Introduction to T H Hill

Third Party Quality Services

for Drilling & Completion Well Operations
November 2016

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved

 T H Hill Value

T H Hill provides Engineering, QA/QC, Supplier Technical

Assessments/Audits and Training to reduce the risk of equipment
failure and prevent Non-Productive Time in D&C operations
Ensure drilling and completions equipment is fit for purpose
Prevent capital cost overruns due to equipment failure

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 2

 Third Party Inspection Correlates to Safety

Safety Triangle Quality Triangle

Fatalities Failures

Lost Time Cases Lost Time Incidents/ NPT

Recordables Critical Defects

Inspection & Assembly

Near Miss Report Discrepancies

Unsafe Behaviors/Unsafe Acts Uncontrolled processes

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 3

 Global Customers & Operations

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 4

 What Does TH Hill Do?

► Technical Quality Services ► Engineering

Being physically present when tools are inspected and  Bottom Hole Assembly Design
built to ensure qualified personnel, equipment, and
procedures are utilized / followed, and the correct  Torque & Drag Analysis
documentation is created and delivered Drill String Design, Load Capacity Verification
 Supplier Technical Assessments/Auditing  Failure Analysis
Drilling Tools Providers, Machine Shops,
 Fatigue Analysis and Inspection
Inspection Companies, Manufacturers
Scheduling
 Manufacturing Surveillance
 Reactive Torque Analysis
Drill strings, specialty tools, rental tools
 Landing String Design and Analysis
 Field Quality Assurance of Drilling and
Heavy and Ultra-Heavy Casing and Liner
Handling Tools
Landing Operations
 Rig Operations Audit
 Mechanical Design Review & Load
Running, Handling, Best Practices Capacity Verification of Tools /
 Casing Running Surveillance and Quality Optimization
Assurance
► Training
► DS-1® Global Standard
 Public and private courses covering DS-
 Four volumes in the 4th Edition covering 1® Standards and other specialized
the specifications and inspection information to prevent equipment failures
processes for downhole drilling equipment

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 5

 History of T H Hill

The Founding Drill String DS-1: 2nd Edition STC-1 Bureau Veritas

Specializing in:
Focus shift Global Standard Global Standard
Engineering from Addressing: Addressing:
Services casing/tubing
Drill Stem Specialty Tool
Third-Party to T H Hill Joins
Design & Operation Certification
Inspection drill string Bureau Veritas

Rapid Growth DS-1: 1st Edition DS-1: 3rd Edition DS-1: 4th Edition DS-1: TS-1

• 100 Employees
Global Manufacturing Global Standard Global Standard Global Standard
• Engineering Standard for: Addressing: Addressing: Addressing:
Expansion
Drilling Drill Stem Drilling H2S Sour Service
• Wrote 1st Tubular Product Inspection Specialty Tools Drill Pipe
Standards Specification

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 6

 DS-1® Standards

► TH Hill developed the first comprehensive, global standard for drilling

technology and inspection (1992).
► Standard includes drilling tubular product specification, drill stem design
and operation, drill stem inspection, and drilling specialty tools
► Engineering continues to develop the standards to meet industry and
customer needs.

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 7

 Why DS-1 Standard

► A.P.I. is a compromise of manufacturers on one side and operators on

the other, often lagging far behind industry needs
► DS-1 was sponsored by major operators desire for improvement and is
a comprehensive globally accepted “norm”.
► Inspection and design criteria surpasses A.P.I. 7 and 7-G
► Allows inspection based upon fitness for purpose for multiple well
construction degrees of difficulty (Cat 2-Cat 5)
► Driven by engineering and field operations rather than compromise
► Provides flexibility of design in drill string components
► A.P.I. adopted certain stringent elements of DS-1 in 2009, after 17 year
lag
► DS-1 added Deepwater Landing Strings; H2S Sour Service; Proprietary
connections; RSS/MWD/BHA specialty tools; FEA-derived thread pitting
criteria and; now bits in 2017

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 8

 Engineering Services
Our dedicated and experienced engineers assist small independents to major operators to
maximize the design of drill string structural integrity no matter the conditions

► Failure Analysis

 World renown for expertise in analyzing failures

and identifying root causes
 Involved in high profile cases, including litigation
 Perform ~100 failure analyses per year
► Design and analysis – Evaluation of drill string,
landing string, and BHA design to mitigate failure
► Casing wear analysis

► Stuck pipe analysis

► Finite Element Analysis (FEA)

► C-Fat™ Inspection Scheduling – Predicting drill

string condition and planning inspections following
the fatigue design approach in DS-1®.

