The Oil Sector

Covered Companies

Drilling Diamond Offshore (DO) Ensco Int’l INC (ESV) Global Santa Fe (GSF) Grey Wolf (GW) Nabors Industries (NBR) Noble Drilling (NE) Parker Drilling (PKD) Patterson – UTI Energy (PTEN) Rowan Companies (RDC) Transocean Inc. (RIG)

Oil Well Services and Equipment Baker Hughes (BHI) Cooper Cameron (CAM) Halliburton (HAL) Key Energy Service (KEG) McDermott International (MDR) Schlumberger LTD (SLB) Smith Int’l (SII)

Support Services BJ Services (BJS) Bouygues Offshore (BWG) Compagnie General de Geophysique (GGY) Dawson Geophysical (DWSN) Petroleum Geo-service (PGO) Seitel INC (SEI) Tidewater Inc (TDW) Veritas DGC (VTS)

Integrated Oil BP Amoco (BP) Chevron Texaco (CVX) ConocoPhillips (COP) ExxonMobil (XOM) Petroleo Brasileiro (PBR) Premier Oil (PMOIY) Royal Dutch/Shell (RD) TotalFina (TOT) Unocal (UCL)

Drilling

Bayard Drilling (BDI) (NBR)

Acquired by Nabors Industries in April 1999

· Half of their rigs operated in Oklahoma

· See Nabors Industries below

Cliffs Drilling (CDG) (FLC) (RIG)

Acquired by Transocean Inc.in December 1998

· Provided offshore drilling service and engineering management service specifically in shallow water

· Bought by RB Falcon in December 1998

· RB Falcon acquired by TransOcean Offshore for $5.53B

· See TransOcean Offshore below

Brokerage	Recommendation	Sentiment
Merrill Lynch
Smith Barney
JP Morgan

Diamond Offshore (DO) Houston , TX CEO James Tisch http://www.diamondoffshore.com/

· Deep, mid and shallow water drilling contractor

· Second largest deepwater fleet in the world

· 47 offshore rigs: 32 semi-submersible, 14 jackups, 1 drillship

· Nine rigs configured to work in ultra-deepwater depths of more than 5,000 feet

· Rigs in North America, South America, the UK, Africa, Asia, and Australia

· Focus and concentrating their future on deep water rigs

· Expects deep water to have higher utilization rates and higher dayrates than shallow and mid-water rigs going into the early 2000’s

· Subsidiary – Diamond Offshore Team Solutions (D.O.T.S) – Manages day work, turnkey drilling, and total project management services

· Diamond Offshore Deep Water Market:

· Gulf of Mexico – Has six deepwater semi-submersibles in the Gulf

· Brazil – Contracted by Petrobras – Have term contracts on three ship that go into 2004

· Southeast Asia – Seeing strong deepwater business (S.E. Asia is generally a mid-water depth market)

· 2003 - Represented roughly 45% of total annual revenue

· Diamond Offshore Mid-Water Semi-submersible Market:

· Gulf of Mexico – 10 mid-water semi-submersible rigs in Gulf and controls 50% of the market – expects the market to be “depressed” through 2003

· Brazil – Two semi-submersibles with 100% utilization – One with Shell Oil, one with Petrobras

· Southeast Asia and Australia – Three rigs

· North Sea – Four mid-water semi-submersibles

· Africa – “Market slow to develop”

· 2003 - Represented roughly 37% of total annual revenue

· Diamond Offshore Jack-up Market:

· Gulf of Mexico – 12 rigs and controls 10% of the market – focus on natural gas

· Indonesia

· 2003 - Represented roughly 15% of total annual revenue)

· Diamond Offshore fleet catalog

Brokerage	Recommendation	Sentiment
Goldman Sachs
JP Morgan
Prudential

Ensco International INC (ESV) Dallas TX CEO Carl Thorne http://www.enscous.com/

· Offshore oil and gas drilling contractor and marine transportation services – Predominantly a shallow water driller

· Operates in North and South America, Europe, West Africa, the Middle East, Asia Pacific and the Caribbean

Ensco Fleet: Current rig catalog

· 43 jackup rigs, 1 semi-submersible rig, 7 barge rigs, 5 platforms rigs, 27 transportation ships

· Built a 5th generation semi-submersible capable of drilling in 7,500 ft of water – completed in the 2nd half of 2000 and contracted to Burlington Resources

