2018 has been the busiest year since 2012 for our Natural Resources team and the outlook continues to appear positive.

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1 2018 has been the busiest year since 2012 for our Natural Resources team and the outlook continues to appear positive. We recently hosted an event with the authors of the International Energy Agency s Investment Report and the consensus from this discussion was that expenditure is increasing in the sector but they also wanted to urge caution. One of their conclusions was that the oil and gas industry is shifting towards short-cycle projects and assets with rapidly declining production, potentially signaling market volatility ahead. From a hiring viewpoint this is something businesses may have in mind but in the short term hiring activity is prevalent. 65% of the vacancies we have worked on in H have been newly created positions. In previous years the majority of finance recruitment across the sector has been down to attrition, but this year we have been busy with commercially focused positions, as well as new businesses who are increasing headcount. As a summary of the expat finance market, this is an area that continues to improve markedly and, away from our traditional focus areas of Africa and the Middle East, we have noted an increase in demand for personnel in Central and South America. Below I have outlined our take of the three main components of our Natural Resources team here: Oil & Gas, Mining, and the Oilfield/Mining Services industries, with a specific focus on hot skill areas and our outlook. Oil & Gas It has been widely documented how the Oil & Gas sector has improved since the depths of the oil price crash, with subsequent exploration and deal making increasing with the rise in oil price. With a global overview, Iran, Venzuela, shale and tight oil production in North America and OPEC have played a vital role in global oil dynamics, contributing to the market oversupply. This is expected by many to drive growth in the oil output across continents. The increase in the price of Brent has also led to the majors benefiting massively with regards to profit earnings, in particular with BP s earnings more than quadrupling from 2016 in Q The North Sea has continued it s renaissance from 2017 with new life seemingly being injected into the basin, combined with costs coming down due to operational efficiencies and increased production in the area. M&A in the region with new players such as Spirit Energy and Okea being particularly busy. Production from the North Sea has bucked the long-term decline and energy consultancy Wood Mackenzie expects it to average 1.9m barrels of oil equivalent (boe) a day in 2018, its highest since This is, in part, driven by new developments such as Catcher, as well as Dana Petroleum s Western Isles and EnQuest s Kraken (Financial Times, February 2018).

2 On the frontier side, Mexico, Mozambique and Argentina present promise as well as the traditional areas of activity in West and North Africa. Macroeconomists continue to postulate on the long term future of the oil industry with numerous reports documenting the drop in levels of expenditure by the majors and with Shell classing themselves recently as no longer an oil and gas group, but as an energy transition company this could be an indicator of a continued shift to renewable and green energy. Christyan Malek, the head of JPMorgan s oil and gas research in Emea suggested that Oil s recovery to above $75 a barrel has led many in the industry to declare that the brief period of lower oil prices since 2014 is over, consigning the so-called lower-for-longer thesis to the history books. But we think this rally remains a short-term anomaly within a much wider and more significant cycle: the coming battle royale between Opec and Big Oil to produce all they can, before climate change concerns and the energy transition lead to a peak in consumption. One thing for certain is that, in the short to medium term, hiring activities in the sector will be vigorous across disciplines. Back on to the recruitment side Financial Planning, Corporate Development and Petroleum Economists (or those with advanced modelling skills) candidates are in demand as the sector grows. There is still a lot of activity with new explorers coming on the scene as well as the influx of PE back businesses in The majors have begun to recruit heavily again with the majority of the candidates for these roles coming from the accountancy firms. We have consolidated our client base and picked up some extremely exciting new clients this year and we look forward to helping these businesses continue to grow. Mining In early 2018, The Financial Times reported Value over volume has become the mining industry s mantra as it has emerged from the worst downturn in a generation. It said there will be no return to the days of chasing growth and market share by piling on profitless production, say senior executives, who are also pledging to keep increasing shareholder returns and eschew megamergers. On the contrary, in the first half of the year there has been numerous examples of the big mining houses starting to spend on projects again and a lot of deal-making activity. Battery metals remain a hot topic, and one that has been well postulated, and on this point we have started to see the junior lithium miners begin to grow Corporate operations in London. There are 154 mining companies in London and we have noted a number of junior mining businesses setting up in London as well as some of our existing clients looking to grow their current finance teams as a result of some recent acquisitions. At Mining Indaba in February, another indicator to the health of the industry was given by the market overview of the various stock exchanges with, encouragingly for London, the LSE finishing 10 metals and mining IPOs in 2017, raising $2.5bn.

