HomeMy WebLinkAboutSupplemental - Received from Jon Waller during Oral CommunicationsMorgan Stanley I RESEARCH
UPDATE
Morch 77, 2019 04:07 AM GMT
•MORGAN
S':ANLE &CO. LLC
Cal$ Services, DrIfing & E gal ent i olio America
"
Connor Lynagh
EQUITY ANALYST
Global Conference Takeaways: '''... I
DnnielK agh @morgansta °lay.`om "2'2296 -8148
Daniel Kutz
RESEARCH ASSOCIATE
O I f e Ld S ervices i n F o c u s
nley.com +i- 212461 -0899
i homes @lags iohnson
RESEARCH ASSOCIATE
Thomas .Johnson @morganstanley.com +1212]61 -4628
Following last week's conference, We see potential for
pricing
M ORGAN STANLEY S GO, INTERNATIONAL :L C+
offshore rigs, US land rigs, and broader international services
Robert Pulleyn
as likely debates in '19. A muted outlook for completions
EQUITY ANALYST
Robert.Pulleyn@morganslanley.com +4420]428 -4398
services seems fain consensus, as does a strong LNG
Y g
Lillian Starke
EQUITY ANALYST
sanctioning year,
Lillian .Starke @morganstanley.com +4420]42`-9104
e
Building on our cross- sector Conference Takeaways note, we highlight a few
North America
oilfield services- specific takeaways from our panels, 19 meetings, and company
IndustryViere At
mot^ � v.
=
dinners. Generally speaking, the outlook across most service tines is for broadly,
`
Europe
but slowly, improving market conditions.
Industryviee, Attractive
2019 likely to be the year where hopes for pricing improvement outside of NAm
are put to the test Large service providers continue to experience challenging
pricing conditions in international markets, but have been pointing to a relatively
Recent Thematic Reports
Energy & Utilities: 2019 Global Energy & Power
tight market for high -spec assets. This is expected to be the year in which pricing
Conference: Innovation From Molecules to Electrons
power is confirmed in contracting (we expect largely for 2020+ work). Service
4Q EPS Preview: Bracing for Bad News
Pieces
company commentary, towards 2H19, will be the rims means of
P Y V. Y primary
3Q EPS revie :Thegupthe
3Q EPS Preview: The Final Expectations Reset?
validating if this is in fact occurring (relevant for BHGEMAUSLB/WFT). 2019 is
EPIC NGL Lineto Convert; Permian Price Exposure
also an important year for offshore drillers: Borr Drilling (covered by Rob
Overhang Eroding
pulleyn) pointed to —4S rig -years of high -spec shallow water rig demand this year
Top 3 Investor Questions Following Our Sector
Upgrade
vs. —2S rigs available, which wilt likely drive pricing power for jackups. The
Oil Services Upcycle Ahead: Raising Industry View to
overhang of newbuild rigs will remain a concern, though Chinese yards'
Attractive; Initiating 14 Stocks
willingness to accept losses remains a potential limiting factor in incremental
Global Upstream Capex: Spending UpeyQle Ahead
jackups returning to market. Offshore drillers have also pointed to 2020 as a
potential time for benign floaters to finally experience material pricing traction,
though bears point to extremely short contract duration as a hurdle to overcome
— for our part, we see this as simply a cyclical factor that will move shortly
before pricing moves higher. We continue to like RIG for deepwater pricing
upside, but BDRILL represents a unique pure -play on the higher -spec jackup,
market.
Diverging rate of change in US rigs and frac HP pricing? We noted some investor ,'
Morgan Slarley does and seeks to do business with
companies covered in Morgan Stanley Research. As a
concerns around land rig pricing, largely stemming from an E &P company's !,
result investors should be aware that the firm may haves
commentary -2 weeks ago that rig pricing had fallen 20% in recent weeks. White 'l
conflict of interest that could affect the objectivity of
Morgan Stanley Research. Investors should consider
land drillers strongly disagreed with this as indicative of market conditions, '':.
Morgan Stanley Research as only a single factor in making
contractors did confirm that leading -edge rig pricing momentum has slowed. We
their investment decision.
For analyst certification and other important disclosures,
think the "first derivative" of realized rates is probably still positive, but spot rates '
refer to the Disclosure Section, located at the end of this
do appear to be at least stalling if not outright declining, potentially indicating I
report.
choppier trading ahead for the Land drilling grou p(HP, ICD, N BR, PDS, PTEN). I
,
+= Analysts not be edhyatedpconslofthe m notrandmaynot
FINRA, may not be associated persons of the member and may not
•
Meanwhile, on hydraulic fracturing, wef eel the challengesof oversupply are
be subject toNASDA YSE restrictions on communications with a
relatively consensus, and no investor or completion services provider is calling
subject company, public appearances and trading securities held by
a research analyst account.
Morgan Stanley I RESEARCH
for pricing power for this industry. Supply has been taken out of the market and
® most companies agreed pricing was beginning to stabilize, suggesting a demand
shock to the upside could cause pricing traction — some suggested improving
Permian takeaway could be enough of a catalyst, though no one seems convicted
in this view. Either way, the relative rate of change could indicate the likes of CJ,
FRAC, FTSI, LBRT, and RES could outperform other small caps like Land drillers.
LNG market strength well- understood, though order intake and contract wins
still matter. We don't find the robustness of the 2019 -20 LNG sanctioning cycle
\� to be a debate anymore, but exposed stocks Like BHGE and FTI should still trade
well if order intake meets /beats market expectations. Meanwhile, although
somewhat discussed already, content mix for BHGE could continue to drive
significant margin expansion, potentially suggesting our numbers may be
conservative.
Lookingahead: our Calgary Energy Bus Tour this week should provide some key
color on the potential timing of a recovery in the relatively challenged market.
The following week, well be turning to our European Energy Field trip for color
around IOC project sanctioning, offshore demand trends, and potential
validation of pricing momentum in the offshore rig market.
See inside for
i Earnings Summaries:
' Cactus Inc (PT to $41 from $38)
® a Stock Performance & Valuation Data
� Morgan Stanley Earnings Estimates
w Industry Activity Data & Forecasts
J
Morgan Stanley I
RESEARCH UPDATE
®
Me %A
Cactus Inc (WHD)
Revenue
140
4Q results in•line: WHD reported revenues of $140MM (cons: $147MM /MS: $150MM),
147 (5 %)
Adj. EBITDA of $54MM (cons: $S4MM /MS: $SSMM), and EPS of $0.4S (cons: $0.4S/
54
MS: $0.4S). At the segment level, all three business lines saw sequential revenue
54 (00/0)
declines, with Rental and Field Service & Other down 18% and 10% respectively, largely
0.45
from customer budget exhaustion and lower completion activity. However, WHO saw a
0.45 (00/0)
slight increase in its estimated market, share for the Product business (28% vs. 3Q 27 %).
30
In general, commentary was positive, and management anticipates sequential revenue
37 170/6
growth for 1Q19, noting "Although the market is anticipating a pullback in the U.S. rig
160%
count in 2019, we believe the strength of our customer base will moderate the impact of
Operabrig EPS to Class A Holders 1.90 1.98
a potential decline in drilling related activity. For the first quarter of 2019, we currently
1.53
anticipate that revenue across all our business lines will increase relative to the fourth
1-1
E,
quarter of 2018 based on the rebound in activity we have seen during the first two
months of the year," See Earnings Summary .
Exhibit l: Earnings Snapshot
4Q18 Eamin s Sna shot
in millions
Actual
Me %A
Cons. %o
Revenue
140
150 (7 0/6)
147 (5 %)
EB17DA
54
55 (2 0/6)
54 (00/0)
EPS
0.45
0.45 1%
0.45 (00/0)
FCF
30
33 6%
37 170/6
Source: iM1P .Reute,e. Company Data, Morgan Stanky Research estimates
Raising our estimates and PT, sting unchanged: Despite softening demand in 4Q18,
upbeat guidance from WHO reflects a more positive near -term outlook than we
previously modeled. Therefore, we are raising our estimates. Specifically, we no longer
model declining revenue through 3Q19, and see 1Q19 revenue 10% higher sequentially
vs. prior —4% decrease. Incorporating guidance, we model 8 /15 %QoQ growth in the
Product and Rental segments, respectively. Meanwhile, WHO was optimistic on its new
Rental offerings, which it sees contributing in the back half of the year, adding 20% to
the 4Q18 Rental revenue exit rate. These updated assumptions result in a —$SSMM
boost to FY19 revenues vs. prior. In general, the $17MM 4Q exit rate increase largely
drives the —$70MM uptick in 2020 revenue, as our revisions here were de minimis.
Further, we slightly increased our margin assumptions, as 4Q18 was higher than
anticipated, with 2019/20 EBITDA up 16/24 %. See Revisions to Our Estimates .
Exhibit 2: Estimate Revisions Snapshot
Revisions to Our Forecasts: Cactus Inc
D
Current
Prior
%Chg,
$in Mlliax 2019E 2020E
2019E
2020E
2019E
2020E
570
0
o
EBITDA 228 240
196
194
160%
24%
Operabrig EPS to Class A Holders 1.90 1.98
1.57
1.53
21%
290/6
Source: Compzny Data Mw5an Stanley ResearcM1 estimates
Morgan Stanley I RESEARCH UPDATE
® Earnings Summary
Exhibit 3: Earnings Summary
4
Actual
MS(E)
53
Actual
Actual
Current
Seq.
YoY
Fwd.
($ in Millions)
4018
4018
Diff.
3018
4017
1Q19E
( %)
( %)
Est Q/O
Revenues:
(50%)
Total EBIT
44
45
(1 %)
52
29
47
Product
79
86
(8 %)
79
57
85
(1 0/6)
38%
8%
Rental
31
32
(1 %)
38
24
36
(18 9/6)
27%
15%
Feld Service & Other
30
33
(10%)
33
23
33
(10 %)
28%
10%
Revenues
140
150
(7 %)
151
105
154
(70/6)
33%
10%
Gross Profit:
(8)
(1)
(6)
40%
NM
(240/.)
Consolidated Net Income (Operating)
39
Product
34
34
(1%)
33
20
34
2%
66%
0%
Rental
23
22
5%
27
16
26
(18 9/6)
41%
14%
Feld Service & Other
6
9
(319/6)
10
5
8
(410/6)
18%
37%
Total Gross Profit
63
64
(3 %)
71
42
68
(12 %)
50%
9%
4
EBITDA
52
53
(2 %)
69
35
5b
(13 %)
491A
r%
(D&A)
(8)
(9)
70/6
(8)
(6)
(9)
(60%)
(32 %)
(50%)
Total EBIT
44
45
(1 %)
52
29
47
(16 9/6)
53%
8%
Net Interest (Expense)
(0)
(0)
70%
(0)
(5)
(0)
179/6
96%
(70/6)
Other Income (E)Wse)
—
—
NM
—
—
—
NM
NM
NM
EBT
44
44
(1 %)
52
23
47
(i6°/,)
86%
8%
Taxes
(5)
(6)
14%
(8)
(1)
(6)
40%
NM
(240/.)
Consolidated Net Income (Operating)
39
38
0%
44
23
41
(11 %)
70%
6%
Consolidated Net Income (GAAP)
39
38
0%
44
23
41
(11 %)
70%
60/6
Operating EPS to Class A Holders
0.45
0.45
1%
0.52
0.30
0.48
(141/6)
48%
60/6
GAAP EPS t0 aass A Holders
0.45
0.45
1%
0.52
0.30
0.48
(14 %)
48%
60/0
Avg. Diluted Share Count
75.3
75.4
(0 0/0)
75
75
75
00/0
0%
0%
per Share
—
—
NM
—
—
—
NM
NM
NM
®Dividends
Adjusted EBITDA
54
55
(2 %)
61
35
57
(139/6)
53%
Actual
MS(E)
Actual
Actual
Current
Seq.
YoY
Fwd.
Drivers
4018
4018
0 in b.p.
3018
4417
1419E
A in b.p.
0 in b.p.
Ain b.p.
Seq. Revenue Growth:
Product
(1 %)
8%
(861)
8%
6%
8%
(895)
(704)
861
Rental
(18 0%)
(17 0%)
(120)
90/0
160/6
15%
(2,733)
(3,373)
3,320
Feld Service &Oder
(100/)
(0 9/6)
(1,017)
9%
10%
10%
(1,957)
(1,982)
2,026
Total Rev. Growth
(7%)
(00/)
(708)
90/6
9%
10%
(1,594)
(1,631)
1,717
Gross Margin:
Product
43%
40%
312
42%
360/6
40%
110
728
(312)
Rental
72%
68%
443
72%
660/6
720%
43
688
(43)
Feld Service & Other
20%
26%
(597)
30%
22%
25%
(1,043)
(178)
497
Total Gross Margin
45%
43%
194
47%
40%
44%
(232)
507
(48)
Incremental Gross Margin:
Product
(136 9/6)
15%
(15,019)
70%
(4 0%)
1%
NM
(13,178)
13,649
Rental
700/6
92%
(2,148)
64%
52%
690/6
637
1,760
(94)
Feld Service & Oder
122%
NM
NM
35%
(570/6)
759/6
8,687
17,831
(4,678)
Total Incremental Gross Margins
77%
NM
NM
60%
50/6
390/6
1,663
7,184
(3,749)
EBITDA %Margin
37%
36%
178
40%
33%
36%
(248)
389
(85)
EBIT Margin
31%
30%
178
350%
270%
31%
(323)
395
(58)
D&A %of Beg. Net PP&E (Ann.)
