PESA Spring 2015 Newsletter

news February – April 2015 Annual Meeting 2015 Volume 69, Number 1 Discovering Metrics for Success www.pesa.org From keynote speaker General Michael Hayden to top executive industry leader panels, members engaged on topics critical to the Upcoming Events service and supply sector. Please save the date for PESA's 2016 Hydraulic Fracturing Workshop Annual Meeting April 6-8 at the Grand Del Mar in San Diego, CA. July 15, 2015 The 2015 PESA Annual Russell Reed, “America Dr. Robello Samuel, Halliburton cannot be free unless Sunbelt Steel Meeting held April it is prosperous and it Houston, Texas 22-24 at the Ritz- cannot be prosperous, Executive Address Series July 23, 2015 Carlton Lodge at unless it is strong.” Citing past foreignPESA Chairman Gary Halverson, Reynolds Plantation in policy where U.S. Cameron Presidents pledged Greensboro, Georgia allegiance with oil TopGolf Houston West producing countries, Houston, Texas focused on industry Gen. Hayden sees new opportunity in a HR Roundtable collaboration and redefined geo-political July 29, 2015 landscape whereStephen Joyce, The Hackett Group; efficiency and creating Joseph Arnett, Schlumberger; Kevin Fleming, Cameron the maximum value Texas A&M at CityCentre Houston, Texas throughout the supply Keynote Speaker General Michael chain. Find all of our upcoming events Hayden, Principal of The Chertoff Group at www.pesa.org. K e y n o t e S p e a k e r and former Director of the CIA and NSA In This Issue General Michael toughest times we have ever resources from NorthAnnual Meeting.....Pages 1 & 4-9Chairman’s Letter................Page 2 Hayden, Principal of The lived in.” The key is adjusting America are game changersPESA Perspective................Page 2 Chertoff Group and former to a new environment and a in foreign relations.PESA Officers 2015-16.......Page 3 Director of the CIA andAustinLegislativeSummit...Page10 NSA, set the stage for a new new world where we are all Gen. Hayden closed with aDC Fly-In...........................Page 11 paradigm in the geo-political empowered and capable, prediction that after the nextLeadership Dialogues & Business landscape where “non-state and equally threatened by election, our country willForums.........................Page 12 actors” pose the biggest the transnational and cyber play a new role in foreignInter national Trade Policy domain. affairs, regardless of whoCommittee....................Page 13 threats in a world that heCrude Exports.........Pages 14-17 says “is more complicated, “States are weak and we wins and that the industrySupply Chain Seminar......Page 18 more immediate, but not the have ungoverned spaces will determine a new playingExecutive Address....Page 18 field. “The most significantMid-Continent District that affect the United States. event to how America viewsMeeting.................Page 18 The dangers coming at foreign affairs and nationalExplorers of Houston security is the DakotasG o l f To u r n a m e n t . . . . . . . . . 1 9 the U.S. do not have the and Marcellus Shale,” heFSO Training Program.........20 attributes of a state,” said remarked. “It is a primal Gen. Hayden. event about how we think of1 PESA News Gen. Hayden illustrated foreign affairs and we now the emerging definition of have the option of making nation state that relies on other choices.” redefining citizenship and Speakers at the annual leaves the Middle East in a meeting addressed the multi-decade long conflict. theme “Discovering Metrics The key to success is the for Success” in panel PESA Chairman Gary role of the U.S. and how discussions that encouraged Halverson, Senior VP it is defined. As Hayden audience participation and & President ‑ Drilling & points out, in a reference engaging question and Production Systems, Cameron to the quote from Walter answer sessions. Panelists —Annual Meeting continued on pages 4 – 9.