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 9

 Supplier Technical Assessments & Audits

► Establish Supplier Ability to Deliver Products and Service to Maximize

Sonatrach Field Operations Performance
► Review Supplier QMS and Specifically Measure Against DS-1, ISO
9001:2015 and API Q1/Q2 (as applicable)
► Assess and Document Supplier Baseline Capability to Meet Specs.
 Management team
 Quality Management System and Documentation
 Personnel Training & Competency
 Material Properties
 Non Destructive Testing
 Gauging and Measurement
 Controls, Preventive and Corrective Actions
 Repair and maintenance
 Special Processes, e.g., welding (WPS, PQR), heat treatment
 Documentation
 Suppliers and Vendors
 Handling and Storage

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 10

 Field Quality Assurance at Vendor Facilities

Inspection Assembly Testing

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved

 What we see across the globe

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 12

 Case Study – Gulf of Mexico

► Challenge: International Oil Company identified high risk of downtime

in multi rig drilling programs.
► Solution: T H Hill developed customer-specific standards and ensured
all equipment met minimum requirements. Continuous improvement
ensures learnings contribute to the quality program.
► Customer Value: Serious non-conformances identified have saved
more than $60 million USD. During 2014, the customer had zero
downtime due to downhole drilling and completions equipment.

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 13

 Case Study – Decreasing NPT in Australia

► Challenge
 While operating in Western Australia in 2014, an operator experienced an average of $4
million USD in non-productive time per month.

► Solution
 T H Hill worked with the client and its vendors to implement a DS-1® based quality
management system for their downhole tools.

► Customer Value
 Within the first 60 days of the program T H Hill reduced the NPT by $3.1 million USD per
month.
TH HILL START

Equipment causing NPT in August was not reviewed by TH Hill.

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 14

 Quality Assurance/Data Capture
► Vendor Quality Performance (VQP) or similar as data for Service
Quality Meetings.

 Hold service providers and business partners accountable for performance

and rental equipment-related NPT.
TH Hill Discrepancy Trends (Atwood Eagle) - 30May - Shortcut.lnk

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 15

 Vendor Quality Reporting

In-depth review of inspection trends and program performance to assist in

continual performance

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 16

 TH Hill Specialist Differentiators

Specialization • Focus on drilling and drilling-related tool types

• Author of standards, > 60 papers & technical articles in

Technical Expertise industry societies and technical groups

• The global standard for inspection, design & operation

Standards Platform of used drill string equipment

• Changing market activity levels results in tools not

Field Presence receiving appropriate maintenance, repair and skilled
assembly. Field presence ensures standards are met

Bundled Service • Services and specialized training offerings give the

operator an unparalleled package for drilling failure
Capability prevention

Extensive Personnel • Technicians, Project Managers & Engineers have

defined technical training programs created and offered
Training Programs only by TH Hill.

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 17

 Example NPT Analysis
Type Av Day Rate Av Spread Rate

NAGA 3 Semisub 1,000ft $ 294,000 $ 588,000

Glen Tanar Tender $ 151,000 $ 302,000
Teknik Berkat Tender $ 151,000 $ 302,000
DD3 Jackup IC 350 $ 164,000 $ 328,000
KM-1 Tender $ 151,000 $ 302,000
Aquamarine Driller Jackup IC 375 $ 164,000 $ 328,000
$127 Million
NAGA 4 Jackup IC 400 $ 164,000 $ 328,000 NPT 2013
NAGA 1 Semisub 1,000ft $ 294,000 $ 588,000
Maersk Convincer Jackup IC 375 $ 164,000 $ 328,000
Hakuryu 5 Semisub 1,640ft $ 338,000 $ 676,000
22%
West Courageous Jackup IC 350 $ 164,000 $ 328,000 Deviation
Tungsten Explorer Drillship 12,000 $ 498,000 $ 996,000 Jul-Dec

$ Average
Spread
$28
449,500 Rate Million
Avoided
90,97
82,12
76,43

Total of 283 days NPT x Average Spread Rate = NPT Cost (127+ Million)

8,05 6,69 5,39 4,77 4,11 2,63 1,98

Baker SLB Halliburton Scomi Alan Solar Alert KST WellTec Tesco Cameron
Maritim

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 18

© - Copyright 2016 T H Hill Associates, Inc. – All rights reserved 19