Purchase and Sale Agreement between National-Oilwell, L.P. and Union Drilling Inc. for Ideal Rig Equipment

  [NATIONAL OILWELL VARCO LOGO] April 27, 2006 PURCHASE AND SALE AGREEMENT NATIONAL-OILWELL, L.P. AND UNION DRILLING INC. This Purchase and Sale Agreement is made and entered this 21st day of April, 2006 between Union Drilling Inc. (UDRL) with offices at 4055 International Plaza, Suite 610. Ft. Worth, Texas 76109 and National-Oilwell, L.P. ("NOV"), with offices at 10000 Richmond, Houston, Texas 77042. In consideration of the mutual promises, covenants and agreements hereinafter set forth, the parties mutually agree as set forth below: AGREEMENT: The parties agree to include the following terms: 1. UDI hereby agrees to purchase rig equipment for three (3) Ideal Rigs from NOV,Such equipment is described in NOV's quotation number NOI-11283-Dwk, Rev 1 and shall be purchased in accordance with the prices set forth therein. 2. Pursuant to the terms and conditions of the Letter of Intent ("LOI") executed by the parties on November 8,2005, UDI provided NOV with a initial deposit of $1,000,000.00 to secure the construction slots for the three (3) Ideal Rigs. Upon execution of this Purchase and Sale Agreement, the initial deposit shall be applied to UDI's total down payment costs. 3. UDI further agrees to remit to NOV a thirty percent (30%) down payment based on the total contract price for all rigs. 4. Delivery of the equipment is subject to Ex-works, NOV's facility - Houston (INCOTERMS 2000 Edition), subject to further tax implementation and clarification. 5. The delivery date of the first rig is scheduled for October, 2006. The second rig will be delivered November, 2006, and the third rig will be delivered December, 2006. 6. A second milestone payment of 50% of the total contract price for each rig shall be made by UDI to NOV upon completion of the "Rig Up" of each rig. For clarification, "Rig-Up" shall be considered complete when both parties agree and/or verify that 85% of all components required per the quotation are in place and assembled within the drilling unit. 7. A third milestone payment of 20% of the total contract price for each rig shall be made by UDI to NOV upon completion of the factory acceptance tests.  2 8. The parties agree that the equipment and services provided under this Purchase and Sale Agreement shall be governed by NOV's standard terms and conditions included in its quotation number NOI-11283-Dwk, Rev.1, and which are hereby incorporated herein. Attachment 1: Standard Terms & Conditions Attachment 2: Special Conditions Attachment 3: Pro Forma Invoice for 30% downpayment IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives on the date first above written. NATIONAL-OILWELL, L.P. UNION DRILLING, INC. - -------------------------------------- --------------------------------------- David C. Crumpler Christopher Strong V.P. Sales and Marketing President and CEO  - -------------------------------------------------------------------------------- [NATIONAL OILWELL VARCO LOGO] PROPOSAL NATIONAL OILWELL VARCO IDEAL 1500 (DC) RIG PACKAGE PREPARED FOR: UNION DRILLING PROJECT: NONE NOI PROPOSAL REF: NOI-11283-DWK REV. 01 Wednesday, April 26, 2006 THIS PROPOSAL IS SUBJECT TO OUR STANDARD AND ANY SPECIAL TERMS AND CONDITIONS OF SALE. - --------------------------------------------------------------------------------  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- OUR REFERENCE: NOI-11283-DWK Rev. 01 YOUR REFERENCE: NONE UNION DRILLING National Oilwell Varco is pleased to offer our equipment detailed in the following proposal. A minimum 30% non refundable down payment required at time of order, 50% at time of Rig-Up with