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PESANews
Volume 66, Number 1 Winter 2012 www.pesa.org
In thE nEWS
EvEnt CalEndar
PESa Supply Chain
Seminar
February 1, 2012
7:00 a.m. to 11:00 a.m.
Houston InterContinental Hotel
FYI: Speakers include Michael
Halloran, Robert W. Baird &
Co.; Mark Ellis, LINN Energy;
Jeff Flaherty, Helmerich &
Payne; Peter Tesark, Hess
Corporation; Mike Van Hook,
Schlumberger Drilling; and
John Vogt, Halliburton
Executive address
Series
February 28, 2012
11:30 a.m. to 1:30 a.m.
Westin Memorial City Hotel
FYI: Speaker is John Gremp,
Chairman, President & CEO,
FMC Technologies, Inc.
Explorers Golf
tournament
March 1, 2012
10:00 a.m. to 6:00 p.m.
Redstone Golf Club, Humble, TX
Washington d.C.
Fly-In
March 18-20, 2012
Washington, D.C.
FYI: This meeting is tentatively
scheduled pending final
arrangements. A notice with
Congressional visits and a
complete timeline will be sent
to members as soon as possible.
PESa annual Meeting
April 11-14, 2012
Hyatt Regency Gainey Ranch,
Scottsdale, AZ
FYI: Speakers include Rice
University’s Amy Myers
Jaffe, Raymond James’
Marshall Adkins, EOG
Resources’ Mark Papa,
Stone Energy’s Dave Welch,
U.S. Steel’s John Surma, Oil
States International’s Cindy
Taylor, and consultant Lew
Watts.
Unconventional Plays
Greatest example of free enterprise is good & bad news
That unconventional resource
plays have reshaped the industry
is beyond question. But the longterm
effects are still a question.
In addition to unlocking huge
amounts of oil and natural gas,
there is no greater example of
free enterprise than the rise of
unconventional resource plays,
says Lee Boothby, Chairman,
President, and CEO for
Newfield Resources.
“Our industry received a price
signal, quickly deployed capital,
technical resources, and talent
and unlocked a 100-year supply
of natural gas … and now we’re
in the early innings of
unconventional oil,” says
Boothby. “We found that we
have lots more energy under our
feet than we imagined, and I
believe this will be the energy
super highway for economic
prosperity for the U.S.”
The abundance of natural gas
is both good news and bad
news. To the good, outside the
government, the oil and gas
industry is the only sector creating
jobs, he says. The technology
used to unlock the tight gas has
also been transformed for use in
tight oil plays.
“It seems like every day you
read about new activity, new
Special Guest —
Prior to Lee Boothby’s
presentation at the PESA
Membership meeting, Past
PESA Chairman Galen
Cobb (Halliburton)
arranged for a brief
appearance by Republican
Presidential hopeful Mitt
Romney.
The former Massachusetts
Governor briefly
addressed PESA members.
For more on his remarks,
see Page 7.
Lee Boothby, Chairmain, President, and CEO for Newfield Resources
records, new wells, and low
unemployment in places like the
Williston Basin, the Eagle Ford,
Uinta Basin, and the list keeps
growing,” he says. “Bit by bit,
we’re reducing our dependence
on foreign oil while creating
high-paying jobs in the U.S. and
positively impacting the communities
where we work.”
Oil Is In
Domestic oil production has
been on a steady decline for 30
years. But Boothby says though
the industry is in the early stages
of tight oil production, domestic
production is on the rise, and
looking to move higher.
“The latest up-to-date report
showed an extra 1 million barrels
per day (bbl/day) in domestic
production added in the past
couple of years,” he says.
“We’re in the early innings and
n See Boothby, Page 4

2 PESA News Editorial
We must become
involved in the
government process
As we begin 2012, our industry and our
nation have a lot in front of us. There is a
big year coming up with many decisions to
be made, and the choices made will
directly affect each of us. We should be
involved in the decision making process.
Our industry’s story is one of hope for
the country. Time and time again and
president after president we have
repeatedly heard the declaration that what
America needs is energy independence and
energy security. Over the years instead of
getting closer to achieving that goal,
America has slipped further into
dependence on nations that would rather
harm than help us.
PESA Chairman John Gremp (FMC
Technologies, Inc.) and the members of the
Executive Committee are hoping to have
PESA do its part to help bring about
change in two areas. They want to
encourage greater participation by member
companies in the political process both
regionally and in Washington, D.C. In
addition, they believe that our association
should be more involved in educating the
public about the oil and gas industry and
the benefits derived by all Americans
through the work of the energy industry.
