2014 PESA Fall Newsletter

news August – October 2014 Customer Insights Volume 68, Number 3 Murphy Oil Corporation www.pesa.org Roger Jenkins, President & Chief Executive Officer Upcoming Events The 2014 Gulf Coast – Louisiana District Meeting held September 18, 2015 Executive Coaching & featured Roger Jenkins, President & Leadership Development Chief Executive Officer, Murphy Oil Corporation. January 20, 2015 Westin Memorial City Gulf Coast – Louisiana District Chairman Doug Polk of Vallourec USA invited Roger Jenkins to address PESA Houston, Texas members at the September meeting. Mr. Jenkins said that Murphy’s oil and gas production levels are at Austin Legislative Summit their highest in 30 years. Unconventionals are driving February 2 – 4, 2015 the company’s North American production growth Roger Jenkins, President & Chief The Driskill and deepwater Gulf of Mexico activity is rebounding. Executive Officer, Murphy Oil Austin, TX Cost control continues to be a primary challenge Corporation and Murphy looks to the service and supply industry Supply Chain Seminar to find innovative ways to reduce capex spending. Their preferred partners are efficient & February 18, 2015 commercially focused. Eagle Ford Shale (EFS) and Gulf of Mexico (GOM) play a significant role in Murphy’s current and future operations. Westin Memorial City Houston, Texas Murphy’s Eagle Ford Shale 2013 Capex Executive Address Series 3% Completion $MM % Drilling $MM %Susan Cunningham, Noble Energy 8% Hydraulic $310 50% Contract $280 44% February 19, 2015 $1.4 Billion 45% Fracturing $130 21% Driller Westin Memorial City Completion $88 14% OCTG $116 18% 44% Equipment $50 8% Other $92 12% Houston, Texas Other Construction Drilling Completion $24 4% Wireline – $43 7% Washington Fly-In Completion Coiled $23 4% Open Hole February 22 – 24, 2015 Production/Facilities Tubing $1 0% Cement $36 6% Other Services $626 100% Directional $34 5% The Hay-Adams Surface Services Washington, DC Trees Drilling Mud $25 4% Fishing & Bits $15 2% 2015 PESA Annual Meeting Rental Solids $6 1% April 22 – 24, 2015 Wireline – Control Cased Hole Cementing $2 0% The Ritz-Carlton Lodge at Hardware Reynolds Plantation Production / $MM TOTAL $647 100% Greensboro, Georgia Facilities % TOTAL Find all of our upcoming events Water Management $46 40% at www.pesa.org. Other Production $30 26% Artificial Lift $24 21% In This Issue Well Servicing $14 12%CustomerInsights.........Pages1&3Chairman’s Letter................Page 2 TOTAL $114 100% —Customer Insights continued on page 3.PESA Perspective................Page 3Globalized Shale.................Page 4Energy Educators................Page 5FSOProgram.......................Page6R.C.Slocum.........................Page6Oil & Gas 101.......................Page 7CID Annual Meeting............Page 7Sponsorships......................Page 81 PESA News

Chairman’s LetterPaul Coppinger Oil prices in the world market hit a five-year low this December, but that has not inhibitedPESA Chairman the positive long-term outlook for the energy industry. The surge in U.S. energy productionDivisional Managing has changed the game for the national economy and reset the world stage. The recent dropDirector, Weir Oil & Gas in prices represents a shift of market fundamentals adjusting to a new, abundant supply. It also signals the growing strength of the United States’ hand.PESA Officers “The key for America is that we shouldn’t let ourselves get distracted by falling oil prices 2014-2015 when there is much more at stake,” commands T. Boone Pickens, founder and chair of BP Capital. Paul Coppinger The U.S. dependence on foreign oil has come at a high price, dictating our national security PESA Chairman decisions concerning the Middle East for decades. In 2005, 60 percent of all fuel consumed Divisional Managing in America was imported. The U.S. Energy Information Administration (EIA) projects that number will fall to just 25 percent by 2016. The rapid increase in shale oil production over Director the past five years has played a pivotal role in bringing our energy production stateside, Weir Oil & Gas undercutting the power of OPEC by reducing our oil trade deficit and bolstering our economic recovery. Gary Halverson While some oil and gas producers may be experiencing challenges due to the oil price PESA Vice Chairman drop, PESA member companies are critical drivers of the technological innovations that Senior VP & President will yield ongoing benefits for the industry. The service and supply sector’s innovation, Drilling & Production new technology and education are sustaining resources that are even more important in a variable world market. Systems New technology has propelled U.S. oil drilling with the six tight oil and shale gas plays, Cameron Eagle Ford, Bakken, Niobrara, Marcellus, Haynesville and Permian, accounting for nearly 90 percent of domestic oil production growth over the last two years. Technologies, such as Johan Pfeiffer