Tesco Profile

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COMPANY PROFILE

Tesco Corporation

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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

Tesco Corporation Page 2© MarketLine

Tesco CorporationTABLE OF CONTENTS

COMPANY OVERVIEW

Tesco Corporation (Tesco or ‘the company’) designs, manufactures, sells, operates, and servicesoilfield equipment used in drilling oil, gas, and geothermal wells. The company operates in LatinAmerica, Europe, Russia, the Middle East and Africa, and Asia Pacific, as well as in the US andCanada. 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 millionin 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

Tesco CorporationHead Office3993 West Sam Houston Parkway NorthSuite 100HoustonTexas 77043USA

1 713 359 7000Phone

1 713 359 7001Fax

http://www.tescocorp.comWeb Address

542.9Revenue / turnover(USD Mn)

DecemberFinancial Year End

2,264Employees

TESONASDAQ NationalMarket Ticker


Tesco CorporationCompany Overview

BUSINESS DESCRIPTION

Tesco Corporation (Tesco or ‘the company’) is engaged in the designing, manufacturing, and servicedelivery of technology-based solutions for the upstream energy industry. The product and serviceofferings of the company include equipment sales and services to drilling contractors and oil andgas 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 andengineering.

The top drive business segment comprises top drive sales, top drive rentals, and after-market salesand service. The segment sells equipment and provides services to drilling contractors and oil andgas operating companies throughout the world. It primarily manufactures top drives that are usedin 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 drillingrigs. Its rental fleet comprises hydraulically powered top drive systems, with power ratings of 475 to1,205 horsepower and load path ratings of 150 to 650 tons, each equipped with its own independentdiesel engine driven hydraulic power unit. Along with sale of top drives, the company also providesinstallations and support services, including training. Tesco’s top drive rental fleet, which comprised135 units in FY2014, is deployed around the world.

Further, the company also offers for sale a range of portable and permanently installed top driveproducts that includes both hydraulically and electrically-powered machines capable of delivering400 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 magnetalternating current (AC), and induction AC technology. It uses AC induction technology and lategeneration power electronics in its smaller horsepower systems, such as the EMI machines (EMItop drive units have 150 and 250 ton load path configurations). In addition, Tesco has developedEXI system for a high performance compact electric top drive system, used in modern fast movingrigs frequently used in pad drilling operations. The EXI system has a load path rating of 350 to 400tons and generates 600 horsepower at the quill. Tesco’s ESI is a new model of its current EXISystem, which has a load path rating of 500 to 750 tons and generates 1,350 horsepower at thequill. Further, the HXI is a new generation of the company’s current hydraulic HMI system that hasa load path rating of 150 to 250 tons and has a 700 horsepower self-contained diesel-driven hydraulicpower unit.

The company’s tubular services business segment includes proprietary offerings, conventionalcasing, and tubing running services for both onshore and offshore markets. The proprietary serviceofferings use certain components of its casing drilling technology, in particular the patented casingdrive system (CDS), to provide a safe and automated method for running casing. CDS is a tool which


Tesco CorporationBusiness Description

facilitates running and reaming casing into a well bore on any rig equipped with a top drive. Tescoalso offers installation service of deep water smart well completion equipment using its multiplecontrol line running system (MCLRS) proprietary and patented technology.

The company also offers a rotating Side Entry Swivel Sub (SESS), a tool which works in combinationwith CDS tool to allow rotation and reciprocation of the casing string during cementing operations.

Tesco’s conventional service offerings provide equipment and personnel for the installation of tubingand casing, including power tongs, pick-up/lay-down units, torque monitoring services, connectiontesting services, and power swivels for new well construction and in work-over and re-entry operations.

The research and engineering business segment comprises Tesco’s internal research anddevelopment activities related to its proprietary technologies in tubular services, casing drilling, andtop drive model development. For FY2014, the company held patents and patent applications in theUS, Canada, Europe, and various other countries. The current patent portfolio included 130 issuedpatents, comprising 56 US and 74 foreign patents, and 107 pending patent applications, comprising42 US and 65 foreign patent applications.


