Monogram/APIQR Program Started in 1924 as a self-certification program to API product specifications

API Monogram Program Facilitate the availability of safe, interchangeable equipment and materials for general use in the petroleum drilling and production industry 3 existing licensees had to agree with your self-certification 1985 – API Spec Q1 “Specification for QMS Requirements for Manufacturing in the Oil and Natural Gas Industry

Quality Evolution in the Industry 1924 Birth of the API Monogram Program Self-certification 1985 API Spec Q1, 1st ed. published Monogram Program transitioned from self-certification to 3rd party verification Monogram licensees required to meet Product Specification and API Spec Q1 1998 Registration program created Began ISO 9001 Registration 2003 TC 67 WG 2 started ISO TS 29001 API adopted as ISO/TS 29001:2003 API adds Annex A creating Spec Q1, 7th ed. API Spec Q1, 7th ed., published to align with ISO 9001 Registration to API Q-Plus launched 2011 API Spec Q2, 1st ed., published for service suppliers 2013 API Spec Q1, 9th ed., published – No longer formatted as an ISO 9001 document Introduced new requirements such as risk management, contingency planning and Management of Change (MOC) Why standards? Without them we have barriers to trade that disadvantages some. With standards, we get fair competition, reliability of products, safety, interoperability, and compatibility. 1924 – Monogram and standards – Self-certification w/recommendation of 3 existing licensees 1926 – ISO began as the International Federation of National Standardizing Associations (ISA) – focused mostly on Mechanical Engineering Both API and ISA (now ISO) are voluntary organizations Build Standards through consensus using widely sourced expertise Equal Treatment through High Standards

Monogram License for API Spec 5L, First Edition, January 1928 11 April 1928 Monogram License for API Spec 5L, First Edition, January 1928 3 existing licensees had to agree with your self-certification 1985 – API Spec Q1 “Specification for QMS Requirements for Manufacturing in the Oil and Natural Gas Industry

Monogram/APIQR Program Basics

What API Certifies Management Systems API Spec Q1/Q2 Registrations ISO 9001 Registration ISO 14001 Registration OHSAS 18001 Registration Products and Services Monogram Licensing

Monogram / APIQR Vision The Unassailable Brand – Renowned for Value and Integrity Benchmark for Licensing and Certification Programs Fair and equitable policies and processes for all clients Postured and Ready for Industry Changes Lead the Way with Competent and Effective Auditors, Assessors, and Staff

The Meaning of the API Monogram To Equipment Purchasers and End-Users Verification that the products meet the requirements of the API specifications and standards Manufacturers have implemented a management system that provides assurances that processes have been implemented to provide consistent, conforming products Manufacturers have implemented processes and controls to identify and address customer requirements, customer complaints and product issues A method to trace products back to the original manufacturer, design and performance requirements A means to report industry product and process issues and nonconformities Visible identification in the field that a product was manufactured to conform to an API product specification or standard The API Monogram constitutes a representation and warranty by the licensed manufacturer that, on the date of manufacture, the product conforms to all applicable, current editions of specifications, standards and requirements of API. To Manufacturers A way to be recognized by API and industry for product quality Recognition of their capability to manufacture products that meet API specifications A means to physically mark and identify conforming product(s) The Monogram is a warranty that at the time of manufacture, the licensed manufacturer ensured the product met API Specs. For Manufacturers, the Monogram makes them standout in the industry because it says they are a quality manufacturer who produces product that meet high standards. For purchasers and end users, the Monogram says: Product produced by a licensed manufacturer in accordance with API standards That the product conforms to API standards and API Spec Q1 quality standards That effective processes and controls are in place to ensure conformance and positive control to protect against non-conforming products The product is traceable That processes are in place to deal with non-conforming product The mark is a visible means of verifying conformance Monogram License Agreement Mandates Quality Requirements Apply to ALL Products

Benefits of the API Monogram Program Helps equipment users identify suppliers capable of producing products that meet API specifications Reduces and eliminates the users’ on- site supplier audits Provides A formal 3rd party objective review and monitoring system Provides input to the product subcommittees to changes and improvements to the product documents Licensees and certificants are in the Composite List Our audit sends a signal that “we’ve look hard” at this licensee/certificant and their QMS It provides a formal “3rd Party” review There is a means for reporting a non-conforming product There is a mechanism for feedback to the standards subcommittees.