25%
26%
(185)
26%
NM
250/p
(185)
NM
—
Average Cost of Debt (Ann.)
6%
6"/°
(43)
7%
80/6
6%
(121)
(272)
43
Effective Tax Rate
11%
13%
(173)
16%
3%
13%
(448)
877
173
Net Margin
28%
26%
209
29%
22%
270/6
(131)
589
(104)
Free Cash Row (FCF)
30
33
NM
18
—
15
69%
NM
(500/6)
•Net
Debt
Net Debt Capital
(55)
(18 0%)
(58)
(19 %)
NM
126
(26)
(9 9/6)
249
1179/6
(70)
(21 9/6)
(112%)
(918)
(122 %)
(13,482)
(28 0/6)
(316)
So„,°e Company Data, Morgan sraniey Research esimares
4
Morgan Stanley { RESEARCH
® Revisions to Our Estimates
Exhibit 4: Estimate Revisions
is
Revisions to Our Forecasts: Cactus Inc D
Current
Prior
% Chg.
$ in Millions
2019E
2020E
2019E
2020E
2019E
2020E
Revenues:
Product
339
349
304
310
11%
13%
Rental
146
156
134
134
9%
16%
Field Service & Other
131
136
124
125
6%
90/0
Revenues
616
642
562
570
10%
13%
Gross Profit:
Product
133
137
112
112
19%
22%
Rental
105
112
92
93
13%
21%
Field Service & Other
38
41
37
38
2%
90/0
Total Gross Profit
276
290
241
243
140/6
20%
EBITDA
228
240
196
194
16%
240/6
Operating EPS to Class A Holders
1.90
1.98
1.57
1.53
21%
29%
Free Cash Flow (FCF)
124
169
136
130
(9 %)
30%
Seq. Revenue Growth:
Product
17%
3%
2%
2%
14pp
1 PP
Rental
9%
7%
0%
0%
9pp
7PP
Field Service & Other
9%
4%
0%
1%
9pp
3pp
Total Rev. Growth
13%
4%
1%
1%
12pp
3pp
Gross Margin:
Product
39%
39%
37%
36%
2pp
3pp
Rental
72%
72%
69%
69%
3pp
3pp
Feld Service & Other
29%
30%
300/6
30%
App
Opp
Total Gross Margin
45%
45%
43%
43%
2pp
3pp
Incremental Gross Margin:
Product
29%
36%
(105 %)
50/0
133pp
31pp
Rental
69%
72%
(1901 %)
69%
NM
3pp
Field Service & Other
48%
60%
NM
48%
NM
12pp
Total Incremental Gross Margins
39%
55%
118%
17%
157pp
38pp
Source. Cothran, Data, Megan Manley Research eslmete5
�1
E
0
Morgan Stanley I RESEARCH
Stock Performance
Exhibit S: 1 -Week Stock Performance
DRIL
assMa SPMI -MI
W G LN
M Brent
0 PFC -LN
0 USD
a SUBC-OS
SBMO -AE c
WHO On
TGS -OS as
NBR AfZ
NODL -OL
S &P
TMKS -LN
CUR
PGS -OS =r-
RIG 0
DO =
DOLL -OL
AKSO-OS tMfs3
Ts e
HE 4
BHGE
PTEN _
FTI
OSX.»ss@tTes,.
HTG -LN
ORD
SLCA
TIRE NO
SLB -
CVIA
POS' V
RES
NOV
VK -FR
SHLE -T
HAL
LBRT
CGG -FR
cJ
FET
WFT .gym -.v, :+.aay
:30�f -200% _10%
Source lTwnsm ReOers, Awyan Stanley Research Note: Total MrII for perIcA
Exhibit& 1 -Week Stock Performance by Vertical
fgl.n,ering & Censtruc;cn
seisria
ORsjtore D-Alers
LA-, D:' Ilers
rluicment; bC -G
^ive'sifleti Servicas
S Heil -CeD ,jgfvi�;.45
- OL
Exhibit 7: YTD Stock Performance
NBR
CL
NC
. OS
streverr TG
SEEMS! S&
HT,
WE
State THE
WG
Deal FTI
= OIS
HAL
i USD
I NE
NOV
AKSO O:
- 14Al2A1G 9 su -r. 0% 2`6 C)% 5,,, '".C!c 15% 20% 25 °h 33%
Source'. Thomson Re.e .MVgan Stanley Resea¢F. NO, TUtalretum for perioC. Source: ThOrnson Remers, MorS an Stanley Research. Nme: Total return to pent
6
•
u
•
Morgan Stanley I RESEARCH
Recent Estimate Revisions
Exhibit 9: 2019 Consensus EBITDA Revisions (Past 3 Months)
?,Rs
WG -LN
i NONL -OL -
-200% -150% - 100% 50% 0% 50%
Sou¢e: Thwnson Reuters, Morgan Shirley Research Note: %change h' aaa hadho acccunl for revisions to
negafrvo F5f1D0. percentages may tle mere Aan 1D0 %Fthese cases.
Exhibit 11: 2020 Consensus EBITDA Revisions (Past 3 Months)
-120% - 100% -80% -60% -00% -20% 0% 20%
Sou¢ealmmyon Reuters, Mvgan Salley RexearcM1; Note. R etianye is atlapteCta ac[mnt fa rewsions'to
ne'.1ire EaIMA, percentages maybe more than 100% in these cases.
Exhibit 10: 2019 Consensus EPS Revisions (Past 3 Months)
ORO
-200% -150% -100% 50% 0% 50% 100%
Swsme. Thamsm Reuters, Moryanpase thResearch these %change 4 aoaplea [o accouMtwremims to
ne5mise FPS, percentages mey Ee mote than 10D% in iM1ese cases.
Exhibit 12: 2020 Consensus EPS Revisions (Past 3 Months)
-200% -150% - 100% -50% 0% 50% 100% 150%
Stwrteapomson Reuters. Morgan Saney Research; Nut.; %change is etlapteC to a[count iwrevis'wns to
nega(x EPS, percentayes may Ee more Nan ip0 %in these cases.
7
Morgan Stanley I RESEARCH
® Rating and Risk - Reward Summary
•
Exhibit 13: Price Target Summary
Saorce. Thamson Peut , Morgan Stanley Peseamh estmales
Upside/Do"side to
MS
Last
Div.
Ticker
Rahn
Price
Bear
Base/PT
Bull
Yield
Bear
Base/PT
Bull
BH
.73
15.00
$30.00
$45.00
2.8% (396/0)
19%
786/0
HAL
O
$27.47
$21.00
$36.00
$60.00
2.66/0 (216/0)
340%
121%
SLB
E
$4129
$33.00
$45.00
$75.00
4.8% (156 /0)
146/0
86'/0
WFr
E
$0.61
$0.10
$1.00
$5.00
-
846/0
646/0
720%
Median - Diversified Services
2.7% (30
%)
27%
194%
CJ
E
$15.24
$10.00
$17.00
$30.00
- (346/0)
126/0
97/6
CLB
E
$65.40
$45.00
$75.00
$113.00
3.4% (286/0)
186/6
760%
CVIA
U
$4.30
$2.00
$5.00
$11.00
- (536/0)
166/0
1560/6
FRAC
O
$9.40
$5.50
$13.00
$21.00
- (416/0)
386/6
123%
FTSI
O
$8.70
$6.00
$11.00
$22.00
- (316/0)
266/6
153%
LBRT
O
$14.46
$7.00
$20.00
$27.00
1.4% (500/0)
406/0
886/6
RES
U
$9.67
$7.00
$11.00
$17.00
4.9% (236/6)
196/0
81%
SHLE -T
E
C$1.02
C$0.50
C$2.00
C$6.00
- (51 %)
96%
488%
Si-CA
U
$13.46
$4.50
$13.00
$24.00
1.9% (656/0)
(26/0)
806/6
SPN
U
$4.09
$2.00
$4.50
$12.00
-
51%
106/0
193%
Median - Small Cap Services
-
(46 %)
18%
110%
FP
U
$52.81
$40.00
$63.00
$80.00
5.4% (196/0)
256/0
576/6
ICD
E
$2.90
$2.00
$6.00
$7.00
- (316/0)
107%
141%
NBR
O
$3.20
$1.00
$6.00
$12.00
2.8% (66%6)
906/0
278%
PDS
O
$2.31
$1.00
$3.50
$7.00
- (576/0)
526/0
2D3%
PTEN
O
$12.76
$10.00
$17.00
$28.00
1.3%
206/0
346/6
121%
Median - Land Drillers
1.3%
(316/0)
52%
141%
BDRILL-OL
O
NK25.00
NKr16.00
NKr43.00
NKr62.00
- (366/0)
72%
W%
DO
U
$9.42
$5.00
$13.00
$28.00
- (476/0)
386/0
197%
NE
U
$2.64
$0.50
$4.00
$12.00
- (816/0)
526/0
355%
NODL -OL
E
NKr56.00
NKr39.00
NCr77.00
NKr112.00
- (3(r)
386/6
1000/0
ODLL-OL
O
MW4.40
NKr19.00
NKr42.00
NKr73.00
- (226/0)
720/6
1990/0
RIG
O
$8.10
$4.00
$13.00
$23.00
-
51%
6D/6
184%
Median - Offshore Drillers
- (51 %)
52%
197%
FTI
O
$20.98
$18.00
$31.00
$40.00
2.5% (126/0)
50%
93%
PFGLN
O
£4.47
£3.00
£7.00
£10.60
8.5% (246/0)
656/0
146%
SBMO -AE
U
E 16.61
E 10.00
€18.00
€ 26.00
2.4% (376/0)
11%
596/6
SPM -M
O
E 4.63
E 2.90
E 6.00
€ 7.30
- (37%6)
306/0
586/6
SUBC-OS
O
NK004.75
NKrW.00
NKr150.00
NKr180.00
0.26/6 (23 0/6)
43%
72%
TRE4v1C
U
€ 23.04
E 16.00
E 26.00
€ 35.00
4.3%
(266/0)
176/6
56%
WGLN
E
£5.44
£4.20
£7.70
£9.70
6.66/6
166/0
486/0
856/6
Median - Engineering & Construction
2.5%
(240/6)
43%
72%
AKSOaS
U
NKi39.85
NKr34.00
NKr55.00
NW73.00
-
(156/0)
38%
836/6
DRQ
U
$39.13
$17.00
$36.00
$58.00
-
(576/0)
(86/6)
486/6
FEf
E
$5.03
$4.00
$6.00
$14.00
-
(206 /0)
196/0
178%
HTG-LN
E
£5.25
£4.00
£7.30
£11.00
1.9%
(226/6)
41%
111%
NOV
E
$25.87
$20.00
$33.00
$63.00
0.8%
(226/0)
286/0
144%
OIS
E
$14.93
$13.00
$20.00
$50.00
-
(136/0)
346/0
235°/6
TS
O
$25.68
$20.00
$39.00
$53.00
3.2%
(196/0)
556/0
1106/0
VK -FR
E
€2.15
E0.00
E2.60
E7.00
- (1000/0)
21%
225%
WHD
O
$36.51
$20.00
$41.00
$55.00
-
450/6
126/6
51%
Median - Equipment & OCTG
-
(22 %)
28%
111%
PGS-OS
O
NKr16.92
NKr11.00
NKI35.00
NKr54.00
-
(356/0)
1076/0
219%
CGG-FR
E
E 1.49
E 0.80
E 2.00
E 3.50
-
(466/6)
356/6
136%
TGS.OL
U
NK227.50 NKr160.00
NK2W.00
NKr390.00
-
30%
27/6
71%
Median - Seismic
359/6
35%
136%
Total Coverage
319/6
34%6
121%
Saorce. Thamson Peut , Morgan Stanley Peseamh estmales
Morgan Stanley I RESEARCH
® Recent Performance and Sentiment Indicators
A
Exhibit 14: Revisions, Street Ratings and Short Interest
CJ
2%
4 Mo.
NA
neiauve
5%
4.8
CLR
3 Mo.
EBITDA
3 Mo.
Street
Short
Days to
CVIA
Return
Rev. EPS Rev.
Rating
interest
Cover
U7'emhe
enures:
13%
(18 %)
(115 %)
18%
3%
BHGE
22%
03%!
(24-%)
®
4%
16
HAL
16 %)
(16 %)
(34 %)
--
2%
1.9
SLB
it %)
(9 %)
(22%)
-
1%
1,6
WFT
32%
It%
133%
�°
10'!0
3.4
19.1
12%
12%
I28 °o)
(81 %)
C%
.6
Smart -Cap
Services:
(t %'
'20°11/
(16 %)
16 %,
7%
CJ
2%
(27 %)
NA
5%
4.8
CLR
(10 %)
(12%)
(131/4)
9%
6.6
CVIA
(9 %)
(13 %)
(80%)
°T
19%
16.6
FRAC
13%
(18 %)
(115 %)
18%
3%
4-3
FTSI
18%
(37 %)
(571/)
®
3%
4.5
LBRT
(5 %)
(27 %)
(41 %)
1 °f1
31%
18.0
RES
(16%)
(31 %)
(59%)
26%
T2
SHLETO
(t6 %)
i43 %)
(143%)
- --
3%
19.1
SLCA
12%
(11 %)
(81 %)
^-
22%!e
9.8
SPN
(t %'
'20°11/
(16 %)
16 %,
7%
33
Saurce'. Thamaan Renen. M «gan Stanley Researcft estmmes
Exhibit 15: Short Interest: Current vs. 6 Mo. Ago
Ago
nt
0% 50/6 10% 15% 20% 25% 30% 351/6
Source. Th«ns m R,We ,Mw9an Stanky Rexaarcb estimates
9
11%
( t)
( e)
1 °m
Offshore Drillers:
DO
(18 %)
(30 %7
(53°x6)
`"
17%
8.9
NE
t26 %)
(15 %)
(5 %)
°°
18%
11.4
RIG
0%
(5 %)
22°!
