HAYS OIL & GAS GLOBAL JOB INDEX Q Increase in hiring globally, with significant jumps in key regions. hays-oilgas.com

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1 HAYS OIL & GAS GLOBAL JOB INDEX Q1 Increase in hiring globally, with significant jumps in key regions hays-oilgas.com

2 GLOBAL INDEX Welcome to Q1 Global Job Index. The start of the year has been positive with an overall increase in the Global Job Index from 1.31 in Q4 to 1.65 in Q1. Several regions are showing higher increases in the number of available jobs, confirming our optimism about the global economic recovery. The industry still has a significant shortage of skilled talent and this shortage will continue to drive compensation packages as companies fight to secure the talent required to drive their business forward. Providing the price of oil remains above $100 per barrel we are optimistic of the continuing levels of capital investment throughout and expect to see strong growth in the job market through the second half of the year. The job markets in South America, Asia and the Middle East have had a strong Q1. In particular Argentina s Vaca Muerta shale has multi nationals forming a queue to get projects moving. According to data released by the US Energy Information Administration, Argentina has potential to be the world s fourth largest shale oil producing region and the worlds second largest shale gas region, behind China. Experts have drawn comparisons between Vaca Muerta and the prolific Eagle Ford paly in Texas USA, which helped transform the dynamics of the US domestic energy market. As these projects are approved the competition for engineers with shale experience is likely to increase. Africa has seen a good start to the year as high levels of job activity and key projects in areas such as Angola and Mozambique are driving job creation. Salaries for critical positions in these areas can be high in order to attract foreign talent. Operator and service companies face stiff competition to hire contract staff who, not only possess strong technical knowledge, but also the ability to train local engineers to ensure stringent governmental regulations on hiring local workforce are met. Hiring in Australia has been steady and we are seeing indicators that the job market is picking up, reflected in the latest unemployment figures released by the Australian Bureau of Statistics reporting the first fall in unemployment since Q2. In Europe, profit concerns of British and European companies have slowed hiring plans. However, the British Chamber of Commerce has announced that the UK GDP growth will surpass its 2008 pre-recession peak in the second half of, ahead of forecast. We remain cautiously optimistic for the remainder of the year, strengthened by research released by the Bank of Scotland, in which 69 per cent of the top UK oil and gas executives were confident about job growth in the second half of. The reports conclude that approximately 39,000 new jobs will be created in the UK oil and gas market over the next 12 to 24 months. North America has seen continued leasing and exploration in the Gulf of Mexico with drilling activity surpassing pre-macondo levels. Production is expected to surpass the 2009 peak production of 1.6 MMbopd, from the current 1.2 MMbopd, before the end of Investment into the midstream and downstream sectors has seen a jump in business activity and therefore jobs, however, hiring has leveled off as employers await final decisions on various pipeline and LNG projects. Further growth in the US is expected, buoyed by the low cost of gas and improved manufacturing conditions, however, if political stability and stringent regulations can be resolved in South America and West Africa the US will face stiff competition for talent. Energy prices should remain within a relatively narrow band, between $107 and $112 per barrel, perhaps on the upside depending on political unrest in Ukraine. While the dollar per barrel remains in this range, conditions are favourable for continued capital spend as companies look to maximize value, this continued investment, will in turn, drive job creation. The midstream sector needs to bridge the gap with current capacity and keep pace with the unprecedented levels of exploration and production in recent years. This would drive increased capital investment in the midstream sector this year, perhaps on the order of 29 per cent over level, according to figures released by the American Petroleum Institute. Should this happen, we expect compensation packages to rise overall, but with a wide variation between disciplines and countries, as competing organisations vie to attract in talent with in demand skills. What is the Job Index? The Global Job Index is a quarterly publication featuring news and updates affecting the oil and gas employment market. It provides an insight into fluctuating job numbers, as well as local events which affect employment demand making it a unique and informative resource for the industry professionals. Background Finding a new job via an online medium is now the norm for any job seeker looking for work. This trend has of course led employers to rely on their web presence, either direct or indirect, to source, attract and drive candidates to apply for their jobs. The oil and gas industry is no stranger to the use of online media to attract candidates, with globalisation and remote work locations meaning the vast majority of roles in the industry are now resourced using online portals. These sites range from a company s own online web pages to large recruitment groups, specialist job boards focused on specific geographies, and those dedicated to the oil and gas industry in all its guises across the world. These global boards have grown considerably in the last few years and now contain many thousands of jobs and resumes of users eager to access their next opportunity. Methodology Our team of analysts and researchers measure the numbers of live jobs posted on all the major job boards that are specific to the oil and gas industry. These are collated into regional figures and compared against a datum of 0 taken from October At this time the industry had largely recovered from the global recession, and the oil price reflecting this recovery slowly edging upwards over $80 bbl. Capital had flowed back into the industry boosting exploration, project starts and profits. Recruitment had recovered steadily since the start of 2010 in line with the increase in revenues although there were no significant skill shortages at that time. With expectations of a growing recruitment market through 2011, October 2010 appeared to be an ideal point from which to set our benchmark for the Global Job Index. Each month since this date we have measured job posting activity on the same sites making sure we are consistent in how and what we measure. From time to time the sites themselves will change the way in which they post and maintain jobs, and this is closely monitored to ensure that this does not alter the results of our research over and above the specific measure of job posting activity we are seeking. This data is broken down further to give a measure of regional activity and the trends within those regions. This further analysis is essential to oil and gas recruiters that scan the world for available talent. All salaries in the Job Index are listed in US Dollars. The Results Hays Oil & Gas publishes its results on a quarterly basis producing the Global Job Index along with dedicated figures for each region; Europe, Africa, Middle East, Russia and CIS, Asia, Australasia, North America and South America.