The PESA Energy Educators Committee
and the Government Relations Committee
are positioned to help us achieve these
goals. The new PESA Energy Educators
Committee moved forward this past year
toward doing a better job of educating
people outside the industry while at the
same time encouraging young people to
take a look at energy as a career path. In
addition, PESA’s Government Relations
Committee has begun making plans to
become more involved in political issues
in 2012 and beyond. Our second
Washington Fly-In is tentatively scheduled
for March.
The new year would be a great time to
get involved in the activities of both
committees. Please consider calling the
PESA office and volunteering to help.
—Sherry Stephens
PESA President
New realities call for stronger PESA
Editor's Note: This
essay was compiled
from John Gremp's
presentation at the
CID Annual Meeting.
Uncertainty and
challenge are nothing
new to our industry.
For more than 100
years, we’ve faced
technical, business,
and economic trials.
Every challenge has
been met with
innovation, technology,
and the can-do spirit
of the oilfield. This
time around, our
obstacles are
different, and perhaps
even beyond our
direct control.
As we’ve discussed
several times at
PESA meetings, the
oil and gas industry
has new realities to
address. A positive
new reality is that we
have in our grasp two critical sources of
hydrocarbons: deepwater Gulf of Mexico
and the unconventional shale plays in North
America. Even though we can’t say that the
U.S. is on the cusp of energy independence,
no one would have suggested two or three
years ago that we could have even gotten
close. Yet today, we’re talking of at least
narrowing the gap of our dependence on
foreign oil.
We also have some uphill challenges.
The political environment today is essentially
opposed to our industry at a level unseen in
decades, if ever. We know that regulatory
agencies are imposing their beliefs in ways
that are unprecedented in our industry. We
know the public perception of oil and gas is
at a place that we haven’t seen in decades,
if ever. We also know that any of these new
realities cannot be addressed by one
company, or even a group of companies.
If there was ever a time for a trade
association like PESA to step up, and use
their voice to deal with these new realities,
it is now. If there ever was a time we
PESA Chairman John Gremp (FMC Technologies, Inc.) says that if there
were ever a time for close member involvement in PESA, it’s now.
needed all 184 member companies
representing almost 400,000 employees
with a market cap of over $200 billion, it is
now. If ever there was a time to become
more involved in your trade association,
PESA, the time is now. We need your
participation, your expertise, and your
enthusiasm to add to PESA’s voice.
First let’s start with our size—184
companies and 400,000 employees seems
big, but it could be bigger, and bigger is
better when it comes to having a voice in
Washington. Our membership committee
headed up by Charles Currie (Schlumberger)
has done a fantastic job, adding a record
number of companies to PESA’s roles
despite the active consolidation environment.
We can do better, and it can begin with
a simple question. Earlier this year, John
Streeter asked his management why
Superior Energy wasn’t a member of
PESA— they looked into the value proposition
and joined soon after. You too can not only
encourage your management to increase
n See Chairman, next Page
PESA, Petroleum Equipment Suppliers
Association, and the PESA logo are all
registered marks of the Petroleum
Equipment Suppliers Association.
PESA News is published by:
Petroleum Equipment Suppliers
Association
1240 Blalock, Suite 110
Houston, Texas 77055
Phone: (713) 932-0168
Fax: (713) 932-0497
© 2012, PESA
PESA Chairman
John Gremp, FMC Technologies, Inc.
PESA Vice Chairman
Chris Cragg, Oil States International
PESA 1st Vice President
Charlie Jones,
Forum Energy Technologies
PESA President
Sherry A. Stephens
PESA Vice President
Michael Perini
PESA Director of Communications
Chris Evans

ChaIrMan
Continued from Previous Page
their presence in PESA, but encourage other
companies with which you do business.
Among the strengths that make PESA so
attractive for companies is the unparalleled
opportunity to network—the CID Annual
Meeting is a terrific example. These new
realities demand that member companies
share experience. One way to deal with
uncertainty is to learn from other companies
that are going through the same experience. I
encourage you to seek out all the PESA
opportunities that we have for networking,
the best of which is the PESA Annual
Meeting. If there was ever a time to expand
your network, it is now. Don’t miss out on
opportunities to network with your peers.
