 Q1 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2018 Q1 2018 Q2 2018 Q3 2018 Q4

The oil and gas rig count is forecasted by Wall Street to decline Capital expenditures for E&P companies are expected to rise in ~75 rigs in Q4 of 2017, but rise to over 1,200 by the end of 2017 and 2018; more sustainable cash flows enabled by 2018. The dip in rig count is due to the 15 – 20 week lag in rig reduced breakeven prices are giving operators more count to oil prices; the market is still working off sub $45 oil confidence to put money to work. To note, 2017 E&P capex prices achieved mid-2017. Strong demand out of emerging has increased 96% since 2016. Industry professionals believe in markets should cause global consumption to outstrip global a stable energy environment of $50 - $60 WTI, 2018 Capex is supply, which would lead to further WTI price appreciation. expected to come in around $150 billion, which is 53% more With oil sustainably being above $50, it is expected that E&P than 2017 Capex. companies will resume drilling activity in more non-core shale basins. This should continue to create a strong pricing environment for oilfield service companies over the next 12-24 months.

3 Oilfield Services Newsletter | November 2017

The Look Ahead Continued…

Supply – Global Producers of Oil Emerging Markets’ Consumption Driving Demand Global Supply 2015 2016 2017E 2018E 3.0% Projections Non-OPEC Supply 2.5% United States 13.0 13.5% 12.5 12.9% 13.0 13.4% 14.1 14.3% North America (less: US) 7.0 7.2% 6.9 7.1% 7.1 7.3% 7.1 7.2% 2.0% Europe 3.5 3.6% 3.5 3.6% 3.5 3.6% 3.6 3.6% Asia Oceania 0.5 0.5% 0.4 0.4% 0.4 0.4% 0.4 0.4% 1.5% Former Soviet Union* 14.0 14.5% 14.2 14.6% 14.4 14.8% 14.4 14.6% Europe 0.1 0.1% 0.1 0.1% 0.1 0.1% 0.1 0.1% 1.0%

China 4.3 4.5% 4.0 4.1% 3.9 4.0% 3.8 3.8% YoY YoY Growth Rate Other Asia 3.6 3.7% 3.6 3.7% 3.5 3.6% 3.4 3.4% 0.5% South Americas 4.6 4.8% 4.5 4.6% 4.6 4.7% 4.8 4.9% Middle East 1.3 1.3% 1.3 1.3% 1.2 1.2% 1.2 1.2% 0.0% Africa 1.8 1.9% 1.7 1.8% 1.7 1.7% 1.8 1.8% 2015 2016 2017E 2018E 2019E Other Supply 4.5 4.7% 4.6 4.7% 4.7 4.8% 4.8 4.9% Oil Demand Growth, OECD Total Non-OPEC Supply 58.2 60.2% 57.3 59.1% 58.1 59.7% 59.5 60.2% Oil Demand Growth, Non-OECD Total OPEC 38.4 39.8% 39.6 40.8% 39.2 40.3% 39.3 39.7% Total Oil Demand Growth Total Supply 96.6 100.0% 97.0 100.0% 97.3 100.0% 98.9 100.0%

Global supply of oil is expected to rise ~1.5% in 2018. The Improving global economic activity, population trends, and United States will represent ~13.4% of the total supply market energy consumption patterns are driving stable ~1.5% growth share – up from the ~12.9% achieved back in 2016. The United per year in worldwide energy demand. The majority of this States prolific shale production, along with its ability to now growth is coming from non-OECD countries, which include export oil to foreign nations is helping it gain market share in a emerging markets such as China, India and Brazil. Investment competitive environment. The expanding of the Panama Canal Analysts are bullish on India’s growth prospects, and believe in 2017 has allowed for more economic exports to China and the country could be a strong driver of energy consumption other Asian nations. over the next 10 – 15 years.