10!
4.3
(1 °o
(4 %j
( %)
1 °f1
Larry Donets:
HP
(10 %)
(5 %)
(51%)
'"
9%
6.8
ICD
(12 %)
(15 %)
(51 %)
®
1%
2.51
NBR
18%
(11 %)
(144 %)
16 %,
3.6
PDS
18%
(11 %)
(125'/)
31,0
53 �
PTEN
2%
(18 %)
NA
5%
2A
S%
Eouioment and
E &C
DRQ
17%
(13 %)
59%
'C°
14%
6.4
FET
(5 %)
(29 %)
(1
10%
5.7
FTI
0%
(1 %)
(2;%)
2%
2.71
NOV
(II %)
(21 %)
(870 %)
`1"
4%
181
OIS
(21 %)
(27 %)
NA
^y'
8%
7.71
TS
13%
(9° %)
(101/6)
^ °1
2%
37
WHD
30%
77)
(9'i)
5%
8.5
i 4M
Saurce'. Thamaan Renen. M «gan Stanley Researcft estmmes
Exhibit 15: Short Interest: Current vs. 6 Mo. Ago
Ago
nt
0% 50/6 10% 15% 20% 25% 30% 351/6
Source. Th«ns m R,We ,Mw9an Stanky Rexaarcb estimates
9
0
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E
Morgan Stanley I RESEARCH
Large Cap Model Summaries
Exhibits Diversified Services Regional Revenue Assumptions
Revenue Growth:
North America (NAm)
Latin America (LatAm)
Europe/aSrAfrica (ECA)
Middle East & Asia (MEA)
Total Revenue Growth
Consensus
Revenue Growth
(39 %)
2015
2016
2017
2018
2019E
2020E
2021E
2022E
BHG - Oilfield Services
8 °,�0)
(6%)
5%
3%
8%
17%
(28 °%O}
(21 °l0)
Revenue Growth:
1 %
0%
4%
7%
90/0
07" /0l
(6 %)
1%
North America (NAm)
NM
NM
NM
21%
(0 0/0)
3%
8%
15%
International
NM
NM
NM
7,
6%
4%
10%
12%
Total Revenue Growth
NM
NM
NM
12%
3%
4%
9%
13%
Consensus
NM
NM
NM
12 %'0
3%
90/0
11%
8%
HAL
Revenue Growth:
North America (NAm)
(390fe)
(38 %)
71%
25%
(11 0%)
3%
11%
14%
Latin America (LatAm)
(19%)
(41 %)
14 %
(2 %)
6%
9%
11%
190/0
Europe/CISIAl(ECA)
(24 %)
(280 /°)
(7 %)
69f0
1%
10%
7%
9%
Middle East & Asia (MEA)
(6 %)
(22%)
(2%)
9`%
7%
5%
6%
8%
Total Revenue Growth
(28 %)
(33 %)
30%
16%
(1
5%
9%
12%
Consensus
(28° U)
(33 9j0)
30%
16`/0
(29/6)
120/6
8%
8%
Revenue Growth:
North America (NAm)
Latin America (LatAm)
Europe/aSrAfrica (ECA)
Middle East & Asia (MEA)
Total Revenue Growth
Consensus
Revenue Growth
(39 %)
(320/0)
42%
26%
(8 %)
50/6
9%
13%
(220%)
(300%)
8 °,�0)
(6%)
5%
3%
8%
17%
(28 °%O}
(21 °l0)
(4 %)
1 %
0%
4%
7%
90/0
07" /0l
(6 %)
1%
1%
8%
8%
7%
15%
Western Hemisphere
(43%)
Eastern Hemisphere
(27�,'0)
Total Revenue Growth
(37 %)
Consensus
(37%)
Sierra, 6omparry Eats, Morgan Stanley Research estimates
9% H °, /e 3% 100/0 100/0 16%
4 % 40/6 3% 6% 140/6
30 %) (5 0/0) 6% 7% 11%
1% (0 %) 11% 9% 1%
14
Morgan Stanley I RESEARCH
Exhlbit21: BHGE Model Snapshot
®Morgan Stanley
Baker Hughes AGE Co (BHGE) Model Snapshot
•
E
Inwme Statement
($In MII, )
2:317
2718
2019E
2020E
2021E
i.1R
&`.218
4QiEi
1479E
2019E
3019E
4019E
Revenues:
01field Services
10,337
11,617
12021
12,464
13,602
2,1&
Z,993
3,002
2,884
2,937
3,025
3,176
01field Ecopnot
X641
3,027
3,316
3,680
5i?
531
i2l"
729
744
766
789
Tubtxrachnery &Process Sclubos
6,4992
'.O1G
6,282
6,5&1
7,124
i "s3: "s
i.3?9
".752
1,426
1,454
1,512
1,890
Digital Sdu)as
2,5,
46:'r
2,594
2,732
Z,B00
rfiy
653
EQI
605
629
654
706
Total Revenues
22,3(16
21,81&
23,925
25,097
27,205
5,548
8,866
6,250
5,644
5,763
5,957
67567
EBIT:
Dilfidd Semoss
71
7185
877
1,092
1,404
1'K,
731
224
173
191
227
286
Weld Egtiprrvt
38
-
62
162
244
(12}
6
4
11
19
28
Tubornachnery & Prooass Sciubus
°v
fi2,1
717
879
1,094
'1;5
13e
?a+
121
135
159
302
Digital ScIttions
?3:3
:A <i
394
429
453
izi
1t
79
91
105
120
Segment EBIT
1,275
1,196
2050
2,562
3,195
S86
475
608
376
428
509
736
(Corporate &Other)
Qr3)
W-41
(426)
(444)
(462)
:v'yl
(58;
0101
(105)
(106)
(107)
(108)
Consolidated EBIT
922
1392
1,623
2,119
2,734
288
3T7
498
271
322
402
62B
Intemt(5perse)
i131y
(223)
(159)
(159)
(156)
(F;1)
(515)
(5:'1'
(40)
(40)
(40)
(40)
Otter (E)pase)
67
owl)
-
-
t2 &1
6
_
-
-
EBT
856
1.129
1,464
1,960
2,ST7
1'37
326
4379
232
282
362
588
Tax(Ep -)
i38.i
iA27i
(615)
(598)
(567)
;75)
;'1151
0-,6;)
(97)
(118)
(152)
(247)
Consolidated Net lnoon,e(Operating)
524
7916
849
1,372
2,010
121
213
263
734
163
210
341
Consolidated Net lnoome(GWIl
1242)
233
849
1,372
2,010
{'19}
38
392
134
163
210
341
Operating EPS
0.46
0,54
0.82
1.36
206
216
0.19
6.26
0.13
0.16
0.20
0.33
G44PEPS
(021)
036
0.82
1.36
206
(1101)
0.03,
02B
0.13
OAS
0.20
033
Avg. Diluted Sloe Cant
1,129'
1.096
1,039
1,008
974
11W,
1 -102
,(a
1,042
1,043
1,039
1,0130
DiNdmds W Sloe
i::z5
0.72
472
0.72
0.72
O.1&
Ei1R
�.._
0.18
018
0.18
0.18
Key Metrics & Drivers
Revenue Growth:
0lfield Sendoas
12; ",'0
3.5%
3.7°/6
91%
3.Fo
z3(
(5.8%)
1.89/6
3.0%
5.066
0lfleld Egtlpmvt
^.C^ /<
14,13M
959/6
10.9'/6
23:2
SSSI
-
20°10
IT%
3.0
Tuborachnery &Process Solutions
!7.30)
4A%
4.86/0
8.2%
-3`6
28:3 0
(20.0616)
206/0
4.0%
25.0%
Oigrtal Sduios
'. -6116
(04916)
5.3%
25%
FiA)
S.b`F,
(125%)
4.06/
4.0%.
8.09/6
Total Revenue Growth
4.0%
4.6%
4.9%
8.4%
2161.
10.6%
(9.9.6)
2.1%
3.4%
10.1%
EBIT Margin:
01field Services
)
fi. #.b
7.3%
88%
10.3%
'b'.:
717',',
7 '1
6.0%
651/6
7.5%
9.0%
01field Egipmat
c
-
200/
49%
&T16
i
1211,
V s
0.5%
1.5%
25%
15%
Tuhoradirery &Pnms Solutions
131.6
').
11.4%
134%
15.4%
&Zlk
95`0
14 ,
8.5%
9.36/0
10.5%
16.094.
Digital Scubas
Psi: S,
15i "i
15.2%
15.7%
162%
i4590
162%
16.556
13.06/6
14.5%
16.06/0
120%
Segment EBIT Margin
5.9%
706*
8.6.6
10.266
11.7%
7.0
8.4%
974
6.7%
7.4%
8.6%
11.2%
Capazte -%d Pew
1 7 <,
i P4b
1.80/
1.80%
1.7%
1,8'o
1'76.'3
1.a ;
1.9%
1.8%
1E°6
1.6°4
Consolidated EBIT Margin
4.2.
$.3/.
6.8%
BA%
10.0%
52 °,16
6.7%
8.06.6
4.8%
5.6%
6.8%
9.6%
s U,0e: canpamesne. Vm sWly ase6,6n 0,nm6re:
15
Morgan Stanley I RESEARCH
Em
Exhibit 22: HAL Model Snapshot
®Morgan Stanley
Halliburton Co (HAL) Model Snapshot
Income Statement
($ in Mllions)
2'17
2,118
2019E
2020E
2021E
7798
3Q18
4'.218
1019E
2019E
3019E
4019E
Revenues:
Corrostion B RadxAon
'3.177
15,073
14,753
15,326
16,976
41&,
4.1M
3°32
3,58
3,633
3,763
3,849
Dri01ng B Evaluation
7,540
8iYJ2
8,185
8,694
9,284
1n°3
2,0202,
2:104
1,939
1,993
2,061
2,191
Total Revenues
20.620
23,935
22.937
24,020
26,260
5,147
6,172
5,936
5,448
5,627
5,824
5,039
EBIT:
Conoetion B Rodjcbw
'i'c,:'1
2,2:"3
1,497
1,680
2,182
t#'><1
11
451/3
331
361
393
412
Drilling & Evaluation
713
7.1,5
655
787
971
501
181
135
146
155
171
193
Segment EBIT
2,330
3,123
2,162
2,468
3,152
060
794
"1
478
517
564
604
(Caporate&Otlly)
(2&°i
i2.91I
(261)
(275)
(286)
J, 1)
!791
(73)
(65)
(66)
(66)
(67)
Consolidated EMT
2151
2732
1,898
2,193
2.867
789
716
608
413
451
498
537
Interest Inmrne
i+.2
44
45
47
46
11
12
11
11
Interest (Expense)
(6)1j
(592)
(592)
(584)
(1150 i
(1501)
W48
(148)
(148)
(148)
(148)
(N-(Epese)
!87)
15x)
(100)
(100)
(100)
i19;
;421
i13)
(25)
(25)
(25)
(25)
EBT -
?;4;5
2,9'79
1,252
1,548
2,229
633
534
458
250
290
336
375
Tax(E7xxse)
t3`Oi
(416)
(300)
(372)
(535)
?Lit
0001
E9E}
(90)
(70)
(81)
(90)
Pre -Tax Income
1.065
1,653
951
1,176
1,694
505
434
362
190
220
255
285
(incase) Loesto Noncarxrolling Interest
5
;1/i
(11)
(13)
(19)
3
1
(.1i
(2)
(2)
(3)
(3)
Consolidated Net lncorne(Operating)
t.f'W
1,002
941
1,163
1,575
511
435
3m
188
218
253
282
Consolidated Net In.(GAAP)
(4631
1,656
911
1,163
1,675
511
435
66'
188
218
253
262
Operating EPS
1.25
1.90
1.08
1.33
1.91
0.58
0,50
0.41
0.22
0.25
0.29
0.32
GAAP EPS
"0.53:
1.89
1.08
1.33
1.91
0.5
0.50
0.70
0.22
0.25
0.29
032
Avg. Diluted Share Coxx
872
577
873
874
877
&W
8:'8
37'.4
873
872
872
873
Diddards par Share
0.'72
0.12
072
0.72
0.72
[ %.18
C ".8
0.1$
0.18
018
0.18
0.18
Key Metrics & Drh ers
Revenue Growth:
Canpledon B PnodxEon
72.1 °,;,
(7.66/)
3.9%
10.8°/
0.1':5
(8.'%)
(8.4%
3.6%
3.60/
23%
Ddlling B Evaluation
64,6
206/6
62%
680/6
.. ,
u
(7.8°/a)
28°/
34%
6.3%
Total Revenue Growth
10.41
(4.4x)
6.71/6
9.3%
0.4%
(3,65y
(8.2X)
3.3%
3.5%
3.7%
E6n Margin:
Cmpletion &Radction
12:%
14.CSn
101%
11.0°/
1299/6
1811116
14, T'!6
12.8°u
9A%
9.96/
104%
10.7%
Drilling &Evaluation
a
4 .;d
81%
91%
105%
' E %,
9. slS
&R %
7.5%
7.8%
83%
880/
Segment E91T Margin
11.3%
1? E >
9.4%
10.3%
120%
14 P"'.
129%
11 ,5111.