Second is our Energy Educators Committee,
which is our newest and least developed
committee, but it will arguably become one
of our most important. When you think about
these new realities, among the most jarring is
the poor perception that our industry has
among the public and the government. We
need to educate our stakeholders—especially
the public and our government—on what our
industry does and how we do it. That’s
exactly the mission of our Energy Educators
Committee. It’s vital that we get our message
out, and we’re doing it in several different
ways—among them are educating the next
generation via IPAA’s Petroleum Academies,
sponsor externships and scholarships, and
we’re developing our own messages to
educate the public. If you’re so inclined,
we’d love to have your participation.
The next area is one we don’t talk about
enough in the industry. As Jim Wicklund
described, our industry is poised for
growth—oil and gas fundamentals are
strong, and all of our companies are striving
for expanded opportunities. One constraint to
that growth is going to be incredibly difficult
to overcome, and that’s talent. Everyone has
heard that we have the missing generation in
the 1980s and that the average age of people
in our industry is about five years shy of
retirement. There’s a huge talent gap and
unless it’s filled, we won’t meet our
company’s expectations for growth, and we
won’t meet the industry’s expectation for
delivering growth in supply.
Five years ago, PESA formed the Emerging
Leaders Committee. It's designed to address
career development for our younger talent
who didn’t have the opportunities to learn
about our industry, to network, or to develop
relationships in the industry as we in the
older generation had. The committee has
been hugely successful, and this year we’ve
had more than 700 people at their events.
Among the most popular events is Oil 101,
which gives an introduction for the industry,
and the Executive Address Series, for which
I’ll be giving a career lecture Feb. 28. We
provide Emerging Leaders with many
NEws
opportunities to network not only among
their peers, but with the more experienced
people in the industry. If you have younger
talent in your organization, I encourage you
to introduce them to the EL Committee—it’s
a terrific way to further develop the talent
that our industry so desperately needs.
Another way that PESA addresses the new
realities is our government relations work.
This is an area that hasn’t perhaps been a
high priority for PESA, but given the realities
that we face—you read it in the paper all the
time—we must make our voice heard with
our representatives in Washington and the
regulatory agencies that have so much
control over our industry. At our annual
meeting we had a couple of speakers that
were stunning in what they announced—they
said that our industry will no longer have the
right to direct our future course. The decision
about what technologies will be allowed to
be used, which companies will exist, and
which geological basins will be developed
will no longer lie with our industry—it will
be decided by Washington, regulatory
agencies, and even public perception. That’s
shocking. Our industry has always been able
to plot our own course, to set our own
destiny, and now we may no longer have that
ability.
Our voice in Washington, the marshaling
of our 184 companies, is essential to
educating and influencing the people who
have such a large say in the future of our
companies. We had a terrific Washington,
D.C session earlier last year in which a
number of member company executives met
with members of Congress. It has helped us
immensely—we didn’t understand before
going how little our industry is understood.
Another surprise was their interest. Despite
everything you hear about Washington,
Congressmen want to hear the anecdotes and
stories about the operations we’re opening,
teaching the new
Generation —
PESA is a strong supporter of
the IPAA energy academies,
three HISD schools that prepare
students for college courses
with an industry focus. Another
of PESA’s educational initiatives
is sponsoring MOLU (Mobile
Offshore Learning Units)
visits to area schools. The
units teach students the
basics of energy production.
These two areas combined as
the Young Women’s College
Preparatory Academy, soon
to be the fourth IPAA Energy
Academy in Houston, received
a MOLU visit courtesy of PESA.
Much like the other three
academies, PESA will provide
speakers, educational
content, and scholarships. To
volunteer for the program,
please call (713) 932-0168.
PESA News
3
the people we’re hiring, and how the
regulatory agencies are affecting our
decisions to expand our businesses.
We further realized that we need to do
more work in crafting our message, in
marshaling our resources, and use all the
strength of PESA to educate and influence
these decision makers. We also realized the
importance of collaboration—we aren’t the
only trade association that represents the
interests of the oil and gas industry.
Collectively putting together our voices and
making our case to our representatives is
essential. This year, the executive committee
is determined to redouble our efforts in
government relations, reaching out to our
sister associations and working collaboratively
with them. We’re planning another
Washington Fly-In this year that will be
bigger and better than the previous one. We’ll
be better prepared, we’ll have more
executives, and we’ll see more people in
Washington.
We’re also continuing our 19-year history
of supporting foreign service officers. PESA
invites FSOs to Houston to spend a week
learning about our industry. This is a grassroots
effort—if we can reach out to the FSOs
and get them to understand our industry,
we’ll have friends in key places, as they take
postings in energy producing countries
around the world.