3 GLOBAL OVERVIEW Q1 job index by region 2.5 in summary Global Dec 1.31 High Feb 1.89 Low Dec 1.31 North America Dec 1.39 High Feb 1.91 Low Dec 1.39 South America Dec 1.20 High Sep 1.25 Low Jan 0.82 Asia Dec 1.81 High Jan 8 Low Mar 1.76 CIS Dec 0.89 High Nov 1.32 Low Mar 0.65 Jan Feb Mar Europe Dec 1.24 High Feb 5 Low Dec 1.24 Africa Dec 1.23 High Feb 1.81 Low Dec 1.23 Australasia Dec 5 High Feb 1.48 Low Dec 5 Middle East Dec 1.40 High Aug 2.37 Low Dec 1.40 Asia Middle East North America Europe Africa South America Australasia CIS Yearly comparison of Q1 job index index score 0.0 EUROPE AFRICA CIS MIDDLE EAST ASIA AUSTRALASIA N.AMERICA S. AMERICA Q Q Q4 Q4

4 NORTH AMERICA Senior Engineers - Pipelines in Canada Average salary in North America $150,000 base Seismic Interpreters in the US Average salary in North America $145,000-$165,000 base Jump in hiring in Q1 fueling further plans for expansion Following the fall in jobs in Canada s upstream sector at the end of, Q1 has seen a jump in the job market as businesses invest in highly technical personnel to maximize production from existing facilities. As a result, there has been consolidation activity, alongside a shift in resource focus from dry gas assets to liquid rich gas and conventional oil mix of consolidated assets. The streamlining activity is due to financial instabilities, while the resource shift is due to horizontal drilling and fracturing technologies unlocking previously unrecoverable reserves. While Alberta is known mainly for producing crude oil, natural gas exports have increased, boosting production from the region. The lower value Canadian dollar has attracted business from foreign interests which has also supported job market growth in the region. Forecasting looks strong for Q2 and Q3 in the US services and manufacturing sectors and the number of positions in production have increased as a result. We are seeing businesses upgrading to larger premises to accommodate the predicted increase in headcount. Sales and business development roles are in demand as US manufacturers are looking for experienced sales professionals to create business opportunities and push their products. The US exploration and production job market has remained steady over the last two quarters though there has been a shift in focus from exploration to production of onshore assets. Although slower to pick up than expected, the international offshore markets for South America in both Brazil and Mexican Gulf of Mexico are gaining traction. Pemex is set to start leasing options at the end of which should lead to an increase in demand for upstream staff in Houston. The onshore operations and production market has shown an increase in activity which should build momentum towards the end of the year. As a result of the increase in asset sales and leasing in the USA onshore market, we are expect to see an increase in the acquisitions and divestiture markets. With the increase of operations and development in the US, we are seeing an increase in demand for enhanced recovery reservoir engineers and operations and development geologists. The need for modeling and mapping geologists is also on the rise.

