tesco analyst day -...
TRANSCRIPT
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Forward Looking StatementForward Looking StatementThis presentation contains forwardThis presentation contains forward--looking statements within the meaning of Section 27A of the Seculooking statements within the meaning of Section 27A of the Securities Act of 1933 and rities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All such stSection 21E of the Securities Exchange Act of 1934. All such statements, other than statements of historical fact, are atements, other than statements of historical fact, are statements that could be deemed statements that could be deemed ““forwardforward--looking statementslooking statements”” within the meaning of the Private Securities Litigation Reform within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, any projections of rAct of 1995, including, without limitation, any projections of revenue, gross margin, operating margin, operating expenses, evenue, gross margin, operating margin, operating expenses, earnings or losses from operations, or other financial items; fuearnings or losses from operations, or other financial items; future product plans; any statements of the plans, strategies and ture product plans; any statements of the plans, strategies and objectives of management for future operations; any statement coobjectives of management for future operations; any statement concerning developments, performance or industry rankings ncerning developments, performance or industry rankings relating to services; and any statements of assumptions underlyirelating to services; and any statements of assumptions underlying any of the foregoing. Although TESCO believes that the ng any of the foregoing. Although TESCO believes that the expectations reflected in these forwardexpectations reflected in these forward--looking statements are reasonable, they do involve risks, uncertlooking statements are reasonable, they do involve risks, uncertainties and assumptions ainties and assumptions that could cause our results to differ materially from those expthat could cause our results to differ materially from those expressed or implied by such forwardressed or implied by such forward--looking statements. These looking statements. These risks include, but are not limited to: the background risks of trisks include, but are not limited to: the background risks of the drilling services industry (e.g., operational risks; potentiahe drilling services industry (e.g., operational risks; potential delays l delays or changes in plans with respect to customersor changes in plans with respect to customers’’ exploration or development projects or capital expenditures; thexploration or development projects or capital expenditures; the uncertainties of e uncertainties of estimates and projections related to levels of rental activitiesestimates and projections related to levels of rental activities’’ uncertainties associated with estimates and projections of costuncertainties associated with estimates and projections of costs s and expenses; complexities of global political and other risks and expenses; complexities of global political and other risks associated with technical results and performance of technology;associated with technical results and performance of technology;and other risks described from time to time in our reports filedand other risks described from time to time in our reports filed with the Securities and Exchange Commission (with the Securities and Exchange Commission (““SECSEC””), including ), including the Companythe Company’’s Annual Report on Form 10s Annual Report on Form 10--K for the year ending December 31, 2006 and subsequent quarterlyK for the year ending December 31, 2006 and subsequent quarterly reports on Form reports on Form 1010--Q. You should not place undue reliance on these forwardQ. You should not place undue reliance on these forward--looking statements. We assume no obligation or duty and do not looking statements. We assume no obligation or duty and do not intend to update these forwardintend to update these forward--looking statements except as required by the securities laws.looking statements except as required by the securities laws.
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Julio QuintanaJulio Quintana, President and Chief Executive Officer, President and Chief Executive Officer
Tony TripodoTony Tripodo, Executive Vice President and Chief Financial Officer, Executive Vice President and Chief Financial Officer
Nigel LakeyNigel Lakey, Senior Vice President of Marketing and Business Development, Senior Vice President of Marketing and Business Development
Jeff FosterJeff Foster, Senior Vice President of Operations, Senior Vice President of Operations
Barry Barry BeierbachBeierbach, Vice President of Top Drive Services Business Line, Vice President of Top Drive Services Business Line
Warren SchneiderWarren Schneider, Vice President of Tubular Services Business Line, Vice President of Tubular Services Business Line
John BoyleJohn Boyle, Vice President of CASING DRILLING, Vice President of CASING DRILLING®® Business LineBusiness Line
Bob KaylBob Kayl, Vice President and Corporate Controller, Vice President and Corporate Controller
Kristi RectorKristi Rector, Investor Relations Coordinator, Investor Relations Coordinator
IntroductionIntroduction
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8:00 8:00 –– 8:30am8:30am Continental BreakfastContinental Breakfast
8:30 8:30 –– 8:45am 8:45am IntroductionIntroduction Julio QuintanaJulio Quintana
