Hunting Titan

© 2019 Hunting All Rights Reserved

Hunting TitanGuns, Hardware & Instruments


PAMPA AGENDA

Agenda

Safety Debriefing – Floyd Koch

Engineering Overview – Adam Dyess

Finance Overview – Nathan Bailey

Pampa Manufacturing Overview – Floyd Koch/Heath Bentley

Pampa Instruments Overview – Aaron Haynes

Tour – Floyd Koch, Heath Bentley, Aaron Haynes

Lunch and Q&A Session

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© 2019 Hunting All Rights Reserved 4

SAFETY

DEBRIEFING

Titan Division – Pampa Manufacturing

Visitors

Sign In/Out at front desk

Visitor badge must be worn in plain sight

Remain with your host at all times

Follow all safety rules

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No weapons permitted on premises

Cell phones & cameras are prohibited

Smoking is allowed in designated areas only

Be aware of forklift traffic


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Hunting Titan Goals

No Accidents

No Harm to people

No Damage to the environment


PPE

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The following MUST be worn at all times throughout our production areas:

Closed toe shoes

Safety glasses

Long pants


ENGINEERING


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Hunting Titan Technology

Engineering Agenda

Engineering Initiatives

Unconventional Product Offerings:

Perforating Hardware

ControlFire ®

Perforating Gun Systems

T-Set ®

Conventional Product Offerings:

Energetics

TCP / Slickline

Autonomous Technology

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Engineering Initiatives

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Support Unconventional Horizontal Well Completions

Majority of wells completed using horizontal stage-frac methods

Increase market share: 410K short guns, 460K switches and ~2.9 million charges used every month

Focus technology on innovative perforating gun systems, perforating instruments and energetics to improve performance, reliability, efficiency and cost

Increase International Presence

Shale plays (Argentina, Australia and China)

Complete Plug and Abandonment (P&A) portfolio

Complete Slickline portfolio

Broaden TCP offering to support existing systems

Technology Gaps (Current Engineering Projects)

High volume expendables: Detonators, Detonating Cord, Power Charges, Igniters, Plugs

Frac enhancing charges– competitor to “reactive charges”

Disposables (setting tools, subs, etc)

Plug alternatives for zonal isolation

Memory tools

Pipe Inspection

HPHT perforating systems

Non-Explosive Energetics

Section 2 Rock Charges

P&A/Decom tools

Frac Technologies

One Stop Shop

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T-Set Setting Tool

Perforating GR/CCL

Weight Bars

Quick Change Adapter

Roller Adapter

Cable Head

Top Sub

Tandem Adapter

Switch Systems

T-Set Firing Head

Shooting Power Supply

Perforating Guns

Plug Shoot Adapter

Release Tools

Plugs

Perforating Hardware

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Improved Hardware

Quick Change

Shorter, more robust stem

Uniform diameter

Top Sub

No pig tail or seal block needed

Disposable contacts

Plug Shoot Assembly

Combine plug shoot adapter, quick change and firing head into a single sub

Coated line (grease-less line) cable heads

Rochester and Camesa

Switch Market

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Electronic (Addressable) switch market has increased year after year due to safety benefits,

operational advantages and price reductions.

Hunting’s EBFire ® and ControlFire ® lines of select-fire switches lead the industry in both quality

and market share. Hunting estimates ~1.8 million ControlFire ® switches to be run in 2019,

representing >40% of the Electronic switch market.

Year Mechanical Switch Electronic/Addressable Switch

2012 94% 6%

2013 86% 14%

2014 73% 27%

2015 63% 37%

2016 61% 39%

2017 59% 41%

2018 48% 52%

Est. 2019 ~30% ~70%

ControlFire

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ControlFire ® Switch

1 in 250,000 failure rate with over 3 million runs

Electrically unarmed

Protection up to 500V

RF-Safe ControlFire ® Assembly (CFA)

Immune to RF from wellsite transmitters

Third party tested

ControlFire ® Cartridge (CFC)

Cartridge containing CFA and pressure bulkhead

RF-Safe assembly without wires

Available for H-1/H-2 Perforating Gun System, H-1 Plug Shoot Assembly, Spectra Cutters, T-Set, Top Fire and Ballistic Release Tool

Perforating Systems

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Service Company

Field Experience

Internal Training

Pricing

Manufacturer

Technology

Reliability

Volume

Hunting offers tiered perforating systems to meet all customers’ needs:

Tier 1: H-1 and H-2 Perforating Systems Best technology, highest price Utilizes ControlFire ® Cartridge and Hunting shaped charges True plug and play system with no wires, subs or ports

Tier 2: Conventional Bottom tier, lowest price guns Requires wiring in gun shop and field Requires sub and port plug maintenance

