tesco analyst day -...

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TESCOTESCOAnalyst DayAnalyst Day

October 16, 2007October 16, 2007

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Forward Looking StatementForward Looking StatementThis presentation contains forwardThis presentation contains forward--looking statements within the meaning of Section 27A of the Seculooking statements within the meaning of Section 27A of the Securities Act of 1933 and rities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All such stSection 21E of the Securities Exchange Act of 1934. All such statements, other than statements of historical fact, are atements, other than statements of historical fact, are statements that could be deemed statements that could be deemed ““forwardforward--looking statementslooking statements”” within the meaning of the Private Securities Litigation Reform within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, any projections of rAct of 1995, including, without limitation, any projections of revenue, gross margin, operating margin, operating expenses, evenue, gross margin, operating margin, operating expenses, earnings or losses from operations, or other financial items; fuearnings or losses from operations, or other financial items; future product plans; any statements of the plans, strategies and ture product plans; any statements of the plans, strategies and objectives of management for future operations; any statement coobjectives of management for future operations; any statement concerning developments, performance or industry rankings ncerning developments, performance or industry rankings relating to services; and any statements of assumptions underlyirelating to services; and any statements of assumptions underlying any of the foregoing. Although TESCO believes that the ng any of the foregoing. Although TESCO believes that the expectations reflected in these forwardexpectations reflected in these forward--looking statements are reasonable, they do involve risks, uncertlooking statements are reasonable, they do involve risks, uncertainties and assumptions ainties and assumptions that could cause our results to differ materially from those expthat could cause our results to differ materially from those expressed or implied by such forwardressed or implied by such forward--looking statements. These looking statements. These risks include, but are not limited to: the background risks of trisks include, but are not limited to: the background risks of the drilling services industry (e.g., operational risks; potentiahe drilling services industry (e.g., operational risks; potential delays l delays or changes in plans with respect to customersor changes in plans with respect to customers’’ exploration or development projects or capital expenditures; thexploration or development projects or capital expenditures; the uncertainties of e uncertainties of estimates and projections related to levels of rental activitiesestimates and projections related to levels of rental activities’’ uncertainties associated with estimates and projections of costuncertainties associated with estimates and projections of costs s and expenses; complexities of global political and other risks and expenses; complexities of global political and other risks associated with technical results and performance of technology;associated with technical results and performance of technology;and other risks described from time to time in our reports filedand other risks described from time to time in our reports filed with the Securities and Exchange Commission (with the Securities and Exchange Commission (““SECSEC””), including ), including the Companythe Company’’s Annual Report on Form 10s Annual Report on Form 10--K for the year ending December 31, 2006 and subsequent quarterlyK for the year ending December 31, 2006 and subsequent quarterly reports on Form reports on Form 1010--Q. You should not place undue reliance on these forwardQ. You should not place undue reliance on these forward--looking statements. We assume no obligation or duty and do not looking statements. We assume no obligation or duty and do not intend to update these forwardintend to update these forward--looking statements except as required by the securities laws.looking statements except as required by the securities laws.

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Julio QuintanaJulio Quintana, President and Chief Executive Officer, President and Chief Executive Officer

Tony TripodoTony Tripodo, Executive Vice President and Chief Financial Officer, Executive Vice President and Chief Financial Officer

Nigel LakeyNigel Lakey, Senior Vice President of Marketing and Business Development, Senior Vice President of Marketing and Business Development

Jeff FosterJeff Foster, Senior Vice President of Operations, Senior Vice President of Operations

Barry Barry BeierbachBeierbach, Vice President of Top Drive Services Business Line, Vice President of Top Drive Services Business Line

Warren SchneiderWarren Schneider, Vice President of Tubular Services Business Line, Vice President of Tubular Services Business Line

John BoyleJohn Boyle, Vice President of CASING DRILLING, Vice President of CASING DRILLING®® Business LineBusiness Line

Bob KaylBob Kayl, Vice President and Corporate Controller, Vice President and Corporate Controller

Kristi RectorKristi Rector, Investor Relations Coordinator, Investor Relations Coordinator

IntroductionIntroduction

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8:00 8:00 –– 8:30am8:30am Continental BreakfastContinental Breakfast

8:30 8:30 –– 8:45am 8:45am IntroductionIntroduction Julio QuintanaJulio Quintana

8:45 8:45 –– 9:15am9:15am Our Top Drive Business Our Top Drive Business Nigel LakeyNigel Lakey

9:15 9:15 –– 10:00am10:00am Our Tubular Services BusinessOur Tubular Services Business Warren SchneiderWarren Schneider

10:00 10:00 –– 10:15am10:15am BreakBreak

10:15 10:15 –– 11:15am11:15am Our CASING DRILLINGOur CASING DRILLING®® Business Business John BoyleJohn Boyle

11:15 11:15 –– 11:30am11:30am Financial ReviewFinancial Review Tony TripodoTony Tripodo

11:30 11:30 –– 12:00pm12:00pm Moving ForwardMoving Forward Julio QuintanaJulio Quintana

12:00 12:00 –– 12:15pm12:15pm Transportation to Transportation to BrittmooreBrittmoore FacilityFacility

12:15 12:15 –– 1:15pm1:15pm Lunch / Q&ALunch / Q&A

1:15 1:15 –– 3:00pm3:00pm TourTour Nigel Lakey/Jeff FosterNigel Lakey/Jeff Foster

3:00pm3:00pm Event ClosingEvent Closing

Presentation AgendaPresentation Agenda

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•• Global leader in design and delivery of technologyGlobal leader in design and delivery of technology--based based solutions for the drilling industrysolutions for the drilling industry

•• Two segments: Top DrivesTwo segments: Top DrivesCasing ServicesCasing Services

•• Five acquisitions from 2005 to 2007 expand Tubular Services foFive acquisitions from 2005 to 2007 expand Tubular Services footprintotprint

