Annual Report 2013

The Board of Directors of Welltec International ApS (“Welltec”) has today approved the Annual Report for 2013.

Key highlights
Welltec® continued on its path of profitable growth and operational cash flow generation in 2013 despite falling short of full year expectations, in a year dominated by corporate development and the necessity to change the organizational structure in order to have a wider impact and better deliver on its mission.

  • Revenues increased by 9% to USD 321 million and all regions contributed to the growth:
    • In Europe, Middle East, Africa and Russia CIS (EMEAR), revenues increased by 11% to USD 170 million
    • Revenues in the Americas rose by 5% to USD 112 million
    • Asia Pacific revenues increased by 10% to USD 40 million
  • Welltec® posted a 3% decrease in EBITDA to USD 135 million, equating to an EBITDA margin of 42% (47% in 2012)
  • Operating profit (EBIT) before special items reduced to USD 72 million (USD 85 million)
  • Net profit was USD 21 million (USD 24 million)
  • Management expects continued growth in revenue in 2014 and an improvement in EBITDA. Revenue is expected to be around USD 340 million (6% growth) with EBITDA of USD 140 million, equating to an EBITDA margin around 42%.

Jørgen Hallundbæk, CEO: “During the past year we took the logical step to change our organizational structure and implement a more decentralized set-up that balances global coordinated management with fast, local decision-making to provide flexibility and strengthen our regional capabilities. The transition has not been without challenges and a continued effort is needed in 2014. However, I remain confident that our efforts in 2014 will pave the way for continued growth. We have remained true to our vision of transforming the oil industry into one that is safer and more sustainable while achieving a higher recovery. The key is how successfully we can implement real shifts in behaviors both from an internal and an external perspective. I believe that a united, refocused organization with a stronger regional presence continued technological leadership and unparalleled service quality, will provide the foundation for further success in the years to come.”

Investor conference call
Welltec® will discuss its results during an investor conference call today at 5 pm CET. An accompanying slide presentation will be available on the “Investor” section of Welltec’s website at under the subheading “Download Center”.

The teleconference can be accessed by dialing in a few minutes before start and informing the operator that you would like to participate in Welltec’s investor conference call, conference ID 50247624.

The call will also be webcast simultaneously on a listen-only basis. Please log in via the “Investor” section of the website in due time to test your browser. A replay of the webcast will then be available following the transmission.

Conference Call Access Numbers:
Denmark: +45-3272-8018
United Kingdom: +44-8445-718-957
USA: +1-866-682-8490

For further information, please contact:
Jesper Helmuth Larsen, CFO, Cell: +45 2329 2600

Company Profile
Welltec® develops and delivers technology and solutions intended to transform the oil and gas industry. Our game-changing solutions are dedicated to optimizing the management and development of clients’ assets, both in the form of well completion technology and intervention services required to ensure performance and integrity. We operate in all types of onshore and offshore well environments, including the most extreme and hostile, such as deepwater, subsea, extended reach, heavy oil and unconventional gas and oil wells. Our lightweight solutions are based on a vision to improve safety while reducing environmental risks, fuel consumption and carbon footprints.

Welltec Secures Direct Award from Ecopetrol Colombia

Welltec is pleased to announce the award of a direct, four year contract from Ecopetrol Colombia for the supply of Well Tractor conveyance and Well Cutter services. The initial contract value is in excess of five million USD with options to increase as required.

“Ecopetrol (NOC) Colombia is focused on exploration and development of assets in Colombia. Ecopetrol is developing a campaign of drilling horizontal wells in several of its main fields in which the use of tractor technology represented significant savings in rig time and minimized risk by avoiding pipe operations. With the new contract we expect to continue having the benefits of using tractors as well as to introduce the use of non-explosive cutters, particularly due to regulations in Colombia for explosives transportation.” stated Diana Patricia Chaparro Corredor, Leader of Reservoir Optimization Group.

