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COMPANY PROFILE

Tesco Corporation

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PUBLICATION DATE: 8 Jan 2016
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Tesco Corporation
TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................3
Key Facts...............................................................................................................3
Business Description...........................................................................................4
History...................................................................................................................6
Key Employees.....................................................................................................8
Key Employee Biographies..................................................................................9
Major Products and Services............................................................................13
Revenue Analysis...............................................................................................14
SWOT Analysis...................................................................................................16
Top Competitors.................................................................................................21
Company View.....................................................................................................22
Locations and Subsidiaries...............................................................................25

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Tesco Corporation
Company Overview

COMPANY OVERVIEW
Tesco Corporation (Tesco or the company) designs, manufactures, sells, operates, and services
oilfield equipment used in drilling oil, gas, and geothermal wells. The company operates in Latin
America, Europe, Russia, the Middle East and Africa, and Asia Pacific, as well as in the US and
Canada. It is headquartered in Houston, Texas and employed 2,264 people as on December 31,
2014.
The company recorded revenues of $542.9 million during the financial year ended December 2014
(FY2014), an increase of 3.4% over FY2013. The operating profit of the company was $46.5 million
in FY2014, a decrease of 15.1% compared to FY2013. The net profit was $21.4 million in FY2014,
a decrease of 39.2% compared to FY2013.

KEY FACTS
Head Office

Tesco Corporation
3993 West Sam Houston Parkway North
Suite 100
Houston
Texas 77043
USA

Phone

1 713 359 7000

Fax

1 713 359 7001

Web Address

http://www.tescocorp.com

Revenue / turnover 542.9

(USD Mn)
Financial Year End

December

Employees

2,264

NASDAQ National
Market Ticker

TESO

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Tesco Corporation
Business Description

BUSINESS DESCRIPTION
Tesco Corporation (Tesco or the company) is engaged in the designing, manufacturing, and service
delivery of technology-based solutions for the upstream energy industry. The product and service
offerings of the company include equipment sales and services to drilling contractors and oil and
gas operating companies across the world. It has its operations in Latin America, Europe, Russia,
the Middle East and Africa, and Asia Pacific, as well as in the US and Canada.
Tesco operates through three business segments: top drive; tubular services; and research and
engineering.
The top drive business segment comprises top drive sales, top drive rentals, and after-market sales
and service. The segment sells equipment and provides services to drilling contractors and oil and
gas operating companies throughout the world. It primarily manufactures top drives that are used
in drilling operations to rotate the drill string while suspended from the derrick above the rig floor.
The company provides top drive rental services on a day-rate basis for land and offshore drilling
rigs. Its rental fleet comprises hydraulically powered top drive systems, with power ratings of 475 to
1,205 horsepower and load path ratings of 150 to 650 tons, each equipped with its own independent
diesel engine driven hydraulic power unit. Along with sale of top drives, the company also provides
installations and support services, including training. Tescos top drive rental fleet, which comprised
135 units in FY2014, is deployed around the world.
Further, the company also offers for sale a range of portable and permanently installed top drive
products that includes both hydraulically and electrically-powered machines capable of delivering
400 to 1,350 horsepower, with a rated lifting capacity of 150 to 750 tons.
The company also offers nine model series of top drive systems, using hydraulic, permanent magnet
alternating current (AC), and induction AC technology. It uses AC induction technology and late
generation power electronics in its smaller horsepower systems, such as the EMI machines (EMI
top drive units have 150 and 250 ton load path configurations). In addition, Tesco has developed
EXI system for a high performance compact electric top drive system, used in modern fast moving
rigs frequently used in pad drilling operations. The EXI system has a load path rating of 350 to 400
tons and generates 600 horsepower at the quill. Tescos ESI is a new model of its current EXI
System, which has a load path rating of 500 to 750 tons and generates 1,350 horsepower at the
quill. Further, the HXI is a new generation of the companys current hydraulic HMI system that has
a load path rating of 150 to 250 tons and has a 700 horsepower self-contained diesel-driven hydraulic
power unit.
The companys tubular services business segment includes proprietary offerings, conventional
casing, and tubing running services for both onshore and offshore markets. The proprietary service
offerings use certain components of its casing drilling technology, in particular the patented casing
drive system (CDS), to provide a safe and automated method for running casing. CDS is a tool which