8.8%
9.2%
9.7%
10.0%
corporate - %of Rm
®
:7`1/„
1.2%
1.1%
1.1%
7 %:
1.29/.
1.29/o
1.1%
1.1
Consolidated EBIT Margin
11.4%
8.3%
9.1%
10.9%
111:
11.66./,
10.2 f -.
7.61/6
8.0%
8.5%.
8.9%
So6,�6. c6,.o6ma0u, Morgan s.oi0va «uz,m 6�emzm:
-J
f[8
E
C
Morgan Stanley I RESEARCH
Exhibit 23: NOV Model Snapshot
Morgan Stanley
National Oi vell Vareo Inc (NOV) Model Snapshot
Inoome Slaternent
3Q18
411E
1019E
2019E
3019E
($ in Mlliore)
2J17
2'3
2019E
2020E
2021E
Revenues:
855
324
391
'62
670
Wdlbore Tedrdogies
2 „717
3,T.5
3,334
3,591
3,858
Conroetion & P,oddon Sdulions
2,6722
"931
2,726
2,981
3,269
Fig Technologies
2,257
2,575
2,718
2,919
3,106
9irriretiors
(197)
08<
(277)
(299)
(322)
Total Revenues
7,344
3,453
8,501
9,192
9,910
Adj. EBITDA
Wdlboie Tedrdogies
Canpleoan & Pmdztion Solutions
Fag Tedndogies
Corporate & O(tw
Adj. EBITDA
(DBA)
Consolidated EBIT
Interest Ircone
Interest (sparse)
Olhar (E. )parse)
EBT
Tar (E p-)
Pre -Tax Inane
(ncarne) Lass to Nmmnlmllirg Interest
Consolidated Net lncwrr (Operating)
Consolidated Not Income (GAAP)
UaRm
Tu =1g
3Q18
411E
1019E
2019E
3019E
4019E
7:33
247
&'.I
815
817
837
855
324
391
'62
670
668
685
703
rc^1
63,7
.°• }S
671
671
681
694
1751
! 5
(7E�
(68)
(68)
(69)
(71)
2,106
2154
2,'m
2088
2,089
2,133
2,192
25
526
523
606
690
133
135
16i
126
125
132
141
34",
378
324
391
483
i;4
7P
112
T7
T7
82
8B
2.W
:h,
279
339
392
&1
7S
102
67
65
70
76
2437
1.x4
(314)
(320)
(333)
(m)
f67i
(C47s
(80)
(78)
p8)
(78)
Sri
910
812
1.017
1.232
226
245
7?4
190
189
206
227
25
25
34
40
47
j102)
i�,P
(88)
(88)
(88)
C23i
'1021
(20)
(20)
(20)
(192}
W
62
290
523
40
(631
(31)
(64)
(115)
(152)
(13)
31
226
408
;11
(r)
(3)
(19)
(34)
(1531
on
28
207
374
j495)
(311
28
207
374
a
k
7
B
8
9
9
2:1)
i24
(22)
(22)
(22)
(22)
(22)
(4)
(22;
(31?
(5)
(5)
(5)
(5)
36
33
E2.
2
1
19
40
(.3i
t29*
t=�1
(1)
(0)
(9)
(20)
25
4
35
1
0
9
20
.1)
,3}
'3i
(0)
(0)
(1)
(2)
24
1
33
1
0
9
18
24
1
12
1
0
9
18
Operating EPS
Cx44PEPS
Aeg. Diluted Share Gxsd
Dividends per Sharre
Key Metrics & Drivors
(0.41)
(281',
377
f.w
m,45)
{,0,0ai
331
0:20
0.07
OA7
388
0.21
0.53
Ob3
39D
0.20
0.95
095
392
0.20
0,06
0.0P
"Ki1
"W13
0.00
0 -`,10'
363
0,%
6.49
(r0?
Xi
k
0.00
0.00
3BB
0.05
0.00
0.00
388
D05
0.02
0.02
389
0.05
0.05
0.05
389
0.05
Revenue Grower:
Wdlbore TedMoyes
:1', .
31%
7.7%0
7.4%
Use
4A%
(7.8 9/6)
029/6
250%
34%
Canple6on& PraixLOn Solutions
9.7<
(7.0916)
9.4%
9.79/
(0.4? %,)
7.2'.L
(15.0%)
(0.3%)
26%
26%
Fig Tedydojes
? +139%
5-5%
7.4%
6.4%
2.2`,'6;
2n2"le
(16.5 1/6)
-
1.4%
20%
Total Revenue Growth
15.7 °,6
0.6%
8.1%
7,8%
2.3-A,
14,3 r.
(129%)
(0.0 %.)
2.2%
27%
EBITDA Margin:
Wellbore Terhdoges
It- /I
1c ".311b
15.7%
16.99/0
1Z9%
`0.3111
15.519, -#
1716.'>
15.5%
15.3%
15.80/6
16.3%
Caroetion &Prodstim Solutions
1299,<
` <`1 "4:
11.99/6
13.1%
14.8 -1.
± "s5'c
1429,rn
11.5910
11.5%
12.0%
1250%
13g Tetlmlogies
90"c
12,tP,.
10.39/6
11.6%
126%
"29%
12.2to
1Z.'a,;
10.0%
9.8%
10.3%
11.01/6
Corporate - %d Pees
3.3io
3(?'4
3.7%
3.59/6
140/6
4 C *i,
314;
sF°;,
3.80/6
3.7%
3.7%
3.60%
Consolidated EBITDA Margin
8.4%
1DA%
9.6%
11.1%
124 %.
11.4%
11.8%
9.1%
9.0%
9.W.
10.4%
source: CpnVanyeam, Morgan Stanley Research estimates
17
•
Morgan Stanley I RESEARCH
Exhibit 24: SLB Model Snapshot
Morgan Stanley
Schlumberger W (SLB) Model Snapshot
Inwme Sfalement
t;"73
ZFmi.
1,535
1.598
1,680
($ in Mllids)
20'7
2018
2019E
2020E
2021E
Revenues:
2,662
3257
3,c62
2.636
2,820
Reseraun Cteradei7a0m
0.78C,
0,6'c
6,580
7,178
7,796
Drilling
8.,arK
9r250
10,099
10,562
11,467
Prodicbm
-0.638
12,44
11,789
12,354
13,385
carneron
'321`1
EIA68
4,836
5,070
5,317
(Binina0ms &Other)
L,61';
(W)
(5333)
(563)
(607)
Total Revenues
30,446
32,016
32,762
34,603
37,357
EBIT:
646
8
S
8
Reservoir Characterie6on
1,251
':, -; 1
1,424
1,627
1,904
Drilling
1,,51
,7rO
1,417
1,624
1,912
Production
920
.U50-
730
812
1,144
carom
Td3
_at7
463
533
612
(Birrinatims &Other)
ti43s
(Ws
(160)
{183)
(221)
Segment EBIT
3.421
4,187
3,874
4,413
5,351
(Corporate & Cther)
034j
(''-','
(950)
(984)
(1,024)
Consolidated EBIT
2,987
3,251
2,914
3,429
4,327
Interest Incorne
';T'
S1
33
34
32
Interest(Epase)
(513;
i63711
(488)
(488)
(488)
Other ( )
4.8%
4.9%
0.21
(25%)
EBT
2581
2,766
2,460
2,975
3,871
Tax(Bperea)
1471:
34651
(418)
(550)
(774)
Pre -Tax Income
2,110
2,298
2,042
2,425
3,097
(inane) Loss to Pimmntrdlirg Interest
20:
1403
(40)
(48)
(61)
Consolidated Net Income (Operating)
2,084
2,2%
2,001
2,377
3,036
Cmrsolldated Net Incorne(GAAP)
ll-%S)
2,137
2,001
2,377
3035
us m-
70118 °x-0i8 44118 1019E 2019E 3019E 4019E
1:136
t;"73
ZFmi.
1,535
1.598
1,680
1,7T7
2.2s;
2,429
2461
2,387
2,474
2,566
2,662
3257
3,c62
2.636
2,820
2,905
2,992
3,072
I,'%J5
1,195
1215
1,164
1,199
1,224
1,250
(273
(1«
{133)
(126)
(131)
(137
(140)
8363
8,504
81120
7,780
8,035
8,325
8,621
-H,
373
ZFmi.
322
341
370
391
289
339,
318
298
334
372
413
(I'm
320
538
169
174
197
200
0,319
148
177
105
111
119
128
(273
328;
3407
(36)
(38)
(42)
(47
1,094
1,152
967
659
922
1,006
1,086
(739;)
(235)
;439)
(240)
(240)
(240)
(240)
855
918
729
619
682
766
646
8
S
8
8
8
9
(I NT.,
(139;
;1321
(122)
(122)
(122)
(122)
731
787
665
505
569
653
733
(1)
.1291
(1"7)
(86)
(97)
(111)
(1 27
805
658
545
419
472
542
60B
fit)
t14;
(10)
(8)
(9)
(11)
(12)
504
644
405
411
453
531
596
441
6"
538
411
463
531
S96
Operating EPS
1.50
1.62
1.44
1.72
220
0.43
0.46
0.36
0.30
0.33
0.38
0.43
GAAPPPS
(I'm
1.03
1.44
1Y2
2.20
032
046
0,319
0.30
0.33
0.38
0.43
Avg. Diluted Share Cast
1,393
"393
1,389
1,385
1,381
1,39"
1'�2
1:92
1,391
1,390
1,369
1,388
Dmd& -& per Share
2.07
z [r
200
2.00
200
C.bc
0.50
0.:x'7
0.50
0.50
0.50
0.50
Rey Monica & Divers
Revenue Growth:
Reservoir Charadenra0on
(A :r,)
1.0'/o
9.1%
8.6Y
7 -?:
ii.i j
(7.0%)
14%
5.8a/
5.8%
Drilling
10.2°%,
9.1%
4.79/.
8.6%
87°5
1. "s';;
(3.09A)
3.7%
3.7%
3.79/6
Production
1fi8 °h
(5.0'1)
4.8%
8.3%
(L.21o;
(-- 9.?°la;
(39%)
30%
3.0%
279/6
Carre4an
(0.7 %,,
(6.4 9/6)
4.8%
4.9%
0.21
(25%)
(8.09/.)
3.0%
2.1%
21%
Eirrintiae - %d OOer Pas
1.6%
1.6%
1.60%
t65�
1.6%
1.69/6
1.6%
1.6%
Total Revenue Growth
7.5%
(0.2%.)
5.6%
8.0%
2.4%
;101?
(4.9 %)
3.3%
3.6%
3.5%
EBIT Margin:
Resawir Charactaira0 n
Z 1.4 %0
21.6%
22.7%
24.4%
21p%�
22.3°0
N. ?,i;
21.0%
21.5%
2209/.
220'1.
Drilling
13.7911.
138 ;-,
14D9/.
15.4%
1679%
7772'X.
14.3-,'•,
12,3=,:
125%
13.51/6
14.59/.
15.598
Production
5.r %,
6.5 °0
6.2%
6.6° /.
8.5°/6
9.Vi,
9.8%
6.01%
6.0%
6.39/.
6.51/6
Ca Wun
14.1 %'
9.6%
10.5%
11.5%
52$%
L.4%
1QCi 6
9 -0%
9.3%
RB%
103%.
Birrina8are - % d COrr EST
3.5%
2,4 °0
4.0%
4.0%.
4.0%.
2893,
24'1
%+.0'/
4.091.
4.091.
4.09/6
4.0%.
SegmOrt EBIT Margin
12.9%'.
128%
11.8%
12.8%
14.3%
13.2%
13.5%.
11.8%
11.0%
11.5Y.
121%
126%
Corpuram - %clRm
3.1%
20
29%.
28%
27%.
2W--
281
291%.
3.1%
3.0%.
29%.
28%
Consolidated EBIT Margin
9.8%
94%<
8.9%
9.9%
11.6%.
13.33%
10.6 %..
8.9%
8.0%
8.5%
9.2%.
9.8%
S rce'.C=panydata,Mmgan Stan @ynesearchestimates
18
4
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Morgan Stanley I RESEARCH
is Global Oilfield Services Activity
E
0
Exhibit 27: Weekly North American Land Rig Count
source. Baker Hugtcs. Morgan hanky Research Use, MS play defmnwns. Hz- HchsarraI, Vert/Dar - VencaVDVectlonal
Exhibit 28: International Land Rig Count
8- Mar -19
1- Mar -19
WoW A
9- Mar -18
YoYA
Pods:
Ferman
424
423
1
392
32
Eagle Ford
94
94
—
84
10
Mdoon
117
115
2
132
(15)
Bakken
52
55
(3)
51
1
Maroellus/Utical
78
79
(1)
76
2
Niobrara
49
51
(2)
33
16
Other
90
94
4
80
10
US Hz Rigs
904
911
(7)
848
56
US VertJDir lags
100
104
4
119
(19
Total US land Rigs
1,004
1,015
(11)
967
37
CDN H2 Rgs
147
162
(15)
222
(75)
CDN VerUDir Rgs
42
49
(1)
48
(6)
Total CDN Land Rigs
189
211
(22)
270
(81)
Total NAm Land Rigs
1,193
1,226
(33)
1,237
(44)
source. Baker Hugtcs. Morgan hanky Research Use, MS play defmnwns. Hz- HchsarraI, Vert/Dar - VencaVDVectlonal
Exhibit 28: International Land Rig Count
source: Baker Hughes. Morgan hanky Research Data Waseca monthly.