the use of drilling platforms called pads, have enabled hundreds of operators to get more PESA First Vice wells out of a single rig. Smarter wells and more disciplined engineering could yield more crude oil from the shale in the future. President Looking to 2015 may be challenging, but the growth prospects for energy production Vice President remain high, with the U.S. EIA expecting U.S. oil production to increase by 750,000 barrels Surface Technologies per day (bpd). The oil price drop could create a different type of pressure in regard to FMC Technologies, Inc. efficiency in exploration, the development of new technologies and the stimulation of innovation and creativity. PESA’s member companies established a firm foundation to David Warren create a lasting and a positive long-term outlook. PESA Treasurer Our industry was built on grit, determination and ingenuity. We help set the course of this President & Chief country and our industry’s leadership is imperative for the prosperity of this great nation. Executive Officer Our best days are still ahead. Energy Alloys Paul Coppinger PESA Chairman Divisional Managing Director, Weir Oil & Gas PESA News is published by: PESA President PESA Executive PESA Director of Petroleum Equipment & Leslie Shockley Vice President Communications Services Association Michael Perini 1240 Blalock Rd., Suite 110, Beyer Molly Smart Houston, Texas 77055 713-932-0168 © 2014, PESA2 PESA News

PESA PerspectiveAs we turn the page on to becoming an advocate for performers. Throughout PESA President2014, I could not be more our members, we launched 2015, participants will have Leslie Shockley Beyerexcited about the future of an online policy center. The access to a professionalPESA. Our board of directors PESA policy center provides executive coach andcharted an ambitious path tools and updates to learn leadership developmentfor our member companies more about the issues facing opportunities that mightand the over 1.3 million men our industry and to connect not be afforded to themand women we represent. with lawmakers, community otherwise.Over the last several months, leaders and organizations In an effort to expandunder their leadership, involved in policy decisions. our footprint in strategicwe have made important We strive to provide a regional areas, we will alsostrides as an association not platform for members to host the 2015 mid-continentonly with our name but a take action and make their district meeting in Denver.renewed sense of purpose. voice heard on behalf of our It’s an honor to be at theThis year, PESA joined the industry and our association. helm of PESA during suchconversation; launching In 2015, we will hold an a pivotal time for oura new website and social Austin Legislative Summit in industry. Thank you for yourmedia presence to share addition to the Washington collaboration, support andnews, provide industry Fly-In. vision as we head into 2015.insights and engage with For the first time in our history, Together, we will continuekey influencers on issues the Emerging Leaders to sustain the momentumspecific to the service and are sponsoring a year- that has changed the gamesupply sector. long leadership program for our association and ourAs part of the commitment for your companies’ high sector of the industry.Customer Insights Continued Leslie BeyerMurphy’s Gulf of Mexico 2013 Capex PESA President MUR - GOM 2013 Capex Drilling $MM % Completion $MM % Contract $42 49% Driller 4% Production / $MM % Hydraulic $23 30% Other $14 16% 25% Facilities Fracturing $21 27% Construction $77 45% Completion OCTG $11 13% $350 MM Pipeline $25 15% Equipment $5 6% Transportation $22 13% Directional48% Subsea Other $17 22% Services $5 5% 23% Facilities $19 11% Completion Drilling Mud $5 5% Surface $4 5% Drilling Facilities $18 11% Surface Trees $12 16% Solids Control Completion Artificial Lift $8 5% $1 1% Production/Facilities Other $169 100% Fishing & $4 5% Wireline – 0% Other Rental Open Hole TOTAL Cement 0% Coiled $1 1% 100% Tubing Services Cementing $0 Hardware $0 Wireline – $0 0% Bits Cased Hole TOTAL $78 100% TOTAL $87Murphy Oil Corporation – Key Portfolio Assets2014E Total 2014E Total Capex 2014E Total Production 2014E DevelopmentProduction Guidance Guidance Capex 220-225 NA Onshore 15% Exploration 26% US-EFS 29% US-EFS54% MBOEPD 46% US-GOM US-GOM Global $3.8 Bn Field 40% 220-225 Canada $3.2 Bn 45% Canada Offshore Development MBOEPD Malaysia Malaysia 57% 28% Development 15% Drilling 10% 11% 24% 3 PESA News