H-1 Perforating System

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Engineered out root cause of failures

No Wires

No Ports

No Tandems

Fool proof and efficient gun loading, arming and assembly

Reduced maintenance

Reduced footprint

Cost reduction initiative – automated manufacturing cell

H-2 Perforating System

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Utilizes unique charge puck

3 charges on same plane

Shortest gun on the market at 7.5”

75% shorter than conventional

Allows maximum guns per stage

Most efficient gun loading, arming and assembly

No wires, ports or tandems

No detonating cord

Reduced maintenance

Utilizes Shorty ControlFire ® Cartridge

T-Set Setting Tools

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Hunting provides a full line of setting tools and power charges for zonal isolation and

P&A in conventional and unconventional completions

T-Set One

One tool replaces four: #10, #20, 3-1/2”, and 3-5/8” compact

Self-bleeding system with redundant bleed off options

Power charge chamber is optimized to ensure correct installation

No oil required

Short and efficient design

Patented dampening system reduces violent actuation

Rebuild and redress is 50% faster

Energetics

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Unconventional

EQUAfrac™

Consistent hole

PerfECTA®

SDP, GH

Expendables

Detonators

Detonating Cord

PowerSet™ Power Charges & Ignitors

Boosters

Conventional

KnockOut™

Circulation charges for P&A

SPECTRA® Jet Cutters

P&A market

HYPERfectaTM

HTHP HSX charges

Rock Charges

Section 2 SDP

TCP / Slickline

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Tubing Conveyed Perforating

TCP Gun Systems

Hydraulic and Ball Drop Firing Head

Systems

Variable Time Delays

Gun to Gun Transfer Systems

Auto Gun Releases

Autonomous Technology

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Multiple efforts to automate the unconventional completion perforating process:

Autonomous Downhole Tools (Exxon)

Surface Shooting Power Supply


FINANCE

Hunting Titan – P&L Comparison 2018 and 2014

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(ooo's)

2018 2014 Variance %

Total Revenue $418,234 $354,927 17.8%


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Key Market Indicators

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2018 2014 Variance %

Total Horizontal Wells Drilled (US) 15,700 20,900 -24.9%

Total Horizontal Wells Completed (Est)12,717 19,855 -36.0%

Average Ft Drilled/Horizontal Well 14,790 11,534 28.2%

Average "in zone" feet drilled/well 6,790 3,534 92.2%

Average Stages Per Well 51 30 70.0%

Estimated Total Stages Completed 648,567 595,650 8.9%

Estimated Total Guns/Stage 8 6 33.3%

Estimated Total "Gun" Demand 5,188,536 3,573,900 45.2%


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Changes in Product Sales Mix

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(000's) % of Total % of Total

2018 Sales 2014 Sales Variance (%)

Perforating Sales * $132,926 31.8% $143,694 40.5% -7.5%

(Guns, Hardware, Setting Tools)

Energetics Sales $141,717 33.9% $115,119 32.4% 23.1%

(Shaped Charges, Power Charges, CFA's)

Instrument Sales $143,591 34.3% $96,114 27.1% 49.4%

(Switches, Measurement Tools, Detectors)

Total Sales $418,234 $354,927 17.8%

* - While the volume of perforating gun sales increased from 2014 to 2018,

there was a marked shift in the number of short guns sold versus higher priced

long guns, due to a 70% decrease in the number of vertical wells drilled.


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Key Market Changes - Perforating

Shift from Conventional Perforating to Unconventional Shale Perforating

Perforating activity in shale plays has steadily increased since mid 2016 due to the evolution in completions methods. Offshore and Conventional Perforating are still lagging. As offshore and conventional completions continue to rebound, average gun selling prices will increase with the increase in long gun usage.

Introduction of H-1

In 2016 Hunting Titan introduced the H-1 Gun System, which combines technologies from across Titan product lines to create the most efficient gun system in the industry. The industry is trending more toward plug and play systems which will increase sales of pull through products and improve operator service quality as a result of the integrated design. H-1 accounted for 29% of total gun sales in 2018 and 33% in Q1 2019.

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Key Market Changes - Energetics

Temporary Shortage of Critical Component

The rapid increase in demand for explosive powders (from both the oil and gas industry and the military) that began during the second half of 2016 combined with the increase in suppliers resulted in a temporary shortage of powders that effected the availability of certain Titan charges in 2018, but has been resolved in 2019 through dual sourcing. This will give additional revenue going forward for HMX Shaped Charges.

Introduction of New Shaped Charge Technology

The introduction “EquaFrac” consistent hole charges created a new class of shaped charge that saw significant growth from 2014 to 2018 (currently accounts for approximately 17% of all charge sales). This trend has continued to increase into 2019 accounting for greater than 25% of charge sales. Lower tier charge manufactures do not have these types of charges.