Exhibit 29: Offshore Rig Activity- Average Rigs Under Contract
PJ s Under Contract
Feb -19
Jan -19
MoM A
Feb -18
YOY A
InPI Land Rgs:
Europe
58
55
3
55
3
Middle East
340
339
1
356
(16)
Africa
88
89
(1)
74
14
Latin America
156
168
(12)
169
(13)
Asia/ Pacific
135
131
4
131
4
Total InYI Land
777
782
2
5
785
8
source: Baker Hughes. Morgan hanky Research Data Waseca monthly.
Exhibit 29: Offshore Rig Activity- Average Rigs Under Contract
PJ s Under Contract
Feb -19
Jan -19
MoM A
Feb -18
YoY A
Floaters:
Asia Pac
22
17
5
16
6
Brawl
16
17
(1)
26
(10)
North Sea
21
20
1
21
—
US GoM
20
20
—
25
(5)
West Africa
13
14
(1)
12
1
Other
34
32
2
27
7
Total Floaters
126
120
6
127
1
Jackuos:
Asia Pac
69
71
(2)
61
8
GoM (US + Max)
26
27
(1)
23
3
Inch
29
29
—
33
(4)
Mddle Fast
119
120
(1)
119
—
North Sea
29
29
—
24
5
Other
37
37
—
31
6
o ac u
3D9
313
(4)
291
13
Total s
435
433
2
413
$ourre:IHS PaUcdata. Morgan hanley Research. Data ydated mohinly Refers torya defined as'unaerccntract',wbch we b elleretobemostinacatiuestoffshore a't ty.
21
11
•
Morgan Stanley I RESEARCH
U.S. Play -Level Rig Counts & Permitting
Exhibit30: Permian
Rolling 4-Wk. Avg. Rig Count 3 -Mo, Avg. Permits
o�; ___ __.. .......... ... __. _._ 800
JiI {iri
g0
z 1a- kl,
400
m e
Y
-MA6 J -16 N -16 M-17 J -1 N -17 M-18 J -18 N -18 M -18
-:^ -- Horizontal =Directional BeseVertcgal — PermAs(RHS)
sane: Rake, M,ghea, Rratad rae,Ry
Exhibit 32: Midcon
Rolling 4 -Wk. Avg. Rig Count 3-Mo. Avg. Permits
175 __. ___ .................. . ............,............... 200
.......... ¢�- 80
y -
-20
7
56
xt
.a 40
-. , "�.".� B. a "�
i 20
simirs -
W18 J46 W16 M -17 J -17 N -17 M-18 J -18 N -18 M -16
,+r:. Horizontal sDimctional =Verfiml — Penmlls(RHS)
Source Baker H fires, Rystad F ergy
Exhibit34: Marcellus /Utica
Rolling 4-111k. Avg. Rig Count 3 -Mo. Avg. Permits
300
pshp
✓ 2'JO
�e t
,ads
P e Rig
eeea..aa�> r ,r.. i_ C
M-16 J -16 N-16 M-17 J -17 NA7 M-18 J -18 N -18 M -18
.—Horizontal ®Directional aw Verbcal — Pennits(RHS)
$ourte: Baker llighes. Ryslatl Eneryry
Exhibit 31: Eagle Ford
Rolling 4-Wk. Avg. Rig Count 3 -Mo. Avg. Permits
-
-z 1'.0
>( e 4 r
1 �
F i
xas`E a..
g NA
^�. 5 .�
M 116 J -16 N -16 !k-17 JA7 N47 M 118 J -18 1,148 MA9
*•Horizontal mDirectional Vertiml — Permits(RHS)
sa,rce: Baker Haghea,Rystad Baeh,
Exhibit 33: Bakken
Rolling 4-Wk. Avg. Rig Count 3 -Mo. Avg. Permits
f
30
,
26 a ��
»v
� l
..% s'.Jfi'•�' e
J...n ..- .......
M -46 J -16 N -16 M -17 J47 N-17 -M -18 J -18 14- ,18 M -18
=a Horizontal �Directianel sm Valisal — PermRa(RHS)
source. Baker Hughes, Ryatad Energy
Fxhibit35: Niobrara
Rolling 4-Wk. Avg. Rig Count 3-Mo. Avg. Permits
5 1.000
an.
4
s �
� ,
- y
wi8 J -16 NAC M -17 J -17 14-17 M 118 J48 N-18 M-19
— Horizontal vDirectional V"ral — Pernits iRHS)
sources Baker Hughes, Rysratl Enryy
22
Morgan Stanley I RESEARCH UPDATE
® US Activity Forecasts
Exhibit36: United States Onshore Oilfield Services Supply - Demand Summary
Well Completions
2015
2016
2017
2018
2019E
2020E
2021E
2022E
HcnzonW Fag Count
748
404
737
900
846
825
881
925
Y/Y %,6
(4110)
(46`:6)
82%
2110
(G%
(30/)
7%
5%
Vertical /Directional Rig Count
195
84
117
111
103
100
100
100
Y1Y % 8
(620%)
(.57/1)
33%
(5110)
; %%)
(2°0101
-
-
Total US Land Rig Count
943
487
853
1,011
949
925
981
1,025
Y;Y01111
(47%)
(4801)
75%
18%
(6%
(310)
6%
4%
Horizontal fag Wization
1,000 -1,499 HP
28%
12'/0
190/1
20%
18%
18%
190/1
20%
1,500 -1,999 HP
49%
30%
61%
75 0/6
71%
69%
73%
77011
Vertical /Directional fag Utllization
1-499 HP
11%
60/6
8%
8%
8%
8%
80/1
8%
500 -999 HP
160/0
70/6
11%
12%
11%
100/0
100/1
100/0
Well Completions
® Hydraulic Fracturing Supply- Demand -
2015 2016 2017 2018 2019E
Y,/Y %A
Nameplate HP Supply (NM
YN1011
2015
2016
2017
2018
2019E
2020E
2021E
2022E
Horizontal
14,103
8,356
11,781
15,189
15,204
14,540
15,519
16,770
YiY %6
(2%/)
(4, 9/)
41%29%
20.9
36%
71%
00/0
(4"010)
70/
801a
Vertical /Directional
12,605
6,729
6,694
5,458
6,233
6,100
6,083
6,083
Y,Y %4
('52/1)
(519x,)
7%
('16%)
14%
(201)
(M
-
Total Well Completions
26,708
14,585
18,475
20,647
21,437
20,640
21,603
22,853
Wy %16
(42"/1)
(45` q)
2P/a
120%
4%
(404)
5%
® Hydraulic Fracturing Supply- Demand -
2015 2016 2017 2018 2019E
Y,/Y %A
Nameplate HP Supply (NM
YN1011
(2301)
18.2
5%
(44 %)
17.8
(201)
83%
19.3
90
2301
22.4
16%
5°%
23.6
5';0
(201.)
23.8
1%
WA
23.7
((P /),
940
24.6
3%
Nameplate Utilization
60%
340/1
58%
67%
66%
64%
70%
73%
Marketed HP Supply (Mfvt)
YY % 4f6N
Marketed Utilization
15.6
70%
9.6
(39°00)
640/1
15.3
5901
73%
20.9
36%
71%
221
601
71%
223
1%
69%
22.2
(L %)
74%
24.6
10%
73%
Effective Capacity (Tons, IVM
83.6
104.6
108.9
139.2
173.7
179.1
179.1
179.1
YY %11
320101
Hydraulic Fracturing Sand
4%
28%
25%
3011
-
2015
2016
2017
2018
2019E
2020E
2021E
2022E
JGI" pu I IL VVQI t 1 UIJ�
Y/Y ° /r,•4
J,J✓e
28`%
Jlw
29%
.Jw
28%
90%
4%
2%
.....
1%
....•
00/0
Sand Demand (Tons, fvHvl)
56.7
43.0
77.4
109.0
113.4
110.9
119.4
129.3
Y,'Y %11
(99)
(24 "ln•)
80%
41 %,
4%
(2 %)
80.6
800%
Effective Capacity (Tons, IVM
83.6
104.6
108.9
139.2
173.7
179.1
179.1
179.1
YY %11
320101
26%
4%
28%
25%
3011
-
-
Utilization
68%
41%
71%
78%
65%
62%
67%
72%
Source Rys1aV. EneW.. Baker H,ghea, IIB, Grq,Tesreq lanC Rp Newskrter, Cwnpanylala. Mo,yan $lanley Research eslonaies
•
23
LI
Morgan Stanley I RESEARCH
Jackup Market Summary
Exhibit 37: Rate Fixtures by Rig Type
Dayrates [$kpd] . JU 250-IC > JU 3 61- 100 -IC < JU Harsh High Spec
25
200 -
"
155
100 � j i e..• . • ♦ __
C e
s °
>' •�•• s to r a e ✓� :. ..
50 1a�ta •a � • t ej •m � a • �^ a e$
•..fix;:? o e
r
N P`3 sj- !Si CD Cam- tKa � 4 r— N Li 7 Lt'S cB t`w clJ t�
N iV N KV N N N N N N N CV N {V N S"V N N
Sourca.H oanrooaia, Morgan Stanley Research
Exhibit38: Recent Fixtures
Source .W oetrwata, Morgan Stanley Research
Exhibit 39: MS Dayrate & Utilization Assumptions
Ri T e
wr.
Mer..l
wn
Ene
ors
cream
Mrs
9rta
�5
JUI Hyl Spec N]Nbt
Ip -19
Q 19
51M -19
Rpf Sr�ec
F
B 100
JU1NehFwS U(
M19
Qi19
- 21F 19
OapN�Gage Gam
B 121
JUHa9Fkfisa NEaIaE
V -19
Lb;.19
- 21♦ 19
s> DagY
wa..
wwigll
JU361d c Wa..
Ma -19
1119
- 18f 19
good Narm
5®
B %
NY c S hKU
r 19
Hg19
- i5 19
Satl perm
MLN
N "*qt
JU wi-0 c seal M
Ag19
h?II
- 1K 19
P11FP
MiitloF ,aana
I Naafi
JU361d c Mir'.
Ma -19
M,19
- 14i 19
,la6tloa5gg)
fisn
B< iw
Ju3 i1 c pMtla
Ma -19
0(-19
- 11F 19
Qpnm
9q, Or
SMDig�
JumI c "godo
A-19
0119
- 11~9
Po oo,00w
Ma4D.
Marn*PadIe
JUW 111h sw Ndla'ark
Ma-19
Ma}19
- 7~9
TO
Ma4Q
Mggr R�/IJo
JJ Uv HT$s MIMIa1b
Ms,19
Ag19
- 7�19
{g c.,w
Dana D,
Sbn
J 301 c TMaisNr
Ma -19
Mara
- 6fO19
Satlp
EWPMna
salty
41361d c som paaa
swig
Ag24
- 6 9
RLds
Arai pMao
OLn NII
JJ3i1 c Miar�
r 19
W -19
- I=
IWmA
Mgm16 Sigarrs
Mr v
NIDc EMO
.aan19
1a,20
- SA I
W Sn FW�van
Hvai
ibar Nia/
JU1�HT $s Nava
Z,
J 1
- L,br19
MC
P./Q.
P/Qiigll
A1361 Q c
1419
0?19
- HJUV19
Tac6u,uru
SE
+U291c Om�ja�
Ia -19
JLL20
- 'bJ.'A19
N
Svo D.
ST 9Jal1
R13 i1 c
lnf9
Ja.19
�19
Source .W oetrwata, Morgan Stanley Research
Exhibit 39: MS Dayrate & Utilization Assumptions
so M, HSVelraoata. Morgan Stanley Research
24
Ri T e
2018
2019
2020
2021
2022
Standard
451/6
50%
4000
--20%
300/0
Utrlizahon
Prerrrum
70%
70%
75%
85%
900/0
F6
65%
800/0
85%
90%
900/0
Standard
55
55
60
65
70
Dayrate
Premium
65
70
85
100
120
$Ipd
H
75
90
110
125
150
so M, HSVelraoata. Morgan Stanley Research
24
E
Morgan Stanley I RESEARCH
Floater Market Summary
Exhibit 40: Rate Fixtures by Water Depth
Dayrates ($kpd) . Ui6`r- deepwaier Deepwller , M,Owh�te'
700
IMarwfi
Saari, �[p hs—
IM-19
Op -19
-
600
♦ •
i
tlD • b�♦ 10
%e`>)y
qgg f
�4 m
J 19
Rl
5x6 -t9
ryya Blag9
M Drp
I.guyr Vy
OOlyq>730 EI., W.
hg19
M -19
t 01
6Mi-19
Tdd
Pm' &6
Paifcaya"
300
.44
Ma119
650/6
616 -19
Wnm
Pa'hc6.