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Tesco Corporation
Business Description

facilitates running and reaming casing into a well bore on any rig equipped with a top drive. Tesco
also offers installation service of deep water smart well completion equipment using its multiple
control line running system (MCLRS) proprietary and patented technology.
The company also offers a rotating Side Entry Swivel Sub (SESS), a tool which works in combination
with CDS tool to allow rotation and reciprocation of the casing string during cementing operations.
Tescos conventional service offerings provide equipment and personnel for the installation of tubing
and casing, including power tongs, pick-up/lay-down units, torque monitoring services, connection
testing services, and power swivels for new well construction and in work-over and re-entry operations.
The research and engineering business segment comprises Tescos internal research and
development activities related to its proprietary technologies in tubular services, casing drilling, and
top drive model development. For FY2014, the company held patents and patent applications in the
US, Canada, Europe, and various other countries. The current patent portfolio included 130 issued
patents, comprising 56 US and 74 foreign patents, and 107 pending patent applications, comprising
42 US and 65 foreign patent applications.

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Tesco Corporation
History

HISTORY
Tesco Corporation (Tesco or the company) was established on 1993 through the amalgamation of
Shelte Oil and Gas Coexco Petroleum, Forewest Industries, and Tesco Corporation. The new
company continued under the name Tesco Corporation. Tesco acquired patent rights to the casing
drilling process in 1995.
Tesco acquired Bo Gray Casing and A&M Tubular Maintenance, a traditional casing and tubing
company, in 2002. Tesco entered into a cooperative agreement with Hughes Christensen, a division
of Baker Hughes, to provide wellsite delivery of the casing drilling bit, in 2004. In the same year, the
company entered the offshore drilling market and conducted an offshore casing running project in
the Gulf of Mexico.
In 2005, Tesco acquired the assets of Latco International, a Southeast Asian operator, and expanded
its casing services presence in South Asia. In the same year, Tesco acquired Cheyenne Services
and Tong Specialty. Both companies provide tubular running and related services offshore in the
US Gulf of Mexico and onshore in Texas and Louisiana. Tesco disposed its four drilling rigs to
Turnkey E&P, in 2005 end.
During 2006, Tesco decided to transition its corporate administrative functions from Calgary in
Alberta, Canada to Houston in Texas and to officially designate Houston, Texas as the company's
corporate headquarters.
In 2007, the company used its proprietary casing drilling technology to drill the first ever offshore
well for an operator in the Norwegian sector of the North Sea, utilizing the combination of industry
standard rotary steerable systems. In the same year, Tesco entered into an equipment placement
agreement with ENSCO Offshore to provide its proprietary casing drive system onto ENSCO's
offshore rigs.
Further in 2007, Franks International (Franks) sued Tesco alleging that Tesco's casing drive system
had infringed two patents held by Frank's. In the same year, Tesco entered into a marketing
agreement with Schlumberger, wherein it identified opportunities to create value for customers by
combining the use of their respective proprietary drilling technologies.
In 2008, Tesco announced it plans of delisting from the Toronto Stock Exchange. In 2009, the
company settled the patent-infringement lawsuit with Frank's. Pursuant to the settlement, Tesco
paid $1.83 million to Frank's and $400,000 to a third party from whom Tesco had a license, and
Frank's requested the court to dismiss the lawsuit with prejudice.
In 2011, Tesco acquired Premiere Casing Services, a tubular services company based in Egypt. In
the following year, Tesco signed a definitive agreement to sell the casing drilling segment to
Schlumberger for $45 million in cash. In addition to this agreement, Schlumberger and Tesco entered
a long-term supplier agreement in which Tesco will sell and lease its casing drive system equipment

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Tesco Corporation
History

to Schlumberger to support casing drilling projects. Also in 2011, the company sold all of the assets
of the casing drilling segment to Schlumberger Oilfield Holdings and Schlumberger Technology
Corporation.
During 2013, Tesco completed the testing phase of two new products, the HXI 150 ton top drive and
Hydraulic Compact Casing Drive System (HCCDS). In the same year, Tesco acquired automated
catwalk technology from Custom Pipe Handlers Canada.
In May 2014, Tesco signed a definitive agreement between its subsidiary, Tesco Corporation (US)
and Tech Field Services. Under the terms of the definitive agreement, Tesco Corporation (US) would
acquire the assets of TFS and would incorporate the TFS business into its US after-market sales
and service operations.
Note: no relevant news were published at the time of profiling the company.