· Jackup rigs - Gulf of Mexico - 22 jackup rigs, Europe – 7 jackup rigs, Asia-Pacific – 12 jackup rigs, South America/Caribbean – 1 jackup rig

· Jackup rigs represent 78.2% of their total annual revenue in 2002

· Deep water semi-submersible – on contract until March 2004 in Gulf of Mexico

· Pull in 8.8% of total annual revenue in 2002

· Barges – 5 of the 6 are without contracts which are located in Venezuela and effected by the strike

· Contributed to 2.8% of total annual revenue in 2002

· Shell is only company under contract in Lake Maracaibo which expires October 2005

· Three are cold stacked as of November 2004

· Platform rigs – Since 1999 have experienced utilization in the 50% to 60%

· Contributed 3.0% of total annual revenue in 2002

· Marine Vessel and transportation – SOLD

· Contributed 6.96% of total annual revenue in 2002

Ensco General Info:

· Acquired Chiles Offshore – August 2002

· 2003 – Had an almost equal balance of jackup rigs committed to domestic and international markets

· Sold the Marine Vessel fleet to Tidewater in April of 2003 for $79M

· Sold due to weak Gulf of Mexico drilling activity and will cease operation of marine transportation after it sells the segment in 2003

· Revenue declined 25% and operating margin fell 70% in 2002 from 2001 – Due to lower average day rate in the Gulf of Mexico

Global Marine (GLM) (GSF) Houston, TX CEO Robert Rose http://www.glm.com/

· Merged with Santa Fe International – see Global Santa Fe below

· Provided contract drilling – provided fully manned, mobile drilling rigs

· Traditionally a shallow-water driller, increased its exposure to the strong deep water market in the late 1990’s

· Contracts include day rates, incentive drilling, integrated drilling service, and turnkey

· Only successful company in the Gulf of Mexico with turnkey operations - 1998

· Won a contract to provide a deepwater drilling ship to EXXON - Revenue of $208M over 3yr period, will work in 8000 feet of water, cost is $300M – 1998

· Designed ship for CIA in the 1970’s to retrieve a sunken Soviet sub north of Hawaii w/2 nuclear missiles – now the ship is used for deep water drilling in the Gulf – Texaco and Chevron are using it (Glomar Explorer)

· 33 mobile offshore drilling rigs – 23 jack-up rigs, 6 semi-submersibles, 3 drillships, 1 ultra-deep water (under construction) - 1999

· Divisions – Applied Drilling (Turnkey management) – Integrated Services (Turnkey management in Europe)

· TransOcean paid Global Marine $67.5M in a settlement dispute in 1999

· Merged with Santa Fe International for $3B – November 2001

· Will change name to Global Santa Fe

· Santa Fe’s largest shareholder is Kuwait Petroleum with a 38% stake – will be diluted to 20%

· C. Stedman Garber Jr. of Santa Fe will be the CEO

· Santa Fe mainly focuses on the Middle East and the North Sea

Brokerage	Recommendation	Sentiment
Morgan Stanley
JP Morgan
UBS

GlobalSantaFe (GSF) Houston, TX CEO Jon A. Marshall www.gsfdrill.com

· Formed November 2001 with the merger of Global Marine and Santa Fe International for $3B

· Offshore and land drilling contractor - Second largest contract driller in the world

· Drilling operations in Gulf of Mexico, the North Sea, Eastern Canada, West Africa, the Middle East, the Mediterranean, South America, and Southeast Asia

· Land rigs are located in Saudi Arabia, Kuwait, Egypt, and Venezuela. These rigs are specially equipped to operate in remote areas – Include facilities necessary to support living and working in a harsh environments

GlobalSantaFe Divisions:

· Engineering Services and Project Management Division: Extended Reach Drilling, Underbalanced Drilling, High Pressure-high Temperature Drilling, Subsea Engineering, Completion and Testing

· Turkey Services Division – Through subsidiary Applied Drilling Technology – Drills wells for a specified price and at a specified depth

· Geosciences Services Division – Through subsidiary Challenger Minerals (CMI) – Screener of oil and gas prospects in the Gulf of Mexico and the North Sea

GlobalSantaFe Fleet:

· 58 mobile offshore rigs and 31 land rigs

· 45 jack-up rigs, 8 semi-submersibles, 1 ultra deep water semi-submersible, 1 platform, 1 moored drillship, 3 dynamically position ultra deep water drillship