•• Global reach: 1800 employees inGlobal reach: 1800 employees in 27 key oilfield locations27 key oilfield locations

•• Founded in 1986; IPO in 1993Founded in 1986; IPO in 1993•• Listed: Listed: NASDAQ (TESO) NASDAQ (TESO)

TSX (TEO)TSX (TEO)

•• 52 week stock price range 52 week stock price range $15.35 $15.35 -- $34.76$34.76

•• 30 day average stock price30 day average stock price $27.83$27.83

•• Market Cap Market Cap $1.1 billion$1.1 billion

* Note: All $ shown in this presentation are in U.S. $* Note: All $ shown in this presentation are in U.S. $

TESCO at a GlanceTESCO at a Glance

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Alberta (3)Alberta (3)

Texas (7) Texas (7)

Mexico (2)Mexico (2)

Venezuela (2)Venezuela (2)

Brazil (3)Brazil (3)

Argentina (5)Argentina (5)

Moscow, RussiaMoscow, Russia

Dubai, UAEDubai, UAE

Beijing, ChinaBeijing, China

Jakarta, IndonesiaJakarta, Indonesia

Aberdeen, ScotlandAberdeen, Scotland

Louisiana Louisiana ArkansasArkansasColorado Colorado

Wyoming Wyoming

Stavanger, NorwayStavanger, Norway

ColombiaColombiaEcuador (2)Ecuador (2)

BoliviaBolivia

1800 Employees1800 Employees

SingaporeSingapore

Perth, AustraliaPerth, Australia

TESCO OfficesTESCO Offices

Global Service CompanyGlobal Service Company

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•• Top DrivesTop Drives

•• Tubular ServicesTubular Services

•• MCLRSMCLRS™™

•• CASING DRILLINGCASING DRILLING®®

Drilling Well on Paper (DWOP)Drilling Well on Paper (DWOP)

Casing ServicesCasing Services

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Top DrivesTop Drives

““A Better Way to DrillA Better Way to Drill””

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•• Top Drive Product SalesTop Drive Product Sales

•• Top Drive Rental ServiceTop Drive Rental Service

•• Aftermarket Sales and ServiceAftermarket Sales and Service

Top Drive Business OfferingsTop Drive Business Offerings

1010

•• Invented portable Top DriveInvented portable Top Drive•• Created Top Drive rental marketCreated Top Drive rental market•• Will rent or sell Top DrivesWill rent or sell Top Drives

–– HydraulicHydraulic–– ElectricElectric

•• Growing Aftermarket Sales and Growing Aftermarket Sales and Service BusinessService Business

•• WorldWorld’’s Largest Top Drive Service s Largest Top Drive Service OrganizationOrganization

•• Installed base of 550+ Top DrivesInstalled base of 550+ Top Drives(@ end 3Q (@ end 3Q ’’07)07)

•• 105 Top Drives in rental fleet105 Top Drives in rental fleet

Units InstalledUnits Installed Rental MarketRental Market

NOVNOVTESCO*TESCO*

CanrigCanrig

OtherOtherOtherOther

TESCOTESCO

Top Drives Top Drives -- GlobalGlobal

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* Includes China & FSU; two large markets with minimal complemen* Includes China & FSU; two large markets with minimal complements of Top Drivests of Top Drives

Offshore Rigs Offshore Rigs withwith Top DrivesTop Drives

95%95%

Land Rigs Land Rigs withwithTop DrivesTop Drives

40%40%

Offshore Rigs Offshore Rigs withoutwithout Top DrivesTop Drives

5%5%

Land RigsLand Rigswithoutwithout

Top DrivesTop Drives60%60%

Sources: BHI Rig Count, MI Rig Count, Schlumberger Rig Count, TESCO Research and Estimates

Total Rigs: 700Total Rigs: 700 Total Rigs: 5,000*Total Rigs: 5,000*

Offshore Rigs Offshore Rigs Land Rigs Land Rigs

Top Drive MarketTop Drive Market

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DERRICKDERRICK

LARGE LARGE TRIPLE TRIPLE MASTMAST SMALL SMALL

TRIPLE TRIPLE MASTMAST

DOUBLE DOUBLE MASTMAST

SINGLE SINGLE MASTMAST

WORKOVER WORKOVER MASTMAST

500 / 650 ECI500 / 650 ECI500 / 650 HS500 / 650 HS

500 HC 500 / 650 HCI500 HC 500 / 650 HCI

250 EMI / 250 HMI250 EMI / 250 HMI

2020’’ 1010’’ 88’’ 66’’ 66’’

Typical Drilling DerricksTypical Drilling Derricks

1313

2235

94

68

0

20

40

60

80

100

120

2004 2005 2006 1H 07

$92$126

$219

$142

0

50

100

150

200

250

2004 2005 2006 1H 07

Rev

enue

(Mil

$)R

even

ue (M

il $)

Uni

ts S

old

Uni

ts S

old

Top Drives Top Drives –– Historical PerformanceHistorical Performance

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•• Safer OperationSafer Operation

•• Increase Drilling EfficiencyIncrease Drilling Efficiency

•• Reaming/Backreaming Reaming/Backreaming

•• Underbalanced Drilling Underbalanced Drilling

•• Enhance Fishing OperationsEnhance Fishing Operations

How Can a TESCO Top Drive Help Your Drill Your Well?How Can a TESCO Top Drive Help Your Drill Your Well?

