Well Services Report 2014 - page 9

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This is an indicationof thediverseworkbeing carriedout bywell services companies. Theyhave reported strong
demand from operators to develop existingwells through remediation and intervention techniques, effectively
demonstrating that the strengthof the sector isnot tieddirectly todrillingactivityon theUKCS.
4.2. EarningsBefore Interest, Tax, DepreciationandAmortisation (EBITDA)
Earnings before interest, tax, depreciation and amortisation (EBITDA) are an indicator of the health of a
business, reflecting the operating profit before adding back the specific non-cash items of depreciation and
amortisation.EBITDA isnotaproxy forcashflow, sinceEBITDAdoesnotaccount formovements inworkingcapital
(stock, debtors and creditors).
In 2013, EBITDAwas $482million (£308.5million), representing a 14.1 per cent decrease on the 2012 figure of
$561million (£350.2million). This is 21 per cent lower thanwas forecast, indicating that the decrease in EBITDA
wasunexpected.
The EBITDA margin, the ratio of EBITDA to gross revenue, has also decreased to 15 per cent in 2013 from
18.5per cent in2012. This reflects the increase inoperating costson theUKCS3.
Figure2: EarningsBefore Interest, Tax, DepreciationandAmortisation (EBITDA)
1
2
3
4
5
6
7
8
9
0%
5%
10%
15%
20%
25%
30%
100
200
300
400
500
600
700
800
900
1,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
2014Forecast
EBITDAMargin
$Million
EBITDA
EBITDAPrevious Year Forecast
EBITDAMargin
Source:Oil&GasUK
3 Oil&GasUK’sActivity Survey2014 is available todownloada twww.oilandgasuk.co.uk/forecasts.cfm
Source:Oil&GasUK