Pei5C Sha,ae
WIs ip >79J IAA
swig
hk,e19
1N
4 -19
LaAn [federm
Smfx
100
Z.
M-ID
J m
+P.
=9
NLea9dlf
.i
Nhtl Mn
3
Iba19
Ease-19
-
r --- T— — — - -i
CgJm
NMMaECR
M °:1' tf; ct1 t'-- CYJ Q7
Seri) L6p9a U(
O C7 0 0 0 0 G` C%
(-
-
0 O 0 O 0 O G1 O
0 O C4 0 CO 0 0 0 0 0
harlh ECf)
N N N N N N N N
N N N N N N N N IN N
Source'MSPelaoLata, Mergan Stanley Research
51p19
Exhibit4l: Recent Fixtures
T7fm19
{ffivn cagi
Jib
IMarwfi
Saari, �[p hs—
IM-19
Op -19
-
`✓A0-19
RNGDmdum
9ve
%e`>)y
°anV6MSladrO Ut
M119
J 19
-
5x6 -t9
ryya Blag9
M Drp
I.guyr Vy
OOlyq>730 EI., W.
hg19
M -19
-
6Mi-19
Tdd
Pm' &6
Paifcaya"
Wi sip 'a19 Seams
Al-19
Ma119
650/6
616 -19
Wnm
Pa'hc6.
Pei5C Sha,ae
WIs ip >79J IAA
swig
hk,e19
1N
4 -19
LaAn [federm
Smfx
NitlB
Serilkog lMpgbi Nsraa,
M-ID
J m
w
=9
NLea9dlf
Sm)i
Nhtl Mn
Seri lbUlO ffi Wr¢/
Iba19
Ease-19
-
26Fm19
CgJm
NMMaECR
lMe Rasi>
Seri) L6p9a U(
JeRig
A-9
-
ZT{ 9
fiaires
harlh ECf)
Zama
sar1i1691�mpuela uR
h 19
51p19
-
T7fm19
Epim
Nana ECR
V Pssa
Seri169if w
swig
w19
400
ZIi9>19
EA
PmficR
Pyfic9ra
Delmp >75W 1'1P®
Mr -19
A,19
1;R
2 19
Beim
Nilh OIaEC U.
VNdRmia
Seri W9i0. w
.M19
JLL19
-
a 19
N de
66n
PISNfPS1
Sari>M) <IISO�u
Patem
M*M
-
21{ 19
(tartalle
Em
6 1S 7
DAMP >7RX) F{pV
Ape-19
swig
-
21im19
bi
Tiaamtr
(Y rRg ftmxn
O,10P>7sg' 'a"
Mr -19
Op -19
-
ZIF4>19
Tu1wvW
Sao
Sae FOT
fNIMD`Sat -75m Oryva
.ha>19
swt9
2VfeO19
BaWAhA
Tru�mer
f%dwraa 111
Sari W -M CyWaN Slam
Sw19
M1tr-31
-
19F4>19
Rena
Tramml
Tra®Ilaetla
Sar116Yi w
ARM
J m
-
19FeG19
Ntllalw FtlNanr
Tramse�
Tra Acts
Sm 165h Yfy15Ca Wval
F 19
x9 -19
-
15Ft>19
Source'. NSAetrotlau, Ma9an Stank, Research
Exhibit 42: MS Dayrate & Utilization Assumptions
Sourca: IHSPORReata, Ma9an Sanley Research
25
Environ.
Rig Type
2018
2019
2020
2021
2022
Benign
50° 9
35 0
6
25 0
25%
llblizahon
6
50' /p
600/6
600/c
650/6
75 "/p
P eG6+ G
o
60
500/6
650/6
65 0
Harsh
6G+
60%
80%
90"/0
9D° /p
900/6
BerxfYnark
Benign
Pre-6G
135
140
160
175
200
Dayrate
6G+
150
175
2DD
250
350
(SqA
Harsh
Pre6G
145
155
20D
230
730
6G+
160
250
330
400
400
Sourca: IHSPORReata, Ma9an Sanley Research
25
N
J^1
lf1 O O
N N N
O
h
W
o
O
O
N
rN
1D
N
`O
G
e
N
CO�f�(O�OO>
C
N
o 0 0 0 0
f0
r
N
E
MM
N N(('�7rrMc
N
41
o 0 0 0 0 o
e
0
r
CDC,),,
�
i
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u
a
J
Q
0Lfi 0000 Vr
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e
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r
L
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100
♦1
h
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N
r
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Morgan Stanley I RESEARCH
is Global Rig Count Forecast
Exhibit 45: Global Rig Count Forecast
UPDATE
Avg. Rig Count in Period
2012
2013
2014
2015
2016
2017
2018
2019E
2020E
2021E
2022E
US Land fans:
Horizontal
1,151
1,101
1,274
748
404
737
900
846
825
881
925
VerticaVDinectional
702
584
515
195
84
117
111
103
100
100
100
US Land
1,852
1,685
1,789
943
487
853
1,011
949
925
981
1,025
Canada Land
363
351
378
190
129
205
199
205
220
240
240
NAm Land
2,215
2,035
2,167
1,133
616
1,058
1,209
1,154
1,145
1,221
1,265
Intl Land Fags:
Middle East
1 309
329
360
356
340
343
351
368
386
398
410
Latin America
342
332
323
257
162
154
164
172
175
183
195
Asia/ Pacific
144
142
138
126
104
123
136
145
148
151
155
Africa
64
90
94
74
69
71
81
91
93
98
104
Europe
73
85
95
71
60
60
53
56
57
59
61
Int'ILand
931
978
1,011
884
734
750
785
832
860
888
924
hors Pori:
Floaters
244
258
262
225
162
131
126
135
142
155
170
Jackups
356
401
418
379
311
297
304
330
330
340
360
Global Offshore
600
659
681
604
473
428
431
465
472
495
530
Global Pig Count'
3,746
3,672
3,859
2,620
1,624
2,237
2,425
2,451
2,477
2,605
2,719
Se . Chan a
2012
2013
2014
2015
2016
2017
2018
2019E
2020E
2021E
2022E
US Land FaOs:
Horizontal
7%
(4 %)
16%
(41 %)
(46%)
82%
229/6
(6 9/6)
(3 9/6)
7%
59/.
VerticaVDirectional
(7 0/6)
(170/6)
(120/6)
(620/6)
(57 0/.)
390/.
(5 0/6)
(7 0/6)
(20/6)
US Land
1%
(9%)
6%
(47%)
(48 0/.)
75%
18%
(6 %)
(3 9/6)
69/6
4%
Canada land
149/6
39/6
8%
50%
32%
59%
3%
3%
7%
9%
—
NAm Land
1%
6%
6%
48%
46%
72%
14%
5° /a
1%
7%
40/6
Int'I Land Fans:
Middle East
22%
6%
10%
(1 0/6)
(4 %)
1%
2%
5%
5%
3%
30/.
Latin America
1%
(3 0/.)
(3 0/6)
(20 0%)
(37 0/6)
(5 0/6)
60/6
50/.
2%
4%
70/6
Asia /Pacific
(4 %)
(1 %)
(3 0/0)
(90/0)
(18 0/.)
18%
11%
7%
2%
2%
3%
Mica
25%
400/6
5%
(229/6)
(79/6)
3%
150/6
139/.
29/.
5%
6%
Eu
4%
189/6
12%
260/6
15%
0%
113%
5%
3%
2%
3%
Int'ILand
8%
5%
3%
13%
17%
2%
5%
6%
31/0
3%
4%
Offshore laps:
Floaters
150/0
6%
29/.
(14 9/6)
(289%)
(199/6)
(4 9/6)
79/.
59/.
9%
10%
JackU
9%
12%
4%
90/6
18%
50/6
30/6
8%
—
3%
6%
Global Onshore
12%
100/6
3%
11%
22%
10%
1%
8%
1%
5%
7%
Global Rig Count'
3%
2%
5%
32%
30%
23%
8%
1%
1%
5%
4%
tdiimm IH Pemamata, R,a.d Energy taker Hughes, NuaTester, Land Rig Newslettey Canpany°ata! dory., Stanley Res eamh estimates. *Note, Emluies China and Russia.
28
E
E
0
Morgan Stanley I RESEARCH
Oilfield Services Debt Tracker
Exhibit 46: Select OFS Debt Monitor (Covered)
BHGE
$1,250
2.773
12115'2022
99
`- '- "- -.--''
3%
Sr Unsecured
A3 I A-
SHGE
$1,348
3.337
12115/2027
95
4%
Sr Unsecured
A3 I A-
SHGE
$243
6.875
1/15/2029
119
"- ""^- -.-- -+
4%
Sr Unsecured
A3 I A-
BHGE
$1,146
5.125
9.'1512040
102
5%
Sr Unsecured
A3 I A-
BHGE
$1,350
4,080
1211512047
Be
"' -"��'
5%
Sr Unsecured
A3 j A-
GLB
$75
4.010
9130''2021
101
""'- '- -�.�'
3°.b
Sr Unsecured
NR I NR
GLB
$75
4 -110
9/3012023
102
4%
Sr Unsecured
NR I NR
CVIA
$1,642
6.349
6/112025
84
-.--.
Floating
Term Loan B
Ba3 `- ( Be
DO
$250
3.450
11 ?112423
84 - -
»"'" "'�*- -..- -+
7 %,
Sr Unsecured
B3 1 B
DO
$500
7.875
8/15/2025
93
9%
Sr Unsecured
B3 I B
DO
$500
5J00
1011512039
68
9%
Sr Unsecured
B3 I B
DO
$750
4.875
1l!712043
63
'- " "'- ""�.r --
8%
Sr Unsecured
B3 I B
FET
$119
4.054
7/112021
NA
Floating
Term Loan B
NR I NR
FET
$400
6.250
10!1/2021
89
""'"""""'^ -.
11 %
Sr Unsecured
B2 I B
FTSI
$121
7.530
411612021
100
+"-""
Floating
Term Lean B
B3) B
FTSI
$404
6.250
5/112022
96
7%
1st lien
B3I B
HAL
$500
3.250
11/1512021
101
' " ° "--- ----''
3%
Sr Unsecured
Baal I A-
HAL
$1,100
3.500
8/1/2023
101
-✓
3%
Sr Unsecured
Baal 1 A-
HAL
$2,000
3.800
11/15/2025
101
4%
Sr Unsecured
Baal I A-
HAL
$1,000
4.850
1 //1512035
103
5%
Sr Unsecured
Baal { A-
HAL
$800
6.700
9115:2038
122
' ""'-`- ".... " -•
S%
Sr Unsecured
Baal I A-
HAL
$1,000
7,450
9115x'2039
131
' ""°""' --.--+
S%
Sr Unsecured
Baal (A-
HAL
$500
4,500
11/15/2041
97
5%
Sr Unsecured
Baal ( A-
HAL
$900
4,750
$1112043
100
5%
Sr Unsecured
Baal ( A-
HAL
$2,000
5.000
11il5/2045
103
' - "'^^ -,.- -^
5%
Sr Unsecured
Baal l A-
HAL
$294
7,600
8/1512096
128
6%
Sr Unsecured
Baal IA-
HP
$487
4,650
311512025
103
4%
Sr Unsecured
Baal j BBB+
ICD
$68
7,003
1115;2020
NA
Floating
Term Loan 8
NR ( NR
ICE)
$130
10.308
101/2023
103
Floating
1L Sc Seed
NR I NR
N13R
$170
NA
711412020
NA
Floating
Unsecured
NR I NR
NBR
$683
5.000
9/1512020
101
4%
Sr Unsecured
B1 16H -
NOR
$696
4,625
91162021
98
-. ••"
5%
Sr Unsecured
81.I BB
NOR
$600
5.500
1/1512023
94
'®"'°".....
7%
Sr Unsecured
Bt 168
NBR
$347
5.100
9115,12023
89
' "' " "'"' " "` -.-- -•
8%
Sr Unsecured
B1 168
NOR
$575
0.750
1115£2024
71
'°-- °- -_.... -
8%
Sr Unsecured
Bt I Be
NOR
$800
5.750
2/112025
88
.%'
8%
Sr Unsecured
81188
NE
$93
4.625
3/112021
_
97
'^w�' -"`-•
6 °:°
Sr Unsecured
Caa2; 8
NE
$801
7.750
1115,2024
88
11%
SrUnseoured
Oaa2;B
NE
$450
7.950
411112025
86
11%
Sr Unsecured
Caa21 B
NE
$750
7 "875
26/2026
90
10%
Sr Unsecured
B3 I B+
NE
$394
6.200
8/112040
63
-- --,
11%
Sr Unsecured
Caa2 18
NE
$395
6 "050
311 ?2041
63
- ' °--.y
10%
Sr Unsecured
Caa2 18
NE
$484
5.250
3115`2042
62
+- -^-"'`- --"-.