Tesco CorporationBusiness Description

HISTORY

Tesco Corporation (Tesco or ‘the company’) was established on 1993 through the amalgamation ofShelte Oil and Gas Coexco Petroleum, Forewest Industries, and Tesco Corporation. The newcompany continued under the name Tesco Corporation. Tesco acquired patent rights to the casingdrilling process in 1995.

Tesco acquired Bo Gray Casing and A&M Tubular Maintenance, a traditional casing and tubingcompany, in 2002.Tesco entered into a cooperative agreement with Hughes Christensen, a divisionof Baker Hughes, to provide wellsite delivery of the casing drilling bit, in 2004. In the same year, thecompany entered the offshore drilling market and conducted an offshore casing running project inthe Gulf of Mexico.

In 2005, Tesco acquired the assets of Latco International, a Southeast Asian operator, and expandedits casing services presence in South Asia. In the same year, Tesco acquired Cheyenne Servicesand Tong Specialty. Both companies provide tubular running and related services offshore in theUS Gulf of Mexico and onshore in Texas and Louisiana. Tesco disposed its four drilling rigs toTurnkey E&P, in 2005 end.

During 2006, Tesco decided to transition its corporate administrative functions from Calgary inAlberta, Canada to Houston in Texas and to officially designate Houston, Texas as the company'scorporate headquarters.

In 2007, the company used its proprietary casing drilling technology to drill the first ever offshorewell for an operator in the Norwegian sector of the North Sea, utilizing the combination of industrystandard rotary steerable systems. In the same year, Tesco entered into an equipment placementagreement with ENSCO Offshore to provide its proprietary casing drive system onto ENSCO'soffshore rigs.

Further in 2007, Frank’s International (Frank’s) sued Tesco alleging that Tesco's casing drive systemhad infringed two patents held by Frank's. In the same year, Tesco entered into a marketingagreement with Schlumberger, wherein it identified opportunities to create value for customers bycombining the use of their respective proprietary drilling technologies.

In 2008, Tesco announced it plans of delisting from the Toronto Stock Exchange. In 2009, thecompany settled the patent-infringement lawsuit with Frank's. Pursuant to the settlement, Tescopaid $1.83 million to Frank's and $400,000 to a third party from whom Tesco had a license, andFrank's requested the court to dismiss the lawsuit with prejudice.

In 2011, Tesco acquired Premiere Casing Services, a tubular services company based in Egypt. Inthe following year, Tesco signed a definitive agreement to sell the casing drilling segment toSchlumberger for $45 million in cash. In addition to this agreement, Schlumberger and Tesco entereda long-term supplier agreement in which Tesco will sell and lease its casing drive system equipment


Tesco CorporationHistory

to Schlumberger to support casing drilling projects. Also in 2011, the company sold all of the assetsof the casing drilling segment to Schlumberger Oilfield Holdings and Schlumberger TechnologyCorporation.

During 2013, Tesco completed the testing phase of two new products, the HXI 150 ton top drive andHydraulic Compact Casing Drive System (HCCDS). In the same year, Tesco acquired automatedcatwalk 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) wouldacquire the assets of TFS and would incorporate the TFS business into its US after-market salesand service operations.

Note: no relevant news were published at the time of profiling the company.


Tesco CorporationHistory

KEY EMPLOYEES

CompensationBoardJob TitleName

2615231 USDExecutive BoardPresident and Chief ExecutiveOfficer

Fernando R. Assing

333940 USDNon Executive BoardChairman of the Board of DirectorsMichael W. Sutherlin

275813 USDNon Executive BoardDirectorJohn P. Dielwart

207870 USDNon Executive BoardDirectorFred J. Dyment

200870 USDNon Executive BoardDirectorGary L. Kott

187870 USDNon Executive BoardDirectorR. Vance Milligan

259313 USDNon Executive BoardDirectorElijio V. Serrano

1432354 USDSenior ManagementSenior Vice President and ChiefFinancial Officer

Christopher L. Boone

Senior ManagementVice President and PrincipalAccounting Officer

Thomas B Sloan Jr.

