Review of Zeron ® 100 Failures in Dulang

1. ADAPTED PRESENTATION Date: 24 November, 2009 (Week 48) Location: PCSB KertehHQ Review of Zeron®100 Failures in Dulang Iain Rei Technical Director

2. Background • Parties • Operator (OC): PetronasCarigaliSdn. Bhd. • Service Provider (SP): Geowell Sdn. Bhd. • Wire Supplier (WS): Wilco OFS Pte. Ltd. • Location: Dulang, PMO • Scope of Work • SP to provide sand-bailing services • WS to provide super-duplex stainless steel Zeron®100 HS

3. Background: Timeline • Timeline • First contact: Week 40 (Susp. wire thinning) • KSB Visit: Week 41 (Wire inspection) • Second Contact: Week 42 (Susp. Inconsistent OD) • KSB Visit: Week 43 (Wire inspection) • Wire replacement: Week 43 (Inconclusive) • Official reply: Week 45 (Mfg. Tolerance) • Third Contact: Week 47 (Susp. lower MBL; surface quality; plastic behavior) • KSB Visit: Week 48 (now)

4. Background: Zeron®100 • First used in Dulang: 2003 • SP: Dimension Bid Sdn. Bhd. • Current countries: 6 • Malaysia, Indonesia, Vietnam, Thailand, Myanmar, Turkmenistan • Current mean per annum usage: 60 reels • Largest end-user: PetronasCarigali • Largest single-user: Chevron Thailand • Keywords: high breaking load, quality, consistency, support, service, stockist, fast

5. Background: Zeron®100

6. Discussion: Thinning • First issue: Wire thinning • Restatement: wire is surface thinning inexplicably causing disruption in service • Premise: • Wire was said to be unused and new from reel • Wire was of poor surface quality • Conclusion: • Wire was found to be used • Wire was found to be significantly stressed mechanically • Link to reportfrom UK

7. Discussion: Thinning

8. Discussion: OD • Second issue: Inconsistent OD • Restatement: wire OD is inconsistently thick or thin, resulting in uncertainty in quality that could lead to NPT • Premise: • Wire is said to be new • Wire OD was changing rapidly during spooling • Operator/helper detected accurately using hands on moving wire from supply to usage reel • Conclusion: • Wire is new • Wire OD seemed to be changing if detected by hand • Wire was replaced • Subsequent findings from Principal show that OD was fluctuating within normal manufacturing limits of ±0.001” 

9. Discussion: OD • Our findings • On 23 Nov., 2009 we performed a series of measurements on a reel that is supposedly problematic with an undulating OD. • Using an electronic caliper provided by Geowell, we conducted a series of measurements of theOD of the wire • The result is an OD measurement of 0.108”±0.00045”ora breaking load of 2,500lb±25.21lb • Error is within manufacturing error of 0.001”

10. Discussion: Plasticity • Third issue: Plastic behavior of Zeron®100 wire • Restatement: wire elongates without recovering original length on tension; indication of poor quality • Premise: • Break load testing methods are normal and common; equipment used to test is approved • Wire elongates plastically without returning to original length under load • Conclusion: • Tested wire had already broken at rope socket but was undiscovered • Subsequent “elongation” was due to wire being pulled out of rope socket • Cup-cone break-ends of wire indicates wire is of good quality 

11. Discussion: Plasticity What is elasticity and plasticity? • Elasticity: when a material behaves elastically like rubber • On tension an elastic material will elongate proportionately with tension • On release of tension, an elastic material will retain its original length • Plasticity: when a material does not behave elastically • On tension beyond the elastic limit, a material will begin to act plastically • The subsequent increase in tension will not result in proportional elongation of length • On release of tension, the material will not return to its original length Plastic return of length Δx (plastic elongation)

12. Discussion: Plasticity

13. Summary • Findings • Most findings conclusively attest to the quality of Zeron®100 • Thinning on recent sand bailing activity is not yet examined and as yet outside of our scope of control • Thinning is akin to mechanical erosionwhereas stress-corrosion-cracking is a form of chemical erosion (or commonly called corrosion) • Problems that have occurred to not seem to be due to the quality of the material or drawn wire 

14. Summary • Recommendations • Shorter runs-between-cut/test cycles • Closer surface inspection for scratches and large reductions in OD of wire between run-cycles • Wilco have been recommended to: • Check for well schematic • Check for nipple or SSD profiles, kick-offs, deviation angles, etc. that may lead to high forces of friction • Request more supporting information from OC and SP • Provide continued support to OC and SP

15. Case Study • Example: Chevron wire thinning • WI/125xx; max pull: 1,350lb; on reel: 21,115'; 271 runs • Mobilized in November 2007 • 25,000ft ZERON®100, 0.125” • WI/125xx; max pull: 1,500lb; on reel: 18,545'; 258 runs • Mobilized in March 2009 • 20,000ft ZERON®100, 0.125”

16. Case Study • Example: Chevron wire thinning • Chevron runs in the northern and southern offshore fields • 20,000+ runs per year • Typical measured depth of wells: 14,000-16,000ft • Typical ordered slickline: ZERON®100, 0.125” • Typical ordered length: 20,000ft • Typical service company junk length: Remaining on drum ≥ 1.5 x Well MD • Shows great belief in their program and our wire

17. Wilco Website Preview • Surface information • History • Work history • Technical information • Material data sheets • Test certificates (private access) • FirstLook Calculator • Contact point « http://www.wilcowirelines.com »

18. Contact Us Wilco Oilfield Services Pte. Ltd. (estd. 1982) No. 9, Kaki Bukit Road 3, East Point Terrace, Singapore 417829 Tel: +65(6)482-3666; Fax: +65(6)482-4782 Visit us at: www.wilcowirelines.com Email us: wilco@wilcowirelines.com For a full technical presentation, please contact us. Focus group: well & production engineers