What is the API Monogram Mark? Monogram is: - Location specific - Only used on new product with the License number and date of manufacture Monogram and License number marked on product provides traceability to: - Original design - Manufacturing specifications

Monogram Requirements Must implement, maintain and continually improve quality management system (QMS) to meet the oil and gas industry’s QMS specification, API Spec Q1 Monogram Licenses are only issued after an on-site audit has verified that the facility meets the program requirements Licensees must maintain continued management system conformity to API Spec Q1; and Product standard; and Monogram program requirements in the license agreement

Monogram Requirements To Remain Active: licensee must go through a renewal audit each 3 year period Composite List: An on-line directory for all licensees, licensing information and licensing statuses Enforcement: A legally binding agreement between API and the Licensee describes Program requirements and obligations, including use of the mark Reporting on nonconforming equipment QMS conformity with API Spec Q1 Product conformity with the specification

Registration Programs – APIQR QUALITY API Spec Q1 Registration recognizes manufacturers conforming with API Spec Q1 for API and non-API products. API Spec Q2 Registration recognizes service companies conforming to API Spec Q2 for service and service related products (beginning January 2013). ISO 9001 Registration general management system certification covering all products and services for use within the oil and gas industry. ENVIRONMENTAL ISO 14001 Registration environmental system registration for companies within the oil and gas industry. SAFETY OHSAS 18001 Registration globally recognized standard registration for occupational health & safety.

API Specification Q1 First published in 1985; now on its 9th edition Quality management system requirements for manufacturers of oil and gas industry equipment Based on a concept that includes both quality assurance and quality control Used as one of the audit criteria for the 3rd party on-site verification of the API Monogram Program All monogram licensees must conform to high standards for quality manufacture. ISO 9001:2015 is the floor for management systems API Spec Q1 is the floor for the Monogram program.

API Spec Q2 Developed by the industry; Concepts similar to API Spec Q1, 9th edition Specific to service suppliers in the upstream sector; identifies expectations for execution of services such as well construction, intervention, production and abandonment Specifies requirements for service and service-related products Aims to standardize risk mitigation and improve service reliability Driven by the need for improved service technology and equipment/tool reliability and need for systems to ensure uninterrupted operations

Monogram/APIQR Program Status

API Monogram and Dual-Licensed Facilities TOP 10 COUNTRIES China 1630 United States 706 India 205 South Korea 149 Italy 115 United Arab Emirates 100 Canada 99 Indonesia 85 United Kingdom 73 Germany 60 Includes all Monogram-Only Licensed Facilities plus Dual Facilities. 78 Countries 4097 Licensees 6842 Licenses 76 Specs/Standards NOTE: Includes all Monogram-Only Licensed Facilities plus Dual Facilities

APIQR Certified Companies TOP 10 COUNTRIES United States 554 China 516 Singapore 88 Canada 81 United Arab Emirates 65 India 54 Indonesia Mexico 39 Russian Federation 38 United Kingdom 36 This includes Dual and APIQR only facilities (all facilities with at least 1 QR cert). EMS Certified = 13 OHSMS Certified = 9 1835 Certified Companies 69 Countries Total Certificates 3492 API Spec Q1 Certs 1727 API Spec Q2 Certs 71 ISO 9001 Certs 1672 NOTE: Includes Dual and APIQR only facilities (all facilities with at least 1 QR certificate). EMS Certified = 13 OHSMS Certified = 9

Active Monogram Licensees and Licenses

API Licensed and APIQR Certified Companies

Top Monogram Specifications Licenses in 76 different specifications and standards * Please visit the STANDARDS table for additional information on API specifications Nov 17-20, 2014 - Shanghai