Welltec has been providing Well Tractor conveyance services to Ecopetrol since January 2012, resulting in efficiency gains for Ecopetrol over other conveyance methods. Similar to the previous contract, this nationwide agreement provides conveyance solutions for open hole, cased hole, perforation and production logging services plus innovative, new technology additions such as the Well Cutter for performing mechanical cutting operations.
“This commitment by Ecopetrol in Colombia demonstrates that our disruptive technology is providing value in terms of optimized management of their assets with a minimized risk profile. It is significant that Ecopetrol allowed us to introduce further new technology into the contract in the form of the Well Cutter. This will allow Ecopetrol to realize the same benefits from this innovative tool that our clients are realizing in other parts of the world,” states Carl Strubberg, Welltec Senior Vice President, Americas.

Welltec has consistently performed to meet Ecopetrol’s requirements, reliably delivering high service quality throughout the previous contract. With this new contract, Welltec is committed to furthering value to Ecopetrol, the largest and leading oil company in Columbia.

“Latin America is one of Welltec’s fastest growing areas in the world and Colombia is one of our key markets within this region. This four year commitment from Ecopetrol is an important component of our future growth there,” further explains Carl Strubberg”

Welltec is the world’s leader in providing tractor technology for conveyance solutions as well as the foremost provider of milling, clean-out and mechanical solutions globally. These technologies have been successfully developed and applied by Welltec for nearly two decades, creating a market for workover services accomplished on electric line.

Welltec Employee Receives Medal for Bravery

The day after your wedding is typically not an ordinary day. Add in rescuing someone from a burning car and you definitely have an extraordinary day!

This was what happened to newlywed, Steven Rothenburger, Welltec’s SAGD Service Delivery Coordinator in Canada. Steven was driving when a lady turned onto the road and their vehicles collided head on.

“I could see fire coming out from under her hood before our cars had even stopped. I also saw that no one was getting out of the vehicle. As it turned out, her door had gotten a bit mangled and she couldn’t get it open,” relates Steven. “I managed to open it and saw that she was just sitting there, frozen. By this time the interior of the car was full of smoke and the fire was starting to spread to it. “

Steven quickly rescued the lady from the burning vehicle. Fortunately she hadn’t suffered any injuries apart from the shock. Only a few minutes after Steven and the woman had gotten to safety, the woman’s car had been reduced to nothing. The police and fire department arrived shortly thereafter and took over.

For his heroic actions Steven received ‘The Medal of Bravery’ at an award ceremony at the Fire Chief’s Recognition Luncheon in Calgary, Canada on January 22. At the luncheon, Fire Chief Bruce Burrell told the audience that because of the interventions of the award recipients, emergency crews were able to help the victims. In total, 28 people were honored for various incidents with six receiving ‘The Medal of Bravery.’

“It is an absolute honor to receive this medal, but I really think I just did what anyone else would have done,” said Steven modestly. In reality, because Steven acted quickly, decisively and selflessly he helped save another person’s life.

The woman from the wrecked car is doing fine today and her whole family is of course, extremely thankful for what Steven did. At Welltec we are also immensely proud of Steven’s actions.

World’s First RLWI Crown Plug Pulling with Well Stroker

Adding to the realm of e-line intervention accomplishments done as riserless, light well interventions (RLWI), Welltec has now accomplished the removal of a stuck crown plug with the Well Stroker. This capability provides a huge potential advantage for operators to benefit from RLWI operations versus conventional rigs.

This world’s first operation was performed in the Gulf of Mexico where the upper crown plug had gotten stuck in a subsea well. After two days of slickline jarring attempts the plug would not come free. The Well Stroker was then implemented due to its ability to apply a focused force of up to 60,000 lbs where needed downhole through the use of a bi-directional, hydraulic ram. Once the anchors of the tool had set in the pre-determined location, the Well Stroker applied the required upward force to pull the plug whereupon the entire assembly was effectively retrieved to surface.

