Picking the winners post-2010
Most European oil services companies are positioning themselves to take
advantage of the emerging South-East Asian deepwater market, where we
expect significant activity to occur beyond 2010.
We recently toured three Asian cities (Beijing, Hong Kong and Singapore) to get a
better understanding of oil & gas related developments in the region. We visited the
three main Chinese integrated oil companies, several oil services companies and
shipyards.
Our overall take-away is that Chinese oil & gas companies plan to continue investing
significantly inside and outside of China for the foreseeable future, owing to strong
continued internal energy demand, the rapid depletion of its mature onshore fields
(especially the large Daqing field operated by PetroChina) and the government’s drive
to achieve greater energy security and independence. The Chinese (and the wider
Asian) offshore deepwater market will probably not significantly take off before 2010,
given the current lack of seismic data and deepwater rig availability in the region.
We believe the Chinese oil services market will remain dominated by local contractors
for technologically less advanced projects given their significant cost advantage over
foreign peers and their successful acquisition of know-how since the 1980s. They can
also draw on a large pool of human talent (engineers, craftsmen, etc).
Nevertheless, foreign oil services companies are currently performing seismic,
drilling, well services and engineering work in China and other parts of Asia. Foreign
companies are also active in complex onshore/downstream projects (but the bulk of
their current activities is exploration capex related). Given their technologically very
advanced vessel fleets and experience in harsh environments, they are particularly
well positioned to take advantage of the deepwater market, especially in drilling and
subsea construction. There is currently no local contractor in Asia that owns a
deepwater subsea construction vessel.
European oil services exposure to Asia
The companies in our European coverage universe are increasingly active in the
region and have set up (or are in the process of doing so) manufacturing plants in
Malaysia (Aker Kvaerner and Technip) and yards in Indonesia (Saipem), and are
bringing deepwater construction vessels to the region (Acergy with the Sapura 3000
and the Toisa Proteus). Seadrill has a sizeable drilling fleet in Asia.
Acergy
Asia has represented 4-6% of group revenues over the past two years. Profitability
has been disappointing given that the company has been building up infrastructure
without enough revenues to cover the up-front costs. According to Acergy, Asia
should generate US$300m in revenues in 2009 and US$500m in 2010. Acergy has
been successful at winning several contracts in the region, such as Vincent (for
Woodside) offshore Australia, which is currently in the installation phase, Maari
offshore New Zealand (will be completed during 2008), Dai Hung (first EPIC project in
Vietnam, which was completed in August 2007), Liu Hua (a deepwater subsea
construction project offshore China for CNOOC, with a contract value of US$35-
40m), Van Gogh (for Apache Energy) offshore Australia (with installation in
2008/09), Pluto (for Woodside) in Australia (US$150m), which will move into
installation phase in 2010. Its SapuraAcergy joint venture will operate in Malaysia

(the Sapura 3000 vessel will operate under the Malaysian flag and benefit from an
attractive tax regime), where Acergy’s J/V partner Sapura Crest Petroleum has
excellent relationships with Petronas. Malaysia is rapidly becoming a deepwater
market, moving straight from 100 meters water depth to 1,000 meters. The Sapura
3000 will start work on Kikeh for Murphy offshore Malaysia (expected completion
during 2008) and Acergy has moved its deepwater pipe-lay vessel Toisa Proteus to
the region as well.
The company is positioning itself for two big projects, Gumusut for Shell (Petronas
Carigili and ConocoPhillips) offshore Malaysia (deepwater northwest of Sabah) and
Gorgon (Australia’s biggest resources project to date) located in the North West shelf
offshore Australia for Chevron (ExxonMobil and Shell), which should both be awarded
during the year.
Aker Kvaerner
Aker Kvaerner has been positioning itself to take advantage of the emerging Chinese
and Indian markets. Today China is the world’s second-largest energy consumer
(13% in 2006) and the company expects that share to rise to 23% by 2020.

Contents
O I L E Q U I P M E N T & S E R V I C E S 1 4 M A R C H 2 0 0 8 2
S T O C K R E C O M M E N D A T I O N S
I N V E S T M E N T V I E W
Picking the winners post-2010 4
Most European oil services companies are positioning themselves to take
advantage of the emerging South-East Asian deepwater market, where we expect
significant activity to occur beyond 2010.
I N D U S T R Y D Y N A M I C S
Attractive industry dynamics 9
China’s oil consumption continues to grow at a rapid pace. Imported crude oil now
accounts for 44% of China’s total apparent demand. This proportion is set to rise
as increases in demand outpace growth in domestic production.
Key issues discussed at company visits 9
China industry dynamics 21
C O M P A N Y P R O F I L E S
Acergy: Buy, TP NKr145.40 26
Aker Kværner: Buy, TP NKr182.90 28
CGG Veritas: Buy, €234.80 30
EMGS: Buy, TP NKr44.60 32
Fred Olsen Energy: Buy, TP NKr339.00 34
PGS: Buy, TP NKr184.00 36
Saipem: Buy, TP €32.50 38
Seadrill: Buy, TP NKr182.90 40
Subsea 7: Buy, TP NKr178.40 42
Technip: Buy, TP €59.50 44
TGS-Nopec: Buy, TP NKr93.00 46
T E A M
ABN AMRO oil services team 48