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•• Our business is Our business is ““Top Drive Drilling, Anytime, AnywhereTop Drive Drilling, Anytime, Anywhere””

•• Our culture is Our culture is ““ServiceService””

•• Complete customer service, global reachComplete customer service, global reach

•• Rental concept pioneersRental concept pioneers

•• Top Drive business experience (15+ years)Top Drive business experience (15+ years)

•• Full service provider (onFull service provider (on--site technical support) site technical support)

•• Currently have over $60MM invested in global rental assets Currently have over $60MM invested in global rental assets

The TESCO Top Drive AdvantageThe TESCO Top Drive Advantage

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Portability & FlexibilityPortability & Flexibility•• Available for sale, or rent as neededAvailable for sale, or rent as needed

•• Install at spud or anytime during well Install at spud or anytime during well programprogram

•• Containerized Containerized -- easily shipped worldwideeasily shipped worldwide

•• Suitable for offshore, inland barge, or Suitable for offshore, inland barge, or land rigsland rigs

A TESCO Top Drive ProvidesA TESCO Top Drive Provides

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More Than Ten Variants AvailableMore Than Ten Variants Available

•• Hydraulic Hydraulic c/wc/w selfself--contained diesel power unitcontained diesel power unit

•• AC Electric AC Electric –– runs on rig power or independent genruns on rig power or independent gen--setset

•• Hook load 150 to 650 tonsHook load 150 to 650 tons

•• Power 400hp to 1350HPPower 400hp to 1350HP

•• Drilling torque to 55,000 ftDrilling torque to 55,000 ft--lblb

•• MakeMake--up/breakout torque to 84,000 ftup/breakout torque to 84,000 ft--lblb

Broad product range to suit almost every applicationBroad product range to suit almost every application

Product OfferingProduct Offering

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•• Hydraulic units Hydraulic units (rental fleet and sales)(rental fleet and sales)

HS 500/650 ton 750/1100HPHS 500/650 ton 750/1100HP

HC 500 ton 750HPHC 500 ton 750HP

HMI 250 ton 475/550HPHMI 250 ton 475/550HP

HCI 500/650 ton 1205/1250HPHCI 500/650 ton 1205/1250HP

•• Electric units (Electric units (sales)sales)

ECI 500/650 ton 900/1350HPECI 500/650 ton 900/1350HP

EMI 150/250 ton 400HPEMI 150/250 ton 400HP

EXI 350 ton 600HPEXI 350 ton 600HP

WhatWhat’’s Provens Proven……

1919

•• 350 EXI 600 in field Q2 2007350 EXI 600 in field Q2 2007-- Built, shipped, in serviceBuilt, shipped, in service

•• 250 HXI 700 in field Q3 2007250 HXI 700 in field Q3 2007-- Prototype built and shippedPrototype built and shipped

•• 750 ESI 1000 (in design)750 ESI 1000 (in design)

•• Rig floor pipe handlingRig floor pipe handling

WhatWhat’’s Nexts Next……

2020

•• Maintain market dominance in Top Drive RentalsMaintain market dominance in Top Drive Rentals

•• Solidify position as preferred land rig Top Drive supplierSolidify position as preferred land rig Top Drive supplier

•• Strengthen relationships with rig buildersStrengthen relationships with rig builders

•• Expand rental business in key Eastern marketsExpand rental business in key Eastern markets

•• Capture AMSS business from growing installed baseCapture AMSS business from growing installed base

Strong business fundamentals continueStrong business fundamentals continue

Where is This Business Going?Where is This Business Going?

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Tubular ServicesTubular Services““Changing the GameChanging the Game””

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•• Azimuth is a brand name for TESCOAzimuth is a brand name for TESCO’’s package of services for s package of services for installing casing, tubing, and control lines in the wellinstalling casing, tubing, and control lines in the well--borebore

Casing RunningCasing RunningCompletion ServicesCompletion Services

Tubing RunningTubing RunningControl lines (Multiple Control Line Running SystemControl lines (Multiple Control Line Running System™™ -- MCLRSMCLRS™™))

Reaming & Rotating CasingReaming & Rotating CasingEnhanced CementingEnhanced CementingAccessoriesAccessories

Overview of Azimuth Tubular ServicesOverview of Azimuth Tubular Services™™

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•• Casing Drive SystemCasing Drive System™™ (CDS(CDS™™) ) –– Increased safety, Increased safety, performance and reliability running casingperformance and reliability running casing

Getting casing to bottom despite hole problemsGetting casing to bottom despite hole problems

•• MCLRSMCLRS™™ –– Improved method for running control lines in Improved method for running control lines in deepwater and intelligent well completionsdeepwater and intelligent well completions

Azimuth Azimuth ““Game ChangingGame Changing”” TechnologyTechnology

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•• Conventional technologyConventional technologyPersonnel intensivePersonnel intensiveEquipment and logistics Equipment and logistics intensiveintensivePerformance limitedPerformance limited

•• Running casing is mission Running casing is mission criticalcritical

•• Technology has changed little Technology has changed little in 60 yearsin 60 years

Conventional Tubular Running ServicesConventional Tubular Running Services

•• Challenges:Challenges:Personnel Safety Personnel Safety Well bore conditionsWell bore conditions

2525

Casing Running with CDSCasing Running with CDS™™

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•• All rigs with Top DrivesAll rigs with Top Drives

•• TroubleTrouble--zone wellzone well--boresboresSoughing formations, tight Soughing formations, tight spots, ledges, bridged holes spots, ledges, bridged holes

•• Extended Reach and deviated Extended Reach and deviated wellwell--boresbores

Long horizontal sections with Long horizontal sections with high torque and draghigh torque and drag

•• Cementing OptimizationCementing Optimization

ApplicationsApplications

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•• TubingTubingEach completed well has at least one tubing string, some wells hEach completed well has at least one tubing string, some wells have multiple ave multiple stringsstringsGlobal tubing running jobs >100,000 jobsGlobal tubing running jobs >100,000 jobs

• Control LinesControl Lines8080--90% of subsea 90% of subsea completions require control completions require control lineslinesForecasted growth of Forecasted growth of subsea completions subsea completions expected to be 25% over expected to be 25% over next 4 yearsnext 4 years