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Tesco Corporation
Key Employees

KEY EMPLOYEES
Name

Job Title

Board

Fernando R. Assing

President and Chief Executive

Officer

Executive Board

Michael W. Sutherlin

Chairman of the Board of Directors Non Executive Board

333940 USD

John P. Dielwart

Director

Non Executive Board

275813 USD

Fred J. Dyment

Director

Non Executive Board

207870 USD

Gary L. Kott

Director

Non Executive Board

200870 USD

R. Vance Milligan

Director

Non Executive Board

187870 USD

Elijio V. Serrano

Director

Non Executive Board

259313 USD

Christopher L. Boone

Senior Vice President and Chief

Financial Officer

Senior Management

1432354 USD

Thomas B Sloan Jr.

Vice President and Principal

Accounting Officer

Senior Management

Darko Ulakovic

Vice President, Products and

General Manager, TESCO
Manufacturing Facility

Senior Management

Brian T. Kelly

Assistant Corporate Secretary and Senior Management

Associate General Counsel

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Compensation
2615231 USD

417366 USD

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Key Employee Biographies

KEY EMPLOYEE BIOGRAPHIES

Fernando R. Assing
Board: Executive Board
Job Title: President and Chief Executive Officer
Since: 2014
Age: 49
Mr. Assing has been the President and Chief Executive Office at Tesco since 2014. He has been a
Director since at Tesco since 2014. Mr. Assing served as an Executive Vice President and the Chief
Operating Officer at Tesco since 2013. He has served as the Senior Vice President of Marketing
and Business Development at Tesco from 2009 to 2011. Prior to joining Tesco, Mr. Assing held in
various global and regional positions within the integrated projects management division at
Schlumberger from 1997 to 2009. Prior to this, he worked in various technical and project management
roles at Technip from 1991 to 1997.

Michael W. Sutherlin
Board: Non Executive Board
Job Title: Chairman of the Board of Directors
Since: 2014
Age: 68
Mr. Sutherlin has been the Chairman of the Board of Directors at Tesco since 2014. He serves as
a Director at Tesco since 2012. Mr. Sutherlin worked as the President and Chief Executive Officer
at Joy Global, a mining equipment and services provider, from December 2006 to December 2013.
Prior to joining Joy Global, he was employed as the Group President, Drilling Equipment, and as
the President and Chief Operating Officer at Varco International. He is also a Director at Peabody
Energy.

John P. Dielwart
Board: Non Executive Board
Job Title: Director
Since: 2014
Age: 62
Mr. Dielwart has been a Non-Executive Director at Tesco since 2014. He is also a member of the
Audit and Compensation Committees. Previously, he was employed as the President or Chief
Executive Officer at ARC Resources from 2001 until 2013. Mr. Dielwart currently serves as a Director

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Key Employee Biographies

at ARC Resources, Denbury Resources and TransAlta. He worked as the Governor at the Canadian
Association of Petroleum Producers including 18 months (2002-2004) as Chairman.

Fred J. Dyment
Board: Non Executive Board
Job Title: Director
Since: 1996
Age: 66
Mr. Dyment has been a Non-Executive Director at Tesco since 1996. He retired from Maxx Petroleum
in 2001 after serving as the companys President and Chief Executive Officer since 2000. Prior to
that, Mr. Dyment was the President and Chief Executive Officer at Ranger Oil. In 2007, he served
on the board at Western Oilsands; and from 2002 to 2008 he served as a Director at ZCL Composites.
Currently, he serves as a Director at ARC Resources, Major Drilling Group International, TransGlobe
Energy and is the Chairman at WesternZagros Resources.

Gary L. Kott
Board: Non Executive Board
Job Title: Director
Since: 2000
Age: 73
Mr. Kott has been a Non-Executive Director at Tesco since 2000. He retired from Global Marine in
1998 after serving as that companys Senior Vice President and Chief Financial Officer for two years.
Prior to that, Mr. Kott served as the President at Global Marines principal operating subsidiary,
Global Marine Drilling, for 17 years.

R. Vance Milligan
Board: Non Executive Board
Job Title: Director
Since: 2006
Age: 63
Mr. Milligan has been a Non-Executive Director at Tesco since 2006. He had been a practicing
lawyer for more than 20 years at Bennett Jones, a Canadian national law firm. He serves as a
Director at Newalta and had served as a Director/Trustee at its predecessor entities since 1994.