8:45 8:45 –– 9:15am9:15am Our Top Drive Business Our Top Drive Business Nigel LakeyNigel Lakey
9:15 9:15 –– 10:00am10:00am Our Tubular Services BusinessOur Tubular Services Business Warren SchneiderWarren Schneider
10:00 10:00 –– 10:15am10:15am BreakBreak
10:15 10:15 –– 11:15am11:15am Our CASING DRILLINGOur CASING DRILLING®® Business Business John BoyleJohn Boyle
11:15 11:15 –– 11:30am11:30am Financial ReviewFinancial Review Tony TripodoTony Tripodo
11:30 11:30 –– 12:00pm12:00pm Moving ForwardMoving Forward Julio QuintanaJulio Quintana
12:00 12:00 –– 12:15pm12:15pm Transportation to Transportation to BrittmooreBrittmoore FacilityFacility
12:15 12:15 –– 1:15pm1:15pm Lunch / Q&ALunch / Q&A
1:15 1:15 –– 3:00pm3:00pm TourTour Nigel Lakey/Jeff FosterNigel Lakey/Jeff Foster
3:00pm3:00pm Event ClosingEvent Closing
Presentation AgendaPresentation Agenda
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•• Global leader in design and delivery of technologyGlobal leader in design and delivery of technology--based based solutions for the drilling industrysolutions for the drilling industry
•• Two segments: Top DrivesTwo segments: Top DrivesCasing ServicesCasing Services
•• Five acquisitions from 2005 to 2007 expand Tubular Services foFive acquisitions from 2005 to 2007 expand Tubular Services footprintotprint
•• Global reach: 1800 employees inGlobal reach: 1800 employees in 27 key oilfield locations27 key oilfield locations
•• Founded in 1986; IPO in 1993Founded in 1986; IPO in 1993•• Listed: Listed: NASDAQ (TESO) NASDAQ (TESO)
TSX (TEO)TSX (TEO)
•• 52 week stock price range 52 week stock price range $15.35 $15.35 -- $34.76$34.76
•• 30 day average stock price30 day average stock price $27.83$27.83
•• Market Cap Market Cap $1.1 billion$1.1 billion
* Note: All $ shown in this presentation are in U.S. $* Note: All $ shown in this presentation are in U.S. $
TESCO at a GlanceTESCO at a Glance
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Alberta (3)Alberta (3)
Texas (7) Texas (7)
Mexico (2)Mexico (2)
Venezuela (2)Venezuela (2)
Brazil (3)Brazil (3)
Argentina (5)Argentina (5)
Moscow, RussiaMoscow, Russia
Dubai, UAEDubai, UAE
Beijing, ChinaBeijing, China
Jakarta, IndonesiaJakarta, Indonesia
Aberdeen, ScotlandAberdeen, Scotland
Louisiana Louisiana ArkansasArkansasColorado Colorado
Wyoming Wyoming
Stavanger, NorwayStavanger, Norway
ColombiaColombiaEcuador (2)Ecuador (2)
BoliviaBolivia
1800 Employees1800 Employees
SingaporeSingapore
Perth, AustraliaPerth, Australia
TESCO OfficesTESCO Offices
Global Service CompanyGlobal Service Company
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•• Top DrivesTop Drives
•• Tubular ServicesTubular Services
•• MCLRSMCLRS™™
•• CASING DRILLINGCASING DRILLING®®
Drilling Well on Paper (DWOP)Drilling Well on Paper (DWOP)
Casing ServicesCasing Services
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•• Top Drive Product SalesTop Drive Product Sales
•• Top Drive Rental ServiceTop Drive Rental Service
•• Aftermarket Sales and ServiceAftermarket Sales and Service
Top Drive Business OfferingsTop Drive Business Offerings
1010
•• Invented portable Top DriveInvented portable Top Drive•• Created Top Drive rental marketCreated Top Drive rental market•• Will rent or sell Top DrivesWill rent or sell Top Drives
–– HydraulicHydraulic–– ElectricElectric
•• Growing Aftermarket Sales and Growing Aftermarket Sales and Service BusinessService Business
•• WorldWorld’’s Largest Top Drive Service s Largest Top Drive Service OrganizationOrganization
•• Installed base of 550+ Top DrivesInstalled base of 550+ Top Drives(@ end 3Q (@ end 3Q ’’07)07)
•• 105 Top Drives in rental fleet105 Top Drives in rental fleet
Units InstalledUnits Installed Rental MarketRental Market
NOVNOVTESCO*TESCO*
CanrigCanrig
OtherOtherOtherOther
TESCOTESCO
Top Drives Top Drives -- GlobalGlobal
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* Includes China & FSU; two large markets with minimal complemen* Includes China & FSU; two large markets with minimal complements of Top Drivests of Top Drives
Offshore Rigs Offshore Rigs withwith Top DrivesTop Drives
95%95%
Land Rigs Land Rigs withwithTop DrivesTop Drives
40%40%
Offshore Rigs Offshore Rigs withoutwithout Top DrivesTop Drives
5%5%
Land RigsLand Rigswithoutwithout
Top DrivesTop Drives60%60%
Sources: BHI Rig Count, MI Rig Count, Schlumberger Rig Count, TESCO Research and Estimates
Total Rigs: 700Total Rigs: 700 Total Rigs: 5,000*Total Rigs: 5,000*
Offshore Rigs Offshore Rigs Land Rigs Land Rigs
Top Drive MarketTop Drive Market
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DERRICKDERRICK
LARGE LARGE TRIPLE TRIPLE MASTMAST SMALL SMALL
TRIPLE TRIPLE MASTMAST
DOUBLE DOUBLE MASTMAST
SINGLE SINGLE MASTMAST
WORKOVER WORKOVER MASTMAST
500 / 650 ECI500 / 650 ECI500 / 650 HS500 / 650 HS
500 HC 500 / 650 HCI500 HC 500 / 650 HCI
250 EMI / 250 HMI250 EMI / 250 HMI
2020’’ 1010’’ 88’’ 66’’ 66’’
Typical Drilling DerricksTypical Drilling Derricks
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2235
94
68
0
20
40
60
80
100
120
2004 2005 2006 1H 07
$92$126
$219
$142
0
50
100
150
200
250
2004 2005 2006 1H 07
Rev
enue
(Mil
$)R
even
ue (M
il $)
Uni
ts S
old
Uni
ts S
old
Top Drives Top Drives –– Historical PerformanceHistorical Performance
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•• Safer OperationSafer Operation
•• Increase Drilling EfficiencyIncrease Drilling Efficiency
•• Reaming/Backreaming Reaming/Backreaming
•• Underbalanced Drilling Underbalanced Drilling
•• Enhance Fishing OperationsEnhance Fishing Operations
How Can a TESCO Top Drive Help Your Drill Your Well?How Can a TESCO Top Drive Help Your Drill Your Well?
