SUMMER2012

No182

Hunting Review; the external house magazine of Hunting PLC 3 Cockspur Street,London SW1Y 5BQ, UKdavid.hunting@hunting.plc.uk Edited by Victoria Bailey and Georgia Langdon, Campaign PR. info@campaignpr.comDesigned by Anthony B Ainley MCSD tony@tonyainley.com Produced and printed by Duffield Printers Ltd martyn@duffieldprinters.co.uk

Cover Dilley TX ‘Big Sky’

IN ISSUE 182 SUMMER 2012

4 Eyeing the eagleAs the energy industry’s attention moves away from shale gas towards the more lucrative production of oil, we examine two of the US’ most prolific oil shale plays - North Dakota’s Bakken field and South Texas’s Eagle Ford

22 LeanexemplarsThe drive to develop and replicate Lean Manufacturing practice is proving highly productive as demonstrated by the efficiency initiatives devised by staff at two Louisiana facilities

18 Aberdeen twenty-four/seven The integration of several North East Scotland sites into two primary facilities means that Hunting Energy Services is now operating an around the clock service to its offshore and European customer base

14 Back to our rootsOperations have started at Hunting Energy Services’ new workshop in Great Yarmouth - 45 years after the company established its first manufacturing facility there for the prospective North Sea

10 Drawing togetherThe annual Hunting Art Prize is a pivotal event in the corporate calendar and this year’s winner illustrates how it is still inspiring outstanding artistic endeavour

24 News from our community

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Wheels of industry

With last year’s faltering economic recovery and fraught geopolitical situation, we still hoped that swift action

might have settled the sovereign debt crisis and that crucial elections around the world might have cleared the political fog. We can only wonder at what has changed. However, delving deeper in these reflections reveals the real progress that has been made at an industry level and moreover, what has been achieved through personal endeavour and team work in our own company. This has proved a transformational period for us where we have nearly doubled our headcount and hugely strengthened our core capabilities through vital acquisition and investment.

Part of that story is told here; first with the extraction of natural gas and now the significant quantities of crude oil produced through fracking shale, providing us with a global platform for future development. We look at the effect on local communities and examine the economic benefits rippling out to those sectors hungry for opportunity. By way of a review, we also cast back fifty years to our first oilfield machine shop and consider how, despite the ups and downs of the commodity cycle, the company has continued to expand into a world class, round the clock enterprise.

We also see how and why we engage with our various stakeholders at such events as the Hunting Art Prize, now celebrating its 32nd year, as well as with our own growing community in the news section of this magazine. The scale of activity and individual involvement is both remarkable and praiseworthy.

So while the news agenda continues to be dominated by economic unpredictability, it is good to be reminded that at the workaday level, our industry continues to strive for the benefit of all.

Chief Executive Officer

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Increasing US oil production by fracking shale is fast providing increased energy security and a tantalising glimpse of energy independence

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T E X A S

area enlarged

Laredo

San Antonio

AustinEagle Ford Shale PlayWestern Gulf BasinSouth Texas

M E X I C O

Shale outcrop

Oil

Wet Gas/Condensate

Dry Gas

Rio Grande

The phenomenal growth in North American production of natural gas from shale in the last few years has been well documented

but until recently less has been understood of the same technological process that has allowed the extraction of crude oil from shale deposits. While the reduction in wholesale natural gas prices has been of enormous benefit to the consumer, the current low price in the USA is threatening to make its production unprofitable for some energy companies. With prices dropping 30 percent since last year alone and onshore production growth slowed (although it still rose 10 percent), it is only recently that the basic economics have kicked in and production plateaued. With this abundance comes the prospect of relatively clean natural gas replacing more costly fuels for power generation although this will take a little

EyeingtheEagle

more time to effect. To put this in economic context, four years ago gas was selling for around $9 per million British thermal units; this year the price momentarily dropped below $2.

Gas to liquidsSo it’s unsurprising that the more versatile operators and service units have been shifting their focus to more profitable oil and wet gas or condensate production where, much to the annoyance of the US motorist, prices have remained stubbornly high. Hunting’s US energy services facilities have been ideally primed to support the shale oil development with long bred expertise in horizontal drilling and well completion equipment, to which the additional benefits of a field service network have been added with the acquisition of Titan Specialities. The perforating systems used extensively in

fracking and on which Titan’s reputation has been built are equally applicable to gas or liquid production and are not geologically nor geographically constrained. In this context it is worth noting that the Baker Hughes land rig count for North America has increased to 2,062 from 1,947 since May last year.

Two of the more distinct oil shale plays are North Dakota’s Bakken field where fracking as proof of concept on an industrial scale has unleashed an energy behemoth and South Texas’s Eagle Ford, which is fast catching up, promoting the state’s reputation for a ‘can do - will do’ attitude.

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Bakken the day

The Bakken Shale’s name derives from the eponymous farmer who owned the land in 1951 when the area’s first vertical well was spudded - long before the technological possibilities opened up by today’s horizontal drilling and multi stage fracking. Today the Bakken formation is thought to be one of the largest oil deposits in North America - with a main basin extending 200,000sq miles, reaching west under the neighbouring state of Montana and north below the province of Saskatchewan.

The Bakken Shale can be credited with single-handedly changing the fortunes of a formerly bare and sparsely populated area of Middle America. Once considered backwards and the butt of many a stand-up comedian’s jokes, North Dakota is now getting its own back. It is second only to Texas in oil production having overtaken Alaska in March 2012 with California, Louisiana, Oklahoma and New Mexico trailing behind. The inexorable rise in

North Dakota’s daily oil output over the last four years from 144,000 to current levels of 575,000 barrels per day, suggests that on conservative projections the one million barrel daily production milestone could be achieved in 2014. This would measure more than one per- cent of projected daily world oil consumption. There are currently 6,200 producing wells with a further 2,400 to be drilled during 2012 and perhaps another 3,000 in 2013.