Globalized Shale And TheFuture Role Of Service CompaniesThe growth in oil and gas production from the US shale industry has had a transformationaleffect on US energy balance, economy, industrial competitiveness and employment levels.Many other countries with shale reserves are now looking at the US experience and hope totake advantage of lessons learned in order to exploit and benefit from their own reserves.Regester Larkin’s latest Shale Report looks at the opportunities that these developmentsoffer for integrated service companies.The latest copy of the Regester Larkin exploitation, ISCs have a significant be nervous about turning over fieldShale Report looks at the role of opportunity not only with respect to development to an ISC, it is likely thatservice companies in the ever-growing development of the fields themselves, significant opportunities will exist in aoil shale market. A convergence of but also to help develop and build traditional service company role.two main factors offer integrated the necessary infrastructure that is Lastly, countries that continue to enjoyservice companies (ISC) significant currently lacking in undeveloped long-term production of conventionalopportunities in the current climate for locations. In some cases, such as hydrocarbons may still want to survey,operators and the article looks at these South Africa, enormous reserves of explore and inventory their shalefactors and identifies three different shale are believed to exist but the reserves. In these circumstances,situations ISC may want to consider. lack of existing pipeline infrastructure, NOCs will wish to take advantage ofFirstly, following the steep decline poor roads and limited water would the technical skills and expertise inin oil prices in the 1990s, the make exploitation of these reserves a shale that service companies offer.international oil companies (IOC) cut significant challenge. This is something In the changing shale environment,back dramatically on the research and that only the largest IOCs may want to ISCs have a number of opportunities todevelopment budgets in contrast to tackle but only with the expertise and apply their technical and developmentISC which increased investment. In capability that ISCs can offer. expertise. Those with the appetite andfact, ISCs now hold a higher patenting A second situation is where countries ability to manage above ground risksrate than IOCs and, when compared have a history of hydrocarbon will be well-placed to take advantageby percentage of annual revenue, production but declining output. In of these opportunities.spend up to 10 times as much as oil light of reduced production, countries To read the full article, visit http://companies on R&D. In some cases, the may begin to look towards shale as an www.regesterlarkin.com/news/rl-shale-actual amount spent by ISCs rivals that alternative source of crude to bolster report-globalised-shales-and-the-of an IOC, for example Schlumberger’s output. Although some countries may future-role-of-service-companies/R&D spend of $1.2bn approachesShell’s budget of $1.3bn.This technical knowledge is alsocoupled with increased capability andmany ISCs are now able to conductfull field development activities,particularly onshore. This expansionof the role of ISCs initially met withresistance by the IOCs but manyservice companies now fulfill this roleon behalf of an IOC or national oilcompany (NOC) license holder. Thiscombination of technical knowledgeand development capability presentsignificant opportunities for ISCs in theshale sector in three different sets ofcircumstances.Firstly, in countries with little or nosignificant previous hydrocarbon4 PESA News

Energy EducatorsProviding A Firm Foundation For The Next Generation Of America’s Energy ProfessionalsFrom early childhood education programs to secondary and higher education STEMprograms, Energy Educators helps PESA member companies channel memberresources and knowledge, promote the industry with an aim to attract new talent andpositively influence public opinion.Renewed Committment to Education by STEM education at the high school new magnet school in HISD for gradesO n e o f P E S A’s m o s t s i g n i f i c a n t level. Brad gave an overview of supply 9–12. Students work within one of thecommitments to STEM education is chain and led the class in an interactive three pathways—geosciences, energythrough the IPAA/PESA Education role play. alternatives, and offshore technology.Center. As part of this program, PESA “It is through the contribution ofmembership supports four petroleum Brad Wise (DistributionNOW) corporations, like those involved withacademies in Houston and Ft. Worth, explaining the supply chain scenario. the Annual OTC Dinner, that the IPAA/as well as the Energy Institute High Alumni Mixers PESA Energy Education Center is ableschool (EIHS) in Houston. The first Petroleum Academy class is to support the educational initiativesThis year, PESA renewed its commitment graduating from college in May 2015. at the Energy Institute High School,”to the IPAA/PESA Education Center in In an effort to place these students with explains Galen Cobb, Chairman ofthe amount of $150,000 each year member company job opportunities, two the IPAA/PESA Petroleum Academythrough 2020. This significant level mixers were planned for IPAA and PESA Advisory Board.of support will allow us to continue HR professionals, Petroleum