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•• Our business is Our business is ““Top Drive Drilling, Anytime, AnywhereTop Drive Drilling, Anytime, Anywhere””
•• Our culture is Our culture is ““ServiceService””
•• Complete customer service, global reachComplete customer service, global reach
•• Rental concept pioneersRental concept pioneers
•• Top Drive business experience (15+ years)Top Drive business experience (15+ years)
•• Full service provider (onFull service provider (on--site technical support) site technical support)
•• Currently have over $60MM invested in global rental assets Currently have over $60MM invested in global rental assets
The TESCO Top Drive AdvantageThe TESCO Top Drive Advantage
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Portability & FlexibilityPortability & Flexibility•• Available for sale, or rent as neededAvailable for sale, or rent as needed
•• Install at spud or anytime during well Install at spud or anytime during well programprogram
•• Containerized Containerized -- easily shipped worldwideeasily shipped worldwide
•• Suitable for offshore, inland barge, or Suitable for offshore, inland barge, or land rigsland rigs
A TESCO Top Drive ProvidesA TESCO Top Drive Provides
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More Than Ten Variants AvailableMore Than Ten Variants Available
•• Hydraulic Hydraulic c/wc/w selfself--contained diesel power unitcontained diesel power unit
•• AC Electric AC Electric –– runs on rig power or independent genruns on rig power or independent gen--setset
•• Hook load 150 to 650 tonsHook load 150 to 650 tons
•• Power 400hp to 1350HPPower 400hp to 1350HP
•• Drilling torque to 55,000 ftDrilling torque to 55,000 ft--lblb
•• MakeMake--up/breakout torque to 84,000 ftup/breakout torque to 84,000 ft--lblb
Broad product range to suit almost every applicationBroad product range to suit almost every application
Product OfferingProduct Offering
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•• Hydraulic units Hydraulic units (rental fleet and sales)(rental fleet and sales)
HS 500/650 ton 750/1100HPHS 500/650 ton 750/1100HP
HC 500 ton 750HPHC 500 ton 750HP
HMI 250 ton 475/550HPHMI 250 ton 475/550HP
HCI 500/650 ton 1205/1250HPHCI 500/650 ton 1205/1250HP
•• Electric units (Electric units (sales)sales)
ECI 500/650 ton 900/1350HPECI 500/650 ton 900/1350HP
EMI 150/250 ton 400HPEMI 150/250 ton 400HP
EXI 350 ton 600HPEXI 350 ton 600HP
WhatWhat’’s Provens Proven……
1919
•• 350 EXI 600 in field Q2 2007350 EXI 600 in field Q2 2007-- Built, shipped, in serviceBuilt, shipped, in service
•• 250 HXI 700 in field Q3 2007250 HXI 700 in field Q3 2007-- Prototype built and shippedPrototype built and shipped
•• 750 ESI 1000 (in design)750 ESI 1000 (in design)
•• Rig floor pipe handlingRig floor pipe handling
WhatWhat’’s Nexts Next……
2020
•• Maintain market dominance in Top Drive RentalsMaintain market dominance in Top Drive Rentals
•• Solidify position as preferred land rig Top Drive supplierSolidify position as preferred land rig Top Drive supplier
•• Strengthen relationships with rig buildersStrengthen relationships with rig builders
•• Expand rental business in key Eastern marketsExpand rental business in key Eastern markets
•• Capture AMSS business from growing installed baseCapture AMSS business from growing installed base
Strong business fundamentals continueStrong business fundamentals continue
Where is This Business Going?Where is This Business Going?
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•• Azimuth is a brand name for TESCOAzimuth is a brand name for TESCO’’s package of services for s package of services for installing casing, tubing, and control lines in the wellinstalling casing, tubing, and control lines in the well--borebore
Casing RunningCasing RunningCompletion ServicesCompletion Services
Tubing RunningTubing RunningControl lines (Multiple Control Line Running SystemControl lines (Multiple Control Line Running System™™ -- MCLRSMCLRS™™))
Reaming & Rotating CasingReaming & Rotating CasingEnhanced CementingEnhanced CementingAccessoriesAccessories
Overview of Azimuth Tubular ServicesOverview of Azimuth Tubular Services™™
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•• Casing Drive SystemCasing Drive System™™ (CDS(CDS™™) ) –– Increased safety, Increased safety, performance and reliability running casingperformance and reliability running casing
Getting casing to bottom despite hole problemsGetting casing to bottom despite hole problems
•• MCLRSMCLRS™™ –– Improved method for running control lines in Improved method for running control lines in deepwater and intelligent well completionsdeepwater and intelligent well completions
Azimuth Azimuth ““Game ChangingGame Changing”” TechnologyTechnology
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•• Conventional technologyConventional technologyPersonnel intensivePersonnel intensiveEquipment and logistics Equipment and logistics intensiveintensivePerformance limitedPerformance limited
•• Running casing is mission Running casing is mission criticalcritical
•• Technology has changed little Technology has changed little in 60 yearsin 60 years
Conventional Tubular Running ServicesConventional Tubular Running Services
•• Challenges:Challenges:Personnel Safety Personnel Safety Well bore conditionsWell bore conditions
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•• All rigs with Top DrivesAll rigs with Top Drives
•• TroubleTrouble--zone wellzone well--boresboresSoughing formations, tight Soughing formations, tight spots, ledges, bridged holes spots, ledges, bridged holes
•• Extended Reach and deviated Extended Reach and deviated wellwell--boresbores
Long horizontal sections with Long horizontal sections with high torque and draghigh torque and drag
•• Cementing OptimizationCementing Optimization
ApplicationsApplications
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•• TubingTubingEach completed well has at least one tubing string, some wells hEach completed well has at least one tubing string, some wells have multiple ave multiple stringsstringsGlobal tubing running jobs >100,000 jobsGlobal tubing running jobs >100,000 jobs
• Control LinesControl Lines8080--90% of subsea 90% of subsea completions require control completions require control lineslinesForecasted growth of Forecasted growth of subsea completions subsea completions expected to be 25% over expected to be 25% over next 4 yearsnext 4 years
Subsea CompletionsSubsea Completions
Source: Douglas Westwood Group
Completions: Markets ServedCompletions: Markets Served
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Features and Technology DifferentiatorsFeatures and Technology Differentiators•• Prevents damagePrevents damage
√√ Control Lines do not pass through the slipsControl Lines do not pass through the slips
•• Safer more controlled environmentSafer more controlled environment√√ No competition for floor spaceNo competition for floor space√√ No overhead sheavesNo overhead sheaves√√ No manual manipulation of control linesNo manual manipulation of control lines
•• Faster rig up & rig downFaster rig up & rig down√√ No personnel in riding beltsNo personnel in riding belts√√ PrePre--assembled unitsassembled units√√ Allows rig floor simulated opsAllows rig floor simulated ops
•• Control Lines can be run or pulledControl Lines can be run or pulled√√ 1111--18 joints per hour following all chrome running 18 joints per hour following all chrome running
proceduresprocedures√√ Run as many as 10 lines encapsulatedRun as many as 10 lines encapsulated√√ Control line guides move in both x & y axisControl line guides move in both x & y axis
•• MCLRSMCLRS™™ Multiple DesignsMultiple Designs√√ Any size rig, sub sea, dry tree, duals customer Any size rig, sub sea, dry tree, duals customer
buildbuild
Completions: MCLRSCompletions: MCLRS™™
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MultiMulti--Lobe TorqueLobe Torque™™ ringsrings significantly significantly increase the torque capacity of API increase the torque capacity of API Round and Buttress thread connectionsRound and Buttress thread connections
HydroHydro--FormForm™™ CentralizersCentralizers provide provide positive standoff in deviated wells positive standoff in deviated wells and will withstand high side loads and will withstand high side loads and aggressive reaming and aggressive reaming operations.operations.