417366 USDSenior ManagementVice President, Products andGeneral Manager, TESCOManufacturing Facility

Darko Ulakovic

Senior ManagementAssistant Corporate Secretary andAssociate General Counsel

Brian T. Kelly


Tesco CorporationKey Employees

KEY EMPLOYEE BIOGRAPHIES

Fernando R. Assing

Board: Executive BoardJob Title: President and Chief Executive OfficerSince: 2014Age: 49

Mr. Assing has been the President and Chief Executive Office at Tesco since 2014. He has been aDirector since at Tesco since 2014. Mr. Assing served as an Executive Vice President and the ChiefOperating Officer at Tesco since 2013. He has served as the Senior Vice President of Marketingand Business Development at Tesco from 2009 to 2011. Prior to joining Tesco, Mr. Assing held invarious global and regional positions within the integrated projects management division atSchlumberger from 1997 to 2009. Prior to this, he worked in various technical and project managementroles at Technip from 1991 to 1997.

Michael W. Sutherlin

Board: Non Executive BoardJob Title: Chairman of the Board of DirectorsSince: 2014Age: 68

Mr. Sutherlin has been the Chairman of the Board of Directors at Tesco since 2014. He serves asa Director at Tesco since 2012. Mr. Sutherlin worked as the President and Chief Executive Officerat 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 asthe President and Chief Operating Officer at Varco International. He is also a Director at PeabodyEnergy.

John P. Dielwart

Board: Non Executive BoardJob Title: DirectorSince: 2014Age: 62

Mr. Dielwart has been a Non-Executive Director at Tesco since 2014. He is also a member of theAudit and Compensation Committees. Previously, he was employed as the President or ChiefExecutive Officer at ARC Resources from 2001 until 2013. Mr. Dielwart currently serves as a Director


Tesco CorporationKey Employee Biographies

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

Fred J. Dyment


Mr. Dyment has been a Non-Executive Director at Tesco since 1996. He retired from Maxx Petroleumin 2001 after serving as the company’s President and Chief Executive Officer since 2000. Prior tothat, Mr. Dyment was the President and Chief Executive Officer at Ranger Oil. In 2007, he servedon 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, TransGlobeEnergy and is the Chairman at WesternZagros Resources.

Gary L. Kott


Mr. Kott has been a Non-Executive Director at Tesco since 2000. He retired from Global Marine in1998 after serving as that company’s Senior Vice President and Chief Financial Officer for two years.Prior to that, Mr. Kott served as the President at Global Marine’s principal operating subsidiary,Global Marine Drilling, for 17 years.

R. Vance Milligan


Mr. Milligan has been a Non-Executive Director at Tesco since 2006. He had been a practicinglawyer for more than 20 years at Bennett Jones, a Canadian national law firm. He serves as aDirector at Newalta and had served as a Director/Trustee at its predecessor entities since 1994.

Elijio V. Serrano

Board: Non Executive Board



Job Title: DirectorSince: 2014Age: 57

Mr. Serrano has been a Non-Executive Director at Tesco since 2014. He is also members of theAudit and Corporate Governance and Nominating Committees. Mr. Serrano is currently the SeniorVice President and Chief Financial Officer at TETRA technologies since 2012. Prior to this, he workedas the Chief Financial Officer at UniversalPegasus International, a global project management,engineering, and construction management company from 2009 to 2012. Previously, he wasassociated as the Chief Financial Officer and an Executive Vice President at Paradigm (formerlyParadigm Geophysical) which is a provider of enterprise software solutions to the oil and gas industryfrom 2006-2009.