5 SOUTH AMERICA 1.24 Operations Manager Average salary in South America $240, % bonus + benefits Drilling Manager Average salary in South America $180, % bonus + benefits State and commercial investment driving hiring activity In comparison to the relatively sedate job market at the end of last year, Q1 of in South America began with a major boost in activity. As new budgets have been allocated, in Colombia and Peru specifically, there has been a push to increase salaries in order to attract the right talent needed for operations. In Argentina and Mexico we are still awaiting the confirmation of government changes to determine how state interest or external investment will impact the industry s production and increase business activity. South America has been ranked as the fourth largest region for investment in oil and gas ($69 billion in ) therefore, we can expect further rises in jobs over the coming quarter, increasing pressure on the candidate market. The trend is to strengthen reserves and increase production in the region therefore the majority of hiring has taken place for roles in operations, reservoir, drilling, logistics and transportation of crude oil. An increase in Unconventional Hydrocarbon Exploration (UHE) has led to a demand for experienced professionals and employers are finding they must search internationally to hire foreign workers. Overall in South America there has been more control, especially in the processing of environmental licenses which has delayed the launching of the new licencing round in Colombia for the first half of.

6 EUROPE 2.5 Senior Pipeline Engineer Average salary in Europe $97,000 Integrity specialist Average salary in Europe $91, Despite low job index, experienced specialist talent is in demand in niche areas As expected, there was a slight spike in vacancies registered in January, but this is the norm following the usually quiet month of December. This surge in vacancies was relatively short lived as overall the quarter displayed the lowest number of vacancies recorded in three years for the same quarter. Although not all jobs are directly linked to the North Sea, this region does have a significant impact on the overall job market. Several of the major operators in the region have issued profit warnings within the quarter and this had a knock on effect in confidence, causing project delays as well as feasibility reassessments. The design and EPC market, has had a particularly quiet quarter with relatively few significant project wins announced. However, due to new regulations regarding environment and safety within refining, there is a focus on compliance, resulting in new jobs created to implement processes and tackle the regulations. A record amount of decommissioning is planned in the North Sea, which will result in the need for experienced candidates in this area, increasing pressure on what is already a skill short market. Salaries in for these roles could rise as companies compete for top talent. In order to support enhanced oil recovery (EOR), Original Equipment Manufacturers (OEM) are investing in technology and new processes to tap into hard to reach oil reserves and increase the output of existing reserves. There has been a softening in the number of roles in Engineering, Procurement and Construction (EPC), however employers tell us they are still struggling to find technical specialists with design and project engineering experience. As the offshore industry is getting ready for decommissioning projects through the summer months, some larger offshore companies have new build vessels and are in the middle of starting new projects including pipelay, installation etc. The tank terminal business is growing and we are seeing an increasing number of new build projects for which skilled, qualified personnel from the European Union are needed. The oil and gas population in Europe are aware of the lucrative markets elsewhere in the world, and therefore are particularly mobile. This has led to a skills drain from the region and employers are finding the need to offer increasingly attractive compensation packages and project work to attract talent.