Constructive collateral With many state budgets in huge deficit, North Dakota boasts a healthy surplus and almost no unemployment. Williston, an erstwhile rural confluence struggling to support a dwindling prairie population is now the hub of support activity for the Bakken field and has the feel of a frontier boom town. Itinerant, dollar hungry oilfield workers sleep in their trucks due to the severe shortage of accommodation, while temporary trailer parks have grown into 5,000 bed Man Camps, built with the prosaically

utilitarian purpose that implies. In 2009 the city issued $45m worth of building permits; last year it issued $385m worth, earning the soubriquet ‘fastest growing small city in the US’.

Eagle soaringA similar story is unfolding on the US’ southern fringe in the Eagle Ford shale basin which sits in the more traditional oil producing territory of Texas. It takes its name from the pleasantly evocative town of Eagle Ford, where the shale outcrops at the surface in clay form but which is now subsumed within the Dallas conurbation. The main Cretaceous Eagle Ford formations are found at depths between 4,000ft in the north and down to 12,000ft towards the Mexican border. The shale play is roughly 50 miles wide and extends some 400 miles from the Rio Grande River into East Texas. The February Oil & Gas Journal recounted 368 Eagle Ford producing oil leases in 2011, up from 72 the previous year - as well as 550 gas producing wells, an increase from 158 in 2010.

Dilley, Texas operating baseRight tools, right location, right time

Hunting Titan designs and manufactures perforating gun systems, shaped charges, well logging instrumentation and perforating gun switches at strategic plants across North America.

Perforating products are distributed through a network of 18 company owned facilities and further field operations located to meet the customers’ immediate needs.

Two hundred or more guns might be needed to frack a multi stage horizontal well and it is essential that all associated consumables are made available with a 24 hour sales and technical support service.

Dilley, Texas is the newest of these sites, comprising a warehouse and offices of 8,000sq ft in a yard of over ten acres in which three bunkers have been built to meet the highest industry safety standards.

Dilley in Frio County, is on the Missouri Pacific Railroad and Interstate Highway 35, close to the Texas - Mexico border at the south eastern end of the Eagle Ford shale play. It was originally conceived as a cattle station with stock pens and sidings at the railroad depot.

Hunting Titan’s Dilley operation is one of two facilities designed specifically for the needs of the Eagle Ford operator and its service company. Delivery time to customer requirement is highly responsive.

Perforating hardware, energetics and instrumentation tools can be packaged and despatched in whatever combination the customer demands.

The shale bonanza has transformed rural communities and triggered a building boom and rush of investment into associated services

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Wireline companies own personnel assemble the perforating guns immediately prior to deployment in the wellbore for safety’s sake. Hunting Titan supplies the component products

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EagleFordShale.com, it will not be surprising if as many as 2,500 wells are brought to production during this year. And the focus has been shifting from gas to oil. In June last year 56 percent of producing wells were considered gas wells, but by March this year that number had fallen to just 38 percent.

Fracking rocksMultistage hydraulic fracturing - fracking is the technique that was unleashed to provide this production bonanza. Virtually all oil wells need to be explosively perforated to harvest their hydrocarbons but this changed comparatively recently with the development of horizontal drilling into a shale formation. It was then required to fracture multiple stages of the wellbore, before pumping hydraulic slurry - basically sand and water - at high pressure to fracture the shale rock, prop open the seams and allow the oil and gas to flow. Common usage coined the terms frack and fracking.

The sheer industry in mounting a frack job is breathtaking. With up to 50,000 horse power needed for the pumping operation alone, a typical well might require around 2,000 truck movements to bring in five million gallons of water and three to five million pounds of sand.

Potential issues concern the fears for environmental impact especially to aquifer contamination and methane release; more recently in the UK this has extended to earthquakes. To ensure the safe growth in shale extraction the energy industry will have to set and meet the highest safety standards possible to ensure the integrity of the wellbore and all associated practices. The International Energy Agency believes that these should represent about seven percent of the construction and completion costs - economically significant but manageable. As drillers employ longer laterals, improve the intensity of fracking and learn more about the rock formations and how best to tap them, the

Production reports indicate that between 2004 and 2007 the Eagle Ford produced about 1,000 barrels of oil per year from vertical wells before the advances brought about by horizontal drilling and fracking. As an illustration, total annual liquids production has gone from 10.8MMboe in 2010 to 57.5MMboe in 2011 reports GlobalData.

Petrohawk Energy is credited with drilling the first Eagle Ford wells back in 2008, when the company began testing several areas across South Texas. However Houston’s EOG Resources reported at the end of last year, that it was now the largest oil producer in the Eagle Ford and had captured potential reserves of 690 million barrels of oil, in addition to natural gas liquids. The initial production rate of some recent wells has approached 3,000 b/d of oil plus condensate and gas. Texas currently pumps about two million barrels of oil per day.

The Eagle Ford Shale drilling rig count rose to 278 working units and according to

Giant trucks are combined to pump frack fluids into the wellbore at great pressure

Perforating is controlled by the individual service company from truck mounted operations centres

A Hunting Titan T-Set®Setting Tool being lifted into position on the wellhead to initiate the fracking cycle

Caption to write please

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recoverable percentage should go up and the costs of extraction should go down.

