Coil Over Top Drive® Drilling Rigs

• Location of XTC Rigs
• About Xtreme Coil's Coil Over Top Drive® Rigs
• Fleet Description
• Advantages of Coil Over Top Drive® technology
• Applications for Coiled Tubing Drilling
• Operational successes
• Video and photos

Xtreme Coil develops and applies leading-edge patented and patent-related technology and designs to build, transport, and operate new COTD® drilling rigs. In addition to contracts in the United States of America, the United Mexican States and the Kingdom of Saudi Arabia, Xtreme Coil markets proprietary, dual-purpose drilling rigs to existing customers and to other international operating regions. Xtreme Coil has designed, with customer input, 7 different models of COTD® drilling rigs. Five designs are completed and deployed and one is ready to commence field operations. Including the most recent re-entry rig design, the XTC 200DTR^PLUS, Xtreme Coil’s fit-for-purpose rigs feature:

• larger coil and conventional drill pipe to reach hydrocarbons in deeper horizons
• high capacity injectors,
• innovative handling of conventional pipe and coiled tubing,
• modular transportation systems,
• and operating methods for achieving deeper, faster and safer drilling.

At June 9, 2010, Xtreme Coil held 18 patents related to technologies for drilling with coiled tubing and conventional drill pipe as well as for certain rig transportation methods. The patents have been issued by: the United States Patent and Trademark Office (nine), the Canadian Intellectual Property Office (seven), the Eurasian Patent Organization (one) and Indonesia (one). In March 2010, the jurisdiction for Indonesia approved one further Xtreme Coil patent application and advised it will provide the related patent registration number in due course. Xtreme Coil has more than 60 patent‐related applications in progress in the United States, Canada and other worldwide jurisdictions. The Company's issued and applied‐for patents collectively cover coiled tubing drilling and transportation technology including equipment and methods for coiled tubing drilling to depths of approximately 3,000 meters (10,000 feet) or more with large diameter coiled tubing and up to approximately 9,000 meters (30,000 feet) for re‐entry applications with smaller diameter tubing.

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Location of Xtreme Coil COTD® Rigs

At June 30, 2010, there are 16 rigs in Xtreme Coil’s fleet.

• 6 rigs in Mexico
• 4 rigs in the Rocky Mountain region of Colorado
• 1 rig in Wyoming
• 2 rigs in Texas to prepare for deployment to Rocky Mountain region
• 1 rig preparing to move to Texas from Mexico
• 2 rigs for re-entry operations in Saudi Arabia.

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About Xtreme Coil's Coil Over Top Drive® Rigs

• Run continuous coiled tubing with zero connections.
• No human contact with the pipe - everything is automated and controlled by the driller working in a climate-controlled doghouse.
• Designed to drill with conventional jointed drill pipe where necessary, with a seamless interchange between systems that can be done in 1 to 2 minutes.
• Increases the maximum depth possible with coil drilling from 2100 meters to 3000 meters (approximately 10,000 feet) using 3.5 or 4 inch tubing.
• Innovative design focused on transporting the drilling rig components in fewer loads makes our rigs among the fastest to move in, rig-up and rig-out.

During 2009, to prepare for new projects ideally suited to our COTD® drilling rigs, Xtreme Coil undertook modifications and customization on a fit-for-purpose deep re-entry drilling rig. The new model, the XTC 200DTR^PLUS, is based on a recently-issued Xtreme Coil patent. This rig design meets the requirements of re-entry projects in the Middle East and North Africa markets.  Two of these rigs are now dedicated to a long-term contract in Saudi Arabia (see News Release).

We believe what differentiates Xtreme Coil from our competitors is our proprietary and patented applications and processes together with our in-house engineering capability. We continue to evaluate drilling markets and the availability of drilling rig equipment or components throughout North America. For instance, we are analyzing the potential to expand Xtreme Coil’s rig fleet cost-effectively through application of our engineering designs which focus on upgrading late model top drive rigs to incorporate our innovative COTD® capabilities.