balance at time of shipment (ex-works). These prices are valid for 30 days and will remain firm through delivery, subject to receipt of written purchase order. Deliveries of the Ideal Rig Packages are to be confirmed by Product Line Manager at time of order placement. As of this date, subject to prior sale, these packages are available TBD (ex-works, Houston Facility) based on "STANDARD IDEAL RIG PACKAGES". Any changes to the standard specification or optional equipment requested to be integrated into the package will extend these committed deliveries. This quote is for standard production equipment and uses National Oilwell Varco standard components. Third party and/or regulator agency requirements are not considered part of standard production equipment and if required, may result in increased costs. This quote does not provide for, nor include documentation or third party certification. Charges for such certification, if required, will be quoted upon definition of your requirements Thank you for considering National Oilwell Varco. Tyson Seeliger Product Line Manager - Ideal & Rapid Rigs - -------------------------------------------------------------------------------- Page 2 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- SECTION RECAP PROPOSAL CURRENCY: U.S. DOLLARS 1. IDEAL RIG 1500 $25,096,650.00 2. COMMISSIONING & STARTUP ON SITE $ 56,100.00 TOTAL $25,152,750.00 - -------------------------------------------------------------------------------- Page 3 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- SECTION 1 IDEAL RIG 1500 1.1 IDEAL 1500 STANDARD RIG PACKAGE QTY. 3 EA. IDEAL-1500 (DC) STANDARD 1500HP IDEAL(TM) RIG SYSTEM The Ideal(TM) Rig System, rated @ 1500 HP, can drill up to depths of 18,000 ft., encompassing a wide array of features and benefits. Designed and manufactured to achieve extraordinary gains in drilling efficiencies for light, safe and efficient rapid deployment. Enhanced safety features including low-set drawworks. All assembly labor is performed at ground level with more inherently safe assembly techniques. National Oilwell Varco quality, reliability and support through National Oilwell Varco's worldwide network of parts and service locations. Please note: The standard 1500HP Ideal(TM) Rig System is not intended for extreme cold weather operation. The 1500HP IDEAL(TM) RIG SYSTEM package comes complete with the following equipment: DRAWWORKS FAST MOVING RIG TRAVELING EQUIPMENT ROTARY EQUIPMENT ELECTRICAL POWER SYSTEM MUD PUMPS MUD SYSTEM HIGH PRESSURE MUD PIPING BOP CONTROL AND CLOSING SYSTEM INSTRUMENTATION AIR SYSTEM FUEL SYSTEM ELECTRICAL RIG-UP MECHANICAL RIG-UP MISCELLANEOUS EQUIPMENT - -------------------------------------------------------------------------------- Page 4 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- DRAWWORKS EQUIPMENT GROUP Qty. 1 EA. JC50D Drawworks LS-NOW model JC50D drawworks (without sandline drum), rated 1500HP, with: o 27" X 49" grooved drum for 1-3/8" Wire Rope o Integral dual electric motor drive o Disengaging auxiliary brake coupling o Four hoisting speeds o Disc brake system with water cooled discs, hydraulic service calipers and spring set emergency calipers, including H.P.U. o LT1170/250T low speed drum shaft clutch o LT1070/200T high speed drum shaft clutch o Two wire line turnbacks o Air-operated controls located at drillers cabin o All necessary chains except rotary table drive Qty. 1 EA. DS50 Auxiliary Electric Brake LS-NOW model DS50 eddy current brake o Rated brake torque 44814 lb-ft / 60.76 KNm o Applicable drilling range 11483-16404ft / 3500-5000m o Max. exciting power 16 HP / 12 KW o Exciting coil insulation class/No. H/4 o Cooling water flow rate 75 G/min / 285L/min o Max. temperature of inlet water 107 DEG. F/ 42 DEG. C o Max. temperature of outlet water 322 DEG. F / 72 DEG. C o Weight 17934 lb / 7285 kg C/W one(1) 503 water cooling unit Qty. 1 EA. MODEL 2025A-LS Eddy Current Brake Control System National Oilwell Varco Model 2025-A Primary Brake Control System, for application with a Model DS50 Eddy Current Brake. The system shall consist of the following: o Model 59926, 2025-A With H20 Alarm o Model 55858 Driller's Control Unit. (Intrinsically Safe) - -------------------------------------------------------------------------------- Page 5 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- o Model 55860 Power Selector Unit (Intrinsically Safe) o 6600-32-0198 Power Transformer, 3 Phase, 30 kVA, 60 Hz, 480 Volt AC Primary, 220 Volt AC Secondary (Drip-Proof) Qty. 1 EA. MODEL 2025A-MS Brake Water Cooling Monitor System National Oilwell Varco designed brake cooling water monitor system to monitor eddy current brake cooling water flow and temperature and provide an alarm for insufficient cooling water inlet flow rate and high cooling water outlet water temperature. In the event of either low cooling water flow or high cooling water temperature an alarm bell and red alarm and red alarm lamp will be activated. The system consists of the following: (2) Cooling water flow switches (intrinsically safe) (1) Cooling water temperature switch (intrinsically safe) (1) Set installation hardware (3) Installation/maintenance manuals o Model 57064, Flow Switch o Model 56236 Temp Sensor o Model 59924 Brake Sensor Junction Box Display to be integrated with SDAQ and read out on the monitor at the driller's position. Qty. 2 EA. YZ08/YZ08A Drilling Motor - Drawworks Yongji YZ08/YZ08A drilling motor. SPECIFICATIONS o Rated power: 1072 HP/800 KW o Rated voltage: 750 V o Rated current: 1150 A o Rated speed: 970 RPM o Rated torque 5925 ft-lb/8033.7 N.m o Max. current: 1600A o Max. torque: 9002 ft-lb/12206.4 N.m o Exciting type series o Insulation class H o Cooling type: Air forced ventilation o Ex-proof type: Air pressurization o Weight: 7054 lb/3200 kg - -------------------------------------------------------------------------------- Page 6 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- FEATURES o Self excited series field o Single shaft extension with standard hub o Pressurized connection box with bolts for connecting armature & field cables o High current, powerful torque and wide speed adjusting range at constant power o C/W blower driven by 15HP ex-proof AC motor, 460V, 60Hz and 230V spacer heater. Qty. 1 EA. CBS-1 Crown Block Saver LS-NOW type Toggle Valve, adjustable support and air piping. FEATURES Safety shut off device to limit block travel, installed on drawworks to actuate main drum brake when required travel is reached. FAST MOVING RIG Qty. 1 EA. LS-IDEAL-1500 Fast Moving Rig Mast o Mast 142' height x 750,000# hook load capacity, upper and lower section. Crown, jib boom, ladder & racking board included. Upper section to contain block and reserve line spool while in transit, lower section to contain top drive while in transit. Crown contains (5) 50" sheaves, (1) 60" fast line sheave and (2) 42" deadline sheaves. o Ramp/Rail style mast raising system includes truck mounted mast alignment mechanism. o Dual mast stand (API Monogrammed). Substructure o 25' slingshot substructure, hydraulic cylinder raising, with pipe ramp and 3-stairs, bop handling rail. Drawworks Master Skid W/ 2 Mast Raising Cylinders and Brake Water Cooling Unit Reservoir & Piping o Skid contains 282 bbl integral brake water cooling unit reservoir, brake water cooling pumps and piping are mounted on the