Boomtime bottlenecksOther pinch points embrace the very success of the fracking methodology itself. Not only does this reflect the materials consumed from the particular grades of sand or ceramic beads needed, to Guar - a vegetable gum used as a lubricant - but also the human dimension. There are not many other opportunities for a clean living high school graduate to start work on a salary of $55,000 per year or $80,000 with a commercial driver’s licence. Experienced frack teams and petroleum engineers are in a league of their own.

Riding the waveThe economic benefits of rising energy production are spreading far beyond the traditional oil patch. With gas production climbing past its 1970s peak, consumers are

looking at cheaper heating bills for those who use gas, or derive electricity from gas-powered plants. The ramp ups in oil production from the Bakken and Eagle Ford alone have halted the 40 year decline in domestic supply.

Housing demand in new oil and gas field regions is boosting construction from the doldrums and, according to the US Labor Department, in 2011 there were 640,000 jobs in oilfield employment - 33 percent up on five years earlier. Manufacturing plants are returning to the US to take advantage of cheap natural gas - spurring major investments in petrochemical and steel production in the Gulf Coast and Midwest.

When a general recovery is established in the US it is going to be based on a new generation of options for low cost power. A new wonder is how that will be replicated overseas.

50,000 horse power can be harnessed to perform the hydraulic fracking as each perforating stage is completed

Water is pumped into the shale formation to form pathways that are propped open by sand to keep the fissures open and the oil flowing

Perforating and fracking operations brought together at the wellhead

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Drawing together

1010

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The 32nd Hunting Art Prize was a combined celebration of American art, community involvement and corporate enterprise

To celebrate the achievement of the contemporary Texan artists who made the Hunting Art Prize’s final shortlist, Hunting

PLC annually organises a gala evening at which the winner is revealed and the $50,000 prize given. All the finalists get to meet the invited guests, drawn principally from the customer community, and given the nature of the occasion are encouraged to establish a dialogue and negotiate sales. Hunting promises to match a portion of the receipts from these purchases to support a deserving local charity which this year was funded by a sum in excess of $100,000. The soirée is timed for the eve of the Offshore Technology Conference (OTC) when many of the major energy players from around the globe gather in Houston to attend the world’s largest energy show.

International inspirationNow in its fourth decade, the Hunting Art Prizes were established in London, awarding a series of small cash prizes to artists in different categories. Relocating the event to the USA seven years ago reflected the increasing importance of the company’s operations to Houston, home of the energy services industry. The opportunity was also taken to re-assess

the competition’s purpose. Quickly shedding the plural, a bold step was taken to hang the entire prize on one award; winner-takes-all. It is now billed as the most generous annual art prize in North America. This inspiration also provides the backdrop for a dramatic annual dénouement, adding to the evident theatricality of the evening. The international flavour of the party is also matched by the cuisine, which represents the many cultures of those now drawn to the event. This year was no exception, as a strong crowd of the great and the good gathered in April, at the now familiar Friedkin Corporate Campus, to view the latest talent that Texas has to offer. The applicants themselves can be budding artists embarking on a professional path or those already firmly established on the scene. No matter how far they are in their career, all can benefit from the boost and limelight that the Hunting Art Prize provides.

One for the oil patch Since relocating, the Prize has traditionally been scheduled for the Saturday night immediately preceding the offshore conference - held this year between 30 April and 3 May.

In addition to the conference programme,

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HOT

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The winner of the 2012 HAP, Michael Bise

the OTC is also a leading exhibition for the latest technologies for the upstream industry. In truth, it is not limited to the offshore environment but that is where most challenges lie. Every conceivable related service is represented on the exhibition floor - from initial geological survey to final offshore production processing. Although much shoe leather can be worn walking the vast halls, the event is an unmissable occasion for international energy professionals to debate and discuss current challenges and developments in the market place.

Following the busiest acquisition period in the company’s history, it is no surprise that Hunting Energy Services also took space for a stand, promoting and explaining its broadening capabilities to the event’s 89,400 visitors. In this way the event proved a valuable meeting point to introduce existing and potential customers to the interlinking technologies and disciplines, to which they might not already be familiar. Of particular interest Hunting was able to demonstrate its significant international and domestic footprint augmented by the recent acquisitions. The company was also able to present the concept of an advanced manufacturing group drawing on the company’s MWD/LWD synergies.

While difficult to measure the immediate impact, the feedback from the Hunting crew was that it had been a successful, busy and productive week with plenty of enquiries to follow up.

Dennis Proctor CEO and Richard Hunting Chairman Hunting PLC to left and right of Kathy Sanders, President of New Danville

Members of the Hunting team at OTC

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David Gray ‘The Question’

Judged and jury Reflecting the creative diversity that the Hunting Art Prize inspires, this year’s competition attracted over 1,600 entries from across the region. During the two-tiered jury process, all work was initially evaluated as a digital file before 109 pieces were put forward for the final round of judging. Making up this year’s distinguished panel of judges was:

Eric Crosby, Curatorial Assistant of Visual Arts at the Walker Art Center in Minneapolis, Minnesota. Julien Robson, Curator of Contemporary Art at the Pennsylvania Academy of Fine Arts in Philadelphia.Claire Schneider, an Independent Curator based in Scottsdale, Arizona and former Senior Curator of the Scottsdale Museum of Contemporary Art.