Christopher L. Boone

Board: Senior ManagementJob Title: Senior Vice President and Chief Financial OfficerSince: 2014Age: 46

Mr. Boone has been the Senior Vice President and Chief Financial Officer at Tesco since 2014. Heworked as the Principal Accounting Officer at Tesco until February 2015. Prior to Tesco, Mr. Booneserved as a Vice President and the Chief Financial Officer at Lufkin Industries between 2008 and2013.

Thomas B Sloan Jr.

Board: Senior ManagementJob Title: Vice President and Principal Accounting OfficerSince: 2015Age: 48

Mr. Sloan has been the Vice President and Principal Accounting Officer at Tesco since 2015. Priorto this, he served as a Vice President and Corporate Controller at Tesco since 2014. Prior to joiningthe company, Mr. Sloan was a Vice President and Corporate Controller at Ocean Rig from 2012 to2013 and as the Regional Finance Manager from 2011 to 2012. He also worked as a Director atFinance and Administration ENSCO (formerly Pride International) from 2008 to 2011.

Darko Ulakovic

Board: Senior ManagementJob Title: Vice President, Products and General Manager, TESCO Manufacturing FacilitySince: 2014Age: 50



Mr. Ulakovic has been the Vice President of Products at Tesco and the General Manager of TESCOManufacturing Facility since 2014. He served as the Vice President of Manufacturing and the GeneralManager at TESCO Manufacturing Facility from 2012 to 2014. Prior to this, Mr. Ulakovic worked asa Director of Project Management in 2012. Prior to joining the company, he was employed at ComDev, a manufacturer of systems and subsystems for the aerospace industry, between 1996 and2011. Mr. Ulakovic worked as a Director of Project Management at Com Dev from 2006 to 2011.



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 servicesRepair services and parts salesCasing accessoriesTraining


Tesco CorporationMajor Products and Services

REVENUE ANALYSIS

Tesco Corporation

Tesco recorded revenues of $542.9 million during FY2014, an increase of 3.4% over FY2013. TheUS, 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 thetotal revenues during FY2014); tabular services (41.2%); and casing drilling (0.1%). The companydid 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 $57.5million 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 $37.0million 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 Americareached $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. Revenuesfrom Europe, Africa and the Middle East reached $58.4 million in FY2014, an increase of 17.7%over FY2013.


Tesco CorporationRevenue Analysis

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


Tesco CorporationRevenue Analysis

SWOT ANALYSIS

Tesco Corporation (Tesco or ‘the company’) designs, manufactures, sells, operates, and servicesoilfield 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 onany particular customer segment to generate revenues. However, the current uncertain globalmacroeconomic conditions could impact Tesco’s growth.

WeaknessesStrengths

Infringement claimsDiversified customer baseConcentrated operationsStrong product portfolio of the top drive

segmentRobust portfolio of patents and patentlicense agreements

ThreatsOpportunities

Uncertain global economic environmentInvestment in research and developmentSeasonalityStrategic acquisitionsRisks associated with the oil and naturalgas industry

Strengths

Diversified customer base

Tesco serves a diverse set of consumers. The customers for top drive sales and after-market salesand service primarily consist of drilling contractors, rig builders, equipment brokers, and also majorand independent oil and gas companies and national oil companies who own and manage their owntop drive systems. The company’s customers for its rental fleet include drilling contractors, majorand independent oil and gas companies, and national oil companies. Tesco’s tubular servicescustomers primarily consist of oil and natural gas operating companies, including major andindependent companies and national oil companies.

No single customer accounted for 10% or more of the company’s consolidated revenue in the yearsended December 31, 2014 and 2012. And, one customer accounted for approximately 10% of thecompany’s consolidated revenue during the year ended December 31, 2013. A diversified customerbase reduces the dependence on any particular customer segment to generate revenues.


