Regals New Rigs Delivered as Advertised

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Regals New RigsDelivered as Advertised
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Index

• 3 Commitment
• 4 Background
• 6 Rig Assembly in USA
• 8 Rig Commissioning in USA
• 9 Shipment of 1st Rig
• 10 1st Rig Arrival in the Ukraine
• 11 Arrival of 2nd Rig
• 12 Base Camp Construction
• 15 Camp Facilities
• 16 Equipment Arriving on Location
• 18 Erection of 1st Rig in Ukraine
• 23 Assembly of 2nd Rig in Ukraine

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Regals New Rigs 2008
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Commitment

• In the first quarter of 2008 Regal Petroleum
  committed to a 5-year contract with Saipem SpA
  for 2 new-build 2000 horse power drilling rigs
  as the first step towards further development of
  the Companys assets in the Ukraine.

Kiev ____

• ___Regal Licences

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Regals New Rigs 2008
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Background

• Regal Petroleum decided to change over from
  locally available rigs to new-build
  high-performance rigs to improve overall drilling
  performance in the Ukraine and thus realise the
  full potential of the Companys assets.
• Previously a typical 5000m well would take
  between 10 to 11 months drilling time while the
  expectation for the new-build rigs is to
  eventually be able to drill to 5000m in less
  than 6 months.
• Reducing the drilling time has a significant
  impact on the economics of the field development,
  including accelerating production, which has a
  direct, positive impact on the net present value
  (NPV) of the project.

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Background

• The new rigs will also be able to explore the
  deeper objectives beyond 6000m, which are part of
  the current development plan.
• The rigs will be managed by Saipem SpA, a well
  known international drilling contractor
  (www.saipem.eni.it).
• The new rigs have been built by LeTourneau in
  Houston, USA. During the construction of the
  rigs, both Saipem and Regal have been actively
  involved in the design.
• To meet the Companys targets, reduce the lead
  time on the construction of the rigs and prevent
  slippage, the manufacturing and assembly process
  was carried out around the clock.

Regals New Rigs 2008
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Rig Assembly

• LeTourneau Factory, Houston

• Completed drilling rig components ready for
  transportation to designated site for testing and
  commissioning

? Each rig is supplied with a total of 3 mud pumps
? Hinged A-Frame mast section ready to be
assembled for commissioning and testing
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Rig Assembly

• To prevent any delay during the erection of the
  rigs in the Ukraine and down-time during
  operations, a significant amount of key Saipem
  personnel were trained by LeTourneau in Houston.
  In addition, prior to the shipment to the
  Ukraine, both rigs were fully assembled and
  tested with the key Saipem personnel present on a
  designated site in Houston.
• The total time from start of the build to the
  last item loaded for shipment for 2 rigs was
  approx. 5 months a record performance for both
  LeTourneau and Saipem.
• The first rig arrived in the Ukraine on the 23th
  September 2008.

Regals New Rigs 2008
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Rig Commissioning in Houston

• LeTourneau (Lewco) Assembly Yard, Houston

• Prior to shipment, both rigs and all the
  equipment were fully assembled and commissioned
  in the presence of Saipem and all the different
  suppliers and manufacturers.
• Any required rectifications and interface issues
  were immediately addressed and completed prior to
  shipment.

Regals New Rigs 2008
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Shipment of 1st Rig

• First rig loaded on the MV Peru in Houston

Regals New Rigs 2008
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Arrival of 1st Rig

• First rig arrived in the Ukraine on the 23rd
  September 2008

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Arrival of 2nd Rig

• The second rig arrived in the Ukraine on the 23rd
  October 2008 and erection commenced on the 17th
  November.
• In addition to the two rigs, a drilling base camp
  had to be constructed to house approx. 200
  people. Purpose built accommodation units were
  imported from Italy.
• This base camp is fully equipped with messing
  facilities, recreation facilities and a clinic
  with a full-time doctor. Both the camp and the
  rig are fully winterised to ensure continuous
  operations during severe winter conditions.
• Saipem obtained a drilling licence for the
  Ukraine and are operating as a Ukrainian
  Licensed Drilling Company Saipem Ukraine LLC.

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Base Camp Under Construction

• The Saipem Base Camp includes a recreation area
  and a permanently staffed medical clinic

Regals New Rigs 2008
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Base Camp Completed
The living quarters are near completion and
waiting for staff to move in during December 2008
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Base Camp Completed

• Junior accommodation facilities
• ? Paramedics are permanently stationed on the rig
  site for support

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Camp Facilities
Catering facility for 200 people
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Equipment Arriving on Location
Regals New Rigs 2008
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Equipment Arriving on Location
Draw Works, Mud Pumps and Generators
Regals New Rigs 2008
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Erection of 1st Rig in Ukraine
Top Drive, Casing Stabbing Board and Derrickman
Working Platform (Monkey Board) being rigged up
Regals New Rigs 2008
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Erection of 1st Rig in Ukraine
Assembly of the Substructure Mast and Top Drive
Regals New Rigs 2008
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Erection of 1st Rig in Ukraine
Regals Supervisor, Gregoriy Lekhwar,
overseeing the assembly of the Mast and
inspecting the instrumentation in the Drillers
Cabin.
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Erection of 1st Rig in Ukraine

• First time raising of the mast (Well MEX-106 Rig
  5914)

Regals New Rigs 2008
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Erection of 1st Rig in Ukraine
Installation of Winterisation (Well MEX-106 Rig
5914)

• Winterisation is the covering and protection of
  the main parts of the rig against snow and frost
  to ensure operations can continue during winter.
• A steam plant permanently heats the rig and
  rig systems during the winter.
• The winterisation has been designed to stand up
  to a temperature of -20 Celsius.

Regals New Rigs 2008
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Assembly of 2nd Rig in Ukraine

• Key components being positioned for assembly of
  Rig 2 (Well SV-58 Rig 5915)

Regals New Rigs 2008