This successful operation allowed the remaining well intervention to continue without further non-productive time (NPT). The alternative to the Well Stroker contingency would have been to bring in a workover rig with riser capability, which would have increased the operational costs significantly; however, using Welltec’s e-line solution facilitated the continuation of the RLWI operation with much lower daily costs.

The Well Stroker can be fitted with the Well Key for further mechanical services and combined with a number of other e-line intervention tools. Together they offer a perfect solution for contingency planning on RLWI operations.

You can read more about this operation here (opens as a PDF).

Shifting sliding sleeves in an upside-down completion using Well Key 325

An Indonesian well was designed with an upside down completion that was causing problems when the operator needed to shift two sliding sleeve doors (SSD’s) in the lower completion. Because of the upside down nature of the SSD’s and a nipple profile in the upper completion, the Well Stroker with its ability to stroke down and the Well Key with its slick design provided the ideal Mechanical Solution. The Well Key is designed to run in hole (RIH) with the keys collapsed, only extending them when positioned via e-line depth control in the vicinity of the SSD’s.

During the operation, the toolstring passed through the restriction with no complications and the Well Key profile was positioned with pinpoint accuracy above the sliding sleeve profile. Once in place and with the Well Stroker anchored above, the keys were activated in the sliding sleeve profile and the Well Stroker powered up to stroke down and shift open the sleeve. Once the first sleeve was opened the well was unloaded. The tools were re-run and the second sleeve opened a few days later.

This was the first sliding sleeve manipulation using the Well Key 325 in Indonesia and the operator was pleased with the outcome. It took only ten hours from rig up to rig down to open the first sleeve and the second operation was completed in just eight hours.

This operation is testament to the agility of Welltec’s Mechanical Solutions. Even with the upside-down completion, using the Well Stroker – Well Key combination enabled the well to be put on production as scheduled.

To learn more about Welltec’s Mechanical Solutions please download the brochure or contact Account Manager Kiki Darwahjudi in Indonesia.

Welltec Awarded Top Presentation in Mexico

Welltec was honoured to receive the award for best presentation at the ‘1st Forum of Technology Experience Exchange’ in Mexico. Welltec’s General Manager in Mexico, Jose Carillo, gave a thought-provoking presentation on how e-line solutions can increase production and improve efficiency in well interventions.

The newly established forum was organized by the Technology Resources Management Sub-Direction (Pemex Exploration and Production). In addition to PEMEX, the national oil company, and the Mexican Petroleum Institute, the event featured presentations from all the major service companies including Schlumberger, Halliburton, Baker and Weatherford. Out of a total of 46 presentations the organizing committee selected Welltec’s contribution as one of the top three.

Welltec in Mexico has already established an impressive track record, accomplishing 69 mobilizations and 110 runs in hole over several years. Welltec has performed 24 conveyance operations in deviated or horizontal wells with the Well Tractor, 26 clean-outs of subsurface safety valve (SSSVs) with the Well Cleaner, and a series of Well Miller operations to remove accumulated debris. All operations were executed successfully with Welltec’s unparalleled service quality and enabled the operators to quickly restore production.

Welltec Secures Direct Award in West Africa from Shell Gabon

Welltec is pleased to announce the award of a direct, two year contract from Shell Gabon for the supply of conveyance, well intervention and clean-out services.

“Shell Gabon is focused on realizing incremental production from existing assets in Gabon. The value proposition offered by Welltec’s services will enable Shell Gabon to realize their objectives of deploying light intervention technologies to address the challenges found in our more mature assets. In line with the new vision of Shell Gabon, this contract will allow us to have direct access to the suite of innovative technologies and methods available from Welltec” stated Keith Minton, the Head of Petroleum Engineering.

Welltec technologies and services increase flexibility and reduce the mobilization time for key operations compared to conventional intervention methods utilizing coiled tubing or jointed pipe. Other benefits include a reduction in the number of lifting operations, personnel and footprint, all contributing to improved risk management; particularly in environmentally sensitive environments.

