Annual Report 2012

The Board of Directors of Welltec International ApS (“Welltec”) has today approved the annual report for 2012.

Key Highlights
Welltec® delivered a strong financial performance in 2012, combining accelerated growth with high profitability and solid cash generation. The results are higher than anticipated in the outlook provided in the Annual Report 2011 and in line with the guidance presented in Welltec’s interim report for the third quarter.

Revenues increased by 39% to DKK 1,701 million and all regions continued to contribute:
Revenue in Europe, Middle East, Africa and Russia/CIS (EMEAR) increased by 32% to DKK 875 million
In the Americas, revenues rose by 36% to DKK 618 million
Asia Pacific recorded a revenue increase of 97% to DKK 208 million
Welltec® posted a 35% increase in EBITDA to DKK 802 million equating to an EBITDA margin of 47% (49% in 2011)
Operating profit (EBIT) increased by 62% to DKK 492 million
Welltec® net profit increased by 44% to DKK 129 million
Management expects continued growth in revenue and EBITDA in 2013. Revenue is expected to be in the range of DKK 2.1 billion to 2.3 billion (24 – 35% growth) with an EBITDA margin expected to be at or around recent historic levels.
Jørgen Hallundbæk, CEO: “2012 was another great year of achievements at Welltec®. We continued our growth journey while managing to uphold strong levels of profitability and deliver superior services at the highest possible technological standard. Our success is testament to the fact that Welltec’s solutions consistently enable our customers to extract significant value beyond cost. And following our strong operational and financial performance, we will continue our work to take Welltec® to the next level in 2013.”

The annual report is available on the “Investors” section of Welltec’s website at www.welltec.com under the subheading “Download Center”.

Investor conference call
Welltec® will discuss its results during an investor conference call today at 5 pm CET. An accompanying slide presentation is also available on the “Investors” section of www.welltec.com under the subheading “Download Center”. The conference call can be accessed by dialling in a few minutes before the 5 pm CET start and informing the operator that you are dialling in for Welltec’s investor conference call, conference ID 86717268.

Conference Call Access Numbers:
Denmark: +45-32728018
United Kingdom: +44-8445-718-957
USA: toll free +1-866-682-8490

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

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 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 the Company 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 the Company’s control, and which could cause the Company’s actual results to be materially different from these forward-looking statements. While the Company 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 the Company’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. The Company 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.


World’s First thru-tubing ESP swap on e-line

An operator was experiencing ESP failures and needed to retrieve and replace the pumps from two highly deviated wells located on a remote offshore island with limited CT unit availability. Welltec’s lightweight, highly mobile e-line technology was the preferred solution for the job, due to its nimble, reliable and cost-efficient nature.

The first step of the operation was to ensure that debris would not cause difficulties, thus a Well Cleaner Power Suction Tool (PST) was run in the hole. Then a tool-string consisting of a Well Tractor, Well Stroker, Welltec Release Device and a GS pulling tool was run to the gravity hold-up depth. Here the Well Tractor was activated and conveyed the toolstring to the depth of the ESP, where the tubing stop and pump were retrieved.

A new toolstring was mobilized consisting of the Well Tractor, Well Stroker and Welltec Release Device with a fishing tool overshot to fish the pump eye insert. The Well Tractor conveyed the fishing tool onto the pump eye insert, while the Well Stroker applied the required force to ensure the fish was latched and to pull the pump eye insert free. When all parts of the ESP were removed, a new ESP was successfully installed.

Integrating the lessons learned, Welltec was able to successfully complete the second job with twice the efficiency, further increasing the value provided. Over 100,000 ft (30,500 m) were tractored on this world’s first operation that has once again expanded the limits of what can be done with e-line interventions.

Welltec’s ability to think outside the box enabled the operator to complete the operation without a rig or CT, resulting in considerable time savings and the well was returned to production significantly faster than with traditional methods.


Installing Telemetry System in One Run

Using the Well Stroker and Well Tractor to install telemetry systems is up to four times as efficient as using coiled tubing, as it can be done in just one run.

An operator in the Guara Norte field in Brazil was looking for an efficient method to replace conventional coiled tubing (CT) when installing telemetry systems in vertical production wells. Telemetry systems provide valuable data and long-term reservoir monitoring, but using CT requires two time-consuming installation runs. The operator approached Welltec because our unconventional technology and innovative approach has proven to be both effective and cost-efficient.