Elijio V. Serrano
Board: Non Executive Board

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Key Employee Biographies

Job Title: Director

Since: 2014
Age: 57
Mr. Serrano has been a Non-Executive Director at Tesco since 2014. He is also members of the
Audit and Corporate Governance and Nominating Committees. Mr. Serrano is currently the Senior
Vice President and Chief Financial Officer at TETRA technologies since 2012. Prior to this, he worked
as the Chief Financial Officer at UniversalPegasus International, a global project management,
engineering, and construction management company from 2009 to 2012. Previously, he was
associated as the Chief Financial Officer and an Executive Vice President at Paradigm (formerly
Paradigm Geophysical) which is a provider of enterprise software solutions to the oil and gas industry
from 2006-2009.

Christopher L. Boone
Board: Senior Management
Job Title: Senior Vice President and Chief Financial Officer
Since: 2014
Age: 46
Mr. Boone has been the Senior Vice President and Chief Financial Officer at Tesco since 2014. He
worked as the Principal Accounting Officer at Tesco until February 2015. Prior to Tesco, Mr. Boone
served as a Vice President and the Chief Financial Officer at Lufkin Industries between 2008 and
2013.

Thomas B Sloan Jr.

Board: Senior Management
Job Title: Vice President and Principal Accounting Officer
Since: 2015
Age: 48
Mr. Sloan has been the Vice President and Principal Accounting Officer at Tesco since 2015. Prior
to this, he served as a Vice President and Corporate Controller at Tesco since 2014. Prior to joining
the company, Mr. Sloan was a Vice President and Corporate Controller at Ocean Rig from 2012 to
2013 and as the Regional Finance Manager from 2011 to 2012. He also worked as a Director at
Finance and Administration ENSCO (formerly Pride International) from 2008 to 2011.

Darko Ulakovic
Board: Senior Management
Job Title: Vice President, Products and General Manager, TESCO Manufacturing Facility
Since: 2014
Age: 50

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Key Employee Biographies

Mr. Ulakovic has been the Vice President of Products at Tesco and the General Manager of TESCO
Manufacturing Facility since 2014. He served as the Vice President of Manufacturing and the General
Manager at TESCO Manufacturing Facility from 2012 to 2014. Prior to this, Mr. Ulakovic worked as
a Director of Project Management in 2012. Prior to joining the company, he was employed at Com
Dev, a manufacturer of systems and subsystems for the aerospace industry, between 1996 and
2011. Mr. Ulakovic worked as a Director of Project Management at Com Dev from 2006 to 2011.

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Major Products and Services

MAJOR PRODUCTS AND SERVICES

Tesco Corporation (Tesco or the company) designs, manufactures, sells, and operates oilfield
equipment used in drilling oil, gas, and geothermal wells. Its key products and services include the
following:
Products:
Top drives (HMI, HXI, HCI, ECI, EMI, EXI and ESI)
Services:
Tubular services (proprietary and conventional tubular services)
Top drive sales and rental services
Repair services and parts sales
Casing accessories
Training

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Tesco Corporation
Revenue Analysis

REVENUE ANALYSIS
Tesco Corporation
Tesco recorded revenues of $542.9 million during FY2014, an increase of 3.4% over FY2013. The
US, Tesco's largest geographical market, accounted for 34.1% of the total revenues in FY2014.
For FY2014, Tesco generated revenues through three business segments: top drives (58.7% of the
total revenues during FY2014); tabular services (41.2%); and casing drilling (0.1%). The company
did not generate any revenues from its research and engineering business segment during FY2014.
Revenue by segment
During FY2014, the top drive segment recorded revenues of $318.7 million, an increase of 2.3%
over FY2013.
The tubular services segment recorded revenues of $224.1 million in FY2014, an increase of 5.4%
over FY2013.
The casing drilling segment recorded revenues of $0.063 million in FY2014, a decrease of 89.9%
compared to FY2013.
Revenue by geography
The US, Tesco's largest geographical market, accounted for 34.1% of the total revenues in FY2014.
Revenues from the US reached $185.0 million in FY2014, an increase of 23.8% over FY2013.
Canada accounted for 11.2% of the total revenues in FY2014. Revenues from Canada reached
$60.7 million in FY2014, an increase of 25.4% over FY2013.
Russia accounted for 10.6% of the total revenues in FY2014. Revenues from Russia reached $57.5
million in FY2014, a decrease of 37.4% compared to FY2013.
Mexico accounted for 6.8% of the total revenues in FY2014. Revenues from Mexico reached $37.0
million in FY2014, a decrease of 29.5% compared to FY2013.
South America accounted for 16.4% of the total revenues in FY2014. Revenues from South America
reached $89 million in FY2014, an increase of 14.2% over FY2013.
Europe, Africa and the Middle East accounted for 10.8% of the total revenues in FY2014. Revenues
from Europe, Africa and the Middle East reached $58.4 million in FY2014, an increase of 17.7%
over FY2013.