These are a few ways that your trade
association, PESA, can address the new
realties that face our industry. I urge you to
not only re-think your commitment to PESA,
but as individuals that have experienced how
PESA can contribute to your business, think
about acting as an advocate for PESA in your
organization to increase its participation.
If we ever needed a strong trade
organization like PESA, it is now.
—John Gremp
PESA Chairman

4 PESA News NEws
BOOthBy
Continued from Page 1
we don’t know what the upper
bounds of production will be,
but if you accept that we’ve
achieved 1 million bbl/day
growth already, getting to
3 million bbl/day by 2025
doesn’t seem like a stretch.”
While most of the attention
goes to the Bakken and Eagle
Ford, Boothby says some of the
newer plays have material
growth potential far beyond
what’s currently known.
newfield & Uinta
Newfield Resources started in
1989 with 26 people and $9 million.
Now it’s a $10 billion enterprise.
Nearly all of the company’s
resources are in the U.S., and for
year-end 2010, Newfield had
3.7 trillion cubic feet in proved
reserves—75 percent of that is
unconventional. But most
importantly, says Boothby, the
company grew its oil production
percentage from under
30 percent in 2008, to north of
40 percent this year, and more
than 50 percent in 2012.
“We accomplished this
through organic growth, drilling
oil and gas wells—that’s a huge
part of our story today, and
to what our peers are doing as
well,” he says. “This is simply
because the margins for returns
in oil are superior to natural gas.
We have this blessing of a 100-
year supply of natural gas, but
without a vibrant economy and
increasing demand, guys that are
pushing gas today are pushing
an oversupplied commodity into
an oversupplied market—not a
good recipe for prices, and easy
to understand why gas is trading
at just over $3.”
Newfield’s expectations for
gas are more low prices for the
near-term, but for the
intermediate and longer term,
Boothby says they’re gas bulls.
For now, all of the company’s
resources are going to oil. The
Uinta Basin in Utah is
Newfield’s cornerstone asset.
“The resource potential net to
our acreage is 700 million barrels
of oil equivalent (BOE)—this is
where we already have wells
producing, so these are not piein-the-sky
stuff,” he says.
Above: Lee Boothby discusses the
country’s resurgence of oil thanks to
unconventional resources.
Right: Glenn Taylor (FMC Technologies,
Inc.) listens as Boothby details the
resource potential of the Uinta Basin.
“That’s huge for an onshore
resource and begs the question
of how did stuff like that get left
lying around It’s a good
question, and a reminder that
somewhere there’s another
position waiting to be found.”
Boothby says the basin,
especially shallow to middledeep
ranges, is very oily. For the
future, the basin also has a deep
gas potential of about 10 tcf,
which will be held by production
with the current oil drilling.
Uinta now has three producing
zones, all successively deeper:
the Green River, the Uteland
Butte, and Wasatch.
The shallow Green River
sands are spread over 165,000
acres between 4,000 and 6,000
feet deep with 4,000 drilling
locations, the development of
which Boothby likens to a
manufacturing process. Uteland
Butte has 200,000 prospective
acres and 1,800 drilling locations.
The Wasatch has 70,000 acres
and 380 drilling locations.
“An historical Green River
well makes about 75 bbl/day
initial production (IP), while the
Uteland Butte wells have
averaged over 500 bbl/day IPs
and we’re just getting started,”
he says. “We drilled some deep
Wasatch wells vertically and
have IP’d north of 1,000 bbl/day.
The exciting part of the basin is
that we haven’t really taken it
horizontal, so we’re going to be
aggressively attacking it in 2012.”
new relationships
What E&P companies need
from the service sector now
more than ever, are long-term
win-win relationships. Today’s
resource plays require us to look
at our historic relationships
differently, and make win-win
more than words, says Boothby.
n See Boothby, next Page

BOOthBy
Continued from Previous Page
“We need to look for creative
ways to work together in lasting
relationships that remove
volatility from activity levels
and extreme pricing swings,” he
says. “Mid-year price increases
can throw a budget into a tailspin
and force reduced activity
to balance expenditures.
Predicting that annual investment
with certainty is a critical piece
of the equation today. We have
to make sure we think about that
when we’re working together
on a capital program to find a
win-win place.”
Embracing a new win-win
paradigm relationship will allow
an opportunity to attack shared
problems like talent as a team.