EIA – Worldwide Supply / Demand Forecasted Demand – World Energy Consumption by Source

2.00 Projections 104 EIA 250 Liquid fuels Projections 1.50 102 Natural gas 1.00 200 100 Coal 0.50 98 150 96 0.00 Renewables -0.50 94 100

92 -1.00 QuadrillionBTU 50 Millions Millions Barrels of Day / 90 -1.50 Nuclear 88 -2.00

0

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 2026 2029 2032 2035 2038 Inventory Change World Production World Consumption

Despite the complexities of the global energy market, oil The EIA predicts that improving living standards across the pricing is ultimately determined by simple supply/demand world will drive energy consumption through 2040. There economics. Given the current industry outlook, the EIA continues to be a shift towards using cleaner alternative believes that worldwide supply should be roughly in line with energy sources; the EIA predicts that natural gas and worldwide demand through the end of 2018. It is important renewable energy will continue to become a larger to note that in 2014, there was a significant build in contributor to the total energy market, but oil will continue inventories prior to the energy correction – no such build is to be the dominate source of energy for the foreseeable forecasted for 2018. future.

4 Oilfield Services Newsletter | November 2017

The Window of Opportunity

A History of the Cyclical Energy Markets $160.00 1978 – 1979 Iran cuts production and 1980’s 2011 exports during Reduced global Arab Spring; Libyan $140.00 revolution, cancels demand as a reaction civil war disrupts to supply constraints contracts with US output companies weighs on oil prices $120.00

1985 – 1986 Mid-2000’s BULL MARKET BULL $100.00 Saudi Arabia Asia drives rising increases production demand as to regain market production stagnates share $80.00

HISTORICAL AVERAGE PRICE BAND $60.00

2008 $40.00 Global financial crisis 2014 1990 2001 - 2003 Global oversupply Iraq invades Kuwait, 9/11 and invasion of Iraq raise of oil leave $20.00 Kuwaiti exports cut concerns about Middle East market searching until 1994 stability for equilibrium

BEAR MARKET BEAR $0.00

Nov-76 Nov-97 Nov-01 Nov-05 Nov-09 Nov-13 Nov-17 Nov-74 Nov-75 Nov-77 Nov-78 Nov-79 Nov-80 Nov-81 Nov-82 Nov-83 Nov-84 Nov-85 Nov-86 Nov-87 Nov-88 Nov-89 Nov-90 Nov-91 Nov-92 Nov-93 Nov-94 Nov-95 Nov-96 Nov-98 Nov-99 Nov-00 Nov-02 Nov-03 Nov-04 Nov-06 Nov-07 Nov-08 Nov-10 Nov-11 Nov-12 Nov-14 Nov-15 Nov-16

Historical Trends The Window of Opportunity – Driving M&A Activity Inflation adjusted, oil has traded within an average band of 140 $50.00 - $67.00 over the last ~45 years, with the average 2018 is shaping up to be a strong midpoint price of $58.00. There have been three major bear year for M&A activity in the markets since the 1970’s, with the average duration lasting ~8 120 ‘Oilfield Equipment & Services’ years. The most recent bear market began in 2015; the price of sector oil reentered the normalized range in October 2017, due to worldwide demand outstripping current supply, causing a draw 100 on inventories. While it is difficult to predict where the price of oil will be in the next 12 months, it is safe to say that sentiment 80 has shifted positively on the commodity. Founders believes that given this shift in sentiment, the market should see range bound pricing between the historical average of $50 - $67 for 60 the foreseeable future.

M&A Outlook Transactions of Number 40 The cyclicality of energy markets makes it difficult to time the ideal environment to sell a business. That being said, business owners should be focused on driving profitability and growing 20 sales with a diverse group of customers, in order to maximize valuation in preparing for a transaction. After a slowdown in M&A activity over the last few years, Founders believes that 0 stability in energy prices will be a key driver for increasing 2014 2015 2016 2017E 2018E valuations and a strong M&A market in 2018. Founders Estimates 5 Oilfield Services Newsletter | November 2017

Profiled Transactions

Date Target Acquirer Description Medallion Gathering & Processing, LLC offers construction of all October 2017 facilities and pipelines to gather, process and deliver production from wells.

