Business Strategy Discussion

ODrill / MCM Inc Prospective Product Line for Coiled Tubing Tools.
 Introduction to Coiled Tubing
What is CT?
Coiled Tubing (CT) has been defined as
any continuously-milled tubular product
manufactured in lengths that require
spooling onto a take-up reel, during the
primary milling or manufacturing
process. The tube is nominally
straightened prior to being inserted into
the wellbore and is recoiled for spooling
back onto the reel. Tubing diameter
normally ranges from 0.75 in. to 4 in.,
and single reel tubing lengths in excess
of 30,000 ft. have been commercially
manufactured. Common coiled tubing
steels have yield strengths ranging from
55,000 PSI to 120,000 PSI.
Key elements of a CT unit
The coiled tubing unit is
comprised of the complete set of
equipment necessary to perform
standard continuous-length
tubing operations in the field.
The unit consists of four basic
elements:
Reel - for storage and transport
of the coiled tubing
Injector Head - to provide the
surface drive force to run and
retrieve the coiled tubing
Control Cabin - from which the
equipment operator monitors
and controls the coiled tubing
Power Pack - to generate
hydraulic and pneumatic
power required to operate the
coiled tubing unit
Inside the Control Cabin Coiled Tubing Rig Up
CT Workover and Completion Applications
(for vertical, horizontal and deviated wells, both on land and offshore)

CT is routinely used as cost-effective solution for numerous workover

applications. A key advantage of CT in this application is the ability to
continuously circulate through the CT while utilizing CT pressure
control equipment to treat a live well. This avoids potential formation
damage associated with well killing operations. The ability to circulate
with CT also enables the use of flow-activated or hydraulic tools.
Other key features of CT for workover applications include the inherent
stiffness of the CT string. This rigidity allows access to highly
deviated/horizontal wellbores, and the ability to apply significant
tensile or compression forces downhole. In addition, CT permits much
faster trip times as compared to jointed pipe operations.
Overview of Selected Workover Applications
Pumping Applications:
Removing sand or fill from a
wellbore
Fracturing/acidizing a formation
Unloading a well with nitrogen
Gravel packing
Cutting tubulars with fluid
Pumping slurry plugs
Zone isolation (to control flow
profiles)
Scale removal (hydraulic)
Removal of wax, hydrocarbon, or
hydrate plugs
Mechanical Applications:
Setting a plug or packer
Fishing
Perforating
Logging
Scale removal (mechanical)
Cutting tubulars (mechanical)
Sliding sleeve operation
Running a completion
Straddles for zonal isolation
Drilling
The CT Business
The coiled tubing industry continues to be one of the fastest growing
segments of the oilfield services sector.
CT growth has been driven by attractive economics, continual advances in
technology, and utilization of CT to perform an ever-growing list of field
operations.
Coiled tubing today is a global, multi billion dollar industry in the
mainstream of energy extraction technology.
The potential advantages associated with CT are typically driven by the
fact that a workover rig (and associated cost) is not required, the rapid CT
trip speed in and out of the well, and that CT operations are designed to
be performed with pressure on the well. Eliminating the requirement to
kill the well can be a significant factor in the decision to utilize CT for a
particular field operation, as it reduces the risk of formation damage.
Growth of the Service Fleet

In January 2004, slightly more than 1,050 CT units were

estimated to be available on a worldwide basis.
The total number of working CT units has risen sharply from
the roughly 850 units reported in February 2001.
At present, the International market accounts for the bulk of
the currently available CT fleet with more than 425 units.
Canada and the U.S. are estimated to contribute an additional
239 and 253 units, respectively.
New CT Markets / Field Applications

CT first established it's niche in the marketplace as a cost-effective well cleanout

tool. In recent years, these conventional wellbore cleanouts and acid stimulation
jobs accounted for more than three quarters of total CT revenue.
However, CT use has continued to expand as it is adopted for use in additional field
operations.
Most recently, CT fracturing and *drilling applications have emerged as two of the
fastest growth areas. Revenue from these two CT applications has grown from
almost zero 10 years ago, to approximately 15 percent in more recent times.

*BP Alaska Baker Hughes & NOV share 50% market share each, in this region. Revenue stream is being mainly generated by
selling motorhead assemblies and renting bi-center PDC speed reamers, directional motors, jars and intensifiers. Tremendous
business opportunity exists for any new potential players.
Coiled Tubing (CT) Market worth $4.4 Billion by 2020
The global coiled tubing
market size is projected
to reach $4.4 Billion by
2020. Major factors
responsible for driving
the growth of this
market include the
energy sector growth in
Africa and the Middle
East, along with rising
investments in shale gas
developments.
The North American region remains
the largest market for coiled tubing,
followed by Europe, Asia-Pacific, and
the Middle East. The recent shale
gas developments in the U.S. have
pushed explorations activities in the
region, thereby increasing the
market. The Middle East and Africa
market continues to be a key growth
area due to increasing demand for
innovative technology in terms of oil
& gas application, which is backed
by new investments. The
development of new fields in the
Middle Eastern and African region
also provides a thrust, thereby
driving the coiled tubing market in
those regions.
CT Service Providers