Tesco CorporationSWOT Analysis

Strong product portfolio of the top drive segment

The company’s top drive segment sells equipment and provides services to drilling contractors andoil and natural gas operating companies throughout the world. Tesco provides top drive rentalservices on a day-rate basis for land and offshore drilling rigs, and also provides after-market salesto, and service for, its customers. The company primarily manufactures top drives that are used indrilling operations to rotate the drill string. Its top drives offer portability and flexibility, permittingdrilling companies to conduct top drive drilling for all or any portion of a well. Tesco offers for sale arange of portable and permanently installed top drive products that includes both hydraulically andelectrically powered machines capable of delivering 400 to 1,350 horsepower, with a rated liftingcapacity of 150 to 750 tons.

The company offers nine distinct model series of top drive systems, using hydraulic, permanentmagnet alternating current (AC), and induction AC technology. The company use AC inductiontechnology and late generation power electronics in its smaller horsepower systems, such as itsEMI machines, allowing the end user to specify its preferred power electronics and motor combinationwhich permits it to select components from a larger vendor base. The company has also developedits EXI system in response to market demands for a high performance compact electric top drivesystem, 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 thequill.

The company proactively understands the demand of its customers and provides model changesaccordingly. It helps the company in tackling with market competition and delivering services accordingto customer’s 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 patentpending technologies for certain innovations that that the company believes will have application toits core businesses.The company holds patents and patent applications in the US, Canada, Europe,and various other countries.Tesco’s current patent portfolio includes 130 issued patents, comprisedof 56 US and 74 foreign patents, and 107 pending patent applications, comprised of 42 US and 65foreign patent applications. The company holds patents for various specific aspects of the designof its portable top drive and related equipment. Tesco holds numerous patents related to theinstallation and utilization of certain accessories for casing for purposes of casing rotation. Variousother related methods and tools are patent protected as well.

The company has a vast portfolio of patented technologies which makes it lucrative for severalcompanies for their custom projects. Patents also make the company the only supplier of a particulartechnology which insures it strong pipeline of developing projects.

Weaknesses



Infringement claims

Historically, the company has been sued by its competitors such as Varco and Weatherford forviolating certain of their patents. The company’s ability to counteract and defend the infringementclaims matters a lot in avoiding monetary damages. If Tesco is not successful in defending itself inone or more of these matters, it may have a material adverse effect on the company’s business.

In addition, if Tesco in the future is subject to other infringement claims and if any of its products arefound to be infringing, then the consolidated financial results of the company can be adverselyaffected.

Concentrated operations

The company’s operations are concentrated majorly in North America. For instance, the US andCanada together contributed more than 50% of the total revenues of Tesco in FY2014. This placesthe company in a disadvantageous position as compared to its peers who have geographicallydiversified operations.

Concentrated operation could restrict the company from capitalizing on the huge potential of otherregions. Tesco’s high geographic concentration in North America region increases its business riskas it makes the company highly vulnerable to region’s economic downturns.

Opportunities

Investment in research and development

As a technology-driven company, Tesco continuously invests significantly in research anddevelopment activities, primarily related to its proprietary technologies in tubular services and topdrive model development. The company’s research and development cost was $9.5 million, $8.6million, and $10.5 million for the years ended 2014, 2013, and 2012, respectively.Tesco continuouslyinvests in the development, commercialization, and enhancements of its proprietary technologies.

Being a technology oriented company continuous innovation is required to overcome the competitionand sustain in the market. By investing fair amounts in its research and development program thecompany gets the opportunity of continuous innovations in technological field. It also provides anopportunity to the company to enhance its existing technologies for betterment of the project theyare used in.

Investment in research and development will help Tesco to better compete with its peer group andthereby helping it to attain a market leading position.

Strategic acquisitions



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 thecompletion of transaction to acquire certain intellectual property assets of Custom Pipe HandlersCanada Inc. The acquired catwalk models offer customers the ability to service drilling rigs utilizingunique rig mechanization technology.