· Operates 11 platform rigs for other companies

· Current GlobalSantaFe Fleet Info

GlobalSantaFe General Info:

· Dayrate rig contracting represents more than 80 percent of operating cash flow

· Has partnership with Caspian Drilling with two semi-submersible drilling units in Caspian Sea

· Had the strongest balance sheet in the offshore drilling sector in 2002

· Expecting independent companies to become more active in the North Sea thus improving their turnkey operations in the area – but expecting continued weakness in the North Sea

· Old CEO - C. Stedman Garber Jr

· 2002 Stats:

· Contract drilling represented 80% of revenue, Drilling Management services (ADTI) represented 19% of revenue

· Average rig utilization: marine - 89%, land - 69%

· Average day rate: marine - $72,400, land - $17,100

· 2002 Contract drilling revenue by area:

· North Sea – 28%, Gulf of Mexico – 21%, West Africa – 12.9%, Middle East – 10.7%, Southeast Asia – 7%, South America - 5%, Other – 14%

· Operating profit margin for contract drilling for 2002 was 22% - was 35% in 2001 – loss due to addition of land drilling operations which have lower margins

· ExxonMobil accounted for 13.3% of revenue in 2002

· Backlog – At December 31,2002 – has $1.2B and included $132.2M attributed to customer commitments for which contracts had not yet been executed

· 2003 Stats:

· 70% of contract drilling revenue derived from the major or super major oil and gas companies

· Average rig utilization: Marine 85%, land 53%

· Average day rate: marine - $65,900, land - $16,400

· Backlog – The company’s contract drilling backlog at December 31,2003, was %996.6M, consisting of $930.8M related tot executed contracts and $65.8M related to customer commitments for which contacts had nor yet been executed as of December 31,2003. Approximately $513.7M of the backlog is expected to be realized in 2004.

· 2003 – Total provided $234.2M of contract Drilling and ExxonMobil with $231.6M - Each accounted for more than 10% of consolidated revenue in 2003 individually

· Selling its land drilling assets to Precision Drilling for $316.5M – April 2004

· Includes 31 land rigs in the Middle East, North Africa and South America

· With the sale of their land rigs, Global Santa Fe just focusing on offshore operations

Brokerage	Recommendation	Sentiment
B of A Securities
RBC Capital Mkts
Deutsche Sec.

Grey Wolf (GW) Houston, TX CEO Thomas Richards http://www.gwdrilling.com

· Focused primarily on onshore Natural Gas Drilling in the US

· 90% of the wells drilled from 1998-2002 by GreyWolf were targeted for natural gas

· 127 land drilling rigs - two-thirds of rigs capable of drilling 15,000 feet or deeper

· November 2004 – 99 in operation, 13 cold-stacked, 15 in inventory

Grey Wolf General Info:

· Grey Wolf Rig Utilization:

· 2002 rig utilization - 55 rigs under contract – 47%

· Feb 2003 – 73 under contract – 63%

· 2003 (full year) - 61

· November 2004 – 99 under contract – 78%

· Contract drilling – 45% of revenue from major oil and gas producers – 55% from independents

· Turnkey business contributed to 20% of company’s operating margin

· Projects in Gulf Coast, Ark-La-Tex, South Texas, West Texas, Wyoming, Mississippi and Alabama – Largest concentration of rigs in Ark-La-Tex region

· Only two profitable years since 1991 being in 1997 and 2001

· Acquired New Patriot Drilling Company for $16.3M and 4,610,480 shares of Grey Wolf Common Stock – March 2004

· Patriot has a feet of ten drilling rigs in the Rocky Mountain region

Marine Drilling CO (MDCO)(MRL) (PDE) Sugar Land, TX CEO Jan Rask www.prde.coml

· 18 offshore rigs

· Specialized in shallow-water jack-up rigs

· Merged with Pride International for $2B – September 2001

· Combined will have 77 offshore rigs and 246 land rigs

· Will keep the Pride name

· See Pride International below

Brokerage	Recommendation	Sentiment
Lehman Brothers
Deutsche Sec.
Smith Barney

Nabors Industries (NBR) Houston, TX CEO Eugene M. Isenberg www.nabors.com

The largest onshore drilling contractor in the world

Focus on Contract Drilling and Manufacturing and Logistics

Nabors Industries Units:

· Sea Mar

o 30 Offshore marine transportation vessels

o From Pool Energy

· Peak USA

o Rig moving, Site construction, Custom heavy hauling, Hot Shot service, Rigging

· Canrig

o Top drive drilling systems

· Epoch

o Well site information Services

· Pool Well Services

o Fluid handling, well service

· Land Drilling

o Daywork, Footage, Turnkey

· Offshore Drilling

o 43 platform, 16 jack-up, 3 barge rigs

· International

o Algeria, Saudi Arabia, Congo, Colombia, Ecuador, Trinidad and Argentina

Nabors Industries General Info:

· Largest land drilling contractor in the world with almost 600 land drilling rigs

· 500 Land rigs, 1100 land workover rigs, 43 offshore platforms, 16 jackups, 3 barges

· Well servicing and workover contracts

· Manufacturing and Logistics Unit includes marine transportation and supply services, top drive manufacturing, directional drilling, rig instrumentation and software, and construction and logistics operations

· Acquired Pool Energy Service and Bayard Drilling in 1999

· Currently in the S&P 500

· Acquired Ryan Energy Technology October 2002 – Ryan manufactures and sells directional drilling and rig instrumentation and data collection

· 2002 Stats:

· Contract Drilling – 91.8% of total revenue

· US Land Drilling – 33.6%

· US Land Well –servicing – 21.6%

· US offshore – 7.8%

· Canada – 10.4%

· International – 23.5%

· Manufacturing and Logistics – 11.8% of total revenue

· Gross margin of 34% - Was 38% in 2001

· Under Investigation for Blow-out Spills (Accidental release of hydrocarbons and gas out of a well) and falling to report it. Occurred in Prudhoe Bay, Alaska in July of 2003 and again in December of 2003 on a BP well

Brokerage	Recommendation	Sentiment
Prudential
UBS
Lehman Brothers

Noble Drilling (NE) Houston, TX CEO James C. Day http://www.noblecorp.com/

· Focus on deepwater offshore drilling with water depths greater than 5000 feet especially in the international market

· In 1999 had 30% of the global deep water semi-submersible fleet

Noble Drilling General Info:

· 75% of their fleet is in International markets – August 2003

· Markets include North Sea, Brazil, West Africa, the Middle East, Mexico and India

· Fleet of 59 mobile offshore drilling units

· 49 offshore rigs (9 Semi-submersibles, 3 Drill ships which are all in Brazil, 40 Jackup Rigs, 3 submersibles)

· 2002 was Noble’s second best year in company history from a financial standpoint

· 2002 Stats:

· International drilling contributed 65% of revenue and 86% of net income in 2002

· Rig utilization – Offshore International – 95% - Domestic 84%

· Acquired Welldone Engineering for $5.75M – Makes downhole technology tools – A rotary steerable drilling system called Well Director which improves accuracy and performance of directional drilling activities

Brokerage	Recommendation	Sentiment
AG Edwards
Jefferies & Co.

Parker Drilling (PKD) Tulsa, OK CEO Robert Parker Jr. http://www.parkerdrilling.com/

· Drilling rigs, labor management, and rental tools

· Drilling predominantly focused in transitional zones – Shallow water with depths of five feet to 25 feet

Parker Drilling Fleet: - 2003

· Has 33 drilling rigs in the US (Gulf of Mexico) and 46 internationally

· US barge rigs – 22

· US platform rigs – 2

· US jackup rigs – 7

· International land rigs – 41

· International barge rigs - 5

Parker Drilling Acquisitions:

· Acquired Mallard Bay Drilling

· Acquired Hercules Offshore Corp, and Hercules Rig Corp

· Acquired Quail Tool Rental – provides rental tools used on offshore and land rigs

· Acquired Bolifor – land drilling rigs located in Bolivia

Parker Drilling General Info:

· US rig fleet specializes in the transition zones and offshore water of Gulf of Mexico (One of two companies in the US with abilities in the Gulf of Mexico transition zone – transition zone five to 25 feet of water depth)

· International rig fleet has barges in the Caspian sea and Nigeria with land rigs in 12 countries

· Once operated exclusively on land, now has positions in the offshore market through several mergers

· Plans to focus on offshore drilling especially in international markets where margins are higher

· In 1999 – 10% of their revenue came from Shell Petroleum Development Co. of Nigeria which used their equipment

Brokerage	Recommendation	Sentiment
Merrill Lynch
Morgan Stanley
Prudential

Patterson – UTI Energy (PTEN) Snyder, TX CEO Cloyce Talbott http://www.patenergy.com/