Quality Oil Tools, Inc. manufactures October 2017 high pressure control equipment for use in offshore oil drilling operations.

Gordon Technologies LLC is an independent provider of October 2017 Measurement-While-Drilling (“MWD”) technology to the oil and gas industry.

SCS Technologies, LLC custom designs, fabricates, and installs liquid measurement systems for the oil September 2017 and gas production and midstream operators throughout the Permian Basin.

AMS provides turnkey hydrocarbon American measurement services at any scale, employing the latest innovations and September 2017 Measurement experienced personnel to bring total Services clarity and peace-of-mind to field measurement.

Terra Directional Services, LLC offers directional drilling services. The September 2017 company is based in Houston, Texas.

6 PEG Backed Strategic Oilfield Services Newsletter | November 2017

Other Recent Oilfield Service Transactions

Announced DateW Target Name Buyer Name Target Business Description

KATKO Ltd offers well hookups, production facility construction, 11/6/2017 KATKO Ltd Basin Energy Group LLC logistics, welding and labor services to natural gas industry.

11/1/2017 Premier Directional Drilling, L.P. Tally Energy Services Premier Directional Drilling, L.P. provides directional services to oil rigs.

Well Service Group Inc. and Utility Access Solutions Inc. represents the combined operations of Well Service Group, Inc. and Utility Access Well Service Group Inc. and Newpark Resources, Inc. 10/31/2017 Solutions Inc. in their sale to Newpark Resources, Inc. Well Service Utility Access Solutions Inc. (NYSE:NR) Group, Inc. provides construction support services to the oil and gas industry.

C&J Energy Services, Inc. O-Tex Pumping, LLC provides specialty cementing pumping services to 10/25/2017 O-Tex Pumping, LLC (NYSE:CJ) the oil and gas industry.

10/17/2017 Gordon Technologies LLC Pelican Energy Partners LP Gordon Technologies LLC develops tools for oil and gas industry.

Copperbeck Energy Partners LLC provides midstream and downstream- Copperbeck Energy Partners 10/17/2017 Tailwater Capital LLC adjacent infrastructure and services for refineries, petrochemical, and LLC industrial concerns.

10/10/2017 WaterBridge Resources, LLC Five Point Capital Partners WaterBridge Resources, LLC provides midstream services.

As of October 10, 2017, Filtration Business Unit of Patriot Rentals was Filtration Business Unit of 10/10/2017 Blue Fin Services, LLC acquired by Blue Fin Services, LLC. Filtration Business Unit of Patriot Patriot Rentals Rentals offers water filtration and handling services for well.

Source: CapitalIQ 7 Oilfield Services Newsletter | November 2017

Trading Statistics

% of 52-Week Enterprise Value / 2017P Enterprise Value / Company Stock Price Enterprise 2016 2016 Ticker Market Cap Name 11/13/2017 Value Revenue EBITDA 2016 2016 2017 2017 High Low Revenue EBITDA Revenue EBITDA Revenue EBITDA

Integrated OFS (Big 3)

NYSE: SLB Schlumberger Limited $64.98 74.0% 105.8% $91,067.10 $103,756.10 $27,922.24 $6,426.31 3.7x 16.1x $30,445.71 $6,839.79 3.4x 15.2x

NYSE: HAL Halliburton Company $44.17 75.1% 115.7% $38,897.87 $47,900.87 $15,947.83 $2,119.86 3.0x 22.6x $20,308.73 $3,505.97 2.4x 13.7x Weatherford NYSE: WFT $3.92 55.3% 124.1% $4,039.59 $11,571.59 $5,787.70 $277.00 2.0x 41.8x $5,728.99 $538.92 2.0x 21.5x International