Chairman’s Letter At our recent annual meeting in Georgia, I to more geopolitical risk. We must also was elected to serve as PESA’s Chairman for counter potentially aggressive regulatory the upcoming term. I would like to express mandates and increasingly strident anti-drilling my gratitude to our immediate past chairman, movements with focused education on the Paul Coppinger, for his leadership and hard safety of our technologies and benefits of work this past year representing the PESA energy security. member companies that form the backbone Although we met this year in the midst of the oil and gas service, manufacturing of extraordinary times for our industry, and supply sector. Under his leadership, we we approached our Annual Meeting with reconfigured ourselves to promote sector optimism for the future, gathering to explore priorities and serve as a stronger resource for innovative opportunities for collaboration our members. between the service and supply sector and our customers.Gary Halverson Our sector has played an integral role in Over the course of the coming year, PESAPESA Chairman the energy revolution of the United States, will continue to act as a trusted resource;Senior VP & President contributing powerfully to the economy and speaking out on issues that are critical to ourDrilling & Production strengthening our geopolitical position. Yet, industry and advancing member priorities onSystems, Cameron we now face a challenging market and must key industry issues. approach the new environment with a delicate balance of managing costs and maximizing Gary Halverson opportunities. PESA Chairman With the innovations of hydraulic fracturing Senior VP & President, Drilling & Production and horizontal drilling, the United States is Systems, Cameron now the world’s largest producer of natural gas, and this has changed the game for our industry. However, the reality is that with oil hovering at $60/barrel, we are exposedPESA PerspectiveIn the short year since I’ve joined PESA, Based on those tenants, PESA will become a PESA Presidentwe’ve seen some exciting developments. An stronger advocate for oilfield service, supply Leslie Shockley Beyerentirely new brand contributes to the modern and manufacturing companies. Promotinglook of our association, and enhanced sector positions on issues that will impactmember resources like our redesigned our business is a top priority for any tradewebsite and developed social channels will association, and we are no different.expand our presence in the industry. We have Our mission is to serve as the unifying voicestreamlined our board structure, developed for the service and supply sector, bringnew policy committees, added two new awareness to critical issues and advocate onRegional Districts: West TX/South TX and the our members’ behalf. My vision is for PESA toNortheast, and strengthened partnerships be recognized as the go-to voice and resourcewith advocacy groups at customer companies for our sector. Thank you for trusting me toand aligned trade associations. Yet while honor the past and build on the foundation ofwe are certainly focused on striving ahead, this great association. And please come seeprioritizing the foundation of the association us in our new office soon!remains a key goal.Three years ago, you laid out the job Leslie Beyercreation, innovation and security themes thatthis sector provides to the energy industry. PESA President PESA News is published by: PESA President Petroleum Equipment & Services Association 2500 Citywest Blvd., Ste 1110 Leslie Shockley Beyer Houston, Texas 77042 PESA Director of Communications Connect With Us 713-932-0168 Molly Smart © 2015, PESA2 PESA News

PESA Elects 2015-16 OfficersCameron’s Gary Halverson, Gardner Denver’s Saeid Rahimian and DistributionNOW’sBurk Ellison to Lead Organization During the 2015-2016 YearPESA elected Gary Halverson as Cameron International. A graduate of when National Oilwell Varco formedchairman, Saeid Rahimian as vice Odessa College, he previously served NOV Wilson. Ellison has a Bachelor ofchairman and Burk Ellison as first vice as vice chairman on the executive Business Administration (B.B.A.) frompresident for the 2015-2016 Board of committee of PESA. Eastern New Mexico University.Directors. Rahimian is the president and chief “Under the board’s leadership, PESA“Since PESA was founded in 1933, executive officer of Gardner Denver’s is developing a stronger voice forour members have evolved with Energy Group, and corporate the energy industry’s service, supplythe energy industry, developing vice president. He obtained his and manufacturing organizations,”new technologies and contributing undergraduate degree from the explained PESA President Leslieto exponential job growth,” said University of Evansville and a master Shockley Beyer. “Our memberHalverson. “In the coming year I look of science in mechanical engineering companies’ achievements in jobforward to working with PESA’s board, from The Ohio State University. In creation, technological innovation andstaff and membership to further the addition, he is a graduate of the energy security continue to be a criticalunderstanding of the vital part the Harvard Business School Advanced contribution to the U.S. economy. It hasservice and supply sector plays in the Management Program. been a pleasure working with outgoingenergy industry.” Ellison is President, Energy Branches chairman Paul Coppinger and I lookHalverson joined Cameron in 1978 for DistributionNOW. Prior to this role, forward to continuing this momentumand has held numerous management he was President of National Oilwell with Gary, Saeid and Burk as we facepositions throughout his career in Varco’s Distribution Services business new challenges and opportunities forthe U.S. and overseas. He is currently unit. He also served in the role of our sector of the industry and ourthe president, drilling & production Senior Vice President of Upstream/ members.”systems and senior vice president of Midstream Sales and OperationsPESA Board of DirectorsGary Halverson Saeid Rahimian Burk L. Ellison Paul CoppingerChairman Vice Chairman First Vice President Immediate Past ChairmanSenior VP & President President & Chief Executive President Divisional ManagingDrilling & Production Officer Energy Branches DirectorSystems Energy Group DistributionNOW Weir Oil & GasCameron Gardner Denver, Inc. Robert Workman Christopher CraggDave Warren Galen Cobb Explorers of Houston Emerging Leaders LiaisonFinance Chairman Energy Educators President & Chief Executive Senior Vice PresidentPresident & Chief Executive Vice President – Industry Officer OperationsOfficer Relations DistributionNOW Oil States International, Inc.Energy Alloys HalliburtonBrad Eastman Mark Wolf Bob Moran Douglas A. PolkLegal Co-Chairman Legal Chairman Policy Chairman Membership ChairmanVice President Assistant General Counsel Vice President Vice PresidentDeputy General Counsel & Assistant Secretary Government & External Industry AffairsCameron FMC Technologies Affairs Vallourec USA Corporation HalliburtonPat Bond Dan Domeracki Richard AlabasterWest TX/South TX District Gulf Coast District Santosh Mathilakath Northeast District ChairmanChairman Chairman Mid-Continent/Rockies Vice PresidentPresident & COO Vice President District Chairman Surface TechnologiesLTR Government & Industry President & CEO FMC Technologies, Inc. Relations LoneStar Group Schlumberger 3 PESA News