“People are an issue for all of
us today, and it’s imperative that
we work together to attract,
train and retain the people we
need, not just in today’s workforce,
but for tomorrow,” he
says. “We need lots more people
than we’ve had in the business
in the last 10-15 years, and
we’re going to have to do
creative things together to
attract them to the business,
train them, and get them
participating. Our mutual
businesses and reputations are
inextricably linked.”
Vertical integration—as in
E&P companies adding services
to their portfolios—is here to
stay.
“From our perspective,
business has changed—it’s
turning into something that you
know more about than we do:
manufacturing,” he says. “I
think that an inability to access
quality services at acceptable
prices have led some to increase
vertical integration. We do not
want to add services—we
believe that you can manage
these crews and equipment
better than we can, which
allows us to focus on what we
do best.”
Boothby says that there has to
be a better way than having
E&P companies and service
companies competing for
people and materials. Both
parties share responsibility for
making it happen.
“We own drilling rigs and
services in the Uinta, we’ve
successfully managed them, and
created value. So it can be done,
but the basin is a core asset with
decades of drilling ahead,” he
says. “Today, what we do is
more alike than different,
because we focus on resource
plays. We’ve conducted internal
evaluations of vertical
integration and are considering
areas where it may have
application. We do not want to
compete with you, but we will if
we have to.”
above Ground risks
Regulation left unchecked is
an impediment to business and
the creation of jobs, says
Boothby. It can create
redundancies in operations,
increase costs, and make the
development of domestic
hydrocarbons less competitive
on a global scale. The key to
stemming overregulation is
educating key stakeholders.
“Many companies in this
room worked to build FracFocus,
a transparent solution in which a
database discloses the chemical
use in hydraulic fracture
stimulation by state, county,
lease, and individual well—a
great example of how we can
work together to provide
transparency and gain the trust
of the broader public,” he says.
“We have an obligation to
educate the public, media, and
our elected officials.”
Finally, he says the industry
must speak up, and demand a
firm energy policy.
“Our future will require that
we harness all forms of
economically viable and
environmentally sound energy.
There should be no doubt that
natural gas is the future of our
nation’s energy supply. It’s the
only energy source we have
that’s abundant, economically
viable, and helps reduce
greenhouse gas emissions,” he
says. “We need an administration
that will develop a sound, nonpartisan
20, 50 or 100-year
energy plan, not the pithy
sound-bytes to the media
designed to aid their reelection
campaigns. It is imperative that
E&P and service companies
speak with a concerted voice,
that our interests are aligned,
and that we have seats at the
table.”
NEws
In the world of investing, Jim
Wicklund says he’s a player
that’s often misunderstood,
sometimes unliked, but always
necessary.
Wicklund, Principal and
Portfolio Manager for Carlson
Capital, L.P., is a hedge fund
manager specializing in oil and
gas service companies. Carlson
Capital, like other hedge funds,
buys stock and sells short—
their average holding period is
two months. On the other side
of the investment world are
groups like Fidelity Investments—
they’re considered long-only
and own stock for 10 years or
more.
“The conventional wisdom is
that guys like Fidelity are your
friends because they forgive
little blemishes along the way,”
says Wicklund. “In the hedge
fund world, we try to create
short term efficiencies in capital
allocation—the blemishes that a
Fidelity wouldn’t notice
because they hold stocks for ten
years … I speed date. We’re not
always well-liked, but we insist
that we provide a service.”
Due to the uncertainty in
financial markets, long-onlys
aren’t playing in the market,
says Wicklund.
“They don’t know if oil’s
going back to $45 or $147—
we’re in the middle of that
price, so they’re in the middle
sitting on their hands,” he
explains. “In the past couple of
months, the only people
investing in the stock market are
guys like me. Today in the
investment world, the people
that are buying and selling your
stocks and all the stocks in the
market are the short-term daters
looking for the marginal
problem.”
Multiple dislocations
The industry has suffered
through the economic crash of
2008, the Macondo disaster, the
gyrations of the oil market, and
uncertainty surrounding
PESA News
Market fundamentals
solid, but stocks may
slide in the short-term
5
government regulations.
“All these are bad, but they’re
balanced against the fact that
the world needs the oil and gas
we produce—there’s no
alternative,” says Wicklund.
“China announced that they're
going from making 16 million
cars a year to 32 million—that
alone increases oil demand by 8
million barrels a day.”