Min $3.92 55.3% 105.8% $4,039.59 $11,571.59 $5,787.70 $277.00 2.0x 16.1x $5,728.99 $538.92 2.0x 13.7x

Median $44.17 74.0% 115.7% $38,897.87 $47,900.87 $15,947.83 $2,119.86 3.0x 22.6x $20,308.73 $3,505.97 2.4x 15.2x

Mean $37.69 68.1% 115.2% $44,668.19 $54,409.52 $16,552.59 $2,941.05 3.4x 26.8x $18,827.81 $3,628.22 2.6x 16.8x

Max $64.98 75.1% 124.1% $91,067.10 $103,756.10 $27,922.24 $6,426.31 3.7x 41.8x $30,445.71 $6,839.79 2.4x 21.5x

Onshore Service Providers

NYSE: RIG Transocean $11.22 67.3% 155.8% $4,530.25 $9,165.25 $3,761.88 $1,887.35 2.4x 4.9x $2,968.11 $1,326.75 3.1x 6.9x

NYSE: ESV Ensco plc $5.91 49.0% 144.0% $2,737.81 $5,693.41 $2,610.59 $1,167.41 2.2x 4.9x $1,847.26 $555.79 3.1x 10.2x

NYSE: DO Diamond Offshore $16.64 73.4% 165.4% $2,385.02 $4,080.18 $1,565.54 $653.61 2.6x 6.2x $1,479.75 $579.66 2.8x 7.0x

NYSE: NE Noble Corporation plc $4.39 52.4% 139.8% $1,134.20 $5,248.31 $1,971.77 $891.99 2.7x 5.9x $1,179.44 $488.80 4.4x 10.7x

NYSE: RDC Rowan Companies plc $14.61 67.4% 161.9% $1,925.36 $3,215.56 $1,759.27 $835.34 1.8x 3.8x $1,244.33 $486.86 2.6x 6.6x

NASDAQ: TUSK Mammoth Energy. $20.15 82.1% 185.2% $929.65 $1,009.37 $224.73 $38.03 4.5x 26.5x $574.55 $104.35 1.8x 9.7x

NYSE: PUMP ProPetro Holding Corp. $17.10 96.8% 157.7% $1,411.68 $1,402.59 NA NA N/A N/A $980.13 $151.49 1.4x 9.3x

Min $4.39 49.0% 139.8% $929.65 $1,009.37 $224.73 $38.03 1.8x 3.8x $574.55 $104.35 1.4x 6.6x

Median $14.61 67.4% 157.7% $1,925.36 $4,080.18 $1,865.52 $863.66 2.5x 5.4x $1,244.33 $488.80 2.8x 9.3x

Mean $12.86 69.8% 158.6% $2,150.57 $4,259.24 $1,982.30 $912.29 2.7x 8.7x $1,467.65 $527.67 2.7x 8.6x

Max $20.15 96.8% 185.2% $4,530.25 $9,165.25 $3,761.88 $1,887.35 4.5x 26.5x $2,968.11 $1,326.75 4.4x 10.7x

Offshore/Subsea Equipment & Service Providers

NYSE: NOV National Oilwell Varco $33.06 75.8% 110.6% $12,738.68 $14,296.68 $7,183.67 $255.69 2.0x 55.9x $7,279.70 $591.33 2.0x 24.2x

NYSE: FTI TechnipFMC $28.44 78.7% 115.9% $13,489.13 $10,229.13 $13,667.99 $1,517.52 0.7x 6.7x $15,057.21 $1,865.10 0.7x 5.5x

NYSE: OII Oceaneering International $20.16 62.8% 117.8% $2,032.41 $2,361.59 $2,288.38 $372.95 1.0x 6.3x $1,875.40 $226.56 1.3x 10.4x

NYSE: DRQ Dril-Quip, $45.75 65.9% 127.6% $1,751.05 $1,278.01 $548.35 $140.55 2.3x 9.1x $447.45 $50.34 2.9x 25.4x