AnnualMeetingcontinuedfocused on how operators andsuppliers can continue to improveperformance and efficiency to takethe oil & gas industry to the next level.David Bat, moderator for the onshorepanel and President of StreamflowUSA, discussed taking a “cold hardlook at the sustaining elements that aredriving our business moving forward,which are primarily in North Dakota,Montana and Bakken.”Just like the geo-political map is The onshore panelists Jeff Shellebarger, President, Chevronshifting, so has the industry with North North America Exploration and Production, Mark Williams,American resources opening a newera of unprecedented production Chevron North America Exploration “We have found resources in Northand providing a resource for many and Production. “We just need to America that are good for our businessyears to come. The current cycle, make it profitable and not respond moving forward, giving us a bigwhile challenging, is a unique time to geo-political events and instead footprint in the U.S. we have not hadto explore long-term planning and base it on supply and demand.” The before,” Shellebarger adds. “We haveefficiency throughout the supply chain. volatility in the oil & gas business will a lot of people in the external worldDuring the onshore panel, the continue, but the focus needs to be on interested in our business.”speakers discussed opportunities for collaboration between suppliers andcollaboration during the downturn and equipment companies and focused on The key moving into the era ofwithin the current cycle of decreased margins. production is finding out how to handleoil prices in a challenging global geo-political and governmental regulatoryclimate.“We know what our business is,”stated Jeff Shellebarger, President ofAnnual Meeting Sponsors4 PESA News

Senior Vice President, Exploration and Development, Whiting Petroleum Corporation, David L.Stover, President and CEO, Noble Energy and Joe Hudson, President, Nabors USAmature unconventional horizontal plays operate, by showing that we operate will determine the outcomes for bothto capture the most value. This means in a responsible and safe manner with service providers and producers.partnerships that focus on long term a lasting benefit by being engagedgrowth. “Relationships with business in the community,” explained Stover. “We have been through cycles manypartners are not transactional,” How we engage with the community in times and we know the playbookstates Shellebarger. “We have a strong, positive voice will help ensure moving forward,” states Jim Kleckner,to communicate performance our mutual success. EVP International and Deepwaterexpectations of the business, looking Operations with Andarko Petroleumdeeper into our supply chain, making Industry leaders attending the annual Corporation. “What helps us is thesure they are all aligned to the same meeting shared the optimistic position ability to execute on very complex andend goal.” that the North American resources very difficult E&P developments, and offer promising prospects for sustained we cannot do that without the supplierDave Stover, President and CEO of growth and long term prosperity. The and service community who we relyNoble Energy explained, “This cycle outlook beyond the current cycle for on for internal technology.”challenges us to think in terms of the entire value chain offers long-termlong-term partnerships that create mutual bottom line success focused The low oil prices require more of thissustained value to continue to improve on efficiencies that drive towards more collaboration to increase productionour break-even economics on a global effective production. efficiencies and maintaining profitscale.” margins. “We rely on standardization, “I am very optimistic because we have continuity of our contractors,All panelists agreed that foresight a large resource opportunity and the knowledge transfer, and specificationsand planning is a great opportunity technology and capability to effectively that are within established parameters,”for long-term success and that the develop disciplines to execute the work continues Kleckner.forecast moving forward offers we are doing focused on margins,” The main focus is establishing opentremendous business potential for Shellebarger stresses,”Eighty percent communication, starting with earlysuppliers and service organizations of what we need to do in the next planning and staying on critical paththroughout the supply chain. The cycle is execution and efficiency that keeps the project on schedule. Thiscollaborative tone includes working which means collaboration between is maintained through the preservationtogether to engage the public to suppliers and equipment companies.” of trained talent which presents bothcontinue making this business viable a challenge and an opportunity whilewhich means developing trust in the The offshore panel continued the managing in the downturn.community. “We have to continue discussion of how collaboration for bothto work together to earn the right to exploration and development towards 5 PESA News enhancing production efficiencies

