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

2. PPG - Contractors 24/8/01 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

3. PPG - Contractors 24/8/01 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

4. PPG - Contractors 24/8/01 UK Ratio of NBV to GBV (8 WSCA members only) 0% 10% 20% 30% 40% 50% 60% 199619971998199920002001 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!)

5. PPG - Contractors 24/8/01 1. Globally there was a modest 15% cutback in global spend. 2. However in the UK the drop was 42% and not recovering

6. PPG - Contractors 24/8/01 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

7. PPG - Contractors 24/8/01 1. Sharp decline through 1998 to 2000 2. Recruitment started, but experience level decreased in UKCS

8. PPG - Contractors 24/8/01 1. Resource flight - 15% to 20% 2. Continuing 3. Helped with efficiencies; limited stretch left in the system

9. PPG - Contractors 24/8/01 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?