Newsco International Energy Services Inc.

Overview and Technology Partnerships

Presented by Terry Cennon, CEO February 2012

Presentation Outline
Concept - Directional Drilling Newsco International Introduction Business Units & Operating Centers

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The Newsco Difference Research & Development Employee Profile QHSSE Regional Overview Operational Strategies Case Study Advantage Newsco
www.newsco.ca

Concept - Directional Drilling

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Relief Well

Shoreline Drilling

Fault Control

Multiple Wells Stratigraphic Offshore Traps

Inaccessible Location

Re-entries Sidetrack

Salt Dome

Directional Drilling is one of the biggest technological innovations in oil field services in the last 15 years Societe Generale, June 2009
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Key Drivers For Directional Drilling

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Greater contact area to reservoirs for increased productive capacity To reach hydrocarbons in tough / logistically challenged terrain Increased land cost = drill multiple down hole targets from a single land location Re-enter abandoned / sick wells To reduce water coning in producing vertical wells To drill non-conventional energy wells like Coal Bed Methane (CBM), Shale Gas and Geothermal

www.newsco.ca

Presentation Outline
Concept - Directional Drilling Newsco International Introduction Business Units & Operating Centers

group company

The Newsco Difference Research & Development Employee Profile QHSSE Regional Overview Operational Strategies Case Study Advantage Newsco
www.newsco.ca

Introduction Inception: Founded 1994 in Calgary, Alberta, Canada

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Introduction

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Focus: Innovate & evolve existing MWD technology

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Introduction

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Strategic Position Full-service Horizontal & Directional Drilling Research & Development Facility Proven, patented MWD, Drillwell, PDM Motors In-House Manufacturing Telemetrix MWD PDM Motors Global infrastructure
www.newsco.ca

Presentation Outline
Concept - Directional Drilling Newsco International Introduction Business Units & Operating Centers

group company

The Newsco Difference Research & Development Employee Profile QHSSE Regional Overview Operational Strategies Case Study Advantage Newsco
www.newsco.ca

Operating Centers
Operations in 14 Countries worldwide

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North America Region

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Headquarters Calgary Alberta, Canada WCSB Operations Base & Telemetrix - Manufacturing

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Rocky Mountain Region

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Casper, Wyoming, USA Rocky Mountain Operations & PDM Motor Manufacturing

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Asia Pacific Region

Mumbai, India

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Russia & CIS Region

Nizhnevartovsk, Russia

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www.newsco.ca

Middle East & North Africa

Dubai, United Arab Emirates

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www.newsco.ca

South America Region

Talara, Peru

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Presentation Outline
Concept - Directional Drilling Newsco International Introduction Business Units & Operating Centers

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The Newsco Difference Research & Development Employee Profile QHSSE Regional Overview Operational Strategies Case Study Advantage Newsco
www.newsco.ca

Research & Development

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Innovative, efficient design solutions

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Research & Development

Innovative Efficient Design Principles
Proprietary Hardware + Software OS & Surface gear Simple practical solutions Sleek seamless integration Robust, reliable operation Reverse-Engineer weak links Secure data-share interface Quick and nimble for custom client-specific designs

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www.newsco.ca

Research & Development

Highlights of Achievements: The most robust, reliable MWD in global marketplace Virtual elimination of operator error and costly downtime
(approximately 85% of MWD failures result from operator error)

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Mean Time Between Failures (MTBF) > 3000 hrs

(2x greater MTBF than industry standard)

500% greater battery life for reduced operations cost

($1,350 per set of Li batteries)

175C and inertial dampening for Bakken drilling

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Research & Development

Patented Intelligent Efficient MWD System

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Research & Development

MWD Pulser Linear drive assembly:

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Most efficient MWD pulser in the industry Eliminates power hungry solenoid actuators
500% better battery life ($1350 per set of Lithium batteries) 300+ lb pulse strength compared to 60 lb (potential for >1000lb)