Annual Meeting continuedOffshore Panel Moderator: Kurt Abraham, Executive Editor of World Oil, James J. “Jim”Kleckner, EVP, International & Deepwater Operations, Anadarko Petroleum Corporation,Merrill A. “Pete” Miller, Jr., Executive Chairman, DistributionNOW; Director, Transocean andChesapeake, and John Mingé, Chairman and President, BP AmericaAccountability, performance, reliability and efficiency are operators and service providers as they examine newthe key metrics to focus on to ensure long term success, business models to improve production efficiency throughhowever the panelists warn not to sacrifice safety, as this best in class engineering expertise.would ultimately have a negative result on both the bottomline and the ability to operate effectively. “When the dollars have to go farther, the innovative ways we can use human capability is one of the things we can all“We need to drill more with less, but we cannot lose our focus on,” explained John Mingé, Chairman and Presidentfocus on safety,” stressed Pete Miller, Executive Chairman of BP America. “We can drive down costs and shortenof DistributionNOW; Director, Transocean and Chesapeake. cycle times by working together to create solutions to the“We have to look at performance metrics and ensure challenges in offshore drilling.”the equipment is reliable because if you cut costs, youultimately lose more in the long-run.” This year’s annual PESA Meeting reinforced the ultimate goal of collaboration to maximize resources and secureMiller emphasized process safety, well safety and personal opportunities that improve efficiency in technology,safety as equally important in a continuum that encompasses production and workforce. The event helped solidify thethe entire spectrum throughout the supply and production resolve of all PESA members and industry producers tochain. cohesively integrate through team-based communication strategies best practices and shared expertise.Upgrading personnel, retiring rigs, and consolidation areall ways to increase capital and production efficiency, butultimately the industry relies on the collaboration between6 PESA News

PESA Chairman Gary Halverson of Cameron, Cindy David L. Stover of Noble Energy, Maryann SeamanGremp and Past PESA Chairman John Gremp of FMC of FMC Technologies, Inc. and Galen Cobb ofTechnologies, Inc. at Wednesday’s Welcome Reception HalliburtonPESA encouraged high-performing emerging leaders to attend annual meeting by offering a reducedregistration fee. Auge Industries sent three high-performers including Marcos Alcocer pictured above. Golf TournamentRollie McGinnis, Auge Industries, John and Patty Royall, Gulf Publishing, and Steve Lykins, Proserve Operations 7 PESA News

AnnualMeetingcontinued8 PESA News Immediate Past Chairman Paul Coppinger

ThursdayReception& DinnerFormer PESA President Sherry Stephens Blanks, Philosopher & Author, Alex Epstein, presented “TheScholarship Recipient Julissa Enriquez & Energy Moral Case for Fossil Fuels” in a plenary luncheon.Educators Chairman Galen Cobb, VP of Industry All guests received copies of his acclaimed book.Relations, HalliburtonSpouse & Guest Boat Cruise 9 PESA News

Austin Legislative SummitPESA member company executives and high performers engaged with policy makers andinfluencers in the Texas Legislature during the Austin Legislative SummitThis February, PESA leaders Austin Legislative Summit Policymet with elected officials Briefingsand industry thought leaders Texas Railroad Commissioner David Porterfor The Austin Legislative Texas Railroad Commissioner Ryan SittonSummit to discuss issues Deb Mamula, Office of the Lt. Governoraffecting the service andsupply sector. This event was State of the Industry Panelthe first of its kind for PESA, Hugo Gutierrez, Marathon Oildesigned to enhance our Tommy Foltz, HBW Resourcesadvocacy efforts on the state Royce Poinsett, Gardere Wynne Sewell LLPlevel. Moderator Andrew Biar, Strategic Public AffairsAttendees also enjoyedan interactive lobbying Texas Energy Policy Updateexercise with Tara Anderson Sen. Carlos Urestiof the American Petroleum Austin Legislative Summit participants visited Rep. Jim KefferInstitute. The session was the Texas State Capitol for private member and Rep. Phil Kingdesigned to give participants staff meetings Private Member/Staff Meetingsa greater understanding of how elected officials make decisions and Sen. Judith Zaffiriniemphasized the need for the oil and natural gas industry to speak up and Rep. Drew Darbypromote sound energy policies. Rep. Ken King Rep. Tracy KingPESA West TX/South TX District Chairman and President & Chief Rep. J.M. LozanoOperating Officer of LTR, Pat Bond, touched on his summit experience, Rep. Tan Paker“I found the Austin Legislative Summit to be very useful time spent. I met Rep. Drew Springersome representatives that are responsible for districts that we operate in. Iintend to continue my communication with these individuals and reach outto them when I am in their respective districts.”  Texas & Okla. Sign Laws To Prohibit Local Fracking Bans Texas Governor Greg Abbott and Oklahoma preserve cities’ authority to reasonably Governor Mary Fallin recently signed bills regulate surface activity related to oil and into law prohibiting cities and towns from gas activities, while affirming that regulation banning hydraulic fracturing, giving the of oil and gas operations fall under the states sole authority over oil and gas exclusive jurisdiction of the state. regulation. “This law ensures that Texas avoids a “The passage of HB 40 and SB 809 is a great patchwork quilt of regulations that differ example of how Texas and Oklahoma states from region to region, differ from county and local governments can work together to county or city to city,” Texas Governor with the energy industry in responsible Abbott said. regulation. This balanced solution will Gov. Fallin said that Oklahoma has led the allow the oil and gas industry to continue nation in developing rigorous standards supporting thousands of jobs in Texas and for oil and gas production. A patchwork Oklahoma and contributing billions of of regulations that vary across the state dollars in tax revenue to public schools, would be inconsistent with the goal of infrastructure and municipal services,” reasonable, easily understood regulations stated PESA President Leslie Beyer. and could damage the state’s economy and Texas’s HB 40 and Oklahoma’s SB 809 environment, she said.10 PESA News