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Tesco Corporation
Revenue Analysis

Asia Pacific accounted for 10.1% of the total revenues in FY2014. Revenues from Asia Pacific
reached $55.3 million in FY2014, an increase of 0.1% over FY2013.

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Tesco Corporation
SWOT Analysis

SWOT ANALYSIS
Tesco Corporation (Tesco or the company) designs, manufactures, sells, operates, and services
oilfield equipment used in drilling oil, gas, and geothermal wells. It is engaged in the designing,
manufacturing, and service delivery of technology-based solutions for the upstream energy industry.
Tesco serves a diverse set of consumers. Its diversified customer base reduces its dependence on
any particular customer segment to generate revenues. However, the current uncertain global
macroeconomic conditions could impact Tescos growth.
Strengths

Weaknesses

Diversified customer base

Strong product portfolio of the top drive
segment
Robust portfolio of patents and patent
license agreements

Infringement claims
Concentrated operations

Opportunities

Threats

Investment in research and development

Strategic acquisitions

Uncertain global economic environment

Seasonality
Risks associated with the oil and natural
gas industry

Strengths

Diversified customer base

Tesco serves a diverse set of consumers. The customers for top drive sales and after-market sales
and service primarily consist of drilling contractors, rig builders, equipment brokers, and also major
and independent oil and gas companies and national oil companies who own and manage their own
top drive systems. The companys customers for its rental fleet include drilling contractors, major
and independent oil and gas companies, and national oil companies. Tescos tubular services
customers primarily consist of oil and natural gas operating companies, including major and
independent companies and national oil companies.
No single customer accounted for 10% or more of the companys consolidated revenue in the years
ended December 31, 2014 and 2012. And, one customer accounted for approximately 10% of the
companys consolidated revenue during the year ended December 31, 2013. A diversified customer
base reduces the dependence on any particular customer segment to generate revenues.

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Tesco Corporation
SWOT Analysis

Strong product portfolio of the top drive segment

The companys top drive segment sells equipment and provides services to drilling contractors and
oil and natural gas operating companies throughout the world. Tesco provides top drive rental
services on a day-rate basis for land and offshore drilling rigs, and also provides after-market sales
to, and service for, its customers. The company primarily manufactures top drives that are used in
drilling operations to rotate the drill string. Its top drives offer portability and flexibility, permitting
drilling companies to conduct top drive drilling for all or any portion of a well. Tesco offers for sale a
range of portable and permanently installed top drive products that includes both hydraulically and
electrically powered machines capable of delivering 400 to 1,350 horsepower, with a rated lifting
capacity of 150 to 750 tons.
The company offers nine distinct model series of top drive systems, using hydraulic, permanent
magnet alternating current (AC), and induction AC technology. The company use AC induction
technology and late generation power electronics in its smaller horsepower systems, such as its
EMI machines, allowing the end user to specify its preferred power electronics and motor combination
which permits it to select components from a larger vendor base. The company has also developed
its EXI system in response to market demands for a high performance compact electric top drive
system, commonly required on modern fast moving rigs frequently used in pad drilling operations.
The EXI system has a load path rating of 350 to 400 tons and generates 600 horsepower at the
quill.
The company proactively understands the demand of its customers and provides model changes
accordingly. It helps the company in tackling with market competition and delivering services according
to customers requirement contribution to customer satisfaction.
Robust portfolio of patents and patent license agreements
The company holds rights, through patents and patent license agreements, to patented and patent
pending technologies for certain innovations that that the company believes will have application to
its core businesses. The company holds patents and patent applications in the US, Canada, Europe,
and various other countries. Tescos current patent portfolio includes 130 issued patents, comprised
of 56 US and 74 foreign patents, and 107 pending patent applications, comprised of 42 US and 65
foreign patent applications. The company holds patents for various specific aspects of the design
of its portable top drive and related equipment. Tesco holds numerous patents related to the
installation and utilization of certain accessories for casing for purposes of casing rotation. Various
other related methods and tools are patent protected as well.
The company has a vast portfolio of patented technologies which makes it lucrative for several
companies for their custom projects. Patents also make the company the only supplier of a particular
technology which insures it strong pipeline of developing projects.