skid, - -------------------------------------------------------------------------------- Page 7 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- the drawworks mounts on the skid, the mast raising cylinders pin to and rest in cradles on the skid when not in use. (Mast and substructure API monogrammed.) Qty. 1 EA. 2302043 Hydraulic Power Unit Self-contained skid mounted hydraulic power unit with two hydraulic pumps. The first hydraulic pump is driven by a diesel engine and the second hydraulic pump is driven by a explosion-proof electric motor. Diesel engine and/or electric motor driven hydraulic pumps can be used separately or in-conjunction to power the hydraulic system Dual Electric/Diesel Hydraulic Power Unit consisting of the following: Hydraulic Pumps: (1) Variable displacement pressure compensated piston pump (electric) Flow: 40GPM @ 1800 RPM Pressure: 3000 PSI (1) Variable displacement pressure compensated through drive tandem piston pumps (diesel) Flow: 65GPM @ 2300 RPM Pressure: 3000 PSI (2) Gear pump (Circulation pump) Displacement: 2 CIR Hydraulic Control Manifold and Components: No Pressure Filter (3) 20 SAE outlet ports (4) 24 SAE return ports (2) 0-5000 PSI pressure gauges o Hydraulic reservoir stainless steel 60 US gallons with all accessories. o Diesel Fuel Tank Stainless steel 150 gallons with all accessories o Pump to motor adapters and coupling sets o In tank return line filter housing and element 10 micron absolute o 3500 PSI relief valve (flanged mounted) o Flange mounted check valves o Hydraulic fan driven air to oil cooler o Tank mounted suction filters for pump supply o Low level and high temp shutdown - -------------------------------------------------------------------------------- Page 8 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- Diesel Motor: o Deutz BF6L914 o 195HP @ 2300 RPM o Air cooled 6 cylinder four stroke o 12 volt starter o SAE C pump adapter & drive plate Electric Items: (1) 75 HP 1800 RPM 365TC 460 volt C face (Class 1, Div 2 G-D) (1) Remote stop/start station Skid: o A36 carbon steel skid o Oilfield skid with roll-off ends o Drip drain with drain valve Assembly: o All fittings and hose ends will be carbon steel. o Label all connections, pressure and supply indication points o Sand blast and paint all components including the skid o Assembly and testing of the HPU Notes: 1. All electric motors are 60 HZ. 2. All gauges and instrumentation to display imperial units. 3. All Equipment name plates to be in English 4. Five (5) copies of Operation and Maintenance manuals in English) Qty. 1 EA. STDPIPE-1 4", 5000psi WP Standpipe Qty. 1 EA. SPM-1 Standpipe Manifold One (1) Single 4" standpipe manifold to connect to standpipe. Manifold Consisting of: o One (1) 4" 5,000# WP BW mud gate valve o One (1) 2" 5,000# WP WN mud gate valve (kill, fill) o Two (2) 4" fig 1002 hammer unions o One (1) 2" connection for pressure gauge with 1002 hammer union o One (1) 2" 1502 hammer union & wing nut connection for - -------------------------------------------------------------------------------- Page 9 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- pressure transducer. o One (1) Pressure gauge 0-6000# 2" flanged connection o Includes X-ray, hydrotest and paint. Qty. 1 EA. VH-1 Vibrator Hose Connects standpipe manifold to drill floor connection. Qty. 2 EA. TWB-1 Tong Weight Box Complete with pulleys and lines, LESS weight material. Qty. 1 EA. 2300-0-EP Safety Climbing Device Mast ladder safety climb with three safety belts. Rope lock 2300-0-EP with 5/8" line. Qty. 3 EA. CB-TS Climbing Belt, Complete with Tail Rope Qty. 1 EA. DLS-H-5000-1-3/8 Drill Line Spooler Hydraulic Powered Drill Line Stand designed to accommodate steel reel with 5000 Ft. 