Washington, D.C. Fly-InMembers Tell the PESA Story of Jobs, Technology and IndependenceWithout question, this is a challenging PESA Members at the 2015 Washington, D.C. Fly-Intime for our sector of the industry. Theprice of oil trading at a six-year low serve to hinder the American energy to release a series of regulations thatsupports the need for broad crude renaissance. will significantly impact the oil andexports, pro-growth tax policies and Congressional leaders must use natural gas industry. PESA supports aa responsible regulatory environment. legislative and/or legal action to temper responsible regulatory environmentRepresenting more than 1.3 million some of the Administration’s regulatory that factors in economic and workforcejobs in over 80 countries, 22 PESA zeal as it considers clamping down on impacts.member company executives took the methane emissions, creating federalmessage of job creation, technology standards for hydraulic fracturing and Offshore Drilling Accessand stability to Washington, D.C., requiring unattainable ozone metrics. The Department of the Interior (DOI)during the Association’s sixth annual Some of the issues discussed were: recently released a Draft Proposal forFly-In this February. Over a period of the 2017-2022 Outer Continental Shelfthree days, PESA met with more than Approval of Exports of LNG and Crude (OCS) Oil and Gas Leasing Program.30 members of Congress and their PESA strongly supports the efforts of Studies suggest that opening thestaffers, Washington-based customer Senators Lisa Murkowski and Heidi Atlantic offshore could create nearlyrepresentatives, U.S. Department of Heitkamp in their introduction of the 280,000 new American jobs andState officials and industry thought American Crude Oil Equality Act, to inject tens of billions of dollars intoleaders to discuss critical issues end the 40-year-old ban on U.S. crude our economy. Under the current five-affecting the service and supply sector. oil exports. year plan, oil and gas exploration isWe are looking to lawmakers to banned in 87 percent of our offshoreuse hearings and legislation to turn Overreach of Federal Regulations areas. PESA supports greater accessup the heat on regulators, and are The Administration has and continues to offshore resources, supportingtaking that message to state capitols domestic energy production in anand Washington, D.C. Unnecessary environmentally safe manner.hurdles in the path of our industry’seconomic development will onlySenator Cory Gardner (R-CO) serves onThe Senate Energy and Natural Re‑sources Committee and spoke to PESAmembers about issues critical to theservice and supply sector.“The PESA Washington, D.C. Fly-In was excellent and one of the strongest programs we’ve ever had. We metwith a very wide variety of representatives, including members of Congress, industry association leaders, andnumerous committee and staff leaders. It was a packed, well-organized program over the three days for thePESA attendees, and our voice was heard in a very effective way during an important time in our industry. I amthankful that PESA has stepped up its advocacy role and appreciate the strong leadership from Leslie Beyerand Bob Moran to assure our message is effectively communicated to policy makers.”PESA Energy Educators Chairman Galen Cobb, Vice President of Industry Relations at Halliburton 11 PESA News