Weaknesses

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Tesco Corporation
SWOT Analysis

Infringement claims
Historically, the company has been sued by its competitors such as Varco and Weatherford for
violating certain of their patents. The companys ability to counteract and defend the infringement
claims matters a lot in avoiding monetary damages. If Tesco is not successful in defending itself in
one or more of these matters, it may have a material adverse effect on the companys business.
In addition, if Tesco in the future is subject to other infringement claims and if any of its products are
found to be infringing, then the consolidated financial results of the company can be adversely
affected.
Concentrated operations
The companys operations are concentrated majorly in North America. For instance, the US and
Canada together contributed more than 50% of the total revenues of Tesco in FY2014. This places
the company in a disadvantageous position as compared to its peers who have geographically
diversified operations.
Concentrated operation could restrict the company from capitalizing on the huge potential of other
regions. Tescos high geographic concentration in North America region increases its business risk
as it makes the company highly vulnerable to regions economic downturns.

Opportunities

Investment in research and development

As a technology-driven company, Tesco continuously invests significantly in research and
development activities, primarily related to its proprietary technologies in tubular services and top
drive model development. The companys research and development cost was $9.5 million, $8.6
million, and $10.5 million for the years ended 2014, 2013, and 2012, respectively.Tesco continuously
invests in the development, commercialization, and enhancements of its proprietary technologies.
Being a technology oriented company continuous innovation is required to overcome the competition
and sustain in the market. By investing fair amounts in its research and development program the
company gets the opportunity of continuous innovations in technological field. It also provides an
opportunity to the company to enhance its existing technologies for betterment of the project they
are used in.
Investment in research and development will help Tesco to better compete with its peer group and
thereby helping it to attain a market leading position.
Strategic acquisitions

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Tesco Corporation
SWOT Analysis

The company has invested substantially in strategic acquisitions in order to enhance its processes.
For instance, in May 2014, the company purchased all of the operating assets of Tech Field Services,
LLC (TFS) for approximately $6.4 million. The acquired assets included four top drive rental units,
parts inventory, and various administrative assets. In November 2013, Tesco announced the
completion of transaction to acquire certain intellectual property assets of Custom Pipe Handlers
Canada Inc. The acquired catwalk models offer customers the ability to service drilling rigs utilizing
unique rig mechanization technology.
The company by its acquisitions gets access to greater level of technology and also saves the time
to build the technology from scratch. The company also automatically gets access to the pre-build
customer base of the acquired company, which can be also be pitched for Tescos other products
that might be useful for the customers existing business.

Threats

Uncertain global economic environment

The current global economic and political environment may negatively impact industry fundamentals,
and the related decrease in demand for drilling rigs could cause a decline in the oil and natural gas
industry. Reduced demand for oil and natural gas generally results in lower oil and natural gas prices
and continued slowdown in the economy could impact the economics of planned drilling projects,
resulting in curtailment, reduction, delay, or postponement for an indeterminate period of time.
Furthermore, volatility in oil and natural gas prices caused by political turmoil, could negatively impact
the world economy and the oil and gas industry. Decline in oil and gas prices and continued variations
for demand of oil and gas will have negative impact on the companys business operations and
profitability. During the second half of 2014, the crude oil prices reduced drastically which adversely
affected the companys business operations. Commodity prices have continued to decline in early
2015 and the company foresees the same trend in the near future. Any long-term reduction in oil
and natural gas prices will reduce oil and natural gas drilling and production activity and result in a
corresponding decline in the demand for products and services, which could adversely affect the
demand for sales, rentals, or services of Tescos top drive units and for its tubular services business.
Seasonality
The company is exposed to the risk of seasonality that is seasonal cycles associated with winter-only,
summer-only, dry-season, or regulatory-based access to drilling locations. The most significant of
these occur in Canada and Russia where conventionally the first and fourth calendar quarters of
each year are the more demanding as the contractor fleet can access drilling locations that are only
accessible when frozen. As of December 31, 2014, approximately 15% of the companys top drive
rental fleet operated in Canada and Russia.