· Second largest provider of onshore contract drilling services (Second only to Nabors)

· Focus on domestic land drilling in Texas, New Mexico, Oklahoma, Louisiana, and Utah

Patterson-UTI Energy Segments:

· Onshore Contract Drilling Services

· Drilling and Completion Fluid Services

· Pressure Pumping Services

Patterson-UTI Energy Fleet: 2003

· 340 land-based drilling rigs operating in oil and natural gas regions of Texas, New Mexico, Oklahoma, Louisiana, Mississippi, Utah and Western Canada (Alberta)

· 9 rigs in New Mexico, 62 rigs in West Texas, 5 rigs in North Texas and Oklahoma, 11 rigs in East Texas, 17 rigs in South Texas

Patterson-UTI Energy General Info:

· Merged with UTI Energy for $1.1B – May 2001

· Became the 2^nd largest owner of land based drilling – 2^nd only to Nabors

· Patterson’s CEO, Cloyce Talbott, will be the reigning CEO

· Will have 286 combined drilling rigs in the US and 16 in Western Canada

· As of Jan 2002 has 319 land based rigs

· 2002 Stats:

· 2002 rig utilization 39%. In 2001 was 70%

· Segments:

· Drilling contributed to 77.7% of total revenue in 2002

· Drilling and completion fluids – 13.2% of total revenue in 2002

· Pressure Pumping – 6.2% of total revenue in 2002

· Oil and Natural gas – 2.7% of total revenue in 2002

· December 2005 – CFO Jonathon Nelson busted for embezzling over $69M from the company

Brokerage	Recommendation	Sentiment
Goldman Sachs
Morgan Stanley
Bear Stearns

Pride International (PDE) Houston, TX CEO Paul Bragg www.prde.com

· Onshore and offshore drilling contractor

· Merged with Marine Drilling Company – September 2001

· 328 total rigs

· 2 Ultra deep water, 12 semi-submersible, 35 jackups, 29 tender assist barge and platform rigs, 250 land based drilling and workover rigs

· San Antonio – Pride subsidiary – Provides oilfield services to Argentina, Venezuela, Bolivia and Peru - www.sanantonio.com.ar

· 2002 stats:

· Gulf of Mexico – Produced 14% of total revenue with a gross margin of 6.4%

· International Offshore – Produced 53% of total revenue with a gross margin of 78.6%

· International Land - Produced 26% of total revenue with a gross margin of 26%

· E&P Services - Produced 6% of total revenue with a gross margin of 4.9%

· 2003 – 16 rigs under contract with Pemex in Mexico

· Sold its Latin American land drilling business and E&P Service unit for $1B to GP Investments – a Brazilian private equity firm – August 2007

· The two units had $823.9M in 2006 revenue with 73 land-rigs and 135 workover rigs and two lake drilling barges

· Pride is focusing on reforming itself into a premium off-rigs supplier

· Upgrading its deepwater fleet

· With the sale of its land drilling business, Pride is almost exclusively an offshore Driller

· Only land based rigs are five in Chad and one in Kazakhstan and one in Pakistan

RB Falcon (FLC) (RIG) Houston, TX CEO Paul Loyd Jr. http://www.rbfalcon.com/

See TransOcean Offshore below

· Was the industries largest oil and natural gas most diversified offshore drilling company in late 1990’s

· Operated the worlds largest fleet of marine based drilling rigs servicing international oil and gas

· Formed in 1997 with merger of Reading & Bates Corp. and Falcon Drilling

· Divisions: Reading & Bates Development Co. (DEVCO), Raptor Exploration, Cliffs Oil and Gas, Cliffs Drilling (Daywork and turnkey drilling and management services), Total Offshore Production Systems (TOPS) – complete field development and turkey management services, R&B Falcon Marine

· R&B Falcon Marine – 102 tug boats, 4 crew boats, 58 barges

· 3 submersibles, 10 semi-submersibles, 26 jackups, 2 self erecting tenders, 1 floating production vessel, 1 special purpose vessel, 12 deepwater drillships, 33 inland barges (lakes and swamps), 15 work over rigs

· Bought Cliffs Drilling in December 1998 – to venture in shallow water operations

· Acquired by TransOcean Offshore for $5.53B, December 2000 – Will be the 3rd largest oil service company in the world

Brokerage	Recommendation	Sentiment
Prudential
CSFB
JP Morgan

Rowan Companies (RDC) Houston, TX CEO C. Palmer http://www.rowancompanies.com/

Three Divisions:

1. Offshore and Land Drilling

· Drilling Segment contributed to 58% of Rowan’s 2002 total revenue

· 21 jackup rigs in the Gulf of Mexico, one in the North Sea, One in eastern Canada

· 18 deep-well land rigs with 67% utilization in 2002

· 90% of drilling revenue from the US – 5% from Eastern Canada, 5% from the North Sea

2. Le Tourneau INC. – heavy manufacturing www.letourneau-inc.com

· Mining – Makes Front-End Loaders and Trucks used in mining industry

· Steel making – Mini-steel mill - Carbon, Alloy, and 400 series stainless steel

· Forestry – Log Stackers, and jib cranes

· Marine – Makes jackup rigs – 35% market share – produces five different varieties

· Mud pumps

· Intermodal – Single Beam Straddle Hoists and Letro Proters

· Contributed to 19% of Rowan’s 2002 total revenue

· 51% of revenue from Le Tourneau in 2002 was from equipment manufacturing

· 15% of revenue from Steel

· 35 % from Drilling products

3. ERA Aviation www.era-aviation.com

· Helicopters, aircraft and aviation services

· Contributed to 23% of Rowan’s total revenue

Brokerage	Recommendation	Sentiment
Prudential
Merrill Lynch
JP Morgan

Transocean Inc. (RIG) Houston, TX CEO J. Michael Talbert http://www.deepwater.com/

· World largest offshore drilling contractor – on capitalization

· Largest offshore Driller, Largest “floating” rig driller, Largest deepwater driller, Largest shallow-water driller, Largest inland drilling barge driller

· Past names: Transocean Offshore (Formed with merger of Slumberger’s offshore division) - TransOcean SedcoForex – Sonat Offshore Drilling – Transocean from merger of Sonat and Transocean of Norway in 1996

Transocean Business Segments:

· International and US Floater Contract Drilling

· Drillships, semi-submersibles and non-US jackups and barge drilling rigs

· Fleet: 14 drillships, 46 semi-submersibles, 26 jackups, four drilling barges, five tenders, a platform drilling rig, mobile offshore production unit and a land rig

· Utilization:

· 2001 – 81%

· 2002 – 78%

· Gulf of Mexico Shallow and Inland Water

· Jackups and submersible drilling rigs located in Gulf of Mexico and Trinidad

· US inland drilling barges

· Land drilling units

· Lake barges located in Venezuela

· Fleet: 29 jackups, 31 drilling barges, three submersible rigs and a platform rig, nine land rigs and three lake barges

· Utilization:

· 2001- 60%

· 2002 – 34%

Transocean Fleet:

· 158 mobile offshore drilling units - 2003

· February 2003 – Gulf of Mexico (75 units), Canada (one unit), brazil (11 units), Trinidad (two units), the North Sea (17 units), the Mediterranean and Middle East (eight units), Caspian Sea (one unit), Africa (21 units), India (six units), Asia and Australia (16 units)

· 58 Semi-submersibles, 8 tenders, 55 jackups, 7 drillships

Transocean General Info:

· Largest clients for revenue – BP (14.1%), Shell (11.6%), Statoil, Royal Dutch Shell, PetroBras - 2002

· 2002 overall utilization rate – 61% - was 73% in 2001

· Prior to R&B Falcon acquisition – operated only in one industry segment – R&B brought in shallow and inland water drilling units

· Acquired R&B Falcon for $5.35B – January 2001

· Making it the world’s largest offshore driller (1/3 of world’s existing offshore drilling rigs & 45% of the worlds ultra deep water ships (Below 7,500ft)

· Changing R&B ‘s name to TODCO

· Dec. 2000 having problems meeting timetables and budget estimates for deep water drilling – has had 200+ rig days when rigs were not working or reduced day rates during 4thQ2000 – Claims due to software problems

· Looking to spin off Gulf of Mexico Shallow and Inland Water business under TODCO

· Paying Global Marine $67.5M on a settlement dispute

UTI Energy (UTI) Houston, TX CEO Vaughn Drum

Acquired by Paterson-UTI see above

· Focus on onshore land drilling

· 150 land rigs, Texas, Oklahoma, New Mexico, and Wyoming

· Merging with Patterson Energy for $1.1B – May 2001

· Merger making it the 2^nd largest owner of land based drilling – 2^nd only to Nabors