Congressional Leadership DialoguesAfter an outstanding of PESA and served as emcee,Washington Fly-In and positivefollow up from a number of facilitating dialogue on policyofficials, PESA began hosting issues most important to oursmall events with members of membership.Congress who are key to the In April, PESA Leadership metindustry. The goal of these with Senator Heitkamp (D-small, non-fundraising events ND). She is a member of theis to build relationships with following Senate Committeeslegislators who are involved and Subcommittees:in many of our priority issues, Subcommittee on Ruraleducating them about the Development and Energy,oilfield service and supply Subcommittee on Nationalsector and the challenges we Congressman Latta (R-OH) Senator Heitkamp (D-ND) Security and Internationalface. Trade and Finance,March 10, PESA met with Congressman Bob Latta (R-OH) Subcommittee on Regulatoryfor the first leadership dialogue. Congressman Latta is a Affairs and Federal Management, Committee on Indianmember of the House Energy and Commerce Committee Affairs and Committee on Small Business & Entrepreneurship.where he sits on the Energy and Power, and Environment and The dinner with Sen. Heitkamp initiated the motion forthe Economy subcommittees. Both committees are deeply PESA to engage in a much stronger way on crude exports.involved in many issues crucial to PESA members. PESA Please see the special focus issue section on crude exportsBusiness ForumsMembership Chairman Doug Polk led the dinner on behalf on pages 14-17. Working with Strategic Public Affairs, PESA co-sponsors business forums with elected Congressman Veasey (D-TX) officials that address today’s most significant and critical issues related to the oil and gas industry. This spring, the forums focused on energy legislation and how it should represent Texas Railroad the industry’s ability to compete in the global market and advance scientific discovery. Commissioner Sitton At the PESA co-sponsored business forum, April 1, featuring U.S. Congressman Marc12 PESA News Veasey (D-TX), who represents Texas’ Congressional District 33 in the U.S. House of Representatives, the discussion focused on his work on the Energy Subcommittee working to encourage energy research and development to increase production from all sources, strengthen our nation’s energy independence, and lower energy production costs for families and businesses. In addition to the Energy Subcommittee, Veasey also sits on the Subcommittee on Space, both part of the House Science, Space and Technology Committee. As a Member of the House Science, Space and Technology Committee, Rep. Veasey sits on the Energy Subcommittee where he works to encourage energy research and development to increase production from all sources, strengthen our nation’s energy independence, and lower energy production costs for families and businesses. The Energy Subcommittee has legislative jurisdiction and general oversight and investigative authority on all matters relating to energy research, development, and demonstration and projects therefor, commercial application of energy technology, and environmental research. Texas Railroad Commissioner Ryan Sitton led the PESA co-sponsored business forum on June 4, delivering details on his vision for Texas and energy producers in this state. As Railroad Commissioner, Ryan is working to make the commission more efficient and effective so Texas can lead America to energy independence. He believes Texas, not the EPA or other federal agencies, should be responsible for overseeing the production of our natural resources which is why he is committed to fighting burdensome federal interference. As keynote at the American Society of Mechanical Engineers recently, Commissioner Sitton said, “With the right energy policies in place, based on sound science and data, Texas is poised to lead America to a place where we are dominating global energy markets through the use of our technology and innovation. Domestic production of our energy resources is fueling our economy and has us well-positioned to enhance our national security and economic security for future generations.”

International TradePolicy CommitteeThe newly-formed PESA International Trade Policy Committee monitors ongoing policies and regulations affecting theoilfield service and supply chain sector, and recommends the appropriate response on behalf of PESA membership.These responses include submitting written comments, statements and scheduling meetings with elected officials andAdministration representatives. The committee chairman also works with other trade groups representing the oil and gasindustry as a member of the Cooperating Associations (IPAA, NOIA, API, IADC, HEITC, etc.) to provide written commentson trade issues affecting PESA member companies either directly or indirectly. Committee Co-Chairmen Ellen Smith,Global Trade Compliance, Baker Hughes, and Doug Polk, VP of Industry Relations, Vallourec USA lead this committee.Primary Develop unified voice for oilfield service companies S Compliance Goals Benchmarking S Build upon collective knowledge to mitigate risk S Federal Agency Engagement S Facilitate ongoing dialogue S Submit comments on regulatory proposals – via PESA outside counsel S Establish quarterly committee meetings to discuss key issues and/or invite guests to provide regulatory outlook informationTarget International Sanctions S Import ClassificationsIssues S Export Reform S Enforcement Actions S International Access S Anti-Corruption Elements S Ex-Im Reauthorization S Anti-Dumping Provisions S Currency Manipulation S Free Trade Agreements S Anti-Boycott Law Member Baker Hughes S Cameron S GE Oil & Gas S Halliburton S National Oilwell Varco SCompanies Schlumberger S Vallourec S Weatherford This committee welcomes wider company representation. For more information email [email protected]. 13 PESA News

Special Focus Issue: Crude Exports Bipartisan Bill Introduced to End Ban on Crude Oil Exports PESA Joins Effort To Pass Energy Supply and Distribution Act of 2015 The Energy and Supply Distribution Act of 2015 introduced by U.S. Sen. Lisa Murkowski, R-Alaska seeks to modernize America’s energy policies. This bipartisan effort will build infrastructure and open access to new markets to enhance energy production and widen the distribution of that supply across the U.S. “The passage of the Energy Supply and Distribution Act of 2015 is mission critical for the oil and gas industry. It is time to enact the essential policies that strengthen our domestic energy production and reflect today’s economic climate,” said PESA President Leslie Beyer. “PESA strongly supports lifting the ban on crude oil exports to increase jobs, lower gas prices and bolster our national security. We will work to ensure the White House and Congress understand that repealing the ban is imperative not only for our industry, but for the entire US economy.” The Act consists of 17 proposals that are being introduced in advance of legislation. Murkowski, chairman of the Senate Energy and Natural Resources Committee, is working to report out of the committee this summer. “America’s energy landscape has undergone a dramatic change since Congress last acted on comprehensive energy legislation. Our domestic energy supply has gone from scarce to abundant,” Murkowski said. “Our energy renaissance underscores the need to modernize America’s energy policies. These targeted bills are an important step toward ensuring economic growth and improving American’s standard of living.” How You Can Make a Difference Visit PESA’s Online Policy Center At pesa.org, we have the tools for you to email and/or send a letter to the White House and your Senators and Congressmen in support of lifting the ban on crude oil exports. Share with Your Employees Encourage your employees to sign up for PESA updates. Share via Social Media Share the PESA resources like the image at right and the infographic on the following page via social media channels. An additional resource is the Producers for American Crude Exports (PACE) website: www.oilexports.com 14 PESA News

