ModuSpec USA, Inc. Page 1 of 10 Order No. US1907.1

FAT REPORT

ModuSpec USA, Inc., 17171 Park Row, Suite 120, Houston, Texas 77084

Project No. : US1907.1 Date : 22 - 25 April 2009 Owner : American Auger Rig name :

Equipment : Rack & Pinion Drilling Rig

Location : Ashland, Ohio

Client : Shell Manufacturer : American Auger

Contact person : Don Sitton Contact person

:

Tel. : Tel. : Fax : Fax : E-mail : E-mail : Surveyor : Larry Jones Travel time to job : Travel time from

job :

Inspection : Meeting date : Attendants: Larry Jones, Moduspec Distribution:

The information in this report is confidential and intended only for the individuals named above.

Purpose of visit: We were requested to observe the FAT testing of one rack and pinion drilling rig in Ashland, Ohio.

Equipment tag plate:

Test results: Upon arrival at the location, we met with American Auger and Shell to discuss the test procedure. There was no procedure document provided. An Excel form was provided with the expected readings and settings to be observed. We were able to observe each of the required readings, but there were delays between each portion of the test as computer programming was changed or pressure control valves were adjusted. At no time were we able to observe all of the listed items without changes to equipment or computer programs being made. It is our opinion that the testing should be rescheduled when all adjustments to the equipment and program are completed. There should be a complete written test procedure that shows each of the tests to be performed and the expected results. It should be possible to observe the entire test procedure without interruption for adjustments to show the equipment can operate as required.

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FAT testing was started 24 April 2009 at 11:00 a.m. During the FAT portion of our visit, the following items were checked and the results were found to be acceptable:

Engine oil pressure idle - A – 35 psi; B – 35 psi; 2,100 rpm - A – 75 psi; B 75 psi Pump rotation – CCW Engine motor speed low idle A – 830 rpm; b – 830 rpm Engine motor speed high idle A – 2,100 rpm; B – 2,100 rpm Verify operation of engine E-stop (OK) Check counter balance valves on drill trailer jacks, 4,000 psi Check counter balance valves on drill trailer lift cylinders, 3,000 psi (holding) Check time it takes to raise derrick, 30 min Confirm when raising that all hydraulic tank labels are accurate (confirmed) Check time to shuttle wrench out (3 seconds) Check time to shuttle wrench in (3 seconds) Check time required to elevate wrench down (7.5 seconds) Check time required to elevate wrench up (6.5 seconds) Check time required to close wrench clamps (3.5 seconds) Check time required to open wrench clamps (2.5 seconds) Check time required to close fixed clamps (3.5 seconds) Check time required to open fixed clamps (2.5 seconds) Check time required to rotate break-out cylinder in break-out (4 seconds) Check time required to rotate break-out cylinder in break-out (4 seconds) Check time required to rotate break-out cylinder in break-out (4 seconds) Check time required to rotate break-out cylinder in make-up (3 seconds) Confirm proper operation of TJC (grease dispensed) Verify vertical travel of wrench assembly (24”) Time required opening pipe arrestor (3 seconds) Time required closing pipe arrestor (3 seconds) Check that charge settings on the pumps installed match the hydraulic schematic

(OK) Check carriage shift pressure in fourth gear; unable to check when the pull reached 75,000 lbs the carriage shifted rapidly to first gear causing a pressure spike of

456,900 lbs Check carriage shift pressure in third gear; unable to check Check carriage shift pressure in second gear; unable to check Check pressure reducing relief valve for supercharge circuit on rotary (OK) Check pressure reducing relief valve for pilot circuit (OK) Ensure that 16 psi indicators are installed in each tank filter (OK) Ensure that 35 psi indicators are installed in each charge filter (OK) Ensure that 44 psi indicators are installed in each high pressure filter (OK)

During our inspection, it was noted that the start-up and operating procedures required the operator to ensure the joystick was in the neutral position prior to proceeding with any operation. It would be advisable to have safeguards built into the program that would prevent the equipment from starting until all controls were in the neutral position. We were able to reach the anticipated 100,000 lbs push pressure with no problems noted. There was a fair amount of bow in the drill pipe during the push test. At the request of Don Sitton, we tested the pulling capability of the rig to 467,900 lbs. There was a concern that at no time during the FAT were we able to move from one item on the checklist to another without programming changes being required in the computer controls or hydraulic control pressure settings having to be changed to achieve the desired result. Overall each

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individual test of the equipment met the required specifications but there was no continuity achieved. It is our opinion that the equipment should be retested after American Auger completes the fine tuning of the system and finalizes the programming of the computer controls.

Outstanding issues: The pull test was interrupted when the top drive automatically downshifted from fourth gear to first gear during the pull test. When the load reached 75,000 lbs, the unit downshifted causing a load spike of 457,000 lbs. This caused the controls to lock out and required the pressure to be bled down to a lower pressure.

Appendices:

Report run on: Report made by: Larry Jones 28 April 2009

Signature:

Larry Jones

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PHOTOS

Push test at 88,000 lbs.

Push test at 100,000 lbs.

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Pull test anchor with drill pipe attached.

Pull test first gear 469,900 lbs.

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Pull test first gear 407,000 lbs.

Pull test first gear 278,000 lbs.

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Pipe handler lifting drill pipe.

Overpressure warning when unit downshifted at 456,000 lbs.

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Make-up torque 18,500 lbs.

Hoist tested to 5,000 lbs.

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High pressure hoses between pumps.

Doghouse and top drive.

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Certified scale during hoist test.

Anchor system for pull and push test.

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