· Patterson’s CEO, Cloyce Talbott, will be the reigning CEO

· Will have 286 combined drilling rigs in the US and 16 in Western Canada

· See Paterson - UTI above

Oil Well Services and Equipment

Brokerage	Recommendation	Sentiment
Lehman Brothers
Merrill Lynch
Prudential

Baker Hughes (BHI) Houston CEO Michael Wiley http://www.bakerhughes.com/

Formed through the merger of Baker International and Hughes Tool Company in April 1987

· Focused on providing drilling, formation evaluation and production technology used within oil and gas wells – focused on down hole tool technologies and reservoir information

· 3rd largest oilfield service company offering a wide spectrum of services from software to drilling

Baker Hughes Units:

· Oilfield Division: Represented 97.6% of 2002 total revenue

· WesternGeco – Seismic service, exploration, reservoir description, field development, reservoir management

· Has a 30% stake with 70% owned by Schlumberger

· Formerly called Western Geophysical

· Baker-Atlas

· Downhole well logging technology and services

· Wireline Well data and well logging

· Baker Hughes INTEQ – Onsite drilling analysis – Measurement-While Drilling (MWD), Logging-While-Drilling (LWD)

· Baker Oil Tools – Completion, workover and fishing technologies

· Hughes Christensen – Drill Bits

· Baker Process – Liquid/solid separation technologies

· Centrilift – Electric submersible pump systems and downhole oil/water separation technology

· Baker Petrolite – Specialty chemicals

· Process Division

· Bird Machine – Solid/Liquid separation equipment – continuous and batch centrifuges and filters

· Petreco – 49% stake – sells de-salters and hydrocyclones

Baker Hughes General Info:

· Specializes in reservoir detection and characteristics, well placement, and production management

· Other specialties: Wireline logging, drilling systems, Measurement-while-drilling, Drill bits, Drilling fluids (No.3), Sand Control, Completions, Electric submersible pumps, Oilfield chemicals

· Acquired Western Atlas for $5.1B in August of 1998 – largest in oil exploration in the world

· No.2 in wireline logging – behind Schlumberger

· Company has detailed worldwide rig counts available on its web site

· 3Q2003 – Took a $106M charge against WesternGeco due to losses

· September 2003 – Folded Bird Machine unit

· October 2004 Subpoena from Manhattan Grand Jury

· Is being investigated over the UN Iraq – Fuel-for-Food dealings which Baker Hughes sold roughly $13.1B in oil production equipment to Iraq between 1995 and 2003

· 2005:

· Expecting revenue growth of 14% to 16% ($2.20 to $2.30 a share) - raised from previously stated 9% to 11%

· Paying $44M over bribery charges related to Kazakhstan under U.S. Foreign Corrupt Practices Act – April 2007

· Revolves around its unit Baker Hughes Services International neither admitting or denying that they gave $5M to agents to bribe officials at Kazakhoil which was Kazakhstan’s national oil company at the time.

Brokerage	Recommendation	Sentiment
Morgan Stanley
JP Morgan
Lehman Brothers

Cooper Cameron (CAM) CEO Sheldon Erickson http://www.coopercameron.com/

· Supplier of pressure control equipment for onshore and offshore rigs, wellheads, chokes, valves and blowout preventers

Cooper Cameron three business segments:

· Cameron – Equipment and systems used to control pressures and direct flows of oil and gas wells

· Products: surface and Subsea production systems, blowout preventers, gate values, production control systems, actuators, chokes, wellheads, drilling risers

· Cameron Units: - Unit accounted for 59.7% of 2002’s total revenue

· Surface – Surface equipment

· Cameron Control – Workover control systems

· Cameron Willis – Chokes and actuators

· Cooper Cameron Valves (CCV) – Unit accounted for 17.7% of 2002’s total revenue

· Values used to control pressure and direct the flow of oil and gas

· 2002 rev of 273.5

· Cooper Compression – Unit accounted for 22.5% of 2002’s total revenue

· Reciprocating compressors and centrifugal technology

· 2002 rev of 345.9

Cooper Cameron General Info:

· Transferred the old the Energy Services Unit and Turbo Compressor unit into Cooper Compression unit

· 54% of revenue from the US in 2002

Dresser Industries (DI) (HAL)

· Produces high tech horizontal parts, valves and ballstops

· Acquired by Halliburton for $8B

Brokerage	Recommendation	Sentiment
Bear Stearns
Morgan Stanley
JP Morgan

Halliburton (HAL) Dallas, TX CEO David J. Lesar http://www.halliburton.com/

Halliburton Units:

· Energy Service Group - Oil service unit

· Well construction, drilling and reservoir evaluation, valves and ballstops, high tech horizontal parts, Well lifecycle management

· Pressure pumping, Logging, completion products, drilling fluids, drill bits, drilling systems

· Contributed 54% of 2002 annual revenue

· Landmark Graphics – Bought in 1996 - Seismic interpretation software

· Nine out of ten leading oil and gas companies are using Landmark products to compress workflows

· Developing technologies in prospect generation, field development and planning, well design, and drilling production optimization

· International revenues were 60% of total revenue for the group in 2002 – was 54% in 2001

· KBR Engineering & Construction

· Designs, builds, and provides operations and maintenance services for liquefied natural gas plants, refining and processing plants, production facilities and pipeline both onshore and offshore

· Contributed 45% of 2002 annual revenue

· Kellogg, Brown and Root (DII) – Engineering and construction – Government contracting unit

· Top contractor to provide services to a rehab effort in Iraq and putting out blown wells

· Projects from this group are longer term in nature than energy services and are not impacted by short-term fluctuations in oil and gas prices

· Reducing its five lines to two: Energy and Chemicals, and Government and Infrastructure

· KBR hasn’t turned a profit since 2001 – September 2004 fact

· Reorganized KBR into two separate business:

· Government and Infrastructure Construction

· Building and large energy facility in remote regions

· Looking to sell KBR?

· KBR construction needs to get out Chapter 11 before it’s sold – Wants to be out of Chapter 11 by the end of 2004

Halliburton General Info:

· Acquired M.W. Kellogg in February 1988

· Bought Dresser Industries in 1998 for $7.7B

· Sold Dresser Equipment Group for $240M- will keep a 5% stake in it though

· One of the last US companies in Myanmar (Burma)

· Halliburton Projects:

· LNG: (Liquefied Natural Gas)

· Building a LNG receiving terminal and natural gas distribution pipeline in Southern China

· Building a LNG plant in Algeria, Nigeria, Chad, Cameroon, and Egypt

· $1.4B shared contract with JGC of Japan for a Liquefied Natural Gas plant in Indonesia (Belenak) - May 2003

· Indonesian project is projects to have cost over runs in 2004

· GTL (Gas to Liquid) plant in Nigeria for ChevronTexaco and being built in conjunction with JGC of Spain and ENI of Italy – Majority of the project slated for completion in 2008 with an output of 34,000 barrel of GTL daily

· Barracuda-Caratinga project in Brazil

· $2.5B project that has recorded $345M in pretax-losses on the project

· Project begun in 2002 and won’t be completed until mid 2005

· As project gets closer to completion Halliburton will need to use its cash to finish the job

· Project continues to have major delays, problems, and cost over runs

· April 2004 – Reached an agreement with Petro Braserlio that reduces the penalties and extends the deadline on the project

· June 2004 – New penalties emerge and Halliburton taking a $200M charge

· Project consists of two converted super oil tankers as floating platforms to pump crude to the surface from 32 wells

· Problem is converting the oil tankers

· 90% of the project is completed – September 2004

· Super tankers will be launched from the shipyard in October 2004 and December 2004

· $750M in cost overrun as of September 2004

· Project considered 97% complete – July 2005

· Has $250M in cash – no debt tied to its equity - $3B in working capital - 2001

· Acquired Magic Earth - 3-D visualization and interpretation technology company in November of 2001 for $100M

· Acquired PGS Data Management for $165M - 2001

· Halliburton Notables:

· Vice President Dick Cheney – CEO from 1995 to 2000

· Halliburton fires Albert “Jack” Stanley for the possibility of bribing Nigerian Officials with $5M over a LNG contract – was chairman of M.W. Kellogg (Part of Kellogg, Root & Brown)

· Halliburton Asbestos Litigation:

· Has had $122M in court judgments from asbestos related lawsuits from its Dresser Industries division

· Total Claims:

· 400,000 asbestos claims and 21,000 silica claims

· Has $2B in insurance protection to cover all claims

· Asbestos was used in heat resistant building products from Brown and Root (Dresser)

· Asbestos was used in a small number of products manufactured or sold by Harbison-Walker Refractories Company (Refractories), which DII (Dresser) Industries acquired in 1967, The unit (Harbison-Walker spun off in July 1992 and assum