7 AFRICA Deepwater Drilling Professionals Average salary in West Africa $87,000 Operations Manager Average salary in West Africa $150,000 Increased hiring in Q1 highlights Africa for potential growth opportunities The African job market made an unpredicted leap forward in the first quarter despite some negative news in the region. Governments continue to push the need for local hires and nationalisation of assets. In some areas this has led to the proactive reduction in the use of expatriate employees. This trend has been progressive over the last 12 months but considerably more so recently. Overall we have seen a resurgence in business activity in North Africa, which has resulted in an increase for exploration and production staff, particularly in Morocco and neighbouring countries. Across to the West, niche skills including deepwater drilling and cost engineering are in high demand with traditionally strong disciplines such as reservoir engineering waning slightly. Overall salaries have remained stable, however, a lack in demand could lead to a softening in wages. To the east, geosciences remain in high demand with several significant projects pushing ahead. The hiring challenge in east Africa is to source candidates who have faced conditions similar to those typical to the specific geology and resources in the region. An example being the interest in people with prior experience with assets in countries such as India to solve similar production and extraction challenges in countries like Uganda. The European and African markets remain firmly entwined with many of the largest players in the African market still staffing significant proportions of their workforce from Europe rather than locally. Similarly a large amount of the detailed engineering and design for the African market resides in Europe. Overall the key challenge in the African market is finding experienced local talent. This is particularly evident for key management roles but exists throughout the ranks. Employers in the region regularly seek people with experience working with local partners and stakeholders including local governments and other parties in joint ventures. In many countries this is a considerable challenge as experienced local talent is very rare. Nationals with these skills have often left the country to pursue more lucrative careers elsewhere and can be reluctant to return on a local employment arrangement. Africa remains one of the most interesting regions in terms of employment growth and opportunities. This is directly linked to the enormous opportunity it represents in terms of unrealised reserves.

8 ASIA Regional Sales Managers/ Business Development Managers Average salary in Asia $140,000-$200,000 + bonus + package Construction Manager/ Senior Project Manager Average salary in Asia $180,000-$250,000 + bonus + package New and existing fields driving business and hiring activity forward Energy demand from South East Asia is expected to grow by 80 per cent by the year This increase should result in the global centre of gravity of oil and gas shifting eastward. A region rich in natural resources, politically stable and with a well-educated, relatively low cost workforce, Asia Pacific continues to be a region targeted for business growth by global IOCs to. Reflecting this, the Asia Job Index has demonstrated a consistently high level of vacancies and continues to grow in comparison to global markets. With existing and new fields in Malaysia, Indonesia and Vietnam in both conventional and non-conventional reserves driving the market forward, we are experiencing continued growth in exploration and production sectors. Additionally design and construction of offshore structures (in particular Topsides, FPSO, FSO and offshore rigs) remains a strong and expanding market with Singapore, South Korea and China well established as market leaders globally. The manufacturing industry in Asia also continues to drive forward, with the OEMs sector proving to be a consistent engine for growth. With issues of quality and reliability high on the end users agenda, Asia has made giant strides in improving quality of the equipment manufactured and the results are increased orders and a wider range of products being produced. Regional sales managers and business development managers in Asia Pacific are in high demand, targeted by global OEM s to drive new business by capitalising on the development of offshore oil and gas fields in Malaysia, Vietnam, Indonesia and China. This demand has seen salaries slowly creep up as businesses seek to maximize their sales revenues though employers are increasingly keen to secure lower cost local talent in lieu of foreign workers.

