1. Baker Hughes Drilling Fluids

2. Baker Hughes Drilling Fluids Organization Richard Williams President Dwight Strickland Vice President, Technology Bill Smith Region Manager North America Alan Corbett Region Manager Asia, Caspian, Middle East (ACME) Ray Herrero Region Manager Europe, Africa, Russia Fluids (EARF) Open Region Manager Latin America Gerald Smith Director of Global Operations Terri Hanna V.P., Human Resources Craig Muller Vice President, Marketing Judy Purucker Executive Assistant

3. Baker Hughes Drilling Fluids Markets  Drilling and Completion Fluids Effective, environmentally safe fluids to optimize wellbore construction process and maximize production.  Fluids Environmental Services Cost effective environmental compliance through efficient handling and disposal of waste.  Industrial Products Specialty products for mining, water well and horizontal directional drilling (HDD) applications.

4. BHDF Region Breakdown

5. Baker Hughes Global Presence and Regional Fluids Laboratory Locations Aberdeen Kuala Lumpur Houston Maracaibo

6. Product Launches: Emulsion Systems 199019951996199720002001 2002 200320042005 Bio Marker Analysis Environmental Compliance GOM Synthetic For Land Drilling Ultra HTHP ECD Management © 2003 Baker Hughes Incorporated All rights reserved Environmental Compliance GOM Stock Limitation Alternative

7. Emulsion Systems  Emulsion Systems – Superior drilling performance – Excellent borehole stability – Environmentally acceptable  Multiple oil and synthetic base fluids – Enhanced mineral oils (CARBO-DRILL) – Internal olefins (SYN-TEQ) – Others (SYN-TEQ CF)  Specialty applications – Low influence on geochemical analysis (GEO-TEQ) – Ultra-low viscosity olefin for land operations (SYNTERRA) – HTHP ( MAGMA-TEQ) – Low ECD/TTRD

8. Emulsion Systems: CARBO-DRILL  Introduced 20 years ago  Environmentally safer, mineral-oil-base alternative to diesel oil muds  Primarily used on land and in zero-discharge offshore operations

9. Emulsion Systems: SYN-TEQ  Superior drilling performance and environmental acceptability in one synthetic-base drilling fluid  First system to employ low-viscosity, olefin isomers  Compliant with 2002 stock limitations requirements  Minimal rheological changes with temperature fluctuations – Retains optimum properties at temperatures above 400°F (204°C)  Cost-effective

10. Emulsion Systems: SYN-TEQ CF  Optimized drilling performance – Excellent filtration control – Extremely low base fluid pour point (-39°F / -39°C)  Compliant, non-aqueous drilling fluid design – Specifically formulated to meet NPDES permit for Western GoM  Simple, cost-effective formulations

11. Emulsion Systems: MAGMA-TEQ  Emulsion-based HTHP systems utilizing either: – Synthetic base fluid – Low aromatic mineral oil  Superior drilling performance – Rheological stability >400ºF (204ºC) – Minimal density differentiation under dynamic and static conditions  Specifically designed to use commonly available, aromatic-free base oils  Minimal occupational hygiene exposure  North Sea compliant

12. Product Launches: Water-Based Fluids 1990199519961997199920002002200420052006 NEW- DRILL Cuttings Integrity Pressure Transmission PPT & Clay swelling ROP Enhancement HT Drilling Fluid Pressure Trans., Cuttings Integrity, Clay Swelling, ROP Enhancement Clay Swelling

13. High-Performance Water-Base Systems  Designed to emulate the invert-emulsion drilling performance  First service company to introduce high performance water based water muds – PYRO-DRILL HTHP fluid (1980’s) – AQUA-DRILL cloud-point glycol system (early 1990’s) – PERFORMAX new-generation high-performance WBM system (2004)

14. Water-Based Systems: PYRO-DRILL  Advanced, proprietary WBM designed for hostile downhole conditions – Geothermal – HTHP  Superior drilling perfomance under hostile conditions – High temperature stability > 400° F (204° C) – Reduced corrosion – Excellent return permeability  Environmentally safe  Cost effective

15. Water-Based Systems: AQUA-DRILL PLUS  Proprietary “cloud-point” glycol technology  Specialty additives  Superior drilling performance – Superior shale inhibition – Excellent lubricity – Simple formulation – Thermal stability – Broad-spectrum application  Environmental acceptability