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SWOT Analysis

In certain Asia Pacific and South American regions, the company is exposed to a decline in performing
its activities due to seasonal rains. In addition to this, seasonal variations in the demand for
hydrocarbons and accessibility of certain drilling locations in North America can affect Tescos
business as its activity follows the active drilling rig count reasonably closely. Seasonal fluctuations
also create an uncertainty for the company for pre-signed contracts and for venturing into new
developing projects.
Risks associated with the oil and natural gas industry
Certain equipment and processes used by Tesco and other companies in the oil and natural gas
industry can pose substantial operational risk, especially during the delivery of oilfield services in
hostile environments, such as exploration, development, and production applications. An accident
or a failure of a product or process could cause personal injury, loss of life, damage to property,
equipment, or the environment, and suspension of operations. Tescos insurance may not protect
it against liability for some kinds of events, including events involving pollution, or losses resulting
from business interruption.
Moreover, in future the company may not be able to maintain insurance at levels of risk coverage
or policy limits that the company deem adequate. Substantial claims made under Tescos policies
could cause its premiums to increase. Any future damages caused by the companys products that
are not covered by insurance, or are in excess of policy limits subjected to substantial deductibles,
could adversely affect Tescos financial condition, operations, and cash flows.
As a result, there will be reduction in exploration, development and production activities which will
have an impact on the companys business and profitability.

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Tesco Corporation
Top Competitors

TOP COMPETITORS

The following companies are the major competitors of Tesco Corporation

Baker Hughes Incorporated

Franks International
Canrig Drilling Technology Ltd.
National OilWell Varco, Inc.
Weatherford International Ltd.
Oil States International, Inc.
Newpark Resources, Inc.
FMC Technologies, Inc.

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Tesco Corporation
Company View

COMPANY VIEW
A statement by Fernando R. Assing, the President and Chief Executive Officer at Tesco, is given
below. The statement has been taken from the companys FY2014 annual report.
Dear Fellow Shareholders:
Allow me to begin by sharing our excitement about the future of the Company despite our complex
market landscape. Before we get into that, however, I would like to introduce myself as the new
Chief Executive Officer of Tesco Corporation. Since my arrival in 2009, then as the Senior Vice
President of Marketing and Business Development, I have been passionate about Tescos success.
In keeping with those sentiments, I embraced every opportunity to take the Company forward with
each added responsibility that was entrusted to me. Beginning in July 2011, one of the challenges
that I faced as Tescos Chief Operating Officer, about which I am most passionate, was the promotion
of our Quality Health, Safety & Environment (QHSE) program and execution excellence as foundations
to build a consistently competitive and profitable business.
My appointment to CEO nearly four years later was immediately confronted with volatile market
conditions. It is my belief that the current market is now presenting us with the opportunity to
differentiate ourselves and to deliver where others may find it difficult. I welcomed the challenges
that I faced upon my arrival at Tesco six years ago during the 2009 down cycle and feel more
confident now in our ability to execute our strategy in the current weak energy environment and to
use this opportunity to reinvent and reposition ourselves to take maximum advantage of the next
market up swing. As a highly differentiated company, Tesco seeks to improve the efficiencies of the
drilling process by providing a range of rig mechanization products, tubular services, after market
services and innovative technologies to an expanding base of customers.
LOOKING BACK AT 2014
You may be asking, How are we going to get there? In May 2014, Tesco formulated and started
implementing a Five-Year Strategy to achieve significant growth and shareholder return by the end
of this decade. This strategy was designed to provide an internal road map to our employees and
also allow us to share our vision with the investor community and our clients. It was the first time
that we published and shared our strategy with the market. While we believe that the fundamental
long-term goals and opportunities defined in that strategy are achievable, we are working hard to
adapt our vision to the realities that surround us today. We plan to continue to execute on our strategic
objectives at a pace that strikes the best balance between achieving such long-term goals and the
short-term needs required to deal with the market of today.
THE PATH FORWARD
I would like to share with you some of the highlights of the Five-Year Strategy that we introduced in
2014.