The CT market is dominated by three large service companies,

who control approximately 60% of the CT total marketplace.
The market is also serviced by numerous smaller CT service
providers.
On a regional basis, there are typically more than 30 providers
of CT in the International marketplace.
Canada is serviced by more than 35 CT providers, and the U.S.
by more than 25 companies.
 Coiled Tubing Industry
Operator not interested
to pay the cost for
upkeep of tools
Operator
Trend to outsource CT (E&P)
jobs

Opportunity for us
Coiled Tubing
Start with basic set of Project
tools and eventually
develop proprietary Service / Tool CT / Rig
specialty tools to stay Company Contractor
ahead of competition

Evolve in to a one-stop-
shop with turnkey
solutions for E&P
companies
CT Downhole Tool Providers / Thru Tubing Tool Providers

AnTech Thru Tubing Solutions (TTS)

Spartan Energy Services Weatherford Wellserv
Hunting Energy Services Viking Coil Tools
Baker Hughes Well Innovation
National Oilwell Varco Brace Tools
Sperry Sun ODrill MCM Potential new player
Taylor Made Oil Tools
CT / Thru Tubing Tools
Cutting Tools
Debris Removal
Fishing Tools
Circulation/Flow Tools
Impact Tools
Jetting & Cleaning Tools
Memory & Logging Tools
Hydraulic Motors, Mills & Shoes
Composite Bridge & Frac Plugs
Diamond Mills
Rotating Tools
Running & Pull Tools
Specialty Tools
Standard CT BHA Components
 Coiled Tubing Product Line
Coiled Tubing Connector
Dual Flapper Check Valve
Hydraulic Disconnect
Mechanical Shear Type Disconnect
Circulation Sub
Motor Head Assembly (Combines CT Connector, Flapper Chk Valve, Disconnt, Circ. Sub)
Bladed Junk Mills
Hydraulic Mud Motor
Jetting Nozzles
Bi-directional Jar
Tri-cone Bits

* Tools will be acquired with re-dress kits for servicing after each job. A service center with all the necessary equipment will be setup
** Product line engineer will manage all field operations (including on-site rig support) and work on new product development / proprietary tools to gain a
competitive edge in the market
Suppliers
Yantai Sanmon Machinery Equipment Co., Ltd
(Dual flapper check valve US $2000-3000 / Set), (Circulation sub, Motorhead assembly, Hydraulic Jar,
Centralizers, Rotating wash tool, CT Fishing spear)

Baoji Safe Petroleum Machinery Co., Ltd

(CT Disconnect, CT Jetting Tool)

Lake Petro Technology

(Hydraulic mud motor US $3000-20,000)

Tripple J Coiled Tubing Products, LLC (Based in Spring, TX)

* Technical Specs are available for each tool

** Supplier can be contacted for the latest pricing
Tool / Product Sales and Rentals
US domestic market, by far the largest market for coiled tubing
Primary Focus

Gradually expand presence in Canada

Followed by expanding our distribution market in Latin America &

Middle East.
Billing Process
Rental fee will be based on the use of the rented tools by the customers

If a tool is at the rig site but not being used, a standby fee will be charged

If a tool is utilized, a higher day rate will be charged

If a tool is lost and/or damaged in use, the client will be charged the full cost
of the tool. This will be recognized as revenue after subtracting the net
carrying cost of the tool.
Recent Success for Bohai 1 on well VLC-1429, Lake Maracaibo Basin
- Removed the old production tubing & completion
equipment
- Next step was to run 10 perforating guns on wireline, run
new completion and put well back on production
- Formation / Reservoir pressure was 3000 psi at 13,000 ft.
- Control fluid was water
- After pulling the wireline, fluid was detected at 874 ft.
due to influx at bottom of the well
- Bull heading was tried by pumping 9.3 ppg NaCl brine
but hydrostatic was reaching the internal yield of the
casing. No drop in pressure
- Bohai 1 CT Barge was called in to action
- BOP stack was installed on the 3-18 valve of the well
head
- 1-12 tubing was run while keeping it filled with fluid to
prevent any kicks
- At 13,000 ft. (TD), circulation started. 312 barrels of brine
was pumped at 1.3 bpm to replace the well fluid
- Wellhead pressure was finally brought down to 0 psi and
the well was monitored for a few hours to ensure that it
was successfully killed
Market Research
Jennifer Wellborn, Ex NOV 832 686 1836

Jim Mckee, Owner of Tripple J Coiled Tubing 281 467 9294

Dominic Trower, KLX Corporate Sales 713 376 4644

Robert Stallings, VP Sales & Operations Logan Oil Tools 713 628 3857

Ryan Colter, Account Manager at NOV 936 672 3567

Questions ?
Thank You