The company by its acquisitions gets access to greater level of technology and also saves the timeto build the technology from scratch. The company also automatically gets access to the pre-buildcustomer base of the acquired company, which can be also be pitched for Tesco’s other productsthat might be useful for the customer’s 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 gasindustry. Reduced demand for oil and natural gas generally results in lower oil and natural gas pricesand 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 impactthe world economy and the oil and gas industry. Decline in oil and gas prices and continued variationsfor demand of oil and gas will have negative impact on the company’s business operations andprofitability. During the second half of 2014, the crude oil prices reduced drastically which adverselyaffected the company’s business operations. Commodity prices have continued to decline in early2015 and the company foresees the same trend in the near future. Any long-term reduction in oiland natural gas prices will reduce oil and natural gas drilling and production activity and result in acorresponding decline in the demand for products and services, which could adversely affect thedemand for sales, rentals, or services of Tesco’s 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 ofthese occur in Canada and Russia where conventionally the first and fourth calendar quarters ofeach year are the more demanding as the contractor fleet can access drilling locations that are onlyaccessible when frozen. As of December 31, 2014, approximately 15% of the company’s top driverental fleet operated in Canada and Russia.



In certain Asia Pacific and South American regions, the company is exposed to a decline in performingits activities due to seasonal rains. In addition to this, seasonal variations in the demand forhydrocarbons and accessibility of certain drilling locations in North America can affect Tesco’sbusiness as its activity follows the active drilling rig count reasonably closely. Seasonal fluctuationsalso create an uncertainty for the company for pre-signed contracts and for venturing into newdeveloping 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 gasindustry can pose substantial operational risk, especially during the delivery of oilfield services inhostile environments, such as exploration, development, and production applications. An accidentor 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. Tesco’s insurance may not protectit against liability for some kinds of events, including events involving pollution, or losses resultingfrom business interruption.

Moreover, in future the company may not be able to maintain insurance at levels of risk coverageor policy limits that the company deem adequate. Substantial claims made under Tesco’s policiescould cause its premiums to increase. Any future damages caused by the company’s products thatare not covered by insurance, or are in excess of policy limits subjected to substantial deductibles,could adversely affect Tesco’s financial condition, operations, and cash flows.

As a result, there will be reduction in exploration, development and production activities which willhave an impact on the company’s business and profitability.



TOP COMPETITORS

The following companies are the major competitors of Tesco Corporation

Baker Hughes IncorporatedFrank’s InternationalCanrig Drilling Technology Ltd.National OilWell Varco, Inc.Weatherford International Ltd.Oil States International, Inc.Newpark Resources, Inc.FMC Technologies, Inc.


Tesco CorporationTop Competitors

COMPANY VIEW

A statement by Fernando R. Assing, the President and Chief Executive Officer at Tesco, is givenbelow. The statement has been taken from the company’s FY2014 annual report.

Dear Fellow Shareholders:

Allow me to begin by sharing our excitement about the future of the Company despite our complexmarket landscape. Before we get into that, however, I would like to introduce myself as the newChief Executive Officer of Tesco Corporation. Since my arrival in 2009, then as the Senior VicePresident of Marketing and Business Development, I have been passionate about Tesco’s success.In keeping with those sentiments, I embraced every opportunity to take the Company forward witheach added responsibility that was entrusted to me. Beginning in July 2011, one of the challengesthat I faced as Tesco’s Chief Operating Officer, about which I am most passionate, was the promotionof our Quality Health, Safety & Environment (QHSE) program and execution excellence as foundationsto build a consistently competitive and profitable business.