UNLEASHLIFT THE BAN ON CRUDE OIL EXPORTS. Let America rise as a world leader in energy. 15 PESA News

Special Focus Issue: Crude Exports U.S. OIL EXPORTS: A HISTORY OF THE BAN AND 1973 1975 MODIFICATIONS MADE TO DATE OCTOBER 1973 DECEMBER 1975 - THE COST OF DOING NOTHING - The Arab President Ford signs Oil Embargo the Energy Policy A widening gap causes prices to and Conservation in U.S. versus skyrocket. Act, banning export international barrel of crude oil to retain costs U.S. oil and protect Decreased investment against price shock. in the energy sector Slowed production + BENEFITS and loss of jobs TO LIFTING Weakened foreign THE BAN + relations $86 Billion in additional gross domestic product* 2 WHAT YOU CAN DO NOW Send a message to SOURCES: 1. https://unlockcrudeexports.org/category/timeline/ 2. http://www.energytomorrow.org/blog/2015/march/yes-lift- the-crude-oil-exports-ban 3. http://energypolicy.columbia.edu/on-the-record/navigating-us-oil-export-debate

A CRUDE CASE MADE CLEAR1985 1992 1996 2014JUNE 1985 NOVEMBER 1985 OCTOBER 1992 APRIL 1996 JUNE 2014President Reagan The Commerce President Bush President Clinton The Commerceapproves limited Department pushed for the issues a finding Department grantsexports to Canada, expands previous export of 25,000 to allow exports two oil shippingdetermining this exception, allowing barrels per day of of crude from the companieswas in the nation’s exports from heavy-crude from Alaskan North permission tobest interest.1 production in California, which Slope, which travels export condensate Alaska’s Cook Inlet.1 was approved by through the Trans- to foreign buyers.1 the Commerce Alaska Pipeline Department in System.1 1995.1 *Projections cumulative from 2016 to 2030 400,000 24% $1.3 Trillion $0.12 new jobs* 2 increase in pay in federal, state, and possible decrease per for workers in the municipal revenue gallon at the pump 3 energy industry from corporate and personal taxes* 2 supply chain* 2Washington. Join the conversation #LiftTheOilBan 17 PESA News

2015 Supply Chain SeminarPESA’s Supply Chain Seminar Emphasizes Best Practiceswith Supplier Relationship as Key to SuccessPESA’s 2015 Supply Chain Seminar, d e v e l o p i n g m u t u a l l y b e n e f i c i a lThe Changing Oil & Gas Market and supplier relationships in Edwardthe Impact on Supply Chains, was Koval’s presentation on using marketheld Wednesday, February 18, 2015, intelligence as a strategic weapon.in Houston and featured four of the Koval, Chief Procurement Officer & VPindustry’s top experts in Supply Chain Global Supply Chain and Procurement with Spectra Energy, emphasized thatManagement. strategic sourcing drives the process. Edward Koval with Spectra Energy Alexander Robart, Partner withBrent Shinall, VP of Supply Chain PacWest Consulting Partners, Luc Messier’s, Senior VP, Projects andManagement at Rowan Companies, discussed how oil prices will impact Aviation Chief Procurement Officer atmade several key points regarding the the supply chain. PacWest, one of the ConocoPhillips, supply chain visionimportance of supplier relationship premier intelligence research firms for reduces the higher costs impactingmanagement that can optimize the oil & gas industry, predicts that returns, as the industry recalibrates to aefficiencies. He pointed out that in a the majority of plays will see major “value over volume” mind-set. Ownersdown market, SCM Drivers are critical decreases in horizontal frac activity in and suppliers must together face thefor success and that cost control 2015 due to the decline in oil prices, challenge to reduce supply chain coststhrough solid inventory management leading to consolidations. This means which is done by bringing exceptionaland streamlined logistics drastically that supplier economics are crucialimprove performance.Executive Address SeriesThis was reinforced with an eye towards moving forward into 2015 and beyond. value through strategic sourcing.Susan Cunningham, Noble EnergyWith over 30 years of industry experience, Susan Cunningham, ExecutiveVice President of Environment, Health & Safety Regulatory and New Frontiersat Noble Energy, recalled her challenges of climbing the corporate ladderin a male-dominated industry. She dealt with gender challenges by notacknowledging them. It’s an attitude she says helped her break many firsts in hercareer, including being the first woman to head an overseas office for Amocoand to land a C-suite position at Noble Energy.Today, she says that she embraces her role as a female leader in a male-dominated industry. “There’s strength in it. There’s something I can bring to thecompany because of it.” FMC Technologies was the event’s corporate sponsor.2015 Mid-Continent District Meeting The 2015 Mid-Continent District Meeting was held on March 3, 2015, in Denver, CO. and featured two industry speakers with extensive expertise in the oil & gas sector. Fernando Aguilar, President & CEO of Calfrac Well Services, described the current downturn as a very complicated year across the industry and stressed the need to prepare for and introduce measures for the down cycle including budget reductions and consolidations. John M. Daniel, Director, Co-Head of Oil Service Research of Simmons & Company International, presented modeling a 676 oil rig count increase from the 2015 trough at the end of Q2’15, with lower service costs in what he described as necessary to meet the “call on US crude.” Down cycles bring opportunities and a chance to refocus on optimizing all phases of the value chain by improving processes and seeking opportunities that support the long- term vision.18 PESA News