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Fleet Description

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Advantages of Coil Over Top Drive® technology

• Deeper, faster, safer
• Flexibility to drill with coil and drill pipe
• Coil has constant circulation
  • reduces potential for getting stuck
  • no surging and swabbing of well bore
  • reduces blowout potential
• Rig up and rig out much faster

• Snubbing capability
  • Coil can snub down as much as it can pull up
• Penetration rates much faster
  • coil can achieve up to 420 m (1,378 ft) per hour
  • conventional drilling with the latest top drive technology can reach a maximum of 120 m (394 ft) per hour
• Coil proven to out drill conventional 2 to 1 in Canadian shallow natural gas reservoirs
• Operator costs savings of 15-50 percent
• Safe and efficient
  • safer, higher tech drilling rigs attract, retain crews
  • rig operators works in safe, climate- and noise-controlled building.
• Trips, on average, three times faster
  • coil 900 m (2,935 ft) per hour
  • conventional 300 m (984 ft) per hour
• Almost no spillage with closed coiled tubing system
• Noise reduction with:
  • "Quash" insulation for engines, generators, pump room
  • sound-dampening mufflers on generators
  • electric brakes on drawworks
  • automated pipe handling and make/break system quieter and efficient
  • generator sets dampen radiator cooling fan noise with insulated baffle panels
• Rig loads levelled using hydraulics – minimizes environmental impact of lease construction

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Applications for Coiled Tubing Drilling

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Operational successes

2009 Operational Successes

• In April in the Rocky Mountain region of Colorado, an XTC 400 achieved a field record by drilling a well to TD of 7,480 feet in 2.7 days rig release to rig release.
• World record depth achieved with coil in México in April 2009
  • reached 3,034 meters (9,954 ft) with 3-1/2” coiled tubing
  • “S” curve (37 degrees) established with conventional drill pipe
  • transitioned to coil to drill vertically below “S” at 2,737 meters (8,979 ft)
  • completed logging on coil in 7” hole diameter
  • XTC 300 COTD® drilling rig
  • coil rate of penetration more than double historical conventional drilling rate
  • demonstrated value of coil’s constant circulation in overpressured formation

2008 Operational Successes

• In November 2008, an XTC 200DT^PLUS drilled the first well ever undertaken with coiled tubing in the Waddell Ranch field of west Texas. Drilling in a carbonate formation the rig reached total depth in 10.5 days, approximately 5 days faster than our customer had projected.
• XTC 200DT ^PLUS drilling in West Texas in May 2008
  • 50% fewer operating hours than the average offset wells
  • penetrated carbonates, which are very hard formations, to approximately 7,300 in a 7-7/8" hole
  • may have opened up new opportunities previously considered beyond the scope of coil
• XTC 400 drilling in Colorado in April 2008
  • to our knowledge, deepest S-curve well drilled with 3-1/2" coil and a rotary-steerable bottom hole assembly
  • 7,500 foot S-curve well
  • maximum angle of 21 degrees before returning to vertical.

2007 Operational Successes with 3-1/2” Coil

• XTC 400 drilling in Wattenberg field, Denver-Julesburg Basin, Colorado in August 2007
  • 44.75 hours actual drill time
  • 18 hours rig up, tear down
  • hook load 70,000 lbs, motors 160 rpm, 490 gals/min
  • short bottom hole assembly: 779 feet
• XTC 400 drilling in Denver-Julesburg Basin, Colorado in July 2007
  • record 51.25 rotating hours drilling with coil from below surface casing to TD of approximately 8375 feet.
  • this 7-7/8 inch hole is the deepest well drilled with 3-1/2 inch coil.
• XTC 200DT drilling for Anadarko June 2007
• Wattenberg field, DJ Basin, Colorado
• record drilling time
• with continuous 3-1/2 inch coiled tubing string
• 82.25 hours spud to total depth 7,655 feet
• 3.4 days spud to total depth; move to rig release 4.8 days
• 12 hours to move and rig up
• 52 hours rotating under the shoe
• surface hole 9-7/8 inch; remainder to TD 6–1/4 inch
• short bottom hole assembly for direction and weight
• XTC 200DT drilling for EnCana March 2007
  • world record total depth 8,125 feet
  • Wattenburg, DJ Basin, Colorado
  • record depth with continuous 3-1/2 inch coiled tubing string
    • 0.224 wall thickness
  • 8-3/4 inch wellbore
  • short bottom hole assembly for direction and weight
    • Baker Hughes VertiTrak® system

2006 Operational Successes with 3-1/2” Coil

• Deepest well drilled with 3-1/2” coiled tubing
• 7,466 feet (2,275 metres); 7-7/8” hole
• Wattenberg field, DJ Basin in Colorado
• Longest  “S” curve well drilled with coil and RSS
• > 6,000 feet (1,828 metres); 7-7/8” hole
• Record drilling time with coiled tubing
• Piceance Basin in Colorado
• 4 days to total depth in Monell Unit in Wyoming (average is 10 days per well)

Video and photos

XTC 200 ST Video and photos
XTC 200 DT Video and photos
XTC 300 Photos
XTC 400 Video and photos

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