‘Gbenga Onadeko, Welltec Senior Vice President, Africa explains that “as the pioneer and market leader of robotic conveyance and intervention technologies, we are extremely pleased by this award from a major client such as Shell Gabon. The continued adoption of our unique, inherently safer, e-line deployed intervention technologies further confirms the advantages of Welltec’s value proposition which is rapidly expanding in the region. Welltec is committed to assisting Shell Gabon increase incremental oil production from their existing and future assets”.

Welltec is the largest provider of tractor technology for conveyance solutions as well as the foremost provider of milling, clean-out and mechanical solutions globally. These technologies have been successfully developed and applied by Welltec for two decades.

Interim Report Q3-2013

Key highlights
Over the last twelve months Welltec’s revenues have increased by 19% and its EBITDA by 7%. Growth in the third quarter was reduced although activity levels continued to grow strongly, with revenues impacted by changing sales mix both geographically and in service solution. EBITDA was impacted by the lower gross margin, but supported by continuing improvements in utilization. Accordingly, Welltec® adjusts its forecast for 2013.
For the last twelve months to September, revenues grew 19% and EBITDA increased by 7%, with the EBITDA margin at 43%.
In the third quarter, revenues increased by 2% year on year to USD 78 million with varied regional contributions:
In Europe, Middle East, Africa and Russia CIS (EMEAR) revenues increased by 11% to USD 39 million
Revenues in the Americas fell by 4% to USD 30 million
Asia Pacific revenues declined by 12% to USD 9 million
Welltec® posted an EBITDA of USD 33 million in the third quarter, equating to an EBITDA margin of 42%, as compared to USD 37 million (49%) in the third quarter of 2012.
Operating profit (EBIT) was USD 14 million, as compared to USD 22 million in the third quarter of 2012.
In view of the performance in the first nine months and the outlook in the remainder of the year, Welltec® adjusts its guidance. Following the change of functional and reporting currency, management expects revenue to be around USD 330 million (12% growth) with EBITDA of USD 140 million, equating to an EBITDA margin around 43%. Welltec® previously expected revenue to be DKK 1.9-2.1 billion and the EBITDA margin at or around recent historical levels.
Jørgen Hallundbæk, CEO: “For the past year we have been in the process of implementing a more decentralized organizational structure to strengthen our regional capabilities and more effectively capitalize on the opportunities we see with our increased client base. While this transformation seems logical with all the time zones and different countries we work in, it has not been without challenges. Regional differences, lack of sufficient critical mass to support the transition in some areas, as well as organizational alignment challenges, have all prolonged the adaptation process, and this has impeded performance in some areas and with it our guidance. Therefore a continued effort is needed with an even more differentiated approach to secure the transition. I remain confident that in the longer term a stronger regional presence and our superior technological offering will pave the way for our continued growth.”

Investor conference call
Welltec® will discuss its results during an investor conference call today at 5 pm CET. An accompanying slide presentation is available on the “Investors” section of under the subheading “Download Center”. The conference call can be accessed by dialing in a few minutes before the 5 pm CET start and informing the operator that you are dialing in for Welltec’s investor conference call, conference ID 93425248.

Conference access numbers
Denmark: +45 32 72 80 18
UK: +44 8445 718 957
US: +1 866 682 8490

The call will also be webcast simultaneously on a listen-only basis. Please log in via the “Investor” section of the website in due time to test your browser. A replay of the webcast will then be available following the transmission.

Company Profile
Welltec® is a leading provider of robotic intervention services and completion solutions to the oil and gas industry. Our pioneering technology enables operators to optimize their use of oil and gas resources throughout the life-cycle of their wells. We address the factors that maximize value creation, continuously innovating to reduce well construction time, speed up access to the hydrocarbons and reduce the capital expenditure burden of more conventional methods. The effect is one of maximizing oil and gas production while minimizing operating down-time.