Explo1r6erthsAonf nHuoausl tPoEnSGAolEf xTpoulorrnearms ent of Houston Golf Tournament March 5, 2015 • Golf Club of HoustonPESA’s Explorers of Houston Annual Golf Tournament was held March 5, 2015, at the Golf Club of Houston. The event waschaired and organized by Committee Chairman Robert Workman, President & CEO, DistributionNOW. Tournament Winners 1st Place Score 126 Luke Juist Joe Johnson Alex GuiscardoTournament Sponsors 2nd Place Score 127 Steve Twellman Rusty Knight Joe Barnes Mike Chamberlain 3rd Place Score 130 Chuck Chauviere Bob Judge Matt Mosely Paul Archibald Closest to the Pin #7 Chuck Chauviere Longest Drive #13 Keith Hruby Straightest Drive #11 Brett StephenJosh Lowrey and Trey Smith of Galtway Industries Jennifer Serrano, LoneStar Group, Mike Closest to the Hole in Two Owens, DistributionNOW, and Burk Ellison, #18 DistributionNOW Joe Johnson 19 PESA News

U.S. Oil and Gas Field 2500 Citywest Blvd., Suite 1110 First Class Equipment Exports Houston, TX 77042 US Postage Paid Top 15 Destinations for Q1 2015 Houston, TX (in U.S. $1,000) Permit No. Jan. Feb. March 04805Korea 71,556 33,941 70,394Singapore 22,427 12,284 66,196Mexico 78,940 71,470 41,153China 48,974 91,167 35,200Canada 16,600 18,372 28,076UAE 14,406 13,203 23,045Saudi Arabia 19,134 17,441 22,173Trin & Tobago 6,816 9,033 17,473Brazil 36,333 28,091 16,592Congo (ROC) 1,061 3,416 14,951Russia 12,629 15,706 14,354UK 12,065 15,997 12,492Norway 5,365 9,213 11,136Egypt 22,439 7,110 9,094Nigeria 6,512 6,499 8,867Subtotal: 375,258 352,943 391,196All Other: 218,280 220,972 161,844Total: 593,538 573,914 553,040Sources: U.S. Department of Commerce & theU.S. International Trade Commission FSO Training For the past 21 years, PESA has co-sponsored a Foreign Program Service Officer Energy Industry Training Session with the U.S. Departments of State, Energy and Commerce and trained FSO’s received a tour of Weatherford’s training rig. nearly 600 Federal Government Officers to date.20 PESA News The week-long training, held April 6-9, familiarizes Foreign and Civil Service Officers with the energy industry to facilitate informed energy decisions at their embassy posts around the world, specifically in energy-intensive countries. The diverse world-wide enrollment featured officers from nineteen different countries including Turkey, Columbia, Russia, Angola, Brazil, Jordan, Canada, Mexico and Germany. “We are proud to co-sponsor this training program and provide practical knowledge of operations of all energy companies - operators, service providers, suppliers and manufacturers. A true education of the challenges and accomplishments of our industry at all levels will allow you to make better-informed decisions at post, and better support American interest abroad,” stated PESA President Leslie Beyer, who welcomed the group upon their arrival. Member and customer companies along with nationally- recognized educational institutions provide experts, materials and equipment for the training program. The course also offers graduates the experience of networking with executives from leading energy companies to learn and understand the opportunities and challenges facing today’s complex global energy sector. The April 2015 class took tours of FMC Technologies manufacturing facility, Weatherford training rig, Halliburton R&D Center, Citi trading floor and the Houston Ship Channel. They also learned from industry experts at Chevron, Schlumberger and Rice University. Participants gained an overwhelming amount of hands-on experience from leading industry experts in the energy sector and a global perspective on creating future energy solutions.