Top Monogram Products Spec Product Number API-6D Ball Valves 720 API-5CT Threader 653 API-7-1 Threading for Rotary Shouldered Connections 599 API-6A Flanged Connectors 585 Check Valves 517 Gate Valves 515 API-5L Manufacturer of Line Pipe Plain End at PSL 1 510 Tees and Crosses 505 Valves 494 Manufacturer of Line Pipe Plain End at PSL 2 452 * Please visit the STANDARDS table for additional information on API specifications Nov 17-20, 2014 - Shanghai

New Business in 2016 Business Development Team completed a total of 239 new applications*. These applications included: 231 Monogram licenses 93 API Spec Q1 51 ISO 9001 7 API Spec Q2 1 ISO 14001 *Note: one application may contain multiple specs/programs. Information Snapshot 231 Total applications 383 Specs/programs included 85 – China 302 – USA Total number of applications down significantly from 2015

Audit Program

3rd Party On-Site Verification Audits to establish manufacturing capability Three-year audit interval with periodic audits, if necessary Facilities must meet both API Spec Q1 and product specification requirements License granted to manufacturers that meet requirements Even today, debate on new standards includes a discussion about what kind of review, assessment or audit there will be. Will this be “First Party Attestation?” Second Party “Peer Review”, or third party review using an independent auditor. Monogram Licensees must be a manufacturer and capable of manufacturing the products they are licensed to mark in accordance with API Standards.

Audit to Decision Making Process 1 myCerts 2 Auditor Facility 4 Associate Here is an overview of the review process. The auditor, you, submits your report and all relevant documentation to myCerts. An API Associate is assigned the audit and reviews the findings as well as the facility’s responses. This information is then weighed against program standards and a decision is made. This decision is then sent to the Licensing and Registration Committee for additional input from other API Associates. If the decision results in an Active recommendation the certificates are issued (if necessary). However, this process rarely runs so smoothly. There are several areas where inaccurate, incomplete, confusing, or contradictory information can be introduced, complicating the issue. The auditor can provide unclear findings or have produced an incomplete audit report. Facilities can provide responses that don’t address the nonconformities. The Associate can fail to ask the right follow-up questions. Decisions resulting in a Suspension, Cancellation, or Withdrawal of a license must be presented to the entire group of API Associates for a majority decision. With all these areas of uncertainty and breaks in the proverbial chain, the fidelity and accuracy of the Audit Report is made that much more important. You have more influence than you might think! 3 Group Review (when necessary) Licensing & Registration Committee Nov 17-20, 2014 - Shanghai

Active API Monogram/APIQR Auditors APIQR/Monogram: 142 Active: 127 In-training: 15 Perforator: 12 EMS &/or OHSAS: 20 Q2 Auditors: 30 In-training: 8 In 2014 = 20 audits per auditor In 2016 = 27 audits per auditor

Audit Program – What’s Happening? Monthly Webinar Training for auditors worldwide Currently transitioning QMS auditors to ISO 9001:2015 and ISO 14001:2015 Summits Shanghai China – November 14 – 17, 2016 Savannah GA – February 27 – March 2, 2017

API Code of Conduct

API Code of Conduct Promotes integrity, compliance, and equitable treatment for all Applies to all Clients must sign off that they have read and understand the Code of Conduct prior to any audit – audit can only be scheduled after this happens Strictly enforced

The Future

API Monogram 2020 Planning for the future of the API Monogram Program Increased audit frequency Increase auditor training Specific projects Add additional value to the industry by changing how and what we audit Improve efficiency and effectiveness reducing audit review cycle time Rapidly respond to changing business environment and industry needs 20 20

API Monogram 2020 Risk-based Auditing Advance quality programs to meet evolving industry needs Continue to ensure safer, standardized, high performance and reliable equipment for users Reduce nonproductive time and nonconforming equipment Improve confidence in the manufacturing base Posture for the future

Questions ?