16. Water-Based Systems: PERFORMAX  High-performance WBM  Emulate emulsion-based drilling performance – Superior shale inhibition  Membrane effects  Reverse osmosis (low activity)  Reduced pore pressure – Excellent clay stability – Cuttings encapsulation – High ROP – Minimize bit balling & accretion – Minimize differential sticking – Torque & drag

17. Hydrocarbon Recovery 1990199419961998200020022003 BIO-LOSE 901992 BARACLEAN 5 & 6 Clean Up System DISPLEX PERFFLOW 100 / PERFFLOW HD2004 CLEAR-DRILL DIF

18. Hydrocarbon Recovery  Reservoir drill-in fluids – Specialized systems to protect the payzone – Simplified clean-up process – Maximized hydrocarbon recovery  Completion Brine Fluids (CBF)  Borehole cleaning technology  Advanced displacement software

19. Hydrocarbon Recovery Systems: PERFFLOW DIF  Unmatched DIF experience – Introduced the first DIF (1994) – Applied more DIF specialty fluids more than any other company  Custom-formulated PERFFLOW DIF systems – Addresses specific reservoir conditions – Maximizes hydrocarbon recovery – Minimal pressure to initiate production – Simplified wellbore clean-up – Applicable across a wide range of formation permeabilities

20. Hydrocarbon Recovery: Completion Brine Fluids  Complete line of Completion Brine Fluids (CBF)  CBF Engineering and support services – Certified engineers – Specialty products – Customized brine systems – Advanced displacement software (Displex) – High flow rate filtration services – Quality assurance – Reporting software (Clear Advantage)

21. OMNIFLOW DIF Kill/Choke Lines Push Pill Clean Up Spacers Clear Brine Hydrocarbon Recovery: Wellbore Displacement and Clean-Up  Design and deploy spacers and cleaners for smooth displacement – Aqueous and non-aqueous spacers – Lower pill volumes – Optimal contact times – Reduced disposal costs  Additives (solvents and surfactants) – FLOW-CLEAN / FLOW-CLEAN SS – FLOW-SURF / FLOW-SURF PLUS – MS-90 – CASING WASH 100 / CASING WASH 200 – DOPE-FREE

22. Hydrocarbon Recovery: Displex Displacement Hydraulics Software Proprietary software to model displacements – 3-D fluid displacement flow dynamics – ECDs / pressures at various depths vs. time – Fluid displacement and flow pattern simulation – Required flow rate for turbulence at different geometries

23. Dynamic Kill Drilling (DKD SM ) Batch Drill Surface Holes & Mitigate Shallow Hazards Advantage System Fluids Reporting & Advanced Engineering Tools At The Rig Site RJF Viscometer Barite Sag Management Engineering Technology

24. Dual Gradient / Riserless Drilling  Control shallow hazards in a riserless application using a dual gradient approach  Push surface casing deeper than with Seawater + Sweeps SeaWater WholeMud

25. Execution Analysis While Tripping Execution Analysis While Drilling Engineering Applications Planning Analysis Before Drilling

26. Fluids Environmental Services  Provides unique, specialized environmental services to the drilling industry  Reducing environmental compliance costs through efficient handling and waste disposal  Multiple systems/methods – Cuttings re-injection (CRI) – Bulk handling systems – Cuttings dryers – Cuttings collection systems – Vacuum units

27. What is Fluids Environmental Service? A seamless provision of solutions / services delivering the well – Safe handling – Minimizing all types of waste from fluids operations Recovered resources to minimize environmental impact Fluids Waste Treatment Transport Fluids Transport Fluids Transport Waste Treatment TransportFluids Resource Recovery Treatment Waste management Fluids Transport Resource Recovery Treatment Waste management

28. Centrifugal Cuttings Dryer: Typhoon A vertical, centrifugal equipment that reduces the liquid content of drilling cuttings to lower the toxicity of the waste and comply with environmental regulations A vertical, centrifugal equipment that reduces the liquid content of drilling cuttings to lower the toxicity of the waste and comply with environmental regulations  Reduces haul-off volumes  Increased solids control efficiency  Reduced waste disposal & treatment costs

29. An Integral Vision of Cuttings Re-Injection Logistics and Storage Surface Equipment Injection Model What is CRI? In-situ disposal technology that safely collects, slurries and injects drilling waste back into a formation, causing minimal effect on the surface environment

30. Industrial Drilling Fluids  Non-hydrocarbon drilling applications – Trenchless/HDD – Water wells – Mining/Minerals industries  Broad range of industrial products – Viscosifiers – Filtration control agents – Lost circulation materials – Other specialty products Industrial Products

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