Winner takes all‘We often say that the Hunting Art Prize can change a life,’ Hunting’s CEO, Dennis Proctor, told the assembled audience. ‘Tonight, however, I can say it is also going to celebrate a life.’ Announcing the 2012 winner of the prestigious Prize as Michael Bise, for his work Children Proctor alluded to the ‘profoundly moving’ and ‘wonderfully executed’ piece from an artist who only a few months previously had undergone a heart transplant.

A graphite drawing that took two months to complete, Children is based on an old school

photograph and evocatively depicts Bise’s classmates as he remembered them, in an non-romanticised style. ‘What I was most interested in doing when creating this piece was to avoid making it saccharine,’ the artist explained. Although much of his work finds its base in source material such as family memorabilia, Bise was on a mission to combat the tedious, often labour intensive detail of his creations with a sense of unpredictability. Describing the project as ‘an interesting discovery of memory’, Bise told of the strong sentiment that came back when working on the individual’s faces. ‘It is hard to draw children because it always invokes such nostalgia, but I wanted to project into the unknown and capture what might happen to them in the future as adults.’

It was this unusual approach, and Bise’s remarkable amplification of the children’s quirky characteristics, which first caught the attention of the judges. Julien Robson picked up on the picture’s ethereal familiarity, suggesting that: ‘Bise reflects the innocence of childhood with a sinister knowingness that is unsettling’, a comment that was also made by Claire Schneider who raised the question ‘Are these the faces of the adults these school children have become...or are we seeing the adult qualities of these children?’

Having entered before, Bise was very surprised at his success: ‘It’s amazing to think that out of however many thousands, that ‘one’ is your drawing... It was a great evening which brings people together, a time to see artists from the whole community.’

Heart of the communityA unique fusion of art and commerce, drama and altruism, the Hunting Art Prize also serves to raise funds and promote deserving members of the community through the goodwill generated at this sparking occasion. The charity selected for 2012 is New Danville, a Willis, Texas-based non-profit self-sustained organisation that is dedicated to offering adults with intellectual and developmental disabilities a community where they can grow emotionally, socially and spiritually with their non-disabled peers. New Danville firmly advocates the importance of self-reliance, enhancing education and encouraging autonomy to overcome human limitations.

In supporting these fine aims, it is worth reflecting on how the many different aspects of Hunting as a community and as a company are brought together in the enduring endeavour of the Hunting Art Prize.

Brian Boyter ‘Censorship without Representation’

RicardoPaniagua Garcia III

‘Technicological Marvel’

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Ann Huey ‘Unusual Suspects: Dallas Zoo Reptile Department 2011’Natalie Jones ‘Syraya’

Back to our roots

Hunting’s North Sea foray into the oil and gas service industry began in Great Yarmouth - and the

story has now come full circle

GREATER YARMOUTH TOURISM/ADRIAN BUCKGREATER YARMOUTH TOURISM/DAVID STREET

Hunting’s new facility at the Waveney Business Park in Great Yarmouth and above (black and white photo) the original workshop in 1970

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Hunting Well Intervention recently opened a small workshop in Great Yarmouth on the Norfolk coast - almost exactly 45

years after Hunting first started to support the early operators in the southern North Sea from this old fishing port and historic seaside resort on England’s eastern seaboard.

Hunting companies had long been connected with the oil industry but it was the establishment of Hunting Oilfield Services in July 1967, to provide a repair and manufacturing service to the oil companies engaged in the nascent North Sea exploration, which set the foundations for the current Hunting Energy Services group. A machining and service workshop opened in November 1967 in a former kipper packing plant in Great Yarmouth. The smell of the smoked fish, known locally as Bloaters, was said to have hung heavy on occasion - a poignant reminder of the declining herring industry, as it was eclipsed by the hope of new opportunities from the emerging offshore oil industry.

North Sea needsThe facility was primarily designed to meet the needs of energy operators looking for smaller, specialised items of drilling equipment such as rotary subs and stabilisers but also to repair worn or damaged equipment, including the re-cutting of damaged thread connections on the tubular sections.

In 1968 the workshop took on its first important on-site repair contract - mending a mud pump on a rig working off the coast

of Holland. The pump circulated around 600 gallons of drilling fluid per minute at a pressure of 3,000lbs per sq inch; breakdowns meant costly drilling time was lost and the facility rose to the challenge, earning itself a good reputation as well as work of a similar nature on rigs in the North Sea, and further afield.

In the early 1970s offshore drilling operations were as costly to operators as they are today - although after 40 years of monetary inflation the figures have changed somewhat dramatically. In those days the cost of a drilling rig which either floated or rested on the sea bed in these relatively shallow waters, was estimated at US$10,000 per day. Now the day rate would be nearer the US$100,000 mark for a shallow jack-up or double that for a semisubmersible but still significantly cheaper than the ultra deep-water modern rigs, which can cost in excess of a $1.5m per day.

Famous co-workersFamed oilfield trouble shooters, Red Adair and Boots Hansen, were drafted in to help contain two blow-outs that occurred in the North Sea during the winter of 1968/1969. The Hunting team had the pleasure of working with these industry legends - both incidents occurred on platforms not far from Great Yarmouth. The workshop’s reputation continued to grow and by 1969 it was the first in the UK to be given a thread cutting licence by Vallourec. During this time the company had also entered into an agreement with French company Neyrpic to lease, operate and repair its turbodrills.

Nelson monument

GREATER YARMOUTH TOURISM/DAVID STREET

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The Hunting Oilfield Services facility in Main Cross Road 1982 and

the modern day facility (below)

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will concentrate on servicing, rentals and sales of pressure control equipment, wireline units and a full scale thru-tubing range of tools. Where local expertise needs supplementing, full engineering support is provided online from Aberdeen. As business demands, a wider range of Hunting technology can be supported.