Downhole intelligence to self-correct plugged debris in pulser

Greater LCM capacity Dampener eliminates broken poppets and shafts

www.newsco.ca

Research & Development

MWD Pulser Linear drive assembly:

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Extreme hot-hole MWD system for exclusive HPHT market NVader rotary pulser (LCM buster) Fully-Integrated Drillwell 2.0 OS for surveys, reports, LWD, etc. Unmanned monitoring tool with remote steering capabilities
Modular design

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Research & Development

Rotary connectors:

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Eliminates intermittent electrical contacts Simplicity eliminates operator error

85% of MWD failures are due to operator errors Result in costly downtime and credits to client operators Incapacitates backup MWD string on locations

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Research & Development

Vibration Dampener: Vibration dampener reduces catastrophic failures of Gamma probes and MWD electronic components due to downhole agitators. (patent pending) Centralization: Centralizer fins reduce downhole failures, eliminate problematic connections and greatly reduce the length of MWD strings

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www.newsco.ca

Research & Development

Resistivity LWD:

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Eliminate 3rd party component / spares purchase ($63K per string) Utilization of existing Newsco MWD systems with top-mount pulser Reduced battery requirements and operating cost Simplistic design improves reliability and operator safety Tool length reduced by 2.3m for closer sensor to bit accuracy Collar-mounted tools advantages for transportation

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Research & Development

Automated quality control and diagnostic testing:

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Proactive diagnostic surface tests identify potential failure items before running equipment into the well Newsco exceeds preventative maintenance standards of all operators
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Research & Development

Proprietary Drillwell 2.0 Software: Industry leader MWD operating system Integrated gamma, resistivity LWD with MWD for geo-steering capabilities Eliminates redundant 3rd party suppliers Remote monitoring and drilling capabilities Integrated reporting, invoicing, shipping manifest generation EDR logs for advanced failure diagnostics Poised for wellbore optimization integration

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www.newsco.ca

Proprietary SDM Motors

Joe Ficken History & Experience 35 years mud motor experience 5 US Patents for designs 3 World records (long reach Hz) Key Design Characteristics Heavy internal components to reduce fatigue Hot-hole & challenging drilling environments Design patenting in process Both oil sealed and mud lube designs

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www.newsco.ca

Wellplanning & Optimization

Advanced Well Designs: Multiple VS views

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Build curve for optimal landing Exaggerated TVD for geo steer Full wellbore for progress

Full EDR datasets and logs alongside drilled well path for drilling optimization Continual improvement of operations means drilling more wells with less money and maximum ROI
www.newsco.ca

Presentation Outline
Concept - Directional Drilling Newsco International Introduction Business Units & Operating Centers

group company

The Newsco Difference Research & Development Employee Profile QHSSE Regional Overview Operational Strategies Case Study Advantage Newsco
www.newsco.ca

Employee Profile

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Total Workforce : 225

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Employee Profile

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Total Employee Profile

MWD = 68 DD = 44 R & M =28 R & D = 14 Sales = 10 Corporate = 62 Total = 226

www.newsco.ca

Presentation Outline
Concept - Directional Drilling Newsco International Introduction Business Units & Operating Centers

group company

The Newsco Difference Research & Development Employee Profile QHSSE Regional Overview Operational Strategies Case Study Advantage Newsco
www.newsco.ca

Industry Leading Health & Safety

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Telemetrix Learning Matrix (TLM) Web-based learning program ISNetworld featured company Maintained 90% COR average for 4 years (Certificate of Recognition) IRP 16 safety requirements Recommended by Enform safety auditor as model for other companies to follow Certifications:

www.newsco.ca

Presentation Outline
Concept - Directional Drilling Newsco International Introduction Business Units & Operating Centers

group company

The Newsco Difference Research & Development Employee Profile QHSSE Regional Overview Operational Strategies Case Study Advantage Newsco
www.newsco.ca

WCSB Region Alberta Oilfields

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Western Canadian Sedimentary Basin Calgary, Alberta, Canada

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WCSB Region Alberta Oilfields

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Regional Market - Canada

Current Business Partners in Canada
Athabasca Oil Sands Talisman Energy Daylight Energy City Of Medicine Hat Solara Energy Ember Resources

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Third Party Rentals to NuVista, Penn West, Hyperion Energy & Apache.