Prior to mobilization, a System Integration Test (SIT) was carried out in order to verify compatibility of all components. Once confirmed, Welltec quickly mobilized the e-line solution to begin installation.

The telemetry system and standing valve was run in hole to desired depth, where the Well Stroker provided the down force to seat the valve in the nipple, and the data was read at surface. Once the Well Stroker was released from the standing valve, the toolstring was retrieved.

The entire installation operation was performed in one run taking only four hours. In comparison with conventional CT, the time-saving was significant: up to four times faster. Using the Well Stroker to set the telemetry system optimized the operational efficiency and saved valuable rig time.

The operator concluded that the Well Stroker is the best option to install the specific telemetry system; not only is it a faster, more efficient method, it is also inherently safer and creates more value. They now consider Welltec’s solution as their primary option for similar operations.


Swift solution to remove glass plug offshore Denmark

Welltec provided a swift solution, when an operator offshore Denmark needed to remove a temporary glass plug in an oil producing well in order to gain access to the reservoir below. The Welltec e-line solution was better suited to address the space and time constraints than conventional coiled tubing.

First the well was drifted to ensure that the tubing was clear from obstructions. Then a plug was run in hole on the Well Tractor® 318 to test the integrity of the production tubing. Once confirmed, the plug was retrieved with the Welltec Stroker® 318. A custom 2.46″ milling bit was run in hole on the Well Miller® conveyed by a Well Tractor® 218 to remove the glass plug. The custom milling bit engaged the glass plug and the surface read-out indicated that the milling process had begun. The Well Miller® broke through the plug in just nine minutes and a drop in surface pressure also indicated the successful removal of the glass plug. The depth and CCL confirmed access as the toolstring went past the glass plug a total of three times.

Welltec provided a swift solution and the operator gained access to the reservoir. This operation saved an estimated four days and 450,000 USD compared to conventional coiled tubing operations.

To learn more about the technology applied please view the Milling Solutions brochure or read the full case story Glass plug removal offshore Denmark.


World’s First Removal of Asphaltenes on E-line, RLWI

During a Riserless Light Well Intervention (RLWI), Welltec has set two new world records: successful removal of asphaltenes on e-line; and a new RLWI water depth record of 3,991 ft (1,216 m).

An operator in the Gulf of Mexico planned to set a lock-open sleeve across a failed subsurface safety valve on one of their subsea wells. The well had not been re-entereed since it was put on production several years ago and subsequently the downhole conditions were unknown. After several failed attempts to run slickline, where the toolstring kept hanging up after only 1,000 ft (305 m), a decision was made to run the e-line Well Tractor and Well Cleaner RCB with integrated bailers to mill through the obstruction and capture any debris. This toolstring made it past the slickline hang up depth and all the way down to 5,727 ft (1,746 m), where it encountered some sort of blockage.

The Well Cleaner RCB was engaged and milled ~ 5 ft (1.5 m) of an unknown material until the toolstring became stuck. It was retrieved and at surface the bit was found to be packed with solid debris and the bailer sections were full of dense, hard packed ashphaltenes.

Based on this unexpected discovery, the operator decided to suspend further operations pending full sample analyses. Due to Welltec’s e-line solution, the operator avoided additional costs and were able to make an informed decision on how to best plan the way forward.


Welltec announces payment of interest January 2013

Welltec announces payment of interest.
Pursuant to the Rules and Regulations of the Luxembourg Stock Exchange (edition 2012/07), section 903 and section 904(vi) it is noted that Welltec A/S has paid interest on the bonds per 30 January 2013.

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

About Welltec
Welltec is a leading provider of well intervention services to the oil and gas industry using robotic technology. We are also expanding into well completion products and solutions. Our services and solutions enhance well production performance and increase the amount of recoverable oil and gas reserves in reservoirs. We provide our services and solutions for onshore and offshore oil and gas wells and operate in deepwater, subsea, Arctic, high-yield, heavy oil, geothermal and unconventional environments as well as conventional environments. We operate in all hydrocarbon producing areas and had, as of December 31, 2011, 793 dedicated employees in 24 countries. For the twelve months ended December 31, 2011, we had revenues and EBITDA of approximately DKK 1,220 million and DKK 593 million, respectively (or approximately US$ 212 million and US$ 103 million, respectively).