1-3/8" Drill Line. Qty. 5000 FT 800091-1-3/8 1-3/8" Drilling line, 6X19, EIPS-PF-RI, IWRC Qty. 1 EA. WC-D-BOPH Bop Beams Trolley rail on Sub for hoisting and positioning BOP stack. Qty. 1 EA. MR-CB-2CYLXHC National Oilwell Varco Two Cylinder Hydraulic Catworks Hydraulic catworks mounted in mast. Individual hydraulic makeup & breakout cylinders. Includes all wire line and all hydraulic piping for the two cylinder catworks. - -------------------------------------------------------------------------------- Page 10 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- SPECIFICATIONS o Breakout and Makeup Cylinders - 4" Bore x 8' Stroke o Maximum Speed - 67' Per Min. at 35 GPM o Maximum Pull - 20,000# at 2,000 PSI Qty. 1 EA. Q250 Model Q250 Spinning Wrench Air Spinner: 12cubic meters/min Applicable Pipe: 3-1/2" - 10" Norm Power: 16HP Spinning Speed: 108-38 rpm Spinning Torque: 1094-2500 NM Qty. 1 EA. HYD-PIPING Hydraulic Piping for Mast and Substructure For mast and substructure raising/lowering and other hydraulic functions (not including top drive). Qty. 1 EA. LFLH-75-C-8C-R-PVF National Oilwell Varco Rotary Slip Deadline Anchor, Lug Type Floor Mount Drum is designed to rotate completely around the shaft during line slipping.Drum design includes a lead in groove to a smooth surface. Rollers guide the line across the drum surface as the drum rotates. Designed and Manufactured to API 8C, PSL-1 For 1-3/8" Wireline size. Has double clamp for use with PVF wireline. Have lugs for mounting to floor with two pins. Model: LFLH-75-C-8C-R-PVF Mounting: Lug Floor Mount Orientation: Left Hand Load Cell (Not Supplied): E-551 Compression Type Maximum Deadline Load: 75,000 LBS. (34 mT) Drum Diameter: 24" (609.6mm) Approximate Weight: 2212 LBS. (1005 kg) - -------------------------------------------------------------------------------- Page 11 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- TRAVELING EQUIPMENT Qty. 1 EA. YC450 LS-NOW Model YC450 Traveling Block FEATURES o Heavy steel fabricated main frame o Heavy wireline guards o Steel sheaves with induction hardened API wireline grooves o Tapered roller bearings in sheaves o Oil quenched and tempered alloy steel shaft with individual grease passages to each bearing o High strength steel becket o Designed to API standard 8A SPECIFICATIONS o Model: YC450 o Max. hook load: 500 ton o Number of sheaves: 6 o Sheave diameter: 1524mm (60") o Shaft diameter: 254mm (10") o Wireline size: 1-3/8" o Approximate length: 3075mm (121") o Approximate width: 1600mm (63") o Approximate depth: 800mm (31") o Approximate weight: 17934lbs/8135kg Qty. 1 EA. DG450 LS-NOW Model DG450 Hook Complete with conventional bail, safety positioner, built in hydraulic snubber and rotation lock. Built to API 8A Max. hook load: 500 Ton Overall dimensions (L x W x H ): 116" x 35" x 35" Weight: 7707 lb/3496kg Qty. 1 EA. SL-450-5 LS-NOW Model Sl-450-5 Swivel w/Spinner With spinning function. - -------------------------------------------------------------------------------- Page 12 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- Equipped with standard bails. The wash pipe and packing assembly are cartridge type and can be replaced on the floor without disconnecting the rotary hose and/or gooseneck. The gooseneck is provided with an outlet for wireline logging. Equipped with 4" API hose connection. Conforms to API specification 8A. Maximum Static Load Rating 500 Ton Maximum Speed 300 RPM Maximum Working Pressure 5,000 PSI Hook Clearance over the Gooseneck 549 mm (21.6 in.) Diameter of Stem 2.95" Coupling Thread to Stem 7-5/8" Reg. LH Coupling Thread to Kelly 6-5/8" Reg. LH Qty. 1 PKG EV-LK 350 Ton Elevator Links, Capacity 350T, size 108" API 