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Company View

We defined four strategic implementations:

- The expansion of our Tubular Services business, particularly offshore
- The expansion of our After Market Services to service third party equipment
- The incorporation of additional pipe handling products into our manufacturing platform
- The adaptation of our Top Drives rental business to the market conditions and incorporation of
additional pipe handling products into our global platform
We put in place a $100 million, two-year share repurchase program and repurchased $27 million of
common stock during the third and fourth quarters of 2014.
We put in place a quarterly dividend program and paid $6 million in 2014.
We proposed a total of $650 million in strategic capital investments during the five-year period
through 2019. This included a budget of $250 million in capital expenditures to fuel organic growth,
$250 million in acquisitions and the remainder in enhancing total shareholder return.
OUR OUTLOOK FOR 2015
As I write this message, the current North American rig count has declined at an average of 66 rigs
per week for the past 18 weeks and is now at approximately 1100 rigs, down 50% from its peak in
November 2014. The rig count decline is in line with the drop in crude oil prices that began around
the same time.
While it remains uncertain how long this down cycle will continue, we are responding to the current
economic conditions with two simple but critical actions: first and foremost, we are making cash
generation and cash preservation our number one priority. Secondly, we are aggressively adjusting
our cost structure and improving our operational efficiencies to ensure that we remain competitive
and retain our ability to serve our customers in this uncertain market.
In parallel with these actions, we will continue our commitment to making QHSE activities an integral
part of operations at all levels. Onshore, we will focus on the regions in which we have a strong
presence and infrastructure by adding scope and services that leverage our current platform and
offerings. In addition, we will continue our aggressive focus on offshore expansion particularly for
Tubular Services. Our current infrastructure in most regions has the capacity to handle service
expansion without the need for additional material capital expenditures. The required global footprint
is already largely in place.
We will also accelerate the use of technology to differentiate ourselves and, as such, we will continue
to support significant investments in Research and Engineering (R&E). We have a strong R&E
development pipeline and are excited about the positive impact those technologies, including new

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Company View

pipe handling, rig mechanization products and drilling automation, will have on our company in the
near future.
Lastly, we will utilize our strong balance sheet, our cash generation capabilities and our access to
credit to our advantage. This, together with our employees passion, commitment and determination,
will provide the strong foundation needed to set us apart from our peers during these difficult times.
In summary, we are rapidly and decisively taking action to successfully navigate the current
environment and to position ourselves for the long haul. I see significant opportunities in this downturn
that will allow highly differentiated companies like Tesco to provide innovative solutions to an industry
that is being forced to rethink the way in which it operates. Now may be a good time to remember
that, Tesco seeks to change the way in which wells are drilled.

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Tesco Corporation
Locations and Subsidiaries

LOCATIONS AND SUBSIDIARIES

Head Office
Tesco Corporation
3993 West Sam Houston Parkway North
Suite 100
Houston
Texas 77043
USA
P:1 713 359 7000
F:1 713 359 7001
http://www.tescocorp.com

Other Locations and Subsidiaries

Tesco Louisiana
3209 Moss Street
Lafayette
Louisiana 70507
USA

Tesco Texas
601 N. 19th Street
Corpus Christi
Texas 78408
USA

Tesco Oklahoma
3400 S. Purdue
Oklahoma City
Oklahoma 73179
USA

Tesco Pennsylvania
2170 Barr Slope Road
Dixonville
Pennsylvania 15734
USA

Tesco Wyoming
20 Wilkins Peak Drive
Rock Springs
Wyoming 82901
USA

Tesco Canada
5616 - 80th Avenue South East
Calgary
Alberta T2C 4N5
CAN

TESCO Corporation (UK) Ltd

Unit 3 Blackness Industrial Center
Blackness Road
Altens Industrial Estate
Aberdeen AB12 3LH
Scotland
GBR

Tesco Argentina
J.J. Lastra No 4560
C.P. 8300
Neuquen Capital
ARG

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Tesco Corporation
Locations and Subsidiaries

Tesco Romania
20 Tamasi Road
Ilfov District
Buftea
ROM

Tesco Corporation
MarketLine

Tesco Russian Federation

23 Building 1, 7th Floor
Pervaya Tverskaya-Yamskaya Street
Moscow 125047
RUS

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