““WarthogWarthog™™”” Reaming ShoeReaming Shoeis rugged with mechanical is rugged with mechanical and hydraulic features to and hydraulic features to break through fill and break through fill and sloughing formations. sloughing formations. Nose is drillable. Nose is drillable.
Multi Multi –– Lobe Torque Lobe Torque ™™(MLT(MLT™™) Rings) Rings
AccessoriesAccessories
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•• Hydraulic Power SlipsHydraulic Power Slips350 ton, 13350 ton, 13--3/83/8””Remotely operatedRemotely operatedLow profileLow profile
•• Portable Automated Stabbing Portable Automated Stabbing ArmsArms
Remotely operatedRemotely operatedMounts on floor or TD trackMounts on floor or TD track
•• Wireless Torque SubWireless Torque SubTransmits signal directly to Torque Monitoring computerTransmits signal directly to Torque Monitoring computerNo cables requiredNo cables requiredWorks with all TD systemsWorks with all TD systems
Floor MountedFloor Mounted Track MountedTrack Mounted
New Product and Service OfferingsNew Product and Service Offerings
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Tubular Service MetricsTubular Service Metrics
•• 3,200 jobs run to date with CDS3,200 jobs run to date with CDS™™
•• 20 million feet run to date with CDS20 million feet run to date with CDS™™
•• Proprietary CDSProprietary CDS™™ requires a Top Drive (any Top Drive)requires a Top Drive (any Top Drive)
•• Approximately 250,000 total Casing Running jobs/year in industApproximately 250,000 total Casing Running jobs/year in industryry
•• 77 CDS77 CDS™™ Units in fleet at end of 2005Units in fleet at end of 2005
•• 167 CDS167 CDS™™ units in fleet at end of Q2 2007units in fleet at end of Q2 2007
•• Typical revenue (varies with size and depth):Typical revenue (varies with size and depth):
Onshore: $15,000 Onshore: $15,000 -- $18,000 per job$18,000 per job
Offshore: $45,000 Offshore: $45,000 -- $50,000 per job$50,000 per job
•• Market for Tubular Services > $ 1.7 billionMarket for Tubular Services > $ 1.7 billion
•• Approximately 2/3 of market is in US and CanadaApproximately 2/3 of market is in US and Canada
3333
•• Safety Safety –– ““Step ChangeStep Change”” ImprovementImprovementEliminates the stabber positionEliminates the stabber positionEliminates conventional tools and injury risksEliminates conventional tools and injury risksImproved well control when running pipeImproved well control when running pipe
•• PerformancePerformanceGet casing to bottom, reduces risk of stuck casing Get casing to bottom, reduces risk of stuck casing Increased Increased ““reachreach”” in directional wellsin directional wells
•• CementingCementingEnhanced success in primary cementing Enhanced success in primary cementing
•• Improved CostsImproved CostsReduced Non Productive Time (NPT) dealing with problemsReduced Non Productive Time (NPT) dealing with problemsCost reduction for remedial cementing costsCost reduction for remedial cementing costsOffshore Offshore –– less equipment to transport/store tools & fewer less equipment to transport/store tools & fewer ““personnelpersonnel--onon--boardboard””
The TESCO Tubular Services AdvantageThe TESCO Tubular Services Advantage
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CASING DRILLINGCASING DRILLING®
““Revolutionizing the Drilling IndustryRevolutionizing the Drilling Industry””
3535
A Rotary Drilling Process:A Rotary Drilling Process:
•• That That ““casescases”” the well as it is drilledthe well as it is drilled
•• Where the well Where the well ““casingcasing”” is the drillstringis the drillstring
•• Where the Where the ““casingcasing”” provides hydraulic energy and mechanical force to the cutting sprovides hydraulic energy and mechanical force to the cutting structuretructure
•• Two Systems:Two Systems:
RetrievableRetrievable -- where all BHAwhere all BHA’’s are run and retrieved through the inside of the s are run and retrieved through the inside of the ““casingcasing””using wireline or drill pipeusing wireline or drill pipe
Non RetrievableNon Retrievable –– where a bit or a casing drill shoe is used on the bottom of thewhere a bit or a casing drill shoe is used on the bottom of thecasingcasing
CASING DRILLINGCASING DRILLING®® -- A DefinitionA Definition
3636
•• Time SavingsTime Savings
•• Improved Borehole StabilityImproved Borehole Stability
•• Reduced Lost CirculationReduced Lost Circulation
•• Improved Well ControlImproved Well Control
•• Improved ProductionImproved Production
•• Improved Personnel SafetyImproved Personnel Safety
•• Reduced Rig Requirements Reduced Rig Requirements
Lost CirculationLost Circulation
Stuck PipeStuck Pipe
KickKick
Sloughing ShaleSloughing Shale
OtherOther
Advantages of CASING DRILLINGAdvantages of CASING DRILLING®®
•• Unscheduled events account for 24% well time. Unscheduled events account for 24% well time. (January 2, 2004 Offshore Magazine)(January 2, 2004 Offshore Magazine)