But demand projections and
stock prices do not necessarily
go hand-in-hand. Following the
2008 market crash, the stocks
for Transocean, Cameron,
Halliburton, and Weatherford
lost 47 percent of their market
capitalization. Following the
Macondo disaster, those stocks
fell a further 47 percent.
“Yet most companies,
especially those who work
onshore, saw their earnings,
pricing, and hiring go up, all
while the markets trimmed 47
percent off of the large companies
twice,” says Wicklund. “That’s
the separation between the stock
in your companies versus the
work that you do.”
Expectations Sink
Stocks
Wicklund says he's incredibly
bullish on how much liquidsrich
drilling the industry will do
over the next several years—the
n See Wicklund, Page 8
Jim Wicklund

6 PESA News NEws
Explorers Award goes to Oxy Oil & Gas USA
Running an oil company—one truly
focused on oil—is nearly a relic of the past.
Not for Oxy Oil & Gas USA, a fact that
their President, Bill Albrecht, says isn’t
going to change.
“We’re proud of the fact that 75 percent of
our reserves on a global basis are oil reserves,
which makes us the oiliest of our major peer
companies,” says Albrecht. “We’re an oil
company true to form. We’re not in the process
of transitioning from natural gas-weighted to
oil-weighted like some of our independent
friends—we are indeed an oil company, and
you won’t see us deviate from that.”
But the market foresight of staying the
course in oil isn’t the reason that Oxy was
selected for the 2011 Explorers of Houston
Award. Each year, PESA presents the award
to an oil and gas exploration and production
company that has a proven record of
pursuing and achieving the advancement of
technology and innovation in the energy
industry.
“As the fourth-largest U.S. oil and gas
company, Oxy is an acknowledged leader in
applying advanced technology to boost
production from mature fields and access
hard-to-reach reserves,” says Robert
Workman, President of Distribution and
Transmission for National Oilwell Varco and
Chairman of PESA’s Explorers of Houston
Committee.
Oxy is the largest onshore oil producer in
the contiguous U.S., and most of their
worldwide reserves are U.S.-based. Their
flagship operation in the Permian Basin
closed out 2010 producing more than
Explorers of Houston Committee Chairman Robert Workman (National Oilwell Varco) presented the
award to Oxy, citing their excellence in performance, safety, and community service.
25 percent of the company’s worldwide total.
“Of particular note is the fact that
approximately two-thirds of the Permian oil
production is from fields that employ CO2
flooding which also has important
environmental benefits,” says Workman.
“The CO2 circulates within a closed loop
and virtually all of the injected CO2
ultimately becomes permanently and safely
trapped in the underground oil reservoir
which could significantly reduce future
greenhouse gas emissions.”
Oxy also has made a commitment to
protect the health and safety of employees,
contractors and neighboring communities.
“The company’s HES Management
System encourages individual responsibility,
values quantifiable results and promotes
communication,” says Workman. “With
more than 30,000 employees and contractors,
Oxy is committed to respecting the
environment, protecting safety and upholding
high standards of social responsibility
throughout its worldwide operations.”
n See Explorers award, next Page
Oxy Oil & Gas USA’s President accepted the Explorers Award on behalf of the company’s 11,000 employees. Attending with him, from left to right are:
Ron Brokmeyer, President & General Manager, South Texas; Robert Palmer, Vice President, Production Engineering ; Joseph DeDominic, President &
General Manager, Williston; Richard Jackson, Vice President, Drilling Americas; Jeff Bennett, Director, Supply Chain Management; Bill Roby, President &
General Manager, Mid-Continent; Michael Land, President & General Manager, Permian Prime Development; Jeff Simmons, Vice President, Subsurface
Engineering; and Doug Chester, Drilling Manager, Permian.

ExPlOrErS aWard
Continued from Previous Page
PESA Chairman John Gremp echoed
Workman, saying that Oxy’s well-known
reputation created one of the largest
audiences for the Explorers Award.
“I’m pleased to recognize Oxy for their
success in increased productivity while at
the same time finding ways to protect the
health and safety of your employees and
contractors,” he says. “Additionally, we
commend you for your recognized
accomplishments in protecting the environment
and your worldwide involvement in community
service.”
Accepting the award, Albrecht gave a
brief glimpse at Oxy’s 2012 operations.
“We don’t know exactly what our 2012
capital program is yet because it has not
been blessed by our Board of Directors,”
says Albrecht. “But suffice it to say that if
the commodity prices stay where they are,
we’re going to have a pretty level loaded
program in 2012, and, if anything, you’re
going to see an increase in our capital
spending.”