Subsea CompletionsSubsea Completions

Source: Douglas Westwood Group

Completions: Markets ServedCompletions: Markets Served

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Completions: Control Line Installation Completions: Control Line Installation

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Features and Technology DifferentiatorsFeatures and Technology Differentiators•• Prevents damagePrevents damage

√√ Control Lines do not pass through the slipsControl Lines do not pass through the slips

•• Safer more controlled environmentSafer more controlled environment√√ No competition for floor spaceNo competition for floor space√√ No overhead sheavesNo overhead sheaves√√ No manual manipulation of control linesNo manual manipulation of control lines

•• Faster rig up & rig downFaster rig up & rig down√√ No personnel in riding beltsNo personnel in riding belts√√ PrePre--assembled unitsassembled units√√ Allows rig floor simulated opsAllows rig floor simulated ops

•• Control Lines can be run or pulledControl Lines can be run or pulled√√ 1111--18 joints per hour following all chrome running 18 joints per hour following all chrome running

proceduresprocedures√√ Run as many as 10 lines encapsulatedRun as many as 10 lines encapsulated√√ Control line guides move in both x & y axisControl line guides move in both x & y axis

•• MCLRSMCLRS™™ Multiple DesignsMultiple Designs√√ Any size rig, sub sea, dry tree, duals customer Any size rig, sub sea, dry tree, duals customer

buildbuild

Completions: MCLRSCompletions: MCLRS™™

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MultiMulti--Lobe TorqueLobe Torque™™ ringsrings significantly significantly increase the torque capacity of API increase the torque capacity of API Round and Buttress thread connectionsRound and Buttress thread connections

HydroHydro--FormForm™™ CentralizersCentralizers provide provide positive standoff in deviated wells positive standoff in deviated wells and will withstand high side loads and will withstand high side loads and aggressive reaming and aggressive reaming operations.operations.

““WarthogWarthog™™”” Reaming ShoeReaming Shoeis rugged with mechanical is rugged with mechanical and hydraulic features to and hydraulic features to break through fill and break through fill and sloughing formations. sloughing formations. Nose is drillable. Nose is drillable.

Multi Multi –– Lobe Torque Lobe Torque ™™(MLT(MLT™™) Rings) Rings

AccessoriesAccessories

3131

•• Hydraulic Power SlipsHydraulic Power Slips350 ton, 13350 ton, 13--3/83/8””Remotely operatedRemotely operatedLow profileLow profile

•• Portable Automated Stabbing Portable Automated Stabbing ArmsArms

Remotely operatedRemotely operatedMounts on floor or TD trackMounts on floor or TD track

•• Wireless Torque SubWireless Torque SubTransmits signal directly to Torque Monitoring computerTransmits signal directly to Torque Monitoring computerNo cables requiredNo cables requiredWorks with all TD systemsWorks with all TD systems

Floor MountedFloor Mounted Track MountedTrack Mounted

New Product and Service OfferingsNew Product and Service Offerings

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Tubular Service MetricsTubular Service Metrics

•• 3,200 jobs run to date with CDS3,200 jobs run to date with CDS™™

•• 20 million feet run to date with CDS20 million feet run to date with CDS™™

•• Proprietary CDSProprietary CDS™™ requires a Top Drive (any Top Drive)requires a Top Drive (any Top Drive)

•• Approximately 250,000 total Casing Running jobs/year in industApproximately 250,000 total Casing Running jobs/year in industryry

•• 77 CDS77 CDS™™ Units in fleet at end of 2005Units in fleet at end of 2005

•• 167 CDS167 CDS™™ units in fleet at end of Q2 2007units in fleet at end of Q2 2007

•• Typical revenue (varies with size and depth):Typical revenue (varies with size and depth):

Onshore: $15,000 Onshore: $15,000 -- $18,000 per job$18,000 per job

Offshore: $45,000 Offshore: $45,000 -- $50,000 per job$50,000 per job

•• Market for Tubular Services > $ 1.7 billionMarket for Tubular Services > $ 1.7 billion

•• Approximately 2/3 of market is in US and CanadaApproximately 2/3 of market is in US and Canada

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•• Safety Safety –– ““Step ChangeStep Change”” ImprovementImprovementEliminates the stabber positionEliminates the stabber positionEliminates conventional tools and injury risksEliminates conventional tools and injury risksImproved well control when running pipeImproved well control when running pipe

•• PerformancePerformanceGet casing to bottom, reduces risk of stuck casing Get casing to bottom, reduces risk of stuck casing Increased Increased ““reachreach”” in directional wellsin directional wells

•• CementingCementingEnhanced success in primary cementing Enhanced success in primary cementing

•• Improved CostsImproved CostsReduced Non Productive Time (NPT) dealing with problemsReduced Non Productive Time (NPT) dealing with problemsCost reduction for remedial cementing costsCost reduction for remedial cementing costsOffshore Offshore –– less equipment to transport/store tools & fewer less equipment to transport/store tools & fewer ““personnelpersonnel--onon--boardboard””

The TESCO Tubular Services AdvantageThe TESCO Tubular Services Advantage

3434

CASING DRILLINGCASING DRILLING®

““Revolutionizing the Drilling IndustryRevolutionizing the Drilling Industry””

3535

A Rotary Drilling Process:A Rotary Drilling Process:

•• That That ““casescases”” the well as it is drilledthe well as it is drilled

•• Where the well Where the well ““casingcasing”” is the drillstringis the drillstring

•• Where the Where the ““casingcasing”” provides hydraulic energy and mechanical force to the cutting sprovides hydraulic energy and mechanical force to the cutting structuretructure

•• Two Systems:Two Systems:

RetrievableRetrievable -- where all BHAwhere all BHA’’s are run and retrieved through the inside of the s are run and retrieved through the inside of the ““casingcasing””using wireline or drill pipeusing wireline or drill pipe