9%
Sr Unsecured
Caa2 1 e
NE
$400
8.950
41V2045
80
11%
Sr Unsecured
Caa2 , 8
NOV
$1,400
2.600
121112022
97
3%
Sr Unsecured
Baal 1889+
NOV
$1,100
3.950
121112042
82
5%
Sr Unsecured
Baal 1 BBB+
OIS
$136 -
5.808
1/30/2022
NA
Floating
- Term Loan B
NR I NR
01$
$200
1.500
2115.12023
86
6%
Sr Unsecured
NR I NR
PDS
$166
6.500
1211512021
101
'-"' ✓
5%
Sr Unsecured
B3I BB-
PDS
$350
7.750
12`1512023
102
"""' " ^*.. -..-+
7 °%
Sr Unsecured
B3 I Be-
PDS
$351
5.250
1111512024
92
7 "%
Sr Unsecured
B3 1BB-
PDS
$400
7.125
111512026
98
7%
Sr Unsecured
B3 1BB-
&,,ce: Bl- berg, Morgan 9aniey Research eslimale5
29
E
C�
Morgan Stanley I RESEARCH
Exhibit 47: Select OFS Debt Monitor (Covered)
Im
Ticker
Srze -[$mm) Coupon Maturity
, -Cast
price
Price LTM
- YTM
Rank
Credit Rating°`
MQOdy s S &P-
PTEN
$300
4.970
10/512020
100
4%
Sr Unsecured
NR NR
PTEN
$300
4.270
611412022
101
4%
Sr Unsecured
NR ( NR
PTEN
$525
3.950
2112028
94
.--'°
5%
Sr Unsecured
Baa2 ( BBB
RIG
$229
6.500
1111512020
103
50%
Sr Unsecured
Caa2 B-
RIG
$265
8.375
12/1512021
105
"'" - -» - - -•
6°!
Sr Unsecured
Caa2 B-
RIG
$221
5.800
1011512022
97
7%
Sr Unsecured
Caa2 B-
RIG
$767
0.500
113012023
107
✓^" --- -«._..
-t%
Sr Unsecured
NR I NR
RIG
$1.050
9.000
711512023
105
7%
Sr Unsecured
Caal ( B
RIG
$709
5.875
111512024
101
5%
1st lien.
BI B+
RIG
$480
7.750
1011512024
105
60/
lst lien
NR B+
RIG
$500
6.250
121112024
102
50%
lst lien
NR B+
RIG
$567
6.125
81112025
101
✓'
6%
tat lien
Bt B+
RIG
$750
7.250
11/112025
95
✓"`
8%
Sr Unsecured
Caal ( B
RIG
$750
7.500
111512026
95
"" ~ . - - -+
8%
Sr Unsecured
Caal B
RIG
$550
6.875
21112027
103
6%
lst lien
Bi I B+
RIG
$588
7. 500
411512031
83
10%
Sr Unsecured
Caa2 B-
RIG
$1,000
6.800
311512038
76
9%
Sr Unsecured
Caa2 l B-
RIG
$300
9.350
12115,12041
92
- . -+
10%
Sr Unsecured
Caa2 I 8-
SLB
$500
2.200
11120/2020
99
3%
Sr Unsecured
At I AA-
SLB
$1,600
3 -000
12/21/2020
100
-` -'
3%
Sr Unsecured
Baal I AA-
SLB
$500
4,200
1/1512021
102
3%
Sr Unsecured
AtIAA-
SLB
$600
4.200
1?1512021
102
3%
Sr Unsecured
At I AA-
SLB
$1.600
1300
91'1412021
101
3%
Sr Unsecured
Al I AA-
SLB
$1.000
2.400
81112022
98
•°- •. --+- -✓
3%
Sr Unsecured
At I AA-
SLB
$600
2.650
1120/2022
99
'---- ---✓`'
3%
Sr Unsecured
At I AA-
SLB
$850
3.625
12121/2022
101
3%
Sr Unsecured
Baal I AA-
SL8
$1,500
3.650
12'1/2023
103
3°!
Sr Unsecured
At AA-
SLB
$750
3.750
511/2024
101
3%
Sr Unsecured
BaalI AA-
SLB
$1:750
4.000
12121/2025
102
4%
Sr Unsecured
Baal I AA-
SLB
€600
1.000
211812026
102
✓'
1%
Sr Unsecured
At AA-
SLS
$850
4.300
5!1/2029
102
4%
Sr Unsecured
Baal ( AA
SLCA
$1,270
6.733
51112025
94
Floating
erm Loan B
Bl ( B+
SPN
$800
7.125
12/15/2021
92
10°%
Sr Unsecured
82 B+
SPN
$500
7°750
9115/2024
85
`°.
11%
Sr Unsecured
82 ( B+
WFT
$317
6.758
81151'2019
NA
-
Floating
2L Gtd Secd
NR G NR
WFT
$310
NA
7/13;2020
NA
Floating
Secured
NR j NR
WFT
$310
5.034
7/13/2020
95
'- 'w .
Floating
Term Loan B
NR 8-
WFT
$365
5.125
9/15/2020
64
- -' -'
17%
Sr Unsecured
Caa3 i CCC-
WFT
$750
7.750
611512021
89
14%
Sr Unsecured
Caa3 I CCC-
WFT
$1.265
5.875
7 1/2021
78
' -" °•.-
18%
Sr Unsecured
NR ( CCC-
WFT
$646
4.500
4/15/2022
65
20%
Sr Unsecured
Caa3 I CCC-
WFT
$750
8.250
6/15/2023
68
20%
Sr Unsecured
Caa3 ICCC-
WFT
$790
9.875
2115/2024
68
---- --
200/6
Sr Unsecured
Caa3 ( CCC-
WFT
$600
9.875
31112025
67
19%
Sr Unsecured
NR I CCC-
WFT
$453
6.500
8/112036
60
""' .....
12%
Sr Unsecured
Caa3 I CCC-
WFT
$461
7.000
3115!2038
58
13%
Sr Unsecured
Caa3 I CCC-
WFT
$463
6.750
9/1512040
57
12%
Sr Unsecured
Caa3 j CCC-
WFT
$375
5.950
4/15/2042
58
11%
Sr Unsecured
Caa3 ( CCC-
Source: Rlocvoheq, Morgan Mercer Research estimates
30
Morgan Stanley I RESEARCH UPDATE
® Valuation Methodologies and Investment Risks
The valuation methodologies we use vary as the earnings cycle develops. At the
(perceived) trough, we essentially want to answer the question, "how low could it go ?"
We favor an investment approach that has a bias towards value at this point. We assess
where the risk/reward is decidedly more attractive for accumulating longer term
positions using normalized earnings, price -to -book, price -to -sa Les, replacement cost and
net asset value. This "value " - oriented approach does carry the risk of being early. As the
earnings cycle begins to turn up, we use forward earnings multiples, price -to -book, price -
to- sales, and peak earnings analysis. The peak earnings analysis offers insight into what
the stock could be worth once the EPS revision phase of the cycle kicks in. For capital
intensive companies with identifiable asset values, we use net asset value and
replacement cost assessments, but also use EWEBITDA multiples and peak earnings
analysis. As the earnings cycle matures, momentum often overtakes value as the market
digests an onslaught of upward earnings revisions. While an asset value assessment is
still useful, it becomes more of a reality check. At this stage, forward consensus earnings
begin to narrow the gap with peak earnings assumptions, and a typical forward multiple
is placed on these "best case' pricing and utilization scenarios for services and equipment
stocks alike.
Investment Risks
® The OIL Services, Drilling and Equipment industry is one of the most volatile and
unpredictable Industries in the "old economy." The main investment risk is the overall
health of the global economy, although with particular interim risk exposure to the
fiscal and geopolitical uncertainties in areas including, but not Limited to the Middle East,
Latin America, Russia, Southeast Asia, and West Africa. In North America, E &P spending is
highly susceptible to changes in oil and natural gas prices, more so in the short-run than
any other region due to the dominance of the spot market and independents.
Main Investment Risks include
• The health of the global economy and its impact on the global demand for oil
and natural gas.
• Merger and acquisition activity among operators typically has a negative impact
on spending budgets.
• Capacity expansion in Long -lived assets such as marine seismic, pressure pumping
equipment, and drilling rigs, particularly speculative newbuilding.
• Changes in fiscal terms (taxes) on oil and natural gas production in the major
drilling basins including, but not Limited to the Gulf of Mexico, Venezuela,
Mexico, Brazil, Argentina, North Sea, West Africa, Southeast Asia, Russia, and the
Middle East.
• Adoption of new technology is often slow in the oilfield. There is meaningful risk
to companies whose success is predominantly dependent upon a single new
® technology and the acceptance of that technology.
31
C
•
I
Morgan Stanley I RESEARCH
Exhibit 48: Valuation Methodologies and Investment Risks
Price Target iVletho"ogy - oil Services
Valuation wed on -11.Ox EWFBFFDA mar 2919E Rase Case EBITDA a -33x P/E mar 2019E base rase EPS.
H4L Our valuation is above the longterm average of 7-8c and more in linevith the higerd of the historic range, as we
nvnerntim Gilding in 2H19 into 2020. Key risks include picing byre, particularly in Wvn undisciplined project
bidding, failure to deliver FCF generation goals, and eyclid/cerrrrody price Fisk
Valuation based on -9.Ox EV/EBfIDA mar 2019E Base Case EB17DA Valuation reflects a mxe+omeload -6.5x
VvFT EV/FBFTDAon cur 2020E base � EBTDA WFTS EBITDA expands to a-$1B n"e ty2H19, and further in 2020
as mstaAtirg efforts lade in. Risks include hgh firerdal lem ge, market et share Ions, inability to execute on
trarsicrrretim plan, and cydird/ca*rrodity price risk
Vahetiorm basal on -25.Cx EV/EBITDAon our 2019E Base Case EBITDA or -37x P/E mar 2019E EPS. We see
CLB sustained high multiples as likely as visibility on yoW gmMh increases. Key risks induce market share less, pricing
pressure, mltiple mrn ressm due to lower FCF mn vesim than e>rpxted, and gdical/con rodity price risk
Valuation based on -S.Ox EV/EBM)Aon or 2019E ease Case EBTDA or -4.Ox EV/EBITDA mar 2020E ease Case
FRAC EBTDA Key risks include (1) ueGlity to ezeeAe Wth larger asset base, (ii) reputatiaW risk due to prior TCW
uderperformace, and (iii) input cost inflation.
Valuation based on -7.5x EV/EBITDAon w 2019E Base Case ®RDA a-6.Ox EV/EBFrDA on our 2020E Base Case
LBRT EBTDA Key nsks include frac demand surprises to the dwrside, cost inflation if firm sand exparsions are unable to
meet demand, exaction nsk and cannodity/oldiral risk
Valuation based on -7.5x EV/EBRDA mar 2019E Base Case EBITDA or-4.Ox EV/EBITDAon our 2020E Base Case
SHE T ®ITDA Those n/tiples are lover than odor annoetonserAcs sods to reflect SH E's relatively loner ligricity and
higher volatility. Key risks udude Canadian EEPS s+itc ing to local sand so rcirg, Caedm vell eoonorrics hurt by
Won gas wesuppy, and targeting of the Canadian malet by orrentiy US-focused sand sppkiers .
Valuation based on -6.Ox EV/EBiiDAon our 2019E Base Case EBTDA or -5.5x EV/EBRDA mar 2020E Base Case
SPN EBTDA SPNs 2019 multiple is beady in fine WM odic completion serArPS storls. Key risks to our PT include industry
o erstpoy peventrg a meanngf l awnings recovery as activity mloo -cs, irfenafimal ex utcn nsk hgh financial
leverage, and cyclic risk
Snu¢c. Mom„an Slanky Reseam6
32
Morgan Stanley I RESEARCH
Exhibit4g: Valuation Methodologies and Investment Risks
® , . d . Il lln Price Target Methodology - Oil Services
FP
woowx�ui'�..i yamw po4.uwq J v Je'...y
II InterrCJtif7� eXBQdlon and nl t0 FPS kiwiend
Pressue, f> r�k f...)
Valuabon used on -7.5>< EV/EBfTL14 on err 2019E Base Case EEIiL1A T?ns Is in line vitlt the typical "rridcyde " "�
ICD mitiple vs. peas. Key risks include market weakness riot alloWng nei bild rigs, agg, ssive bidding behavior by peers,
PDS EBITDA PD5s 2019 ntAtiple is broadly in line Wth the typical "n-idcyde" multiple vs. peas. Key risks to err Pi include
Ticker Offshore Drillers
Our Pi is bared on a nidlyde value of $13share, disco riled 1 year. Our nidcycle value is based on -8.5c EV/EBITDA
based on nidcyde EBITDA of - $SGIXvM We see increased visibility of inp oved earrings rasing stocks to oismud a
DO 2020 mdcyde ernrirorrrent, vhich vs discount back one year to our 12 -18 mo. Fi horbm. lkty risks include market
share loss, inability to market older assets, customer contract cancellations, aggnessive bidding behavior by Competitors,
arci r%rJiral /mrtrodity nice risk.
® .....^^__ beftavlabyoortpetitorSandcyrilral /Nrmo3typnoansk `s
Ctr PT is based on a rridcyde value of $15rsfwe, discounted 1 yea. O r mdcy cle value is based on -7 Ox EV/EBITD4
based on mcicycle EBITDA of - $2.8B. Vkk see irueased visibility of improved earrings causing stocks to discount a
RG 2020 nidcyde erm orrrvt, vhich %e discount back one year to our 12 -18 rrn. Pi horimn. Key risks include market
share lass, inability to m3W older assets, fnvrclal leverage, Customer Contract cancellations, aggressive liddrg
-..... beFua"ior by con petitas, and cyclical /cormndity price risk ---------
Source: Morgan Sranky Research,
E
33
Morgan Stanley I RESEARCH UPDATE
For valuation methodology and risks associated with any price targets referenced in this
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("Weatherford') in relation to their subsidiary's definitive agreement to sell their land
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Iraq to ADES International Holding Ltd, as announced June 17, 2018. The proposed
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that ore contingent upon the consummation of the proposed transaction. Please refer to
the notes at the end of this report.