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Key Market Changes - Instruments

Market Shift to Addressable Technology

The proving and acceptance of the addressable switch (primarily through Titan’s “ControlFire”) increased the market share of this technology versus the traditional pressure switch from approximately 20% in 2014 to 70% in 2018.

Traditional Perforating tools will see an uptick as old equipment will need to be replaced.

New generation types of tools such as HRT-B/E (release tools – ballistics or electronic) are being required by operators to reduce risk / costs of tool-strings being stuck. This diversifies Instruments revenue stream.

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PAMPA

MANUFACTURING

DIVISION


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Pampa Manufacturing Portfolio

H-1 Guns

H-2 Guns

Conventional Guns

Economical Guns

Slick Guns and Low-Pressure Guns

RTG Guns

Hardware

Quick Change, Plug Shoot Assembly, Coated Line Cable Heads, etc.

Other Miscellaneous Equipment

Weight Bars, Junk Baskets, Dump Bailers, etc.


Pampa Manufacturing Facts

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Machine Count

Automated Production 2 Cells (4 CNC Lathes)

Manual Lathes 15

Manual Mills 4

CNC Lathes 53

VMC Mills 4

Lasers 4

Welding Machines 8

Saws 6

Head Count

Pampa 251

Perforating 184

Instruments 37

Admin 30


Property Boundaries

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Total Acreage 84.66

Total Sq. Ft. 3,687,824


Roofline

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Total Sq. Ft. 283,160

Titan Division – OKC Manufacturing

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Head Count

Perforating 29

Machine Count

Manual Lathes 1

CNC Mills 5

CNC Lathes 9

VMC Mills 4

Lasers 2

Saws 2

Titan Division – OKC Manufacturing

OKC Manufacturing Portfolio

H-1 Guns

Conventional Guns

RTG Guns

T-Set Assembly

TCP Assembly

Various Tool Modifications for Setting Tools

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Titan Division - Mexico

Mexico Manufacturing Portfolio

Conventional Blanks

Conventional Subs

Miscellaneous Hardware

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Head Count

Perforating 26

Titan Division - Mexico

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Machine Count

CNC Lathe 7

CNC Axis 4

CNC Mill 1

Manual Lathe 1

Met Mag

Inspection Unit

1

Copper Plating

Unit

1

Bead Blast Unit 1

Zinc Phosphate

Tank

1

Manganate

Phosphate Tank

1

Vertical CNC Milling

Machine with 4th axis

Slant bed Lathe

equipped with

back chuck and a

14.7” spindle hole


PAMPA INSTRUMENT

DIVISION

Product Offering

Perforating Tools

Gamma/Pressure/Temperature

Magnetic Orientating Tool

Single/Dual Fire

Shock Absorbers

Release Tools

Logging Tools

Bond Tools

Neutron Porosity

Audible Noise Survey

Free Point Tool

Temperature

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MWD/LWD

Industry Standard Gamma Sensor

Highly Integrated Detector

Focused Gamma Sensor

Customized Gamma Modules

Coil Tubing Gamma Sensor

Nuclear Detectors

Industry Standard Sizes Available

Open Hole Sizes

Spectral Sensors Available

Perforating Tool Offering

Gamma Perforators

Control the power applied to the detonators in the perforating guns.

Provide a depth correlation log

Single or dual fire for multiple zone shooting

Magnetic Orientating Tool (MOT)

Identifies dual string completions

Fiber optic control line avoidance

Shock Absorbers

Isolate the impact of a gun detonation

Protect capital equipment

New series that has size compatible electrical hardware

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Logging Tool Offering

Cement Bond Tools

Measures the strength and quality of the cement bond to the casing

Can identify channeling

Free Point Tools

Identifies the location tubing or casing is stuck

Neutron Porosity

Quantifies the pore space in the reservoir rock for accurate reserve calculation

Correlation

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MWD/LWD Sensors

Industry Standard MWD Detectors

Traditional scintillation detector

Fully customizable

Very mature, rugged and reliable product

HID Sensor

Patented scintillation detector mounting tech

Ultra rugged for the harshest environments

Fully customizable

Directional Sensors

Tight angular window

Tungsten shielded

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Down Hole Detectors

Patented shock and vibration dampening technology

High efficiency optical interface design

Improved pulse height resolution

200°C design available

Fully customizable to customer application.

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Industrial Detectors

Available in Q1 2020

High efficiency optical interface

Suitable for Industrial, medical, military, homeland security and research applications

Available customized

Industry standard connections

Global Distributor for Well-Sun Tools

Well Integrity

Imaging Caliper

Magnetic Thickness

Production Logging

Well Tractors

Fully Digital

Real Time/ Memory Operation

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FACILITY TOUR

At this time, please prepare for the facility tour.