Non RetrievableNon Retrievable –– where a bit or a casing drill shoe is used on the bottom of thewhere a bit or a casing drill shoe is used on the bottom of thecasingcasing

CASING DRILLINGCASING DRILLING®® -- A DefinitionA Definition

3636

•• Time SavingsTime Savings

•• Improved Borehole StabilityImproved Borehole Stability

•• Reduced Lost CirculationReduced Lost Circulation

•• Improved Well ControlImproved Well Control

•• Improved ProductionImproved Production

•• Improved Personnel SafetyImproved Personnel Safety

•• Reduced Rig Requirements Reduced Rig Requirements

Lost CirculationLost Circulation

Stuck PipeStuck Pipe

KickKick

Sloughing ShaleSloughing Shale

OtherOther

Advantages of CASING DRILLINGAdvantages of CASING DRILLING®®

•• Unscheduled events account for 24% well time. Unscheduled events account for 24% well time. (January 2, 2004 Offshore Magazine)(January 2, 2004 Offshore Magazine)

•• Difficult wells account for 20Difficult wells account for 20--25% of all wells drilled, 25% of all wells drilled, defined by Spears and Associatesdefined by Spears and Associates

3737

•• Interval CASING DRILLINGInterval CASING DRILLING®®

Down Hole Tools (Service)Down Hole Tools (Service)

Retrievable and NonRetrievable and Non--retrievableretrievable

Casing Accessories (Product Sale)Casing Accessories (Product Sale)

Surface Equipment (Service)Surface Equipment (Service)

•• Integrated CASING DRILLINGIntegrated CASING DRILLING®® Services Services

Entire Well Construction ProcessEntire Well Construction Process

•• Performance DrillingPerformance Drilling

Lump Sum or Footage agreements in mature CASING DRILLINGLump Sum or Footage agreements in mature CASING DRILLING®®

fieldsfields

CASING DRILLINGCASING DRILLING®® OfferingOffering

3838

•• EZCaseEZCase™™ Drillable Shoe is essentially a premium PDC bit Drillable Shoe is essentially a premium PDC bit mounted on the end of a piece of casing or liner mounted on the end of a piece of casing or liner

•• Drillable Shoe is a nonDrillable Shoe is a non--retrievable productretrievable product

•• Drillable Shoe is utilized toDrillable Shoe is utilized to

Ream to bottom of a pre drilled holeReam to bottom of a pre drilled hole

Drill new hole while casingDrill new hole while casing

•• Drillable Shoe is rotated by one of two methods:Drillable Shoe is rotated by one of two methods:

Through a Through a liner liner attached to attached to drill pipedrill pipe

Through Through casingcasing attached to the Top Driveattached to the Top Drive

Non Retrievable SystemNon Retrievable System

EZCase™ is a product of Baker Hughes Incorporated

3939

•• Tools are run in or pumped in on Tools are run in or pumped in on wirelinewireline

•• Fluid does not go through BHA, but Fluid does not go through BHA, but rather bypasses to outside below rather bypasses to outside below packer cupspacker cups

•• Stop dogs locate BHA into profile Stop dogs locate BHA into profile nipplenipple

•• Pressure up to shift mandrel, close Pressure up to shift mandrel, close bypass, set axial locks and release bypass, set axial locks and release running toolrunning tool

•• Rotation engages torsional locksRotation engages torsional locks

Landing / Setting DLALanding / Setting DLA

4040

CASING DRILLINGCASING DRILLING®® AssemblyAssembly

Centralizers Centralizers as reqas req’’dd

Casing Casing ShoeShoe

CasingCasing UnderreamerUnderreamer BitBitConnection Connection RingRing

Wireline Retrievable BHAWireline Retrievable BHA

Running & Running & Retrieving Retrieving

ToolTool

Torque Torque LocksLocks UnderreamerUnderreamer BitBitToolTool

LocatorLocatorMud Motor, Directional Mud Motor, Directional Tools and/or Logging Tools and/or Logging

Assembly Assembly as requiredas required

Drill Lock Assembly Drill Lock Assembly (DLA)(DLA)

Axial Axial LocksLocks

Wear Wear BandBand

Landing & Landing & Lock Lock

profileprofile

Downhole ToolsDownhole Tools

4141

•• Can run a conventional bent Can run a conventional bent housing/motor combinationhousing/motor combination

•• Can run a Rotary Steerable Can run a Rotary Steerable assemblyassembly

•• Can run a conventional Can run a conventional building/holding/dropping building/holding/dropping assembly assembly

•• Use Pump Down Release Use Pump Down Release Tool (PDRT) to release DLA Tool (PDRT) to release DLA and slide casing over BHA and slide casing over BHA prior to pumping wirelineprior to pumping wireline

Directional DrillingDirectional Drilling

4242

•• Torque ImprovementTorque ImprovementMultiMulti--Lobe TorqueLobe Torque™™ RingsRings

•• Wear ResistanceWear ResistanceHydroHydro--formform™™ CentralizersCentralizersWear Bands & Wear padsWear Bands & Wear padsWear Resistant CouplingsWear Resistant Couplings

•• Stabilization and CentralizationStabilization and CentralizationHydroHydro--formform™™ CentralizersCentralizersStabilizers (Integral or HF)Stabilizers (Integral or HF)NonNon--rotating stabilizersrotating stabilizers

•• Drilling/Guide ShoesDrilling/Guide Shoes•• Bit Release ToolBit Release Tool

When bit screwed directly onto casingWhen bit screwed directly onto casing

•• CementingCementingPump Down Displacement Plug (PDDP)Pump Down Displacement Plug (PDDP)