J
34
Morgan Stanley I RESEARCH UPDATE
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ha a not received ant will not receive direct or indirect compensation in exchange for expressing specific recommendations or views In this report: Connor
Lynagh.
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As of February 2B, 2019, Morgan Stanley beneficially awned 1 % or more of a class of canon equity securities of the fdlowing companies covered in Morgan
Stanley Research: Aker Solutions ASA, CGG Veritas, Hunting PLC, Petmfac, U.S. Silica Holdings, Inc., Vallourec, Weatherford International PLC, Weir
Group PLC, Wood Group.
Within the last 12 months, Morgan Stanley managed or co- managed a public offering (or 144A offering) of securities of Baker Hughes A GE Co, Keane Group
Inc, Nabors Industries Inc., Petroleum Geo Services, Schlumberger NV, Transocean Ltd., Wood Group.
Wthin the last 12 months, Morgan Stanley has mceived compensation for imestment banking services from Baker Hughes A GE Co, C&J Energy Services
Inc, Helmerich & Payne Inc, Liberty Oilfield Services Inc, Nabors Industries Inc., Schlumberger NV, T2reocean Ltd., U.S. Silica Holdings, Inc., Weatherford
International PLC.
In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from Baker Hughes A GE Co, Bar
Drilling Ltd, C&J Energy Services Inc, OGG Veritas, Coma Holdings Corp, Diamond Offshore Dulling Inc, Uil Quip Ina., Forum Energy Technologies Inc, FTS
®International Inc, Hallibuton Co, Helmerich & Payne Inc, Hurting PLC, Independence Contract Dulling, Inc., Keane Gmup Inc, liberty Oilfield Services Ina,
Nabors Industries Inc., National Oilwell Vamo Inc., Noble Corporation PLC, Oil States International Inc., Patterson-UT Energy, Petroleum Geo Services,
Saipem, SBM Offshore, Schlumberger NV, Subsea 7, Superior Energy Services Inc., TECHNIPFMC, Tenaris SA TGS -NOPEC Geophysical Company AS&
TMK PAO, Transocean Ltd., U.S. Silica Holdings, Inc., Vallourec, Weatherford International PLC, Weir Group PLC Wood Crap.
Within the last 12 months, Morgan Stanley has received compensation for products and services other than investment banking services from Baker Flgnes A
GE Co, CGG Veritas, Liberty Oilfield Services Inc, Noble Corporation PLC, Pertmfac, Petroleum Geo Senices, Schlumberger NV, Superior Energy Services
Inc., TECHNIPFMC, Transocean Ltd., U.S. Silica Holdings, Inc., Weatherford International PLC.
Within the last 12 months, Morgan Stanley has prodded a is priding investment banking senices lo, or has an investment banking client relationship with,
the following company: Baker Mxjres A GE Co, Bar Drilling Ltd, C&J Energy Services Inc, OGG Veritas, Coda Holdings Corp, Dianxnd Offshore Drilling Inc,
Dril Quip Inc., Faun Energy TwInnolgpee Inc, FTS International Inc, Hallibuton Co, Helmerich & Payne Inc, Hurting PLC, Independence Contract Drilling,
Inc., Keane Group Inc, Liberty Cilfield Services Inc, Nabors Industries Inc., National Oilwell Vamo Inc., Noble Corporation PLC, Oil States International Inc.,
Patterson -UTI Energy, Petroleum Geo Services, Saipem, SBM Offshore, Schlumberger NV, Subsea 7, Superior Energy Services Inc., TECHNIPFMC, Tenaris
S.A, TCS -NOPEC Geophysical Company ASA, TMK PAO, Transocean Ltd., U.S. Silica Holdings, Inc., Valloumc, Weatherford International PLC, Weir Gnxp
PLC, Wood Crap.
Within the last 12 moths, Morgan Stanley has either pmided or is presiding ran- irvestment banking, secunties-related smites to ardor in the past has
entered into an agreement to provide services or has a client relationship with the following company: Baker Hughes A GE Co, CGG Verilas, Hallitwton Co,
Liberty Oilfield Serdces Inc, Nabors Industries Inc., Noble Corporation PLC, Petrofac, Petroleum Geo SeNces, Schlumberger NV, Supeua Energy Services
Inc., TECHNIPFMC, Transaean Ltd., U.S. Silica Holdings, Inc., Weatherford Intematiorel PLC.
Morgan Stanley & Co. LLC makes a market in the securities of Baker Hughes A GE Co, Diamond Offshore Drilling Inc, Dril Quip Inc., Forum Energy
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Inc., Patterson-LIT Energy, Precision Drilling Corp, RPC, Schlumberger NV, Superior Energy Services Inc., TECHNIPFMC, Tennis S.A, Transocean Ltd,
U.S. Silica Holdirgs, Inc., Weatherford International PLC.
Morgan Stanley & Co. International plc is a corporate broker to Wood Group.
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STOCK RATINGS
®Morgan Stanley uses a relative rating system using terns such as Ovenwaight, EqualAkeigN, Not -Rated or Underweight (sea deflnitio s below). Morgan
Stanley dos not assign ratings of Buy, Hold a Sell to the stocks we cover. O.ekweight, Equat - weight, Not -Rated and Urdenweight are not the equivalent of
buy, hold and sell. Investors should carefully read the definitions s of all ratings used in Morgan Stanley Research. In addition, since Morgan Stanley Research
contains rrae complete information concerning the analyst's views, investors should carefully mad Morgan Stanley Research, in its entirety, and rat infer the
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35
Morgan Stanley I RESEARCH UPDATE
Global Stock Ratings Distribution
®(as of February 28, 2019)
The Stock Ratings described below apply to Morgan Stanley's Fundamental Equty Research and do not apply to Debt Research produced by the Finn.
For disclosure purposes only (in accordance with NASD and NYSE requirements), we include the category headings of Buy, Hold, and Sell alongside our
ratings of Overwveight, Equal - weight, Not -Rated and Underweight. Morgan Stanley does not assign ratings of Buy, Hold a Sell to the stocks we cop'.
Overweight, Equal- weight, Not -Rated and Underweight are not the equivalent of buy, told, and sell but represent recommended relatve weightings (see
definitions below). To satisfy regulatory requirements, we correspond Overweight, our most positive stock rating, with a buy recommendation; we correspond
Equal -weight and Not -Rated to hold and Underweight to sell recommendations, respecti%dy.
COVERAGE UNIVERSE INVESTMENT BANKING CLIENTS (IBC)
STOCK RATING COUNT %OF COUNT %OF %OF
CATEGORY TOTAL TOTAL IBC RATING
CATEGORY
OTHER MATERIAL
INVESTMENT SERVICES
CLIENTS (MISC)
COUNT %OF
TOTAL
OTHER
Ize
Overweight/Buy
1115
36%
296
420/6
27%
526
38%
Equal- welght/Hold
1379
44%
325
460/6
24%
639
4616
Not- RatedfHold
46
1%
6
1%
13%
6
00/0
Underweight/Sell
585
19%
82
120/9
140/6
225
160/6
TOTAL
3,125
709
1396
Data include common stock and ADRs currently assigned ratings. Irnestment Banking Clients are compares from vAx n Morgan Stanley received in estment
banking compensation in the last 12 months. Due to rounding off of decimals, the percentages praided in the "% of total" column may not add up to exactly
100 percent.
Analyst Stock Ratings
Overweight (0). The stock's total return is expected to exceed the average total return of the analyst's industry (a industry team's) co%erage universe, on a
risk - adjusted basis, oe the next 12 -18 months.
®Equal -weight (E). The stock's total return is expected to be in line with the average total return of the analyst's industry (or inch stry team's) coverage unlverse,
on a risk- adusted basis, oar the next 12 -18 months.
Not -Rated (NR). Currently the analyst does not have adequate corn fiction about the stock's total return relative to the average total return of the analyst's
industry (or indrstry team's) coverage unxese, on a nskad)usted basis, over the red 12 -18 months.
Underweight (U). The stock's total return is expected to be below the average total return of the analyst's industry (a industry teams) coverage universe, on a
nskadjusted basis, over the next 12 -18 months.
Unless otherwise specified, the time frame for pace targets included in Morgan Stanley Research is 12 to 18 months.
Analyst Industry Views
Attractive (A): The analyst expects the performance of his or her industry coverage universe own the next 12 -18 months to be attractive ws. the relevant broad
market benchmark, as indicated below.
In-Um (1): The analyst expects the perfar once of his or her industry coerage universe oar the next 12 -18 months to be in line with the relevant broad market
benchmark, as indicated below.
Cautious (C): The analyst views the performance of his or her industry coverage universe over the red 12 -18 months with caution vs. the relevenl broad market
benchmark, as ineucated below.
Benchmarks for each region are as fellows: North America - S&P 500; Latin America - relevant MSCI country index a MSCI Latin America Index; Europe -
MSCI Europe; Japan - TOPX Asia - relevant MSCI country index or MSG sub - regional index or MSCI AC Asia Pacific ex Japan Index.
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36
Morgan Stanley I RESEARCH UPDATE
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Morgan Stanley I RESEARCH FDAT
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similar framework.
INDUSTRY COVERAGE, Oil Services, Drilling & Equipment
COMPANY(TICKER) RATING(/SOi) PRICE'(03AI82019)
E
E
Connor Lynagh
Baker Hughes AGE Cc (BHCEN)
C&J EnergySeMces Inc (CJ.N)
Cactus Inc CMD.N)
Core Laboratories NV(CLB.N)
Coma Holdings Corp (C1AAN)
Diamond Offshore Drilling Inc (DO.N)
061 Quip Inc. (DRO.N)
Forum Energy Technologies Inc(FET.N)
F'S International Inc (FTSI.N)
Halliburton Cc (HAL.N)
Helmench & Payee Inc (HP.N)
Independence Contract Drilling, Inc (ICD.N)
Keane Group Inc (FRAC.N)
LibertyOlfield Seruces InciLBRT.N)
Nabors Industries Inc. (NBR.N)
National Olwell \,bw Inc. (NO✓.N)
Noble Corporation PLC (NE.N)
Oil States International Inc. (OIS.N)
Patterson -UO Energy(PTEN.0)
Precision Drilling Corp (PDS.N)
RPC (RES.N)
Schlumberger NV (SLB.N)
Source EnergySermoas Ltd (SHLE.TO)
Superior Energy Services Inc. (SPN.N)
Transccean Ltd. (RIGN)
U.S. Silica Holdings, Inc. (SLCAN)
Weatherford Intemational PLC (WFT.N)
$25.73
$15.24
$36.51
$65.40
$4.30
$9.42
$39.13
$5.03
$8.70
$27.47
$52.81
$2.90
$9.40
$14.46
$3.20
$25.87
$2.64
$14.93
$12.76
$2.31
$9.67
$41.29
C$1.02
$4.09
$8.10
$13.46
$0.61
Robert Pulleyn
TECHNIPPIW(FT1.N)
0(01/142013)
$20.98
TECHNIPPKC(FT1.PA)
0(01/172017)
€18.74
Tenaris SA(TS.N)
0(03/162018)
$25.68
Tenaris SA(TENR.M)
0(04272018)
€11.40
Stack Ratings are subject to change. Please see latest research kx each company
' Historical prices are not split adjusted.
38
Morgan Stanley I RESEARCH
® INDUSTRY COVERAGE Oil Services
COMPANYMC103ij RATING(ASOF) PRICF(0310=019)
Igor l(mmin
TM(PAOCRWq.L) ++ $2.83
Lillian Starke
Aker Solutions ASA(ACSOLOL)
U(05/152018)
NKr 39.85
CGGVeritas(GEPH.PA)
E(11/072018)
ElIA9
Hunting PLC(HTG.L)
E(01/16/2019)
525p
Northern Drilling Ltd (NODL.CL)
E (1 2 /1 22 01 8)
NW 56.00
04ell Dulling Ltd (ODLLAL)
0(12/122018)
NKr 24.40
Petroleum Geo SeMces (PGS.OL)
0(02/21/2018)
NKr 16.92
SBM 08shore(SBMJAS)
U(01/162019)
616.61
Temicas Reunidas ORENC)
U (05/152018)
€23.04
TGSNOPEC Geophysical CompanyASA(TCS.CL)
U (05/302013)
NKr 227.50
Robert Pulleyn
Bon Dolling Ltd(BDRILL.OL)
0(121122018)
NKr 25.00
Petrofac(PFC.L)
0(011162019)
447p
Saipem(SPM.M)
0(121122016)
64.63
Subsea 7(SUSCCL)
0(09/05/2018)
NKr 104.75
Vallourec(M-LP.PA)
E(12/032018)
E2.15
'Abod Croup (NGL)
E(08212018)
544p
Vikhyat Sharma, CFA
Mw Energy PLC(WO.L)
0(11 /1 5 2 01 8)
133p
Stock Ratings are subject to charge. Please see latest research for each congrany
' Hstoucal prices are not split adjusted.
C 2019 Morgan Stanley
39
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