My appointment to CEO nearly four years later was immediately confronted with volatile marketconditions. It is my belief that the current market is now presenting us with the opportunity todifferentiate ourselves and to deliver where others may find it difficult. I welcomed the challengesthat I faced upon my arrival at Tesco six years ago during the 2009 down cycle and feel moreconfident now in our ability to execute our strategy in the current weak energy environment and touse this opportunity to reinvent and reposition ourselves to take maximum advantage of the nextmarket up swing. As a highly differentiated company, Tesco seeks to improve the efficiencies of thedrilling process by providing a range of rig mechanization products, tubular services, after marketservices 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 startedimplementing a Five-Year Strategy to achieve significant growth and shareholder return by the endof this decade. This strategy was designed to provide an internal road map to our employees andalso allow us to share our vision with the investor community and our clients. It was the first timethat we published and shared our strategy with the market. While we believe that the fundamentallong-term goals and opportunities defined in that strategy are achievable, we are working hard toadapt our vision to the realities that surround us today.We plan to continue to execute on our strategicobjectives at a pace that strikes the best balance between achieving such long-term goals and theshort-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 in2014.


Tesco CorporationCompany 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 ofadditional pipe handling products into our global platform

We put in place a $100 million, two-year share repurchase program and repurchased $27 million ofcommon 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 periodthrough 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 rigsper week for the past 18 weeks and is now at approximately 1100 rigs, down 50% from its peak inNovember 2014. The rig count decline is in line with the drop in crude oil prices that began aroundthe same time.

While it remains uncertain how long this down cycle will continue, we are responding to the currenteconomic conditions with two simple but critical actions: first and foremost, we are making cashgeneration and cash preservation our number one priority. Secondly, we are aggressively adjustingour cost structure and improving our operational efficiencies to ensure that we remain competitiveand 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 integralpart of operations at all levels. Onshore, we will focus on the regions in which we have a strongpresence and infrastructure by adding scope and services that leverage our current platform andofferings. In addition, we will continue our aggressive focus on offshore expansion particularly forTubular Services. Our current infrastructure in most regions has the capacity to handle serviceexpansion without the need for additional material capital expenditures.The required global footprintis already largely in place.

We will also accelerate the use of technology to differentiate ourselves and, as such, we will continueto support significant investments in Research and Engineering (R&E). We have a strong R&Edevelopment pipeline and are excited about the positive impact those technologies, including new



pipe handling, rig mechanization products and drilling automation, will have on our company in thenear future.

Lastly, we will utilize our strong balance sheet, our cash generation capabilities and our access tocredit 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 currentenvironment and to position ourselves for the long haul. I see significant opportunities in this downturnthat will allow highly differentiated companies like Tesco to provide innovative solutions to an industrythat is being forced to rethink the way in which it operates. Now may be a good time to rememberthat, “Tesco seeks to change the way in which wells are drilled”.



LOCATIONS AND SUBSIDIARIESHead Office

Tesco Corporation3993 West Sam Houston Parkway NorthSuite 100HoustonTexas 77043USAP:1 713 359 7000F:1 713 359 7001http://www.tescocorp.com

Other Locations and Subsidiaries

Tesco TexasTesco Louisiana601 N. 19th Street3209 Moss StreetCorpus ChristiLafayetteTexas 78408Louisiana 70507USAUSA

Tesco PennsylvaniaTesco Oklahoma2170 Barr Slope Road3400 S. PurdueDixonvilleOklahoma CityPennsylvania 15734Oklahoma 73179USAUSA

Tesco CanadaTesco Wyoming5616 - 80th Avenue South East20 Wilkins Peak DriveCalgaryRock SpringsAlberta T2C 4N5Wyoming 82901CANUSA

Tesco ArgentinaTESCO Corporation (UK) LtdJ.J. Lastra No 4560Unit 3 Blackness Industrial CenterC.P. 8300Blackness RoadNeuquen CapitalAltens Industrial EstateARGAberdeen AB12 3LH

ScotlandGBR


Tesco CorporationLocations and Subsidiaries

Tesco Russian FederationTesco Romania23 Building 1, 7th Floor20 Tamasi RoadPervaya Tverskaya-Yamskaya StreetIlfov DistrictMoscow 125047BufteaRUSROM


Tesco CorporationLocations and Subsidiaries

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