Academy “The IPAA/PESA Energy Educationfunding the petroleum academies and graduates and current academy seniors. Center and the Energy Institute HighEIHS. OTC Award School are committed to bringingEnergy Institute High School The Offshore Technology Conference students an innovative and fresh (OTC) announced the 2015 beneficiary perspective into the world of energy PESA President Leslie Beyer with of the Annual OTC Dinner—the IPAA and developing the next generation EIHS students and PESA Energy Education Center for of talented energy professionals.PESA participated in the Guest the benefit of EIHS. Establishing a new program of thisLecturer Series on September 3 at “The OTC Dinner Executive Advisory size is monumental and along with theEIHS. The goal of the guest lecturer Board’s aim is to make a difference in rewards brings sizable challenges. Thisseries is to provide students the ability people’s lives,” says Kevin McEvoy, award allows us to further enhance theto make more informed career choices CEO of Oceaneering, PESA Board program while continuing to providein the areas of math, science and Member, and Chair of 2015 Annual ground-breaking project-based STEMthe emerging technology concepts OTC Dinner Executive Advisory Board. education,” says Leslie Beyer.available in our industry. “The Board selected this year’s charityDuring the school year, industry because of its strong commitment Hoover Container Solutions &professionals volunteer to share to advance STEM education through Precision Additives at the Sportingthe vast career opportunities that hands-on, project-based learning with Clays Tournamentare available within the petroleum a specific focus on the energy industry.” Sporting Clays Tournamentindustry. PESA President Leslie Beyer IPAA and PESA partnered with the Thank you to all the participants in ourand DistributionNOW Vice President Houston Independent School District 2014 Energy Educators Tournament.of Marketing & Business Development to create the first Energy Institute High Proceeds from this event help supportBrad Wise presented to the freshman School in the United States. Opened in all of the efforts mentioned in this articleclass. Leslie spoke to the class about August 2013, the Energy Institute is a in addition to college scholarships fordeveloping a career in the energy graduating seniors of the Petroleumindustry and the opportunities created Academies. 5 PESA News

PESA & the US Department of StatePartnering to Train Foreign Service Officers on the Energy Industry For the past 21 years, PESA has co-sponsored Member companies donate their time, a Foreign Service Officer Energy Industry personnel, and facilities to give FSOs a Training Session with the U.S. Departments hands-on overview of the petroleum industry. of State, Energy, and Commerce. The week- In return, PESA member companies gain long training familiarizes Foreign and Civil valuable, educated contacts in the FSO Service Officers with the energy industry to community. facilitate informed energy decisions at their Highlights of the FSO training included the embassy posts around the world, specifically James A. Baker III Institute for Public Policy; in energy-intensive countries. Citi Trading Floor; Weatherford’s drilling rig; Member and customer companies along with a briefing on security from BP; Halliburton’s nationally-recognized educational institutions Research and Development Center; provide experts, materials, and equipment for ExxonMobil; and the FMC Technologies the training program. To date, PESA has trained production floor. more than 550 federal government officers.Federal governmentofficers tour SNAPSHOT ofWeatherford’s training rig FSOs August 2014Executive Leadership Address PESA Emerging Leaders Executive Leadership series allows individuals to share details of their journey to success and best practices for the next leaders of the energy industry. Legendary Texas A&M football coach Richard Copeland “R. C.” Slocum shared his leadership principles October 15. Slocum served as the head football coach at Texas A&M University from 1989 to 2002, and is the most winning coach in Aggie football history. Slocum was inducted into the College Football Hall of Fame as a coach in 2012. Slocum spoke of respect through leadership from his coaching experience and how that could apply to any organization. “Every person has dignityEmerging Leaders Chairman Brian Swagerty, and deserves respect,” said Slocum.Coach R. C. Slocum and Sarah Swagerty Hannon Hydraulics was the event’s corporate sponsor.6 PESA News