Casing AccessoriesCasing Accessories

4343

Directional CASING DRILLINGDirectional CASING DRILLING®®

Drilled with Rotary Drilled with Rotary Steerable Tools Steerable Tools

Drilled with Drillable Shoe Drilled with Drillable Shoe

Drilled with Retrievable AssemblyDrilled with Retrievable Assembly

Drilled while Coring with CasingDrilled while Coring with Casing

50250255

53531313

ComplexityComplexity

2020266266

44 DrilledDrilledUnder BalanceUnder Balance

Over 2.4 Million Feet Drilled with Casing

Hole Sections DrilledHole Sections Drilled

Drilled with Disposable BitDrilled with Disposable Bit

4444

•• North Sea North Sea –– Norway, ConocoPhillipsNorway, ConocoPhillipsMature field, losses and depletionMature field, losses and depletionCASING DRILLINGCASING DRILLING®® with RSS drilled through loss zones with no lost timewith RSS drilled through loss zones with no lost time

•• PiceancePiceance -- ConocoPhillipsConocoPhillipsBorehole stability and severe losses, problems getting casing toBorehole stability and severe losses, problems getting casing to bottombottomCASING DRILLINGCASING DRILLING®® with RSS, casing to bottom and improved with RSS, casing to bottom and improved wellborewellbore

•• Lobo, South Texas Lobo, South Texas -- ConocoPhillipsConocoPhillipsLoss circulation and stuck pipe Loss circulation and stuck pipe Resolved with Resolved with CASING DRILLINGCASING DRILLING®® + faster drilling times+ faster drilling times

•• Louisiana Louisiana –– Salt DomeSalt DomeBorehole stability issues and resulting sidetracksBorehole stability issues and resulting sidetracksCASING DRILLINGCASING DRILLING®® resolved borehole issue with casing to bottomresolved borehole issue with casing to bottom

•• South Texas, Stratton South Texas, Stratton -- ApacheApacheSevere losses impacted drilling and productionSevere losses impacted drilling and productionCASING DRILLINGCASING DRILLING®® reduced losses, improved borehole and eliminated cement squeeze reduced losses, improved borehole and eliminated cement squeeze jobsjobsConverted a marginal field into a producing fieldConverted a marginal field into a producing field

Examples of Value to ClientExamples of Value to Client

4545

North Sea OffshoreNorth Sea Offshore

Recovering stranded reserves via extended Recovering stranded reserves via extended reach CASING DRILLINGreach CASING DRILLING®®

4646

3232”” x 30x 30”” Conductor Conductor @ 695@ 695’’ MDMD

2/7B2/7B--21212/7B2/7B--16A16A

1313--3/83/8”” casing casing @ 1100@ 1100’’ MDMD

1313--3/83/8”” casing casing @ 1080@ 1080’’ MDMD

Casing DrilledCasing Drilled

1010--3/43/4”” casing casing @ 4887@ 4887’’ MD,MD,

20 degrees20 degrees

77--3/43/4”” x 10x 10--3/43/4”” liner liner hanger@ 4699hanger@ 4699’’ MDMD

Casing Drilled 7Casing Drilled 7--3/43/4”” liner liner @ 12088@ 12088’’ MDMD

60 degrees (almost 70 60 degrees (almost 70 degrees max angle)degrees max angle)

55”” liner liner @ 13598@ 13598’’ MDMD

Top of 5Top of 5”” x 7x 7--3/43/4””liner @ 11092liner @ 11092’’ MDMD

North Sea CASING DRILLINGNorth Sea CASING DRILLING®®

4747

PiceancePiceance Basin Basin –– Colorado, USColorado, US

4848

1616”” Conductor at 97Conductor at 97’’Drilled ConventionallyDrilled Conventionally

9 5/89 5/8”” 36# J36# J--55 DWC set at 205055 DWC set at 2050’’ MDMD20002000’’ TVD (MAX Inc 25 degrees)TVD (MAX Inc 25 degrees)Casing Drilled With Mud Motor and BHACasing Drilled With Mud Motor and BHA

77”” 23# N23# N--80 DWC set at 700080 DWC set at 7000’’ MDMD67006700’’ TVD return wellbore to verticalTVD return wellbore to verticalCasing Drilled with Rotary Casing Drilled with Rotary SteerableSteerableBHABHA

4 1/24 1/2”” 11.60# N11.60# N--80 DWC set at 981980 DWC set at 9819’’ MD, MD, 96269626’’ TVD.TVD.Drilled ConventionallyDrilled Conventionally

PiceancePiceance Basin Basin –– Colorado, USColorado, US

4949

Days vs. Depth Comparison

0

2000

4000

6000

8000

10000

12000

14000

0 10 20 30 40 50 60

Days

Dep

th in

Fee

tPiceancePiceance Basin Basin –– Colorado, USColorado, US

5050

0

2

4

6

8

10

12

14

16

Day

s Sp

ud to

Rig

Rel

ease

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82CASING DRILLING® Well Sequence

CASING DRILLINGCASING DRILLING®® averageaverage

Conventional Drilled wells average 228 Mcfg/dConventional Drilled wells average 228 Mcfg/dCasing Drilled wells averaged 753 Mcfg/dCasing Drilled wells averaged 753 Mcfg/d

Conventional AverageConventional Average

South Texas ProjectSouth Texas Project

5151

Ultimate Recovery Increased Two FoldUltimate Recovery Increased Two Fold

Gas

Pro

duct

ion,

MM

CF/

Mo

Gas

Pro

duct

ion,

MM

CF/

Mo

Months from first ProductionMonths from first Production

00

5050

100100

150150

200200

00 1212 2424 3636

ConventionalConventionalCASING DRILLINGCASING DRILLING®®

South Texas ProjectSouth Texas Project

5252

anhydriteanhydrite

anhydriteanhydrite

shaleshale

sandsand

limestonelimestone

dolomiticdolomitic limestonelimestone

calcarenitecalcarenitedolomitedolomite

calcareniticcalcarenitic limestonelimestone



sloughing shalesloughing shale

Middle East Middle East –– WellboreWellbore InstabilityInstabilityProjects Under Review Projects Under Review –– Studies OngoingStudies Ongoing

5353

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

Wells - Economics

9 5/8" Conv.13 3/8" Conv.