NYSE: SPN Superior Energy Services, $9.21 47.8% 120.3% $1,446.64 $2,561.33 $1,435.21 $39.55 1.8x 64.8x $1,888.45 $173.98 1.4x 14.7x

TSX: ESI Ensign Energy Services $6.16 59.2% 101.1% $992.71 $1,692.72 $844.49 $181.75 2.0x 9.3x $989.94 $201.29 1.7x 8.4x

NYSE: BAS Basic Energy Services, Inc. $21.61 48.2% 154.0% $569.76 $846.77 $547.65 -$28.82 1.5x N/A $874.80 $67.99 1.0x 12.5x

Min $6.16 47.8% 101.1% $569.76 $846.77 $547.65 -$28.82 0.7x 6.3x $447.45 $50.34 0.7x 5.5x

Median $21.61 62.8% 117.8% $1,751.05 $2,361.59 $1,435.21 $181.75 1.8x 9.1x $1,875.40 $201.29 1.4x 12.5x

Mean $23.48 62.6% 121.1% $4,717.20 $4,752.32 $3,787.96 $354.17 1.6x 17.5x $4,058.99 $453.80 1.5x 14.4x

Max $45.75 78.7% 154.0% $13,489.13 $14,296.68 $13,667.99 $1,517.52 2.3x 64.8x $15,057.21 $1,865.10 2.9x 25.4x

Source: CapitalIQ 8 Oilfield Services Newsletter | November 2017

Earnings Release Calendar

November Date Company Name Vertical 11/16/2017 Helmerich & Payne, Inc. Land Drillers

January Date Company Name Vertical asdfasdfasdf 1/20/2018 Halliburton Company Integrated Equipment & Service Providers 1/24/2018 RPC, Inc. Service Providers

February Date Company Name Vertical 2/1/2018 Weatherford International plc Integrated Equipment & Service Providers 2/3/2018 National Oilwell Varco, Inc. Equipment & Technology 2/8/2018 Diamond Offshore Drilling, Inc. Offshore Drillers 2/8/2018 Oceaneering International, Inc. Equipment & Technology 2/8/2018 Patterson-UTI Energy, Inc. Land Drillers 2/11/2018 Forum Energy Technologies, Inc. Equipment & Technology 2/13/2018 Noble Corporation plc Offshore Drillers 2/15/2018 Oil States International, Inc. Equipment & Technology 2/17/2018 Pioneer Energy Services Corp. Land Drillers 2/18/2018 Basic Energy Services, Inc. Service Providers 2/19/2018 Superior Energy Services, Inc. Service Providers 2/19/2018 Nabors Industries Ltd. Land Drillers 2/22/2018 Trican Well Service Ltd. Service Providers 2/22/2018 TechnipFMC plc Equipment & Technology 2/22/2018 Transocean Ltd. Offshore Drillers 2/23/2018 Frank's International N.V. Service Providers 2/23/2018 Calfrac Well Services Ltd. Service Providers 2/23/2018 Ensco plc Offshore Drillers 2/24/2018 Rowan Companies plc Offshore Drillers 2/25/2018 Dril-Quip, Inc. Equipment & Technology 2/27/2018 TETRA Technologies, Inc. Service Providers 2/28/2018 Tesco Corporation Service Providers

9 Oilfield Services Newsletter | November 2017

Commodity Prices ➢ WTI Oil $/bbl

$58.00

$55.00

$52.00

$49.00

$46.00

$43.00

$40.00

Crude Oil - WTI (ICE) Historical Pricing Crude Oil - WTI (ICE) Future Contracts ➢ Natural Gas $/MBtu

$4.50

$4.00

$3.50

$3.00

$2.50

$2.00

$1.50

Natural Gas - Henry Hub (NYMEX) Historical Pricing Natural Gas - Henry Hub (NYMEX) Future Contracts