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Rocky Mountain Region Operations

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Regional Market United States

Current Business Partners
Petro Harvester Sagebrush Resources Whiting Resources SM Energy FlatIrons Resources

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We recognize the United States as a highly active, key development region moving forward. Our current technology offering is very well suited to drilling conditions and project demands.

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Regional Market Russia & CIS

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Large Russian Gas Fields: Large Russian Oil Fields: Total Russian oil and gas fields: Total Operating Rigs:
www.newsco.ca

73 fields 149 fields 2734 950

Regional Market Russia & CIS

Current Business Partners:

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BashNeft-Drilling, TransTechnology, BNGRE, RS-Drilling Clients under negotiation: IDS-Drilling, Churs, SSK Target clients: I. Lukoil, TNK-BP, Rosneft, Slavneft, Gazprom II. DC Eurasia, Integra, SBK, SSK

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Regional Market - Asia Pacific

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New Delhi

Duliajan
Kolkata

Mumbai

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Asia Pacific Region Current Business Partners Existing clients: OIL, ONGC, Gail, Naftogas, Adani, Essar, KOA, Sun Drilling.

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www.newsco.ca

Peru Operations

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Talara
Base office and Workshop

www.newsco.ca

Regional Market Peru

Current Business Partners: BPZ Sapet Petro-Tech Olympic Repsol

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www.newsco.ca

Presentation Outline
Concept - Directional Drilling Newsco International Introduction Business Units & Operating Centers

group company

The Newsco Difference Research & Development Employee Profile QHSSE Regional Overview Operational Strategies Case Study Advantage Newsco
www.newsco.ca

Operational Strategies

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Maximize utilization of available technology based on region and demand. Maintain our Continuous Improvement Concept by actively pursuing the manufacturing of new and innovative directional drilling technologies. Invest in our workforce with leading edge training programs. Maintain and continuously monitor Quality, Health, Safety, Security and Environment (QHSSE) standards. Continuously upgrade R & M facilities to handle all levels of repair to decrease operating cost.

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Operational Strategies
Australia Growth Market

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Australia Growth Opportunity

Australian Resources & Infrastructure

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Australia Growth Opportunity

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Experienced directional drillers & MWD operators from Canada

Application of extensive CBM and Shale gas experience

EM-MWD with dual focused gamma for thin coal seams

Establish operations center within Australia

www.newsco.ca

Presentation Outline
Concept - Directional Drilling Newsco International Introduction Business Units & Operating Centers

group company

The Newsco Difference Research & Development Employee Profile QHSSE Regional Overview Operational Strategies Case Study Advantage Newsco
www.newsco.ca

Case Study
Winter Drilling Season 2011 Single Canadian client Operating across WCSB 13,567 total circulating hours 3 Failure incidents 16 total hours of downtime 99.98% uptime

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www.newsco.ca

Case Study
Compare the cost of downtime? Average daily rig operation:
$40,000 - $60,000 per day $ 1,500 - $ 2,500 per hour

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Downtime can severely hamper long-term ROI for wells Excessive tripping, circulating, etc. can damage hole condition and result in long-term production challenges

www.newsco.ca

Presentation Outline
Concept - Directional Drilling Newsco International Introduction Business Units & Operating Centers

group company

The Newsco Difference Research & Development Employee Profile QHSSE Regional Overview Operational Strategies Case Study Advantage Newsco
www.newsco.ca

Advantage Newsco
Over 5,000 directional wells drilled Over 1 million operating hours Best Mean Time Between Failure (MTBF) in Industry

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Reliability <99% operating time, down time less than 0.5% Over 300 contracts to date Over 50 clients world wide Newsco International designed the world's first fully retrievable / re-seatable positive pulse MWD tool

www.newsco.ca

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THANK YOU

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