New baseThe near 10,000sq ft Waveney Business Park unit was acquired in September 2011 as a basic workshop oriented towards offshore rig support. It underwent some major upgrading to bring it in line with other Hunting operations, before opening for business in time for the New Year. A two tonne lift capability and fully certified pressure control testing cell help build a highly competitive offering and re-certification service for third party products. The re-establishment has been led by the redoubtable Bill Artis as Base Manager. Bill came to Hunting following the acquisition of Welltonic in 2009, where he was in charge of the Kazakhstan field operation. As a Gorleston man - the better fishing end of Great Yarmouth - he too has come back to his roots.

New businessRefurbishment complete, business is well underway at the facility which now comprises a fully compliant, modern and flexible work space. The business’ ethos harks back to the original Main Cross Road facility in providing high quality and fast delivery for the key service customers, but this time with Hunting’s Well Intervention products. The advantages of the new facility devolve to the customers, who for logistical expediency continue to support the southern sector rigs from Great Yarmouth. Worn or damaged parts can now be assessed, repaired or replaced without a costly and extended inventory loop. This adds to the value offering and quality assurance provided by the Hunting brand.

Now in 2012 with manufacturing operations humming around the world, it is fitting that once again, Hunting Energy Services can look full circle to the unveiling of one of its newest facilities barely a mile away from where it had all first begun.

Hunting’s early involvement in the downhole mud motor or turbine drilling sector really paid off - by the late 1970s and early 1980s the company had some 80 percent market share.

By 1974 there were 18 commercially viable fields being exploited in the UK sector of the North Sea Continental Shelf - with a production potential in excess of 3,000,000 barrels a day. However this also coincided with a shift in focus progressively to the northern North Sea and Hunting Oilfield Services opened a small venture in Aberdeen, followed by a subsidiary in Den Helder, Holland in 1975.

Design talentBy the mid 1970s energy companies were searching for better ways to develop the technology specific to the harsh and localised conditions in which it was deployed. A notable example concerned the jointing of large diameter casing. Hunting Oilfield Services stepped up to the challenge, introducing the Talon Connector - a self-stabbing irreversible joint. This simple but highly effective piece of equipment won a coveted award from the UK Design Council. In 1979 one of the first computerised numerically controlled (CNC) machines was installed in Great Yarmouth to undertake the high volume machining of connectors and couplings.

But sadly the growth came to an abrupt end in 1986 as activity was severely curtailed by the major oil companies in response to falling commodity prices. New exploration programmes were axed and with them the purchase of associated equipment. By 1987 Hunting had to make the difficult decision to close the Great Yarmouth facility, opting to focus on its now larger Aberdeen base and its Dutch offshoot.

Great Yarmouth revisitedWith recent expansion of the Hunting Energy Services capability the opportunity has re-emerged to capitalise on the synergies available from the combined business streams with a new presence in Great Yarmouth. In many ways, time has not changed much. Today’s Operational Base is also focused on offering the right range of products in a timely manner to the southern sector of the primarily gas producing North Sea. Hunting Energy Services Well Intervention division (HESWI)

Bill Artis Base Manager, points out the local girls soccer team that the Company supports

Mike Lummis Workshop Supervisor

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Aberdeen twenty-four/sevenThe co-location of Hunting’s key Aberdeen operations at two revamped sites provides a significant enhancement in the service offered to the company’s upstream customers

Impeccably timed with the UK Government’s recently announced North Sea Licensing Round, the consolidation of seven of

Hunting’s North East Scotland facilities into two principle sites is now complete. Known internally as Project Harper the major investment in new company facilities sends a strong message of Hunting’s commitment to the United Kingdom Continental Shelf (UKCS) and its enhanced capability to support operators in Europe and further afield. A record 224 applications were submitted in the 27th

Licensing Round, covering 418 blocks - the largest number since 1964. Separately, the UK Offshore Oil and Gas UK Industry Association reports a commitment of £57bn investment in projects during the period 2011-13. Despite undoubtedly having earned its mature label, to dismiss the potential for further activity in the region would be rash, as it continues to attract

significant new investment. The stimulus behind the move was to establish two centres of excellence, defined by their respective logistical requirements. This was especially important after a busy acquisition programme which had threatened to fragment expertise and diffuse customer attention throughout the different business streams. It was also in recognition of the nature of the offshore industry, its supply chain strictures and unique operating environment in some of the world’s most inhospitable waters.

Providing uninterrupted support to the customer throughout the process has proved

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Aberdeen twenty-four/seven

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still be recognised by its outline - into a world class pipe management facility. The recent concentration at Fordoun brings together the previously dispersed casing and tubing inspection, speciality threading, repair and service from Badentoy, Montrose and Edzell.

Due to the sheer scale of the operation, the yard has been purposely designed for the space afforded by the rural location. It has excellent links to the principle transport network and is just twenty minutes down the road from Badentoy. Focused on full length OCTG and large OD pipe, the revamped site has at its heart a brand new 2,835sq m machine shop. Additionally, the custom designed, automated pipe handling system for moving materials between yard and threading lines, is leading edge. Combined with a genuine 24 hour operation serving the tough scheduling requirements of the North Sea operator, this provides a pipe management service that is second to none.

Despite the disruption caused during redevelopment, the European operation has continued to successfully meet the ever changing challenges placed by key customers. The opening ceremonies for both sites, celebrated on 20 April this year, signal the significant commitment to Hunting’s North Sea customer base, with an equally vigorous effort to support their respective investment programmes.