For production, Albrecht says that Oxy is
the largest producer in the state of Texas; the
number-one natural gas producer in
California; and recently, they became the
number-one overall producer in California
on a barrel of oil equivalent (BOE) basis.
Overall, the company produces 750,000
BOE per day, the majority of which is in the
U.S. Their largest operation is in the
Permian Basin, in which they’ve succeeded
in unlocking increased oil production
through CO2 flooding.
“Our EOR operations in the Permian
make us the largest handler of CO2 in the
world—we move about 1.7 bcf per day, or
more than 600 bcf of CO2 every year.”
Finally, Albrecht said a significant source
of pride for the company is their financial
performance.
“We’ve had a successful record of increasing
our dividends—since 2002, our dividends
have gone up 268 percent and have paid a
dividend every year since 1975,” he says.
“We’re very proud of our stock price relative
to the S&P 500—we’ve outgained the S&P
for the last 12 years, the longest streak
running for any company in the S&P.”
Finally, Albrecht says that while it is an
honor to accept the Explorers Award on
behalf of Oxy’s 11,000 employees, their
accomplishments would not be possible
without their partners.
“None of this would be possible without
your help and cooperation and willingness
to work with us,” he says. “We owe you a
debt of thanks, and the only way we can
achieve these kinds of performance metrics
year over year is to have a great working
relationship with our service company
friends. We look forward to a successful
2012 working with you.”
NEws
Presidential candidate Mitt Romney made
a brief appearance prior to Lee Boothby’s
remarks at the 2011 PESA Membership
Meeting. Below are his remarks.
Some people wonder what the future holds,
and I think you got a good taste of that if
you read the Wall Street Journal’s Op-Ed
page this morning (Dec. 1). At the top of the
page is an article written by the head of the
Service Employees International Union,
Andy Stern, in which he lays out what he
thinks our policy should be moving forward.
He says the government ought to run our
economy. He literally says China’s got it
right, we’ve got it wrong. Free markets
don’t work, and the right course for America
is to have an industrial policy set by our
friends in Washington. Sometimes you just
shake your head, but this gives insight into
the thinking of the people that surround the
President. But fundamentally, he believes
government guiding an economy and
guiding our lives is a better course for
America, than free individuals creating free
enterprises in free markets.
That’s the battle that’s going on right
now—where those that think a governmentguided
life and economy is the right course
for America. And they’re fighting hard. It’s
not that we’re protecting our society against
some bad thing that might happen, but instead
protecting our society against business, and
trying to guide business, and trying to replace
business with their own arrangement. They
really feel—the EPA and other agencies—
that they could do a better job running and
guiding the health sector, the energy sector,
PESA News
Presidential hopeful Mitt
Romney speaks to members
7
and the list goes on.
We’re in the middle of a battle. I shudder
to think what would happen if we had a
second term with President Obama—I don’t
think we will, I can’t be 100 percent sure of
that because it’s hard to defeat an
incumbent, but I intend to do that if I’m the
nominee. At this stage, it looks pretty
good—it’s narrowed down, I wouldn’t have
guessed it would narrow down to me and
Newt Gingrich. But you never know—
Donald Trump was the leader for a while in
the polls, then Michelle Bachman, and then
Governor Rick Perry, and then Herman
Cain. We all have microscopes tuned to us
and we’re considered for our strengths and
weaknesses. I think it’s going to be a great
opportunity for people to decide what the
right course is for the country.
I respect the work that you’re doing, and I
know that people in Washington don’t like
you very much. I like you a lot, and I look
forward to working with you. I want to see
you succeed and thrive, because I want to
see more domestically produced energy for
America. I want you to succeed and thrive
because I want to see more tax revenue
coming in from you and the people you
pay—when business does well, the country
does well. I look forward to being a
President that makes America the best place
in the world again for enterprise, for
business, for development, for job creation,
and for the middle class in America. I look
forward to having your help, and we’ll see
you—hopefully from the White House—in
a couple of years.