This is the essence of Welltec’s philosophy; to challenge existing practices and think laterally in order to develop products and services which increase oil and gas recovery while improving the economic, environmental and safety aspects of our industry. In practice we develop, test and manufacture state- of-the- art technology to enhance the recovery and production rates for our clients, thereby improving their profitability through a longer term revenue stream.

Our intervention solutions allow our customers, some of the world’s largest national and independent oil companies, to pursue fields that would not otherwise be economically viable. Our lightweight technology delivers more efficient, more effective, more productive and safer interventions in environments that are becoming increasingly complex, remote and hostile.

In an industry characterized by maturing fields and increasing depletion rates, the premium attached to technology which aids in reversing these trends is continuing to gain momentum. Our value proposition is compelling; our technology enables clients to unlock more production from their assets and to address reservoir complexities and uncertainties with a greater number of options.

Important Notices
Any statement in this announcement that is not a historical fact is a “forward-looking statement”. Such statements may include opinions and expectations regarding Welltec® and its future business, management’s confidence and strategies as well as details of management’s expectations of new and existing programs, technology and market conditions. These forward-looking statements rely on assumptions concerning future events that are subject to a number of risks and uncertainties, many of which are outside Welltec’s control, and which could cause Welltec’s actual results to be materially different from these forward-looking statements. While Welltec® believes that its assumptions concerning future events are reasonable, there are inherent difficulties in predicting certain important factors that could impact the future performance or results of Welltec’s business. Accordingly, such statements should not be regarded as representations as to whether such anticipated events will occur nor that expected objectives will be achieved. Welltec® expressly disclaims any intention or obligation to revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise.

For further information, please contact:
Jesper Helmuth Larsen, Chief Financial Officer,
mobile: +45 23 29 26 00

Morten Græsbøll Ottesen, Investor Relations Director,
mobile: +45 22 33 73 08

Royal visit creates stronger tie between Pemex and Welltec

Last week a Danish delegation incl. Jørgen Hallundbæk and HRH Crown Prince Frederik of Denmark participated in a workshop at the Pemex office in Mexico. The meeting was part of an export promotion initiative taken by the Danish Ministry of Foreign Affairs and the Trade Council to further Danish – Mexican trade relations and promote Danish know-how within health and welfare, agriculture and food products, as well as energy and clean tech.

During the meeting, CEO of Pemex, Lozoya Austin, said that the visit will strengthen the collaboration between Pemex and Danish O&G companies and His Royal Highness stressed the importance of such summits to generate stronger ties between Pemex and Danish companies and said that this was one of the most important aspects of the visit to Mexico.

From a Welltec perspective this meeting and the following workshop was a good opportunity to further strengthen the partnership with Pemex and show how technologies like ours can improve recovery rates and the economics involved in well maintenance through ie. efficient scale clean-outs with lower risks than conventional methods.

To learn more about the technologies applied in Mexico, please view the Clean-out Solutions brochure or contact our General Manager in Mexico Jose Guadalupe Carrillo Osorio.

Well Cutter cases applauded at ADIPEC

This week the O&G community gathered in Abu Dhabi for the annual ADIPEC show. Welltec presented a paper based on a number of highly interesting local cases in which the novel Well Cutter was used to cut 4-1/2” production tubing in compression in several high deviation wells prior to a tubing change-out campaign. The Well Cutter was selected in order to reduce rig time during the workover operations due its non-explosive design, ability to cut pipe under compressions and the smooth beveled surface it produces, which precludes the need for a polishing trip. The paper discusses the operational sequence and lessons learned from the operations and includes a discussion of the design features of this novel tool.

During the show visitors to our booth had the opportunity to examine an expanded, all-metal WAB™ which was on display. The WAB comprises an integral part of our Flex-Well® completion concept, providing an all-metal barrier for zonal isolation or cement assurance

To learn more about the solutions described above, please see the Mechanical Solutions brochure or the Completion Solutions brochure or contact Rob MacFarlane or Paul Matthews respectively.