•• Difficult wells account for 20Difficult wells account for 20--25% of all wells drilled, 25% of all wells drilled, defined by Spears and Associatesdefined by Spears and Associates
3737
•• Interval CASING DRILLINGInterval CASING DRILLING®®
Down Hole Tools (Service)Down Hole Tools (Service)
Retrievable and NonRetrievable and Non--retrievableretrievable
Casing Accessories (Product Sale)Casing Accessories (Product Sale)
Surface Equipment (Service)Surface Equipment (Service)
•• Integrated CASING DRILLINGIntegrated CASING DRILLING®® Services Services
Entire Well Construction ProcessEntire Well Construction Process
•• Performance DrillingPerformance Drilling
Lump Sum or Footage agreements in mature CASING DRILLINGLump Sum or Footage agreements in mature CASING DRILLING®®
fieldsfields
CASING DRILLINGCASING DRILLING®® OfferingOffering
3838
•• EZCaseEZCase™™ Drillable Shoe is essentially a premium PDC bit Drillable Shoe is essentially a premium PDC bit mounted on the end of a piece of casing or liner mounted on the end of a piece of casing or liner
•• Drillable Shoe is a nonDrillable Shoe is a non--retrievable productretrievable product
•• Drillable Shoe is utilized toDrillable Shoe is utilized to
Ream to bottom of a pre drilled holeReam to bottom of a pre drilled hole
Drill new hole while casingDrill new hole while casing
•• Drillable Shoe is rotated by one of two methods:Drillable Shoe is rotated by one of two methods:
Through a Through a liner liner attached to attached to drill pipedrill pipe
Through Through casingcasing attached to the Top Driveattached to the Top Drive
Non Retrievable SystemNon Retrievable System
EZCase™ is a product of Baker Hughes Incorporated
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•• Tools are run in or pumped in on Tools are run in or pumped in on wirelinewireline
•• Fluid does not go through BHA, but Fluid does not go through BHA, but rather bypasses to outside below rather bypasses to outside below packer cupspacker cups
•• Stop dogs locate BHA into profile Stop dogs locate BHA into profile nipplenipple
•• Pressure up to shift mandrel, close Pressure up to shift mandrel, close bypass, set axial locks and release bypass, set axial locks and release running toolrunning tool
•• Rotation engages torsional locksRotation engages torsional locks
Landing / Setting DLALanding / Setting DLA
4040
CASING DRILLINGCASING DRILLING®® AssemblyAssembly
Centralizers Centralizers as reqas req’’dd
Casing Casing ShoeShoe
CasingCasing UnderreamerUnderreamer BitBitConnection Connection RingRing
Wireline Retrievable BHAWireline Retrievable BHA
Running & Running & Retrieving Retrieving
ToolTool
Torque Torque LocksLocks UnderreamerUnderreamer BitBitToolTool
LocatorLocatorMud Motor, Directional Mud Motor, Directional Tools and/or Logging Tools and/or Logging
Assembly Assembly as requiredas required
Drill Lock Assembly Drill Lock Assembly (DLA)(DLA)
Axial Axial LocksLocks
Wear Wear BandBand
Landing & Landing & Lock Lock
profileprofile
Downhole ToolsDownhole Tools
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•• Can run a conventional bent Can run a conventional bent housing/motor combinationhousing/motor combination
•• Can run a Rotary Steerable Can run a Rotary Steerable assemblyassembly
•• Can run a conventional Can run a conventional building/holding/dropping building/holding/dropping assembly assembly
•• Use Pump Down Release Use Pump Down Release Tool (PDRT) to release DLA Tool (PDRT) to release DLA and slide casing over BHA and slide casing over BHA prior to pumping wirelineprior to pumping wireline
Directional DrillingDirectional Drilling
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•• Torque ImprovementTorque ImprovementMultiMulti--Lobe TorqueLobe Torque™™ RingsRings
•• Wear ResistanceWear ResistanceHydroHydro--formform™™ CentralizersCentralizersWear Bands & Wear padsWear Bands & Wear padsWear Resistant CouplingsWear Resistant Couplings
•• Stabilization and CentralizationStabilization and CentralizationHydroHydro--formform™™ CentralizersCentralizersStabilizers (Integral or HF)Stabilizers (Integral or HF)NonNon--rotating stabilizersrotating stabilizers
•• Drilling/Guide ShoesDrilling/Guide Shoes•• Bit Release ToolBit Release Tool
When bit screwed directly onto casingWhen bit screwed directly onto casing
•• CementingCementingPump Down Displacement Plug (PDDP)Pump Down Displacement Plug (PDDP)
Casing AccessoriesCasing Accessories
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Directional CASING DRILLINGDirectional CASING DRILLING®®
Drilled with Rotary Drilled with Rotary Steerable Tools Steerable Tools
Drilled with Drillable Shoe Drilled with Drillable Shoe
Drilled with Retrievable AssemblyDrilled with Retrievable Assembly
Drilled while Coring with CasingDrilled while Coring with Casing
50250255
53531313
ComplexityComplexity
2020266266
44 DrilledDrilledUnder BalanceUnder Balance