Come rain or shine, or sleet and snow, Hunting has raised the bar once again on the standards expected from a global energy services provider.

demanding, owing to the inevitable complications that arise during the transfer of a plant, its machinery and staff into new premises. However, perseverance won out and the team can now reap the benefits of working more efficiently together in a better work environment. Further advantages include radically reduced traffic between sites. Finally after years of planning and construction, slowed but not stymied by one of the harshest winters on record, the project has been successfully delivered and state of the art facilities formally unveiled.

With Badentoy’s newly extended 1,259sq m offices and specialised workshop complete, the resident Hunting Energy Services (UK) team have been joined by their colleagues from Well Intervention and Thru-Tubing businesses. The site now represents a nucleus of the company’s core engineering operations with the associated synergies derived from the centralisation and strengthening of business administration. Badentoy Business Park forms a technology cluster of oil related manufacturing and service companies at Portlethen, just to the south side of Aberdeen. As an aside it is worth pointing out that the original facility had probably processed one million tons of steel pipe in the preceding 25 years. Half of this would have been new work (60 percent carbon, 40 percent chrome) and the other half would have been repair work, which will have been split into customer inventory and stock sold.

Over the past few years Fordoun has also undergone extensive redevelopment, evolving from a WWII airfield - a purpose which can

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Night and day service throughout the year from a dedicated state of the art facility

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Lean exemplars: small change, big leapCNC machines are at the heart of many

of Hunting’s manufacturing processes. The tools chosen for machining are

determined by the task and at the point of contact are fitted with consumable inserts matched to the precise requirement of the job. Changing the insert is easier, faster and cheaper than changing the whole tool. Inserts are small and are designed in multiple variations to suit their purpose. Owing to their diminutive size however, the significance of this key kit is all too easily overlooked.

At the company’s Capital facility in Houma, inserts are used to cut Hunting product on a

daily basis and the monthly spend on them can vary from $15,000 to $30,000. Recognising that the route to efficiency is through order, Richard Williams, the facility’s Manufacturing Manager and his shop lead, Cyril Foret, a design control specialist and Senior Machinist, coordinated an organised overhaul of the inserts. The duo first pulled all the inserts from the shop floor, organised them by size, shape and purpose and removed all excess inventory. They then studied each machine to determine how many of each insert type would be needed on a daily basis. With the review complete they developed a box for each machine and

controlled the number of inserts issued to the shop each day.

The immediate benefit was 100 percent traceability and accountability of all inserts. Once brought under tight control, the team had better visibility of the essential inventory needed and could set up minimum stock levels and develop re-order points. The next tangible benefit was that, three months after the LEAN exercise, the facility’s monthly spend had plummeted to $0.00, through the use of excess inserts from the shop floor. Over the last year, monthly demand has stabilised and is still under $10,000 per month. The space needed

Inserts pulled from the Capital Boulevard shop floor

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Lean exemplars: small change, big leapas a monthly expense. The goal is to swiftly replicate this LEAN lesson across the whole Hunting manufacturing network.

Space and safetyWoodlawn Ranch in Houma, Louisiana was out of space and pup joints were stored increasingly haphazardly as the operation had grown - as shown below. Therefore, a new rack system was designed to store the pup joints horizontally in bins, by size. Thomas Pitts and Steve Avet led the implementation of the new system as part of their LEAN project and 5S organisation plan. The new rack occupies

to store the inserts was also reduced by 75 percent.

In the photo, Richard (left) and Cyril (right) review the monthly purchase needs. In the background there are two cabinets which now house all the inserts, colour coded by size and shape. This makes identification and location of the required insert very simple. In short the total dollar amount of inventory was reduced 50 percent thus freeing up capital for other purposes. Their combined knowledge and experience was instrumental in developing the organisation and control of an item most Hunting facilities have traditionally managed

96sq ft but safely holds four times the product in the same amount of space as was available before. As the racks were manufactured, they were installed to a logical plan, creating free space on the shop floor. Over 5,000sq ft of valuable floor space was recovered, which is now available for increased production and meeting the customer’s growing needs.

Previously haphazard storage of pup joints at the Woodlawn Ranch facility

The new rack

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Our HuntingCommunity

Opening of Aberdeen operations hub

In the presence of Dennis Proctor CEO and assembled staff, Richard Hunting formally declared the newly built machine shop at Fordoun open, followed by a similar ribbon cutting ceremony at Badentoy performed by Sam McClements. Senior executives led the Directors on a tour of the facilities on a decidedly mixed April day - underpinning the company’s 24-7 ‘whatever the weather’ approach to its operations.

The final assembly of a new batch of Pressure Control Equipment (PCE) for shipment from the new Badentoy premises for Schlumberger was another notable first.

Middle East: new regional baseHunting’s UAE facilities have been co-located on one site at the Oilfield Supply Centre in the Jebel Ali Free Zone of Dubai; following a major refurbishment, the 15,500sq ft site is now fully operational. The Centre is home to a cluster of international service companies geared to the upstream oil and gas industry. This gives access to shared technical services and logistical benefits of a dockside presence.

The move brings together the various elements of the Middle East and North African regional companies under one roof: Well Intervention: Pressure Control, Down Hole Tools, Wireline and Thru-Tubing, as well as OCTG. A state of the art workshop is initially geared towards servicing well intervention tools but the offices also house specialist staff in Sales & Technical Support, Draughting/Engineering, along with QA, accounting and administration functions to support and develop each business stream.

