Oilfield Services Sector Update &
Q3/2009 Industry Preview
The Worst Likely Over But Meaningful Recovery Not
Expected Until H2/2010

With Q3/2009 now complete and reporting season getting under way in the
coming days, we are providing investors with an overview of the quarter,
adjusting our estimates to reflect Q3/2009 performance and updating our
2010 forecasts to incorporate our revised commodity price forecasts.

In our "Industry Issues And Trends" section, we highlight: 1) the positive
momentum in Q3/2009; 2) improving U.S. activity levels; 3) the structural
change in WCSB activity; 4) the positive implications from producer capital
raises; and 5) services valuations relative to previous downturns.

Overall, we believe the worst of the current downturn is behind the
industry. That said, we believe that any recovery in the near term will be
muted and that a meaningful improvement in activity levels is most likely to
not be realized until H2/2010.

In conjunction with our revised commodity price and industry forecasts, we
are increasing our price targets for the majority of names in our coverage
universe. We are also upgrading CET.UN and ESI to SO from SP, as of
October 21. Our top picks are CET.UN, ESI, PD.UN, TDG and TOT.