Over 2.4 Million Feet Drilled with Casing
Hole Sections DrilledHole Sections Drilled
Drilled with Disposable BitDrilled with Disposable Bit
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•• North Sea North Sea –– Norway, ConocoPhillipsNorway, ConocoPhillipsMature field, losses and depletionMature field, losses and depletionCASING DRILLINGCASING DRILLING®® with RSS drilled through loss zones with no lost timewith RSS drilled through loss zones with no lost time
•• PiceancePiceance -- ConocoPhillipsConocoPhillipsBorehole stability and severe losses, problems getting casing toBorehole stability and severe losses, problems getting casing to bottombottomCASING DRILLINGCASING DRILLING®® with RSS, casing to bottom and improved with RSS, casing to bottom and improved wellborewellbore
•• Lobo, South Texas Lobo, South Texas -- ConocoPhillipsConocoPhillipsLoss circulation and stuck pipe Loss circulation and stuck pipe Resolved with Resolved with CASING DRILLINGCASING DRILLING®® + faster drilling times+ faster drilling times
•• Louisiana Louisiana –– Salt DomeSalt DomeBorehole stability issues and resulting sidetracksBorehole stability issues and resulting sidetracksCASING DRILLINGCASING DRILLING®® resolved borehole issue with casing to bottomresolved borehole issue with casing to bottom
•• South Texas, Stratton South Texas, Stratton -- ApacheApacheSevere losses impacted drilling and productionSevere losses impacted drilling and productionCASING DRILLINGCASING DRILLING®® reduced losses, improved borehole and eliminated cement squeeze reduced losses, improved borehole and eliminated cement squeeze jobsjobsConverted a marginal field into a producing fieldConverted a marginal field into a producing field
Examples of Value to ClientExamples of Value to Client
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North Sea OffshoreNorth Sea Offshore
Recovering stranded reserves via extended Recovering stranded reserves via extended reach CASING DRILLINGreach CASING DRILLING®®
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3232”” x 30x 30”” Conductor Conductor @ 695@ 695’’ MDMD
2/7B2/7B--21212/7B2/7B--16A16A
1313--3/83/8”” casing casing @ 1100@ 1100’’ MDMD
1313--3/83/8”” casing casing @ 1080@ 1080’’ MDMD
Casing DrilledCasing Drilled
1010--3/43/4”” casing casing @ 4887@ 4887’’ MD,MD,
20 degrees20 degrees
77--3/43/4”” x 10x 10--3/43/4”” liner liner hanger@ 4699hanger@ 4699’’ MDMD
Casing Drilled 7Casing Drilled 7--3/43/4”” liner liner @ 12088@ 12088’’ MDMD
60 degrees (almost 70 60 degrees (almost 70 degrees max angle)degrees max angle)
55”” liner liner @ 13598@ 13598’’ MDMD
Top of 5Top of 5”” x 7x 7--3/43/4””liner @ 11092liner @ 11092’’ MDMD
North Sea CASING DRILLINGNorth Sea CASING DRILLING®®
4848
1616”” Conductor at 97Conductor at 97’’Drilled ConventionallyDrilled Conventionally
9 5/89 5/8”” 36# J36# J--55 DWC set at 205055 DWC set at 2050’’ MDMD20002000’’ TVD (MAX Inc 25 degrees)TVD (MAX Inc 25 degrees)Casing Drilled With Mud Motor and BHACasing Drilled With Mud Motor and BHA
77”” 23# N23# N--80 DWC set at 700080 DWC set at 7000’’ MDMD67006700’’ TVD return wellbore to verticalTVD return wellbore to verticalCasing Drilled with Rotary Casing Drilled with Rotary SteerableSteerableBHABHA
4 1/24 1/2”” 11.60# N11.60# N--80 DWC set at 981980 DWC set at 9819’’ MD, MD, 96269626’’ TVD.TVD.Drilled ConventionallyDrilled Conventionally
PiceancePiceance Basin Basin –– Colorado, USColorado, US
4949
Days vs. Depth Comparison
0
2000
4000
6000
8000
10000
12000
14000
0 10 20 30 40 50 60
Days
Dep
th in
Fee
tPiceancePiceance Basin Basin –– Colorado, USColorado, US
5050
0
2
4
6
8
10
12
14
16
Day
s Sp
ud to
Rig
Rel
ease
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82CASING DRILLING® Well Sequence
CASING DRILLINGCASING DRILLING®® averageaverage
Conventional Drilled wells average 228 Mcfg/dConventional Drilled wells average 228 Mcfg/dCasing Drilled wells averaged 753 Mcfg/dCasing Drilled wells averaged 753 Mcfg/d
Conventional AverageConventional Average
South Texas ProjectSouth Texas Project
5151
Ultimate Recovery Increased Two FoldUltimate Recovery Increased Two Fold
Gas
Pro
duct
ion,
MM
CF/
Mo
Gas
Pro
duct
ion,
MM
CF/
Mo
Months from first ProductionMonths from first Production
00
5050
100100
150150
200200
00 1212 2424 3636
ConventionalConventionalCASING DRILLINGCASING DRILLING®®
South Texas ProjectSouth Texas Project
5252
anhydriteanhydrite
anhydriteanhydrite
shaleshale
sandsand
limestonelimestone
dolomiticdolomitic limestonelimestone
calcarenitecalcarenitedolomitedolomite
calcareniticcalcarenitic limestonelimestone
Lost CirculationLost Circulation
Lost CirculationLost Circulation
sloughing shalesloughing shale
Middle East Middle East –– WellboreWellbore InstabilityInstabilityProjects Under Review Projects Under Review –– Studies OngoingStudies Ongoing
5353
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
Wells - Economics
9 5/8" Conv.13 3/8" Conv.