Oil & Gas 101PESA created certification and Denver, LTR, NOV, Oceaneering, Oileducation programs like Oil & Gas 101 States International, and Weir Oil &designed to equip our future leaders Gas sponsored 30 transitioning militarywith knowledge and skills that capitalize servicemen who are interested inon our industry’s success and build the joining the oil and gas industry. Oneindustry of tomorrow. veteran said, “The course enlightenedSponsored by PESA’s Emerging Leaders me on how the industry works. ThanksCommittee, the Oil & Gas 101 seminar for providing retiring/transitioningheld September 2014 provided an military a seat. In addition to learningoverview of the exploration, drilling and the industry vocabulary, I was able toproduction phases of oil and natural gas talk with those in the industry which waswells. tremendously helpful.”PESA member companies Auge,DistributionNOW, Energy & Specialty The following companies contributed Brad Wise (DistributionNOW) led aDistribution, FMC Technologies, Gardner subject matter experts for the Oil & real-life supply chain scenario. Gas 101 training:Baker Hughes • Ed O’Malley, Director • Introduction to Supply Chain National Oilwell Varco • KarlApplications Engineering, Sales, and Appleton, Business and TechnologyOperations Support FMC Technologies, Inc. • Dennis Director• Completions and Flow Equipment Pham, Field Development Manager – • Rig Systems and Drilling the Well Major Tenders Sinclair Group • Steve Jacobs, Sr.Cobalt International Energy, Inc. • Subsea Drilling and Production Vice President – Oil & Gas • History of the Industry & Emerging• James Geary, Sr. Exploration Halliburton • Robert Moran, Vice TechnologiesGeologist President, Government Affairs Viking Oil Tools • Wes Heiskell,• Introduction to Geology and Seismic • Government 101 President & CEO • Well Intervention & Well End-Of-LifeCredit Suisse • James Wicklund, HARC & Environmentally Friendly Wood Group Mustang • Chris Doss,Managing Director – Energy Research Drilling Systems • Andra Wilcox, P.E., Process Engineer, Downstream• Energy Markets Energy Production • Refining 101DistributionNOW • Brad Wise, Vice • Environmental and Societal Issues ofPresident, Marketing & Business Oil & GasDevelopmentCID Annual Meeting Speakers at this year’s CID annual personnel could mitigate the risk meeting included Paul Coppinger, inherent in their companies’ operations Divisional Managing Director, Weir by capturing and documenting the Oil & Gas; Dr. Chad Moutray, Chief proper information at various stages of Economist, National Association of their interactions with customers. Manufacturers; and Carl Doré, Jr., Repeating a successful segment from President, Doré Law Group. the previous year’s annual meeting, senior CID member credit managers PESA Chairman Paul Coppinger spoke shared their expertise by providing about the progress that PESA was useful information and leading group making to provide member companies discussions in separate breakout with additional resources to highlight sessions. This year’s topics included tips the issues affecting our industry and to for negotiating, managing international provide a platform for advocacy efforts. risk and examining the various credit risks in the lifecycle of a well. Dr. Moutray provided an overall There were also presentations to discuss outlook for the American economy best practices and provide information and discussed a number of the drivers on recently added features of CID’s required to sustain a recovery within credit reporting system that were given the manufacturing sector: export sales, by Mike Perini, PESA, and Mike Meyers, a skilled workforce, raw material costs ABC-Amega.Dr. Chad Moutray, Chief Economist, and steady levels of investment.National Association of Manufacturers Carl Doré gave insight into how credit 7 PESA News

U.S. Oil and Gas Field 1240 Blalock Road, Suite 110 First Class Equipment Exports Houston, TX 77055 US Postage PaidTop 15 Destinations for Q3 2014 Houston, TX (in U.S. $1,000) Permit No. July August Sept. 04805Saudi Arabia 62,356 23,546 53,027Korea 22,923 29,060 21,921Singapore 29,312 59,346 38,184Mexico 63,622 52,329 55,424China 29,328 32,684 27,823Canada 33,567 22,292 21,276Brazil 27,575 35,803 29,678UAE 34,245 13,542 19,076Argentina 52,862 48,018 44,755Nigeria 11,095 34,472 9,598UK 13,549 17,380 14,732Venezuela 26,899 12,351 16,504Egypt 7,711 6,031 4,916Angola 24,304 29,913 16,954Russia 35,178 30,341 22,618Subtotal : 474,525 447,108 396,487All Other: 192,123 194,255 206,973Total 666,648 641,364 603,459Sources: U.S. Department of Commerce & theU.S. International Trade CommissionSecure Your 2015 PESA Sponsorships › Washington Fly-In Congressional Reception › Annual Meeting › Oil & Gas 101 › Executive Address Series Luncheons › Topical Seminars › Energy Educators Shooting Clays Tournament › Explorers of Houston Golf Tournament “PESA Meetings deliver unparalleled opportunities to gain insights from industry leaders and key stakeholders. They are also an opportunity to share with our customer executives this sector’s proven advances in technology and innovations that create more value for their resource plays.” Galen Cobb Vice President of Industry Relations, Halliburton Emerging Leaders LiaisonIf your company is interested in sponsoring an event, please contact Molly Smart at [email protected] 713-932-0168.8 PESA News