9 COMMONWEALTH OF INDEPENDENT STATES (CIS) 1.45 Drilling Supervisor Average salary in Russia & CIS $7,000-10,000 per month Pipeline Supervisor Average salary in Russia & CIS $5,000-8,000 per month International agreements set to drive investment and hiring activity Due to several large projects surrounding pipeline construction, we are seeing an invigorated Caspian basin job market. This is driving demand for drilling and pipeline supervisors alongside specialists in offshore platforms. A major player in the labour market in Russia and CIS is the Caspian Pipeline Consortium, which is currently expanding its transport capacity to 67 million tons of petrol by 2015 and plans to build 10 new pumping stations and additional terminal handlers worth 5.4 billion dollars. Although the most active phase of attracting staff for Pipeline Consortium (CPC) has passed, the company s investments are still high. Crimea is likely to see further attention, specifically on the 23 fields along the Black Sea coast. News of the agreement between Gazprom and the China National Petroleum Corporation (CNPC) to supply gas to the Chinese markets could signal new investment in the region. In particular, in order to maintain compliance with international standards we are seeing signs of state and international investment in reconstruction of infrastructure.

10 AUSTRALASIA Commissioning Electrical Instrumentation Average salary in Australia $100,000 + site uplift & allowance Operations & Maintenance Supervisor Average salary in Australia $120,000-$130,000 + bonus 4 Focus on cost saving driving demand for cost engineers The job market in Western Australia is steady. There are still a number of contracts to be awarded which will generate opportunities in both the marine sector and operations & maintenance providing good career opportunities, in particular for rotating equipment engineers who have in-depth knowledge of managing assets in this area. Keeping costs low is a focal point for many businesses; which has resulted in a recent rise in demand for cost engineers. In particular, employers are looking for candidates who, alongside reporting, can also analyse cost trends, identifying potential problem areas and taking advanced action. As projects move into operation phase, Queensland employers are looking at ways of strategically partnering with plants to provide optimisation and maintenance services. This is increasing demand for electrical and instrumentation technicians, who are very short supply as it takes time to progress from an electrical starting position. As competition for skilled staff increases, we are seeing an uplift in salaries as companies bid for top talent. The market here continues to be contract driven and salaries here are stable. Commissioning personnel, project management and construction related skills are required for a finite time only, therefore employers are engaging candidates on a temporary basis to keep long-term costs down. In order to drive business forward, specialist companies servicing the oil and gas industry in Victoria are focused on securing experienced sales engineers. Finding and retaining sales talent with strong technical knowledge has been the key to success for these organisations.

11 MIDDLE EAST Regional Sales and Operations Manager Average salary in Qatar $18,500 per month Senior Reservoir Engineer (Development Planning) Average salary in Oman $14,000 per month + expat benefits Increased investment in infrastructure resulting in the creation of new jobs Employers in Dubai, Abu Dhabi and Doha confirmed that staffing levels would increase during which is why we see an increase of 21 per cent for the Middle East versus the Global Job Index. As reported last quarter the push continues to be in polymer and plastics projects together with increased investment across the Middle East in infrastructure and project related expansion. Our expectation for the next quarter is a continuation of the above as well as vacancies created through attrition, as rates are currently running at approximately eight to nine per cent across the region. The above two components of new jobs and replacement vacancies provides a very fluid job market, however employers tell us they don t have major plans to increase base salaries in order to attract talent needed to fill these jobs. In order to ensure the offering is attractive, employers are considering some tactics to keep competitive including re-evaluating job grades for critical positions or offering specific bonus to reward tenure, performance or upon completion of stage in the project. Process engineers both at senior and mid-level are in high demand, specifically those who have international experience in facilities modifications, efficiency improvement and technical process engineering support. Regional sales and business development managers who have expertise within niche oilfield services, oilfield equipment manufacturers and components across all the GCC regions are in demand. Of particular interest are those who understand the processes of doing business with all the major OPCO s and EPCM s in the region and have a good network of contacts. Senior discipline engineers with international EPCM company experience on projects related to the hydrocarbon processing plants sector are in highly sought after, specifically in electrical and instrumentation engineering. This skill set will be in demand for the foreseeable future, particularly those interested in Saudi Arabia and some other (non-city) based locations in Oman and Qatar.

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