Conventional Drlg. CASING DRILLING®

~$200k Savings

Middle East Middle East –– Financial ImpactFinancial ImpactProjects Under Review Projects Under Review –– Studies OngoingStudies Ongoing

5454

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

Wells - Economics

9 5/8" Conv.13 3/8" Conv.

Conventional Drlg.

Includes $290k for TESCO Technology Costs

CASING DRILLING®

Middle East Middle East –– Financial ImpactFinancial ImpactProjects Under Review Projects Under Review –– Studies OngoingStudies Ongoing

5555

•• Created a commercial productCreated a commercial product

•• Drilled 350+ wells to dateDrilled 350+ wells to date

•• More than 2.4 million feet drilledMore than 2.4 million feet drilled

•• Drilled 50+ directional wellsDrilled 50+ directional wells

•• Drilled 10 horizontal or near horizontal wellsDrilled 10 horizontal or near horizontal wells

•• System accommodates industry standard LWD/MWD/MM/RSSSystem accommodates industry standard LWD/MWD/MM/RSS

•• Have drilled 7 Offshore wellsHave drilled 7 Offshore wells

•• Have drilled 13 wells with CASING DRILLINGHave drilled 13 wells with CASING DRILLING®® and rotary steerablesand rotary steerables

•• Have drilled for over 35 customersHave drilled for over 35 customers

•• Doubled CASING DRILLINGDoubled CASING DRILLING®® service revenue in 2007 (exclusive of rigs)service revenue in 2007 (exclusive of rigs)

•• Have a current project lead list of over 50Have a current project lead list of over 50

•• Tripling capital assets and key personnel by 12/07Tripling capital assets and key personnel by 12/07

CASING DRILLINGCASING DRILLING®® AccomplishmentsAccomplishments

5656

* Difficult wells as defined by Spears and Associates are 20-25% of all wells drilled.

• TESCO believes this potential market is measured in billions $TESCO believes this potential market is measured in billions $

•• TodayToday’’s market is between $40s market is between $40--50 million50 million

•• On an ongoing onshore project:On an ongoing onshore project:

$1.5 to $2.5 million / rig$1.5 to $2.5 million / rig--yearyear

•• On an ongoing offshore rotary steerable project:On an ongoing offshore rotary steerable project:

$6 to $10 million / rig$6 to $10 million / rig--yearyear

•• Should ultimately apply cost effectively to most difficult welShould ultimately apply cost effectively to most difficult wells drilled*ls drilled*

•• Current technology should apply cost effectively to thousands Current technology should apply cost effectively to thousands of wellsof wells

•• Our offering focuses on:Our offering focuses on:

Onshore trouble/difficult wellsOnshore trouble/difficult wells

Offshore rotary steerable wellsOffshore rotary steerable wells

CASING DRILLINGCASING DRILLING®® MarketMarket

5757

•• Myth BustersMyth BustersCASING DRILLINGCASING DRILLING®® is a proven technologyis a proven technology

Almost every well can use CASING DRILLINGAlmost every well can use CASING DRILLING®®

•• Retrievable and Non Retrievable SystemsRetrievable and Non Retrievable SystemsFull range of offeringsFull range of offerings

•• Experience & ReliabilityExperience & ReliabilityPeoplePeople

EquipmentEquipment

•• Global Application Global Application –– Onshore and OffshoreOnshore and OffshoreUS, Europe, Middle East, Asia Pacific & Latin AmericaUS, Europe, Middle East, Asia Pacific & Latin America

•• Flexibility and AccessibilityFlexibility and AccessibilityTESCOTESCO’’ss CASING DRILLINGCASING DRILLING®® system can run any third party system can run any third party downholedownhole toolstools

TESCOTESCO’’ss CASING DRILLINGCASING DRILLING®® system can operate from any rigsystem can operate from any rig

The TESCO CASING DRILLINGThe TESCO CASING DRILLING®® AdvantageAdvantage

5858

FinancialsFinancials

5959

We are delivering growth and earnings We are delivering growth and earnings ……

$133 $138

$203

$386

050

100150200250300350400

2003 2004 2005 2006

$170

$224

0

50

100

150

200

250

1H 06 1H 07

RevenueRevenue

TESCO DeliversTESCO Delivers

6060

($16.1) ($16.2) $1.9 ($5.6)

$17.7

$8.1

$60.9

$30.5

-20-10

010203040506070

2003 2004 2005 2006

Operating Income Net Income

We are delivering growth and earnings We are delivering growth and earnings ……

$27.0

$11.6

$26.6

$14.9

0

5

10

15

20

25

30

1H 06 1H 07

Operating Income Net Income

TESCO DeliversTESCO Delivers

6161

Strong Balance Sheet(June 30, 2007)

Cash $8

Debt $39

Net Debt $31

Equity $276

Net Debt/Book Cap. 10%

Unused capacity in credit facility…

Millions $ USDMillions $ USDEBITDA*

2005 EBITDA $36

2006 EBITDA $85

TTM 6/30/07 $92

* Non GAAP Measure* Non GAAP Measure

TESCO Financially SoundTESCO Financially Sound

6262

TOP DRIVESTOP DRIVES–– RentalRental–– SalesSales–– Aftermarket Sales and ServiceAftermarket Sales and Service