Conventional Drlg. CASING DRILLING®
~$200k Savings
Middle East Middle East –– Financial ImpactFinancial ImpactProjects Under Review Projects Under Review –– Studies OngoingStudies Ongoing
5454
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
Wells - Economics
9 5/8" Conv.13 3/8" Conv.
Conventional Drlg.
Includes $290k for TESCO Technology Costs
CASING DRILLING®
Middle East Middle East –– Financial ImpactFinancial ImpactProjects Under Review Projects Under Review –– Studies OngoingStudies Ongoing
5555
•• Created a commercial productCreated a commercial product
•• Drilled 350+ wells to dateDrilled 350+ wells to date
•• More than 2.4 million feet drilledMore than 2.4 million feet drilled
•• Drilled 50+ directional wellsDrilled 50+ directional wells
•• Drilled 10 horizontal or near horizontal wellsDrilled 10 horizontal or near horizontal wells
•• System accommodates industry standard LWD/MWD/MM/RSSSystem accommodates industry standard LWD/MWD/MM/RSS
•• Have drilled 7 Offshore wellsHave drilled 7 Offshore wells
•• Have drilled 13 wells with CASING DRILLINGHave drilled 13 wells with CASING DRILLING®® and rotary steerablesand rotary steerables
•• Have drilled for over 35 customersHave drilled for over 35 customers
•• Doubled CASING DRILLINGDoubled CASING DRILLING®® service revenue in 2007 (exclusive of rigs)service revenue in 2007 (exclusive of rigs)
•• Have a current project lead list of over 50Have a current project lead list of over 50
•• Tripling capital assets and key personnel by 12/07Tripling capital assets and key personnel by 12/07
CASING DRILLINGCASING DRILLING®® AccomplishmentsAccomplishments
5656
* Difficult wells as defined by Spears and Associates are 20-25% of all wells drilled.
• TESCO believes this potential market is measured in billions $TESCO believes this potential market is measured in billions $
•• TodayToday’’s market is between $40s market is between $40--50 million50 million
•• On an ongoing onshore project:On an ongoing onshore project:
$1.5 to $2.5 million / rig$1.5 to $2.5 million / rig--yearyear
•• On an ongoing offshore rotary steerable project:On an ongoing offshore rotary steerable project:
$6 to $10 million / rig$6 to $10 million / rig--yearyear
•• Should ultimately apply cost effectively to most difficult welShould ultimately apply cost effectively to most difficult wells drilled*ls drilled*
•• Current technology should apply cost effectively to thousands Current technology should apply cost effectively to thousands of wellsof wells
•• Our offering focuses on:Our offering focuses on:
Onshore trouble/difficult wellsOnshore trouble/difficult wells
Offshore rotary steerable wellsOffshore rotary steerable wells
CASING DRILLINGCASING DRILLING®® MarketMarket
5757
•• Myth BustersMyth BustersCASING DRILLINGCASING DRILLING®® is a proven technologyis a proven technology
Almost every well can use CASING DRILLINGAlmost every well can use CASING DRILLING®®
•• Retrievable and Non Retrievable SystemsRetrievable and Non Retrievable SystemsFull range of offeringsFull range of offerings
•• Experience & ReliabilityExperience & ReliabilityPeoplePeople
EquipmentEquipment
•• Global Application Global Application –– Onshore and OffshoreOnshore and OffshoreUS, Europe, Middle East, Asia Pacific & Latin AmericaUS, Europe, Middle East, Asia Pacific & Latin America
•• Flexibility and AccessibilityFlexibility and AccessibilityTESCOTESCO’’ss CASING DRILLINGCASING DRILLING®® system can run any third party system can run any third party downholedownhole toolstools
TESCOTESCO’’ss CASING DRILLINGCASING DRILLING®® system can operate from any rigsystem can operate from any rig
The TESCO CASING DRILLINGThe TESCO CASING DRILLING®® AdvantageAdvantage
5959
We are delivering growth and earnings We are delivering growth and earnings ……
$133 $138
$203
$386
050
100150200250300350400
2003 2004 2005 2006
$170
$224
0
50
100
150
200
250
1H 06 1H 07
RevenueRevenue
TESCO DeliversTESCO Delivers
6060
($16.1) ($16.2) $1.9 ($5.6)
$17.7
$8.1
$60.9
$30.5
-20-10
010203040506070
2003 2004 2005 2006
Operating Income Net Income
We are delivering growth and earnings We are delivering growth and earnings ……
$27.0
$11.6
$26.6
$14.9
0
5
10
15
20
25
30
1H 06 1H 07
Operating Income Net Income
TESCO DeliversTESCO Delivers
6161
Strong Balance Sheet(June 30, 2007)
Cash $8
Debt $39
Net Debt $31
Equity $276
Net Debt/Book Cap. 10%
Unused capacity in credit facility…
Millions $ USDMillions $ USDEBITDA*
2005 EBITDA $36
2006 EBITDA $85
TTM 6/30/07 $92
* Non GAAP Measure* Non GAAP Measure
TESCO Financially SoundTESCO Financially Sound
6262
TOP DRIVESTOP DRIVES–– RentalRental–– SalesSales–– Aftermarket Sales and ServiceAftermarket Sales and Service
CASING SERVICESCASING SERVICES•• Tubular ServicesTubular Services
-- Casing RunningCasing Running-- CompletionsCompletions
•• CASING DRILLINGCASING DRILLING®®
CasingServices
CasingServices
Top Drive Top Drive$142 $38
$11$82
RevenueRevenue Segment Operating IncomeSegment Operating Income
Millions $ USDMillions $ USD
Total $224Total $224 Total $49*Total $49*
1H 20071H 2007
* Excludes * Excludes ““Corporate Corporate and Otherand Other”” SegmentSegment
Business SegmentsBusiness Segments
6363
Revenue Trends (over the next 5 years)Revenue Trends (over the next 5 years)
•• RentalRentalGrow rental fleet from 105 units at 6/30/07 to 125+Grow rental fleet from 105 units at 6/30/07 to 125+
•• SalesSalesEstimated market penetration today @ 40%Estimated market penetration today @ 40%to increase to 75% + in 5 yearsto increase to 75% + in 5 years
•• AMSSAMSSGrowing installed base (~550 units) + strategic focus should resGrowing installed base (~550 units) + strategic focus should result in significant growthult in significant growth