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Appointments and PromotionsHunting PLC is pleased to announce the following

Hunting LondonDean Mitchell, a stalwart of the accounts team in Cockspur St, has been appointed Head of Risk and Financial Reporting. Paul Samson joins as the new Treasury Assistant at Hunting PLC.

Hunting EuropeJohn Goodfellow has been appointed Technical Sales Director, Hunting Titan and will be responsible for identifying and pursuing new business opportunities using existing and new technologies in the UK, European and African markets.Stewart Barrie has assumed the role of Business Development Manager and will oversee the Thru-Tubing and Well Intervention operations through the development of new business contacts and existing customer relations.As the new Business Projects Manager, David Wilson is in charge of the planning, management and delivery of key strategic projects and initiatives within the Group. David will also act as a focal point for the growth of innovative business improvement projects covering all aspects of the company’s activities.Bill Artis has changed his role and has been appointed Base Manager at the new HESWI facility in Great Yarmouth.

Hunting North AmericaHillary La Manna has assumed the new position of General Manager, Human Resources, working with Hunting’s divisional HR managers in the US to develop and deploy a standardised HR programme. Joining the company following the Titan Specialities acquisition, where she was Director of HR, Hillary brings 19 years of experience gained from global HR roles.Assuming the position of Global Manager of Business Services, John Feuerstein is now responsible for the company’s marketing, business systems and special projects. John will also spearhead the standardisation of the Hunting brand.Newly appointed President of Hunting Titan, Rick Bradley will be responsible for all aspects of the business. Rick began his career at Titan as a journeyman machinist in 1979. He quickly progressed through various management positions in the organisation, becoming Chief Operations Officer when Titan was purchased by Riverstone. Ken Babcock will be leaving Hunting Titan to pursue other interests. We extend our thanks to Ken for his service to the Company.

Assuming the role of Senior Commercial Manager, John Phillips will be responsible for the integration of the company’s manufacturing products and services within Hunting Titan’s North American offering. This will involve the development of stocking points for Well Intervention and Completion capabilities throughout the region. John will also work with Hunting Titan’s commercial group to build key strategies to support a larger customer base for these products and services.Dane Tipton is the newly appointed President at Hunting Stafford following two years as Vice President, Engineering and having previously developed roles in Sales, Operations and Project Management. A strong leader, Dane has held positions within BP North and South America and at FMC in the Subsea and Surface business units. Preceding this, Dane served in the Army for eight years and reached the rank of Communication Sergeant during Desert Storm. These skills will suit Dane’s new role in growing Hunting’s Subsea Technologies business. Following a year as Operations Manager at Rankin Road, James Caldwell has been promoted to Group Operations Manager of Hunting’s US Manufacturing Division. James’ many years of experience in manufacturing and quality assurance, as well as extensive knowledge of premium threading technology will assist him in his new role, which includes responsibility for the company’s US facility maintenance and manufacturing operations.Ben Jarveaux has been promoted to the role of Group Inside Sales Manager for Hunting’s US Manufacturing Division. Ben has been with Hunting for more than two decades and during this time has worked in sales in Louisiana and Texas. Most recently, Ben worked as US Manufacturing’s Account Manager to Halliburton Energy Services.

Hunting CanadaFollowing the recent transition of Canada Drilling Tools to the Great Plains information system, Susan Bessey, formerly Senior Controller, US Drilling Tools, will now oversee the accounting and financial aspects of HES Canada Drilling Tools. Toni-Marie Lashta, Contoller HES Canada Drilling Tools will continue to manage everyday accounting and finance responsibilities in Edmonton, Canada. A number of synergies are anticipated to continue across the board, including the training of accounting staff, as well as the sharing of good practice knowledge.

Farewell to FieldIt was announced in May that the Company has sold its Canadian aviation business, which includes Field Aviation, thus concluding Hunting’s development into a pure energy services company. This also marks the final step away from a long history in aviation, which began in 1938. We wish the new purchasers, John Mactaggart and his management team a long and prosperous future.

Singapore bridge buildingThe Singapore recreation committee plays an important role organising activities that help promote understanding, build bonds and friendship. February saw the first of this year’s gatherings with a Lunar New Year celebration on site at the Benoi Road facility. Kicking off with a customary ‘Lion Dance’ performance to bring prosperity, festivities included a traditional ‘Lo Hei’ session where employees come together to toss the ‘Yusheng’ (salad with raw fish slices), calligraphy writing and creative greetings. Other special events, such as an evening bowling competition, which was supported by some 60 participants, have also been declared a huge success.

Aberdonian golf sponsorshipFollowing a year of successful partnership, Hunting has extended its sponsorship with former Open champion Paul Lawrie. Since winning the Claret Jug in 1999, Lawrie (right) has gone on to claim titles at five further events on the European Tour with victories in Spain, Wales and Scotland before winning a stunning four shot triumph at the Qatar Masters. Hunting has also signed a new agreement with rookie golfer David Law, who recently turned pro after an excellent amateur career.

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Our HuntingCommunityHunting Pte office move

After many happy years at the Benoi Road facility in Singapore, the team at Hunting Energy Services Pte has relocated its regional administrative centre to new offices in the International Business Park - a larger site which neatly accommodates the need for expanded quality office space. Benoi Road will now be reconfigured for increased manufacturing capacity with associated operational offices only.

Regional business process improvementIn preparation for the rapid growth expected in the Asia Pacific region, the Operations and Quality Assurance teams from Singapore, Batam and Wuxi came together at the year end to discuss plans toward a vision of operational excellence. The launch of the Business Process Improvement (BPI) Unit shortly followed, focused on driving forward a culture for change and the delivery of continuous improvement. The supply chain division of Hunting Energy Services Asia Pacific was also established to help support the company’s commitment to ‘total customer satisfaction’.