CASING SERVICESCASING SERVICES•• Tubular ServicesTubular Services

-- Casing RunningCasing Running-- CompletionsCompletions


CasingServices

CasingServices

Top Drive Top Drive$142 $38

$11$82

RevenueRevenue Segment Operating IncomeSegment Operating Income

Millions $ USDMillions $ USD

Total $224Total $224 Total $49*Total $49*

1H 20071H 2007

* Excludes * Excludes ““Corporate Corporate and Otherand Other”” SegmentSegment

Business SegmentsBusiness Segments

6363

Revenue Trends (over the next 5 years)Revenue Trends (over the next 5 years)

•• RentalRentalGrow rental fleet from 105 units at 6/30/07 to 125+Grow rental fleet from 105 units at 6/30/07 to 125+

•• SalesSalesEstimated market penetration today @ 40%Estimated market penetration today @ 40%to increase to 75% + in 5 yearsto increase to 75% + in 5 years

•• AMSSAMSSGrowing installed base (~550 units) + strategic focus should resGrowing installed base (~550 units) + strategic focus should result in significant growthult in significant growth


TTM Revenues through 6/30/07 = $267MTTM Revenues through 6/30/07 = $267M

6464

Revenue Trends (over the next 5 years)Revenue Trends (over the next 5 years)

•• Conventional Tubular ServicesConventional Tubular ServicesExpand geographically where critical mass and/or proprietaryExpand geographically where critical mass and/or proprietaryservices can be leveragedservices can be leveraged

•• Proprietary Casing RunningProprietary Casing RunningIncrease capacity to meet growingIncrease capacity to meet growingmarket acceptance that CDSmarket acceptance that CDS™™is preferred way to run casingis preferred way to run casing

•• MCLRSMCLRS™™Expand geographically outsideExpand geographically outsideof Gulf of Mexicoof Gulf of Mexico


Game changing technology/increasing number of troubled wells beiGame changing technology/increasing number of troubled wells being drilledng drilled

Casing ServicesCasing Services

TTM Revenues through 6/30/07 = $173MTTM Revenues through 6/30/07 = $173M

6565

Moving ForwardMoving Forward

6666

Leverage Competitive AdvantagesLeverage Competitive Advantages

•• Top Drive rental fleetTop Drive rental fleet--strong market position/high margin businessstrong market position/high margin business

•• Focus on Top Drive aftermarket sales and serviceFocus on Top Drive aftermarket sales and service--growing installed basegrowing installed base

•• Aggressively market and grow proprietary casing running offerinAggressively market and grow proprietary casing running offering g -- the the CDSCDS™™ systemsystem

•• Expand geographical reach of MCLRSExpand geographical reach of MCLRS™™ offeringoffering


Capture market opportunitiesCapture market opportunities

Further widen technology lead in retrievable systemsFurther widen technology lead in retrievable systems

•• Promote the integration of our business linesPromote the integration of our business lines

Moving ForwardMoving Forward----StrategyStrategy

6767

Focus on improving financial results from Q2 2007Focus on improving financial results from Q2 2007

•• Increase manufacturing throughput and capacity for Top DrivesIncrease manufacturing throughput and capacity for Top Drives

•• Rebalance rental fleet toward international marketsRebalance rental fleet toward international markets

•• Reduce manufacturing costs (Canadian $$ exposure)Reduce manufacturing costs (Canadian $$ exposure)

•• Work on cost structure in our tubular services businessWork on cost structure in our tubular services business

•• While at the same time, continue to invest and focus on CASING While at the same time, continue to invest and focus on CASING DRILLINGDRILLING®®

Note: Some of these issues will continue to impact Q3 and our efNote: Some of these issues will continue to impact Q3 and our efforts to forts to remediate will take more than one quarter to show resultsremediate will take more than one quarter to show results


6868


•• Rental FleetRental FleetDiversify rental fleet internationallyDiversify rental fleet internationally

Expand (cautiously) rental fleet from existing levels to meet mExpand (cautiously) rental fleet from existing levels to meet market demandarket demand

•• Top Drive SalesTop Drive SalesMarket more aggressively in the international marketsMarket more aggressively in the international markets

Introduce high performance portable systems for land rig markeIntroduce high performance portable systems for land rig markett

Develop rig mechanization packageDevelop rig mechanization package——pipe conveyance and handlingpipe conveyance and handling

•• After Market Sales & ServiceAfter Market Sales & Service

Focus on capturing lionFocus on capturing lion’’s share of parts and service business on existings share of parts and service business on existing installed baseinstalled base


6969

Tubular ServicesTubular Services

•• Accelerate industry conversion to proprietary CDSAccelerate industry conversion to proprietary CDS™™ technologytechnology

•• Utilize existing footprint for conventional services to rapidlUtilize existing footprint for conventional services to rapidly expand use of CDSy expand use of CDS™™

•• Begin aggressive international expansion of Begin aggressive international expansion of MCLRSMCLRS™™

•• Continue to seek niche strategic acquisitions to expand geograContinue to seek niche strategic acquisitions to expand geographic basephic base

•• Promote aggressively the sales of Casing Accessories for all serPromote aggressively the sales of Casing Accessories for all servicesvices

•• Sell the concept of optimal cementing qualitySell the concept of optimal cementing quality


7070

CASING DRILLINGCASING DRILLING®®

•• Continue to promote CASING DRILLINGContinue to promote CASING DRILLING®® as the preferred drilling technology for:as the preferred drilling technology for:

Offshore rotary steerable wellsOffshore rotary steerable wells

Onshore trouble wellsOnshore trouble wells

•• Aggressively invest in operational resources for growthAggressively invest in operational resources for growth

•• Advance relationship with top 10 major E&P companiesAdvance relationship with top 10 major E&P companies

•• Continue to invest in R & D to extend substantial competitive Continue to invest in R & D to extend substantial competitive edgeedge

•• Promote aggressively the sales of Casing Accessories for all sPromote aggressively the sales of Casing Accessories for all serviceservices


7171

Would You Have Invested?Would You Have Invested?

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