Top DrivesTop Drives
TTM Revenues through 6/30/07 = $267MTTM Revenues through 6/30/07 = $267M
6464
Revenue Trends (over the next 5 years)Revenue Trends (over the next 5 years)
•• Conventional Tubular ServicesConventional Tubular ServicesExpand geographically where critical mass and/or proprietaryExpand geographically where critical mass and/or proprietaryservices can be leveragedservices can be leveraged
•• Proprietary Casing RunningProprietary Casing RunningIncrease capacity to meet growingIncrease capacity to meet growingmarket acceptance that CDSmarket acceptance that CDS™™is preferred way to run casingis preferred way to run casing
•• MCLRSMCLRS™™Expand geographically outsideExpand geographically outsideof Gulf of Mexicoof Gulf of Mexico
•• CASING DRILLINGCASING DRILLING®®
Game changing technology/increasing number of troubled wells beiGame changing technology/increasing number of troubled wells being drilledng drilled
Casing ServicesCasing Services
TTM Revenues through 6/30/07 = $173MTTM Revenues through 6/30/07 = $173M
6666
Leverage Competitive AdvantagesLeverage Competitive Advantages
•• Top Drive rental fleetTop Drive rental fleet--strong market position/high margin businessstrong market position/high margin business
•• Focus on Top Drive aftermarket sales and serviceFocus on Top Drive aftermarket sales and service--growing installed basegrowing installed base
•• Aggressively market and grow proprietary casing running offerinAggressively market and grow proprietary casing running offering g -- the the CDSCDS™™ systemsystem
•• Expand geographical reach of MCLRSExpand geographical reach of MCLRS™™ offeringoffering
•• CASING DRILLINGCASING DRILLING®®
Capture market opportunitiesCapture market opportunities
Further widen technology lead in retrievable systemsFurther widen technology lead in retrievable systems
•• Promote the integration of our business linesPromote the integration of our business lines
Moving ForwardMoving Forward----StrategyStrategy
6767
Focus on improving financial results from Q2 2007Focus on improving financial results from Q2 2007
•• Increase manufacturing throughput and capacity for Top DrivesIncrease manufacturing throughput and capacity for Top Drives
•• Rebalance rental fleet toward international marketsRebalance rental fleet toward international markets
•• Reduce manufacturing costs (Canadian $$ exposure)Reduce manufacturing costs (Canadian $$ exposure)
•• Work on cost structure in our tubular services businessWork on cost structure in our tubular services business
•• While at the same time, continue to invest and focus on CASING While at the same time, continue to invest and focus on CASING DRILLINGDRILLING®®
Note: Some of these issues will continue to impact Q3 and our efNote: Some of these issues will continue to impact Q3 and our efforts to forts to remediate will take more than one quarter to show resultsremediate will take more than one quarter to show results
Moving ForwardMoving Forward----StrategyStrategy
6868
Top DrivesTop Drives
•• Rental FleetRental FleetDiversify rental fleet internationallyDiversify rental fleet internationally
Expand (cautiously) rental fleet from existing levels to meet mExpand (cautiously) rental fleet from existing levels to meet market demandarket demand
•• Top Drive SalesTop Drive SalesMarket more aggressively in the international marketsMarket more aggressively in the international markets
Introduce high performance portable systems for land rig markeIntroduce high performance portable systems for land rig markett
Develop rig mechanization packageDevelop rig mechanization package——pipe conveyance and handlingpipe conveyance and handling
•• After Market Sales & ServiceAfter Market Sales & Service
Focus on capturing lionFocus on capturing lion’’s share of parts and service business on existings share of parts and service business on existing installed baseinstalled base
Moving ForwardMoving Forward----StrategyStrategy
6969
Tubular ServicesTubular Services
•• Accelerate industry conversion to proprietary CDSAccelerate industry conversion to proprietary CDS™™ technologytechnology
•• Utilize existing footprint for conventional services to rapidlUtilize existing footprint for conventional services to rapidly expand use of CDSy expand use of CDS™™
•• Begin aggressive international expansion of Begin aggressive international expansion of MCLRSMCLRS™™
•• Continue to seek niche strategic acquisitions to expand geograContinue to seek niche strategic acquisitions to expand geographic basephic base
•• Promote aggressively the sales of Casing Accessories for all serPromote aggressively the sales of Casing Accessories for all servicesvices
•• Sell the concept of optimal cementing qualitySell the concept of optimal cementing quality
Moving ForwardMoving Forward----StrategyStrategy
7070
CASING DRILLINGCASING DRILLING®®
•• Continue to promote CASING DRILLINGContinue to promote CASING DRILLING®® as the preferred drilling technology for:as the preferred drilling technology for:
Offshore rotary steerable wellsOffshore rotary steerable wells
Onshore trouble wellsOnshore trouble wells
•• Aggressively invest in operational resources for growthAggressively invest in operational resources for growth
•• Advance relationship with top 10 major E&P companiesAdvance relationship with top 10 major E&P companies
•• Continue to invest in R & D to extend substantial competitive Continue to invest in R & D to extend substantial competitive edgeedge
•• Promote aggressively the sales of Casing Accessories for all sPromote aggressively the sales of Casing Accessories for all serviceservices
Moving ForwardMoving Forward----StrategyStrategy