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PPG - Contractors 24/8/01 Preliminary Report AUPEC Survey WSCA.

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PPG - Contractors 24/8/01 Preliminary Report AUPEC Survey WSCA
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Page 1: PPG - Contractors 24/8/01 Preliminary Report AUPEC Survey WSCA.

PPG - Contractors24/8/01

Preliminary Report

AUPEC Survey

WSCA

Page 2: PPG - Contractors 24/8/01 Preliminary Report AUPEC Survey WSCA.

PPG - Contractors24/8/01

Gross Revenues as a % of 1998

60%

70%

80%

90%

100%

110%

1996 1997 1998 1999 2000 2001

UK

World Wide

EBITDA as a % of 1998

40%

60%

80%

100%

1996 1997 1998 1999 2000 2001

UK

World Wide

1. Over 5 years UK market has fallen from 5% to 3.9% of the global total

2. Slower recovery in earnings is indicative of pressure on margins

Page 3: PPG - Contractors 24/8/01 Preliminary Report AUPEC Survey WSCA.

PPG - Contractors24/8/01

UK Capital Investment

90

110

130

150

170

1996 1997 1998 1999 2000 2001

`

$MWorld Wide Capital Investment

2.0

2.5

3.0

3.5

4.0

1996 1997 1998 1999 2000 2001

`

$Bn

1. Capital investment in 2000 is 54% of 1998 peak with little improvement for 2001

2. Globally, drop was to 61% but has recovered sharply

Page 4: PPG - Contractors 24/8/01 Preliminary Report AUPEC Survey WSCA.

PPG - Contractors24/8/01

UK Ratio of NBV to GBV(8 WSCA members only)

0%

10%

20%

30%

40%

50%

60%

1996 1997 1998 1999 2000 2001

1. Decline in NBV/GBV from 57% in 1996 to 25% today is an alarming trend

2. The UK sector asset base is getting older (fully depleted within 2 to 3 years!)

Page 5: PPG - Contractors 24/8/01 Preliminary Report AUPEC Survey WSCA.

PPG - Contractors24/8/01

UK New Technology Spend

0

10

20

30

40

50

60

1996 1997 1998 1999 2000 2001

$M

World Wide New Technology Spend

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1996 1997 1998 1999 2000 2001

$Bn

1. Globally there was a modest 15% cutback in global spend.

2. However in the UK the drop was 42% and not recovering

Page 6: PPG - Contractors 24/8/01 Preliminary Report AUPEC Survey WSCA.

PPG - Contractors24/8/01

UKCS Employee's

6,000

7,000

8,000

1997 1998 1999 2000 2001

N.B. Exludes Co.'s that have expanded through acquisitions

% of UKCS Used for Intnl. Work

24%

26%

28%

30%

32%

34%

1997 1998 1999 2000 2001

1. Reduction in headcount recovering in 2001 as companies try and recruit

2. An increase from 27% to 32% of people based in the UK but working internationally

Page 7: PPG - Contractors 24/8/01 Preliminary Report AUPEC Survey WSCA.

PPG - Contractors24/8/01

Graduate Engineers

540560580600620640660680700720740

1997 1998 1999 2000 2001

Technicians (HND)

500

550

600

650

700

750

800

850

900

1997 1998 1999 2000 2001

1. Sharp decline through 1998 to 2000

2. Recruitment started, but experience level decreased in UKCS

Page 8: PPG - Contractors 24/8/01 Preliminary Report AUPEC Survey WSCA.

PPG - Contractors24/8/01

Surface Units

300

350

400

450

500

550

600

650

700

1997 1998 1999 2000 2001

Downhole Units

1,200

1,250

1,300

1,350

1,400

1,450

1,500

1,550

1997 1998 1999 2000 2001

1. Resource flight - 15% to 20%

2. Continuing

3. Helped with efficiencies; limited “stretch” left in the system

Page 9: PPG - Contractors 24/8/01 Preliminary Report AUPEC Survey WSCA.

PPG - Contractors24/8/01

Closing points:

1. Report will be factual, with no WSCA recommendations:• Financial performance of WSCA companies in the UKCS has suffered• Capital investment has dropped• Resource flight is proven

2. Published mid September, a full report with many other interesting comments.

3. WSCA will develop recommendations to coincide with release of report.

• The UKCS followed the world during the downturn. Will it recover as before?• Resources can return but at this time the UKCS appears unattractive.• With the expected increased work program through the end of 2001, can the

well services sector meet expected demand?


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