3 The Ex Pat area has begun to get busy again, predominately across Africa, and we are always eager to speak to candidates interested in these roles who are currently based onsite. Again, at Mining Indaba the positive feeling continued, and some interesting themes were discussed. It was noted that that mining merger and acquisition activity was up 10% in 2017 from the 2016 and this was largely led by coal, iron ore and steel deals, which are seen as consistently reliable despite the global drive to reduce pollution. One panellist commented that the industrial metals sector (for cobalt and lithium) has been treated with caution still and, while M&A is expected to increase, it will be interesting to see if investors will embrace green energy and turn their back on traditional fuel commodities. Innovation was a hot topic at Indaba, with industry veteran Evy Hambro suggesting that innovation was the lifeblood of the industry. This along with the development of talent will drive the industry in the near future. Junior miners still continue to be the most active areas of finance recruitment, both in London and onsite, with a heavy bias to assets being developed in, and roles located in, francophone West Africa. Mining continues to be a sector that attracts a lot of interest and we are proud to partner with some extremely exciting businesses so far. Key skill areas in mining this year have been Group Accountant, Performance Reporting, Financial Controller and Commercial Manager roles. If any of these roles are of interest then we are keen to talk to you. Services H1 has been our busiest time for finance recruitment at the services businesses since before the oil price crash. Admittedly all of these roles have been in London & South East England but this is a welcome sign for the sector. Rystad noted that the oilfield service industry continues to show a positive trajectory. As a result of strong oil market fundamentals, we estimate shale investment to grow at around 20% rate in 2018 and we now foresee 100 offshore FIDs in We expect that the improved market fundamentals will translate into better performance for oilfield service players in the coming quarters. In 2018, we expect the oilfield service market to grow by 3.8% compared to Our area of coverage has yet to reach the U.S. (and specifically Houston) and from what we understand there does seem to be a buzz of activity with recruitment from the drillers in these regions. Linking to the oil and gas segment of this report, with increased exploration spend and projects being green lit, there is a lag time, with this filtering down to the services businesses and this is what we are seeing now.

4 As ever, these roles have varied from the traditional Corporate Accounting, to Project Accounting and even a Head of Regional Finance role, so the spread in the demand for skills has been wide. Naturally by the nature of these businesses, and based on previous roles, the majority of the new vacancies are Project Accounting focused and with this in mind we are eager to speak to candidates with experience of project accounting, costs, budgets and forecasting in a heavy industry environment as we anticipate a huge demand for this in the coming months. Hot Skills Compared to H1 2018, our Natural Resources team were instructed on 36% more mandates in H The roles have varied widely from Finance Director, Corporate Development, Economist to Project Controller positions. Arguably, now more than ever there is a huge preference from our clients for candidates with previous sector experience, particularly at the senior end of the market. Candidates who have onsite experience within mining and onshore oil and gas are sought after, as are bilingual expat finance professionals, with a professional grasp of either (or all) of English, French and Portuguese in demand in Africa. With Argentina and Mexico becoming more active, we are expecting a demand for the same types of candidates with Spanish skills. A comment I made in my last review, on the demand for Newly-Qualified Accountants looking to make their first moves from Practice into the Industry rings true again. A premium exists for qualified accountants looking to move from the Big 4 and BDO, specifically those who have Natural Resources experience. I have omitted the salary section in this review as there has been no change in these levels for years and, should you require any specific benchmarking of a skill or level of experience then we can cover this for you within our most recent generic salary guide document: As ever, I am keen to speak to anyone with finance experience in, or wishing to get into, the sector. Outlook The outlook is positive. It has taken us a while to think like this but the signs are everywhere. Our clients are still cost focused but before a business can grow with regards to revenue and projects they need to grow the workforce and this is what we are seeing. We maintain a market leading client portfolio across the sector and we are always keen to grow this further as we grow our own team to maintain our professional focus on service.

5 If you are a prospective candidate or client anywhere in the world in the Natural Resources sector then Chris Brannigan, our Head of Natural Resources will be delighted to advise on how we can assist with your needs. We can offer tailored recruitment solutions to suit specific projects globally, be they mass hiring events, time focussed or commercially sensitive mandates and we would welcome the opportunity to discuss these with you. In our Natural Resources team at Goodman Masson we offer unrivalled expertise of Finance Recruitment across Oil, Gas and Mining in London, Africa and the Middle East and we look forward to continuing to grow this function and continuing to assist our existing clients, as well as new ones, as the market improves. Our dedicated team of Consultants across Finance, Tax and Treasury have over three decades of Recruitment experience, as well as academic backgrounds in the sector. Chris Brannigan - Executive Consultant Chris.Brannigan@goodmanmasson.com