In March the BPI unit staged a meeting of core Health and Safety in the Environment (HSE) team members from three locations to share and review current company practices. The gathering was also used to establish a comprehensive framework to evaluate HSE Excellence in four key areas: Risk Assessment and Management; Education and Training; Emergency Preparedness; and Assessments and Improvements. Andrew Yeo, General Manager for Quality/HSE, also conducted a ‘safety safari’ training session for employees at the Benoi Road facility.

A day of teambuilding in April kicked off with an opening address from Daniel Tan, Managing Director, who disclosed plans for business growth in the coming year, re-affirming the company’s commitment to maintaining excellence throughout the supply chain, operations and its people.

The Enterprise Resource Planning (ERP) project team has also been formed to work with key stakeholders and forecast the future value stream of processes currently underway.

Casper food driveAt the beginning of this year employees at the Casper facility in Wyoming formed a commendable ‘donation committee’, which sees representatives from each department meet once a month to consider funding requests from a variety of local groups. This valuable contribution to the community began with a food drive, organised through the Wyoming Food Bank of the Rockies. The team at the facility had begun collecting non-perishable items from employees in late November, resulting in over 17,667lbs of food donated to the local community. The committee was also able to give $500 directly to the Rockies food bank.

Gibson’s top ten broker 2011Gibson Managing Director, Nigel Richardson, has been featured in Lloyd’s List Top Ten international brokers, in recognition of the company’s enduring strength in the tanker trade and response to changing market patterns. He was cited for the growth of the gas and offshore teams, as well as promoting the dry bulk and sale & purchase desks.

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Indonesia thanksgiving celebrationHunting Energy’s plant in Batam, Indonesia played host to some 200 employees in January to mark the communal feast of thanksgiving, Selamatan. Symbolising the social unity of its participants, the occasion offers a time to express thanks for the year that has passed and for good tidings to come. During a traditional ceremony Tumpeng (cone rice) was cut before employees joined together for a special dinner. The event was attended by representatives from the community including the Head of Jasinta village and the local cleric who asked for the ‘blessing of 2011 and the prosperity of 2012’.

Hunting InnovaCrawfish boil celebrations

Over 360 employees enjoyed a day of fun and food - a well-earned ‘thank you’ for their ongoing hard work with a seasonal Crawfish Boil celebration. Marking the first Hunting Innova employee appreciation event since last year’s entrance to the Hunting fold, the occasion recognised the time and effort that the team continues to dedicate to its work and a good few top rewards were presented during the event. Pictured here, left, VP Technology, Chet Fielden rewarding Susan Chanthapathet with a gift and right, Production Manager Ernest Buggs receiving a gift card from Hunting Innova President, Scott George.

Mount Huangshan conqueredThe team at HESWX is known to thrive on a challenge, as was clearly demonstrated by the 230 employees who embarked on an epic 1800m climb up China’s Mount Huangshan (‘Yellow Mountain’) in May. On the day before the expedition, the team visited famous sites surrounding the base of the mountain, including the ancient folk buildings of Huizhou, before spending the evening preparing for the assault on the mountain. Having reached the summit, the Hunting climbers paid tribute to the mutual support which got them to the top - as well as modern technology by way of a cable car which took them halfway!

The complex financing deal, which had to be completed under huge time pressure, to underpin Hunting’s series of recent transformational acquisitions, has been recognised at ‘The Treasurer’s Deals of the Year Awards’. Known as the ‘Top Tap’ prize for Revolving Credit Facilities, a panel of esteemed judges commended Hunting for its careful handling of the Titan acquisition last year, which was completed in just nine days during a period of great market volatility. Christopher Berris, Hunting’s Group Treasurer, accepted the award at the prestigious celebratory dinner, describing the conclusion of the deal as ‘an immensely satisfying process for the whole finance function’. As indeed was the public recognition. Shortly thereafter Peter Rose, Hunting’s Financial Director was also shortlisted for The FD’s Excellence Awards.

Hunting PLC ‘Top Tap’

Chinese good sportsSome 250 employees at Hunting Energy Services Wuxi (HESWX) took part in a company sports meet earlier this year for an afternoon of friendly competition. Games included a tug-of-war and a relay race as well as a traditional shuttlecock kicking contest. The afternoon’s exertions were followed by a lively evening, where everyone enjoyed a well-earned meal, onstage performances and more fun activities.

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Hunting PLC3 Cockspur StreetLondon SW1Y 5BQ, UKTel +44 (0) 20 7321 0123www.huntingplc.com

Hunting PLC (USA)24 Waterway Avenue, Suite 700, The Woodlands Houston, Texas 77380, USATel +1 713 595 2950

Hunting Energy (North America)2 Northpoint Drive, Suite 400, Houston Texas 77060-3236, USATel +1 281 442 7382

Hunting Energy (Europe)Badentoy Avenue, Badentoy Park, Porthlethen Aberdeen AB12 4YB, UKTel +44 (0) 1224 787000

Hunting Energy (Middle East)Building B23, Oilfield Supply Centre Jebal Ali Free Zone, Dubai UAETel +971 4 887 6850

Hunting Energy (Pte)2 International Business Park,#04 - 13/14, The Strategy Tower 1Singapore 609930Tel +65 693 31777

Gibson ShipbrokersPO Box 278, 16 Ely Place London EC1P 1HP, UKTel +44 (0) 20 7667 1000