Reminders

No cell phones

No cameras or other recording devices allowed

Should you want an image please ask

Watch for sharp metal shavings

Wear your Safety Glasses at all times

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Agenda

Safety Presentation – Pat Valentino

CFA/CFC Presentation – Mark Pederson

Energetics Presentation – Chris Sokolove

Product Line Overview

Capital Investment Projects

Energetics Engineering Focus

Posters

Production Building Presentation – Bill Collins & Kim Smith

QC Presentation – Aaron McGregor

Q&A Session

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SAFETY PRESENTATION

Safety Policies

Safety glasses are required

No RF emitting devices (such as cell phones), except main office and main office parking lot.

No smoking, except in designated areas

No photographs are allowed

In event of an emergency please follow your tour guide to the muster point location

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Muster Points

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Muster PointsEngineering Office

Security officeMain Office

Test Site

Production


Hunting Titan – Energetics


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Agenda

Product Line Overview

Capital Investment Projects

Energetics Engineering Focus

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Product Lines (Headcount – 180)

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Shaped Charges

• EQUAfrac™

• PerfECTA®

• KnockOut™

• H-LOK™ (H-1)

• H-2™

• HYPERfecta™

Power Charges

• PowerSet™

Jet Cutters

• SPECTRA®

• SPECTRA®Edge

Initiating Systems

• ControlFire® Assembly

• ControlFire® Cartridge

• Bi-Directional Boosters

Milford, TX Facility – 564 Acres

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Milford, TX Capital Investment Projects

Capital Investment Strategic Objectives

Increase manufacturing capacity and efficiency of Energetics core product line: Shaped Charges

Internalize manufacturing of high volume 3rd party items: Power Charges and Detonating Cord

• Improve margins

• Mitigate business risks by controlling critical system components

Expand supporting infrastructure to compliment product line growth• Update employee facilities: Training Room, Break Room

• Increase Quality Assurance footprint

• Increase warehouse and explosive storage capacity

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New Roofline – 34,000 sq. ft.

Shaped charge manufacturing was relocated to Milford, TX in 2004 with excess land for growth.

The new roofline provides sufficient infrastructure for continued future growth across the Energetics manufactured products.

After expansion, more than 50% of the property remains available

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Shaped Charge Manufacturing

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1. Weigh metal liner powder 2. High force pressing in die 3. Liner ready for charge assembly

1. Raw materials

Primer Explosive

Main Explosive

Charge Case

2. Weigh explosive into charge case and prepare

Liner

Loaded Charge Case

3. Press liner into charge case to assemble charge and compact explosive

4. Pressed charge 5. Glue and package

Shaped Charge Assembly Process

Liner Manufacturing Process

Shaped Charge Capacity and Efficiency

+40% total capacity expansion Prior to expansion, explosive press capacity

exceeded liner press capacity

10% increase in explosive press capacity

70% increase in liner press capacity

100% increase in part marking capacity

+25% efficiency increase (charges/man hour) New, more efficient equipment designs

Automate non-critical steps

One high efficiency model production bay

Updates to all production bays with elements of the high efficiency model

New processes are scalable with headcount as market demands

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Automated

Case Cart

High Speed

Inkjet Printing

Charge Case

Singulator

High Efficiency Production Bay

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1. Automated cart to load

charge cases onto conveyor

2. Automated explosive

weigh system

3. Dual explosive

presses with shuttle system

to assist operator

4. Automated adhesive station and robotic tray

packaging

Detonating Cord Facility

Capacity to support 40% market share

If market increases, the facility can be expanded with relatively small capital investment to capture 55% market share

The facility will be operational 2Q 2020 and require 7 headcount

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Explosive Slurry Mixing

Braiding and DryingInsp.ExtruderComp.Insp.Pkg.

Support FacilitiesWarehouse Space

Energetics Engineering Focus (Headcount – 13)

Energetic product design and development

Shaped Charges

Jet Cutter Product Lines

Initiating systems

Boosters

ControlFire Detonator Assemblies

Power Charges

Perforating system and instrument qualification

Customer testing including API 19B Industry Standard

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Engineering test site which includes a 1 mile flow loop for autonomous tool development with

ExxonMobil

Poster Session

Engineering

EQUAfrac Consistent Hole Technology targeting unconventional completions

Conventional Completions

Plug and Abandonment

PowerSet™ Power Charge Product Line

Manufacturing

Automated Inkjet Marking

Electric Servo Liner Presses

High Efficiency Charge Assembly Production Bay

Automated Adhesive Station

Quality

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Hunting Titan

Documents

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