BG India Awards Welltec Direct Contract for the Provision of Well Tractor and Intervention Services, Offshore India

Welltec India is pleased to announce that it has been awarded a contract for the provision of Well Tractor, mechanical intervention services along with associated e-line services by BG India. This landmark award for Welltec in India covers a scope where the contract value is estimated to be in excess of $20M (USD) over a 3 year period.

Welltec will provide their proprietary, e-line based technologies such as Well Tractor, Well Stroker, Well Key and Well Cleaner in order to perform, remediate and improve production operations without the need for a rig or coiled tubing unit based operation.

Welltec is the largest provider of tractor technology for conveyance solutions as well as the foremost e-line based provider of milling, cleaning and mechanical solutions which have been successfully developed and applied by Welltec over the last two decades.


Q3-2012 Report and Investor Conference Call and home member state announcement

Welltec will disclose its interim quarterly financial report for Q3-2012 on Wednesday 21 November 2012 and will discuss the results during an investor conference call.

The investor conference call will take place on Wednesday 21 November 2012 at 5 pm CET.

An accompanying slide presentation will be available on the “Investor” section of Welltec’s website at www.welltec.com under the subheading “Download Centre” before the teleconference.

The conference call can be accessed by dialing in a few minutes before the 5 pm CET start and telling the operator that you are dialing in for Welltec’s investor conference call, conference ID 70686652.

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

About Welltec
Welltec is a leading provider of well intervention services to the oil and gas industry using robotic technology. We are also expanding into well completion products and solutions. Our services and solutions enhance well production performance and increase the amount of recoverable oil and gas reserves in reservoirs. We provide our services and solutions for onshore and offshore oil and gas wells and operate in deepwater, subsea, Arctic, high-yield, heavy oil, geothermal and unconventional environments as well as conventional environments. We operate in all hydrocarbon producing areas and had, as of December 31, 2011, 793 dedicated employees in 24 countries. For the twelve months ended December 31, 2011, we had revenues and EBITDA of approximately DKK 1,220 million and DKK 593 million, respectively (or approximately US$ 212 million and US$ 103 million, respectively).

Important Notices
This press release contains forward-looking statements. These statements reflect current beliefs, as well as assumptions made by, and information available to, Welltec. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual future results and developments could differ materially from those set forth in these statements due to various factors.


Well Cutter Assists Removal of Packer

Welltec’s latest cutting edge technology continues to prove itself through successful applications. This time, offshore in Russia the Well Cutter was used to cut a Super 13Cr mandrel of a 9 5/8” x 4 1/2” packer so that this intelligent completion could be retrieved.
Mandrel Cut
The operation went flawlessly – yet again – and the Well Cutter was able to produce a perfect cut at 44.50° inclination in about four hours. After the Well Cutter was pulled out of hole, the client was able to pick up on the tubing hanger and observe that the 9 5/8” packer was free.

Client quote
“Excellent performance and a perfect cut in the packer mandrel target area, spot on. This was our objective and the main reason we use the Well Cutter whenever possible to cut mandrels or tubing. The Well Cutter cuts an excellent shaped fishing neck, eliminating extra BHA dressing trips on stubs and leaves a clear gauge path if re-access into the tubing bore is needed.” said Bernard Renker, Snr. Completions & Well Interventions Engineer Piltun, Sakhalin Energy.

Piltun CWI have been continuously pleased with Welltec’s services and solutions in 2012 and based on this recent success, they are looking to increase the portfolio of services Welltec can perform for them in the future.

Please click here to read more about this operation.


Excellent Conveyance Solutions in the UK North Sea

In this industry you need confidence where it matters, at the well site. When a client demanded production logging (PLT) data from a challenging well located in the UK portion of the North Sea, the incumbent service provider was unable to tractor to the required depth. Welltec had also been mobilized as a contingency, but quickly rigged up and performed the job flawlessly.

Despite challenging well conditions the Well Tractor’s performance was outstanding. It reached speeds in excess of 5,400 feet/hr and performed all the required PLT passes with excellent results while going approximately 40% faster than the pre-job planning of the previous provider.

Success promotes opportunity and based on these results, the Well Tractor was chosen by this operator as the primary conveyance solution for the next well in the campaign. This job involved conveying a PLT using a tandem Well Tractor configuration to negotiate a Y-tool installed in the completion. Again, Welltec’s technology performed excellently and logging was completed from 7,404 ft to 10,940 ft, accomplishing the objectives.