10 Oilfield Services Newsletter | November 2017

Production Data ➢ U.S Crude Oil Production*

9,800

9,600

9,400

9,200

9,000

8,800

8,600

8,400

8,200

8,000

Thousands of Barrels per Day Change From Current Prior Month Prior Year Prior Month Prior Year Crude Oil 9,203 9,234 8,716 -0.3% 5.6% ➢ U.S Natural Gas Production*

93,000

91,000

89,000

87,000

85,000

83,000

81,000

Million Cubic Feet per Day Change From Current Prior Month Prior Year Prior Month Prior Year Natural Gas 89,053 88,781 87,927 0.03% 1.3%

*Gulf of Mexico, Shale, and other basins 11 Oilfield Services Newsletter | November 2017

Rig Counts by Basin ➢ U.S Rig Count by Basin Analysis

1200

1000

800

600

400

200

0

Cana Woodford Eagle Ford Haynesville Marcellus Permian Williston Other

➢ U.S Rig Count by Basin ➢ U.S Rig Count by Basin YTD Increase

Other 41

73 Williston 15 67 253 Cana Woodford 38 Permian 119 Eagle Ford 42 Haynesville Marcellus 2 Marcellus Permian Haynesville 9 48 Williston Other Eagle Ford 20

386 Cana Woodford 36

0 20 40 60 80 100 120 140

12 Oilfield Services Newsletter | November 2017

Rig Counts (continued) ➢ U.S Oil vs. Natural Gas Rig Count

1,800 500 1,600 450

1,400 400 Natural Rigs Gas Natural 350 1,200 300 1,000 250 800 Oil Rigs Oil 200 600 150 400 100 200 50 0 0

Oil Gas

Rig Counts Change from Current Prior Week Prior Year Prior Month Prior Year Oil 738 729 452 1.2% 63.3% Natural Gas 169 169 115 0.0% 47.0% ➢ Gulf of Mexico: Oil Rig vs. Natural Gas Rig

50 45 40 35 30 25 20 15 10 5 0

Gulf of Mexico Gas Rigs Gulf of Mexico Oil Rigs

Rig Counts Change from Current Prior Week Prior Year Prior Month Prior Year Oil 16 16 21 0% -23.8% Natural Gas 2 2 0 0% -

13 Oilfield Services Newsletter | November 2017

About Founders Advisors

Founders Advisors (Founders) is a merger, acquisition & strategic advisory firm serving middle-market companies. Founders’ focus is on energy, industrials, software, internet, digital media and industrial technology companies throughout the United States. Founders’ skilled professionals, proven expertise and process-based solutions help companies access growth capital, make acquisitions, and/or prepare for and execute liquidity events to achieve specific financial goals. In order to provide securities-related services discussed herein, certain principals of Founders are licensed with M&A Securities Group, Inc. or Founder M&A Advisory, LLC, both members FINRA & SiPC. Founders M&A Advisory is a wholly owned subsidiary of Founders. M&A Securities Group and Founders are not affiliated entities. For more information, visit www.foundersib.com.

Contact For more information, visit www.foundersib.com, call us at 205.949.2043, or contact the Energy & Industrial team directly by email:

Duane P. Donner II, Managing Director Matt Carrington, Director [email protected] [email protected]

John W. Sullivan, Vice President Evan H. Klisares, Analyst [email protected] [email protected]

David Szell, Analyst [email protected]

BIRMINGHAM DALLAS 2204 Lakeshore Drive, Suite 425 5605 N. MacArthur Blvd, Suite 1000 Birmingham, AL 35209-8855 Irving, TX 75038 Phone: 205.949.2043 Phone: 214.295.1055 Fax: 205.871.0010 Fax: 214.295.1047

14 In order to provide securities-related services discussed herein, certain principals of Founders are licensed with M&A Securities Group, Inc. or Founders M&A Advisory, LLC, both members FINRA & SiPC. M&A Securities Group and Founders are unaffiliated entities. Founders M&A Advisory is a wholly owned subsidiary of Founders.