8 PESA News NEws
U.S. Oil and Gas Field
Equipment Exports
Top 15 Destinations for Q3-Q4 2011
(in U.S. $1,000)
AUG SEPT OCT
Brazil 52,604 50,778 50,997
Singapore 37,592 43,560 63,918
Russia 31,101 32,125 41,820
Venezuela 27,235 28,062 45,692
P.N.G. 618 64,199 35,100
Korea 19,205 21,078 55,812
China 27,690 28,067 33,832
U.A.E. 21,793 30,754 24,399
U.K. 21,848 30,287 24,214
Canada 23,321 23,396 27,162
Mexico 26,060 19,349 22,668
Saudi Arabia 11,736 19,121 21,648
Egypt 19,686 9,061 20,464
Belgium 354 8,518 30,013
Israel 953 1,740 22,535
PESA News
Petroleum Equipment Suppliers Association
1240 Blalock, Suite 110
Houston, TX 77055
First Class
US Postage Paid
Houston, TX
Permit No. 04805
Subtotal 311,794 410,097 520,272
All Other 228,972 337,651 259,995
Total 540,767 747,748 780,267
Source: U.S. International Trade Commission
WICklUnd
Continued from Page 5
long-term fundamentals are
solid. But he does have
concerns about the short term.
Long-term fundamentals for
the industry will not mirror the
gas drilling booms that began in
the late 1970s and 1980s.
“We didn’t quit drilling for oil
because we wanted to drill for
gas—we couldn’t find oil in
economic accumulations,” he
says. “So we started drilling for
gas, and we’re so good at it that
we ruined the economics of it
for 13 out of the past 25 years.”
Natural gas is a localized
commodity, and if too much is
produced, prices fall. Oil,
however, is globally fungible.
“We now have the
opportunity to drill oil wells—
the industry now has 15 years of
current drilling inventory at
current rig rates for oil
prospects,” he says. “We can’t
kill the commodity price of oil
like we have gas, and we can
show the efficiency of this
industry that has been reined in
by price in the past.”
However, the business is still
cyclical, says Wicklund. As a
cyclical business, rig count and
pricing accelerate, then plateau,
and then decline before reaccelerating.
“A recent Halliburton conference
call said that business has
been fabulous. Prices have been
rising for the past 3 years and
are starting to plateau, but
Halliburton is not concerned
about them going down,” he
says. “In a cyclical business
they do, but then they reaccelerate.”
Wall Street pays close
attention to the dips in pricing
and performance, however
small. Wicklund gave a current
example:
“In pressure pumping, they’re
bragging that they can buy a
pressure pumping spread and
get a full cash payback in 14
months,” he says. “Wall Street
will ask if business will still be
good next year. The companies
always answer yes. But if that
rate of return moves to 24
months, service companies
would still be happy. Our concern
is that it’s going from a 14
month payback to a 24 month
payback, which means margins
are coming down, and we sell
your stock—a 14 month payback
on capex normalized over
time is Wall Street lingo for
margins are going down soon,
we just don’t know when.”
The broader market is calling
for a slowdown, he says. There
is a high correlation between the
U.S. rig count and the Dow Jones.
“The Dow Jones has recently
come down, though some will
argue that it was a market
mistake, an aberration, that it
won’t be the same as previous
times … it’s different this time
is a lousy argument,” he says.
“This is what Wall Street is
concerned about. The market is
a discounting mechanism, and it
sees the future before we do,
and it indicates that business is
going to slow down.”
The problem, Wicklund says,
is expectations. As of the
presentation, the industry was
eight rigs away from the
September 2008 highs, and nine
rigs from the highs of 1985.
“I understand well complexity
is increasing, frac lengths are
going up, wells are more
expensive, and if activity stayed
where it is right now, you’d all
be happy—that would be
incredibly negative for Wall
Street,” he says. “If the heads of
Schlumberger, Halliburton, and
Baker Hughes came out and
said rig count will stay right
where it is for the next three
years, your stocks would be
down 25 percent the next day.
We don’t buy stocks because
things are staying good, we buy
because things are getting better.”
For 2012, the market expects
revenues in North America to be
up by 20 percent next year, and
oil will be $100.
“I love optimism, but it drives
investment expectations,” he
says. “The future strip has been
between $75 and $89 for the last
two weeks. The difference is
that at $80 oil, the E&P industry
has to outspend their cash flow
by 60 percent just to keep
activity flat. Wall Street wouldn’t
think this is a good thing.”
Wicklund says that the good
news is that it isn’t a repeat of
2008, and virtually no company
will lose money from an
earnings perspective.
“Stocks always swing to
extremes relative to the
underlying business,” he says.
“We’re not expecting business
to crash—the outlook is better
than it's been in years, and we’re
now drilling for a commodity
for which we can’t screw up the
pricing. There hasn’t been a
better time to be in the business,
it’s just that for the next several
months it may not be the best
time to be in the underlying
stocks.”