8A. ROTARY EQUIPMENT Qty. 1 ZP-375 LS-NOW Model ZP375 37-1/2" Rotary Table o Built to API 7K o Opening dia. 37-1/2" o Static load rating 1,300,000 lbs o Max. working torque 23,900 ft-lbs o Weight 16640 lbs Qty. 1 EA. IRD-LS-NOW Independent rotary drive for LS-NOW ZP375 rotary table includes: o Coupling, with Spacer, between Rotary and Transmission o 2-Speed IRD Transmission (Roller Chain Type) - -------------------------------------------------------------------------------- Page 13 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- o Coupling between Transmission and DC Motor o Inertia Brake for IRD Components Above components to be assembled with rotary and motor (not included) as one unit. Above modified to directly mount drive in substructure. Qty. 1 Full Guard, Included in Item. IRD-LS-NOW Qty. 1 EA. YZ08/YZ08A Motor - Rotary Table Yongji YZ08/YZ08A drilling motor. SPECIFICATIONS o Rated power: 1072 HP/800 KW o Rated voltage: 750 V o Rated current: 1150 A o Rated speed: 970 RPM o Rated torque 5925 ft-lb/8033.7 N.m o Max. current: 1600A o Max. torque: 9002 ft-lb/12206.4 N.m o Exciting type series o Insulation class H o Cooling type: Air forced ventilation o Ex-proof type: Air pressurization o Weight: 7054 lb/3200 kg FEATURES o Self excited series field o Single shaft extension with standard hub o Pressurized connection box with bolts for connecting armature & field cables o High current, powerful torque and wide speed adjusting range at constant power o C/W blower driven by 15HP ex-proof AC motor, 460V, 60Hz and 230V spacer heater. Qty. 1 EA. Master Bushing Bowl LS-NOW split body pin drive master bushing for ZP375 rotary table, complete with API No.3 bowl, lifting sling, and bit breaker plate for ZP375 rotary table. - -------------------------------------------------------------------------------- Page 14 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- Qty. 1 EA. Master Bushing Bowl LS-NOW API No. 2 Bowl for 10- 3/4" and 9 -5/8" Pipe. Qty. 1 EA. Master Bushing Bowl LS-NOW API No. 1 Bowl for 13-3/8" and 11- 3/4" Pipe Qty. 1 EA. Split Casing Bushing LS-NOW 37-1/2" x 20" split casing bushing for LS-NOW 37-1/2" Rotary Table Qty. 1 EA. Kelly Bushing LS-NOW pin drive roller kelly bushing for 5-1/4" HEX KELLY Qty. 1 EA. Hex Kelly 5-1/4"x40' Hex. Kelly. (5" Drill pipe), Drill Pipe connection NC50- 4-1/2IF. Qty. 1 EA. Upper Kelly Valve 7-3/4" OD / 3-1/16" ID 6-5/8" reg LH (Upper) ELECTRICAL POWER SYSTEM Qty. 1 EA. 6715-00 SCR House System Description Item Qty Description ---- --- ----------- 1 3 Detroit Diesel V-1600 engines driving a 1750 kVA, 600 VAC, 60 Hz generator. 2 1 1500 HP Drawworks, driven by two (2) series wound Yongi DC motors. 3 2 1600 HP Mud Pumps, each driven by two (2) series wound Yongi DC motors. - -------------------------------------------------------------------------------- Page 15 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- 4 1 1000 HP Rotary Table driven by one (1) series wound Yongi DC motor. SCOPE OF NATIONAL OILWELL VARCO SUPPLIED EQUIPMENT National Oilwell Varco to provide the following equipment (Requires Engineering confirmation of description) Item Qty Description ---- --- ----------- 1 4 Model 1400 SCR control cubicles 2 3 Model 1400 Engine/Generator control cubicles 3 1 Blank cubicle for future Gen Control 4 1 Synchronizing system 5 1 Ground detection system 6 1 Hands off circuit 7 1 Power limit system 8 1 PLC System 9 1 Driller's console 10 1 Driller's foot throttle 11 1 Drawworks dynamic brake system 12 1 Eddy Current Brake Control 13 1 600 Volt feeder section 14 1 Transformer section 15 1 MCC section 16 1 Power Control House 1) MODEL 1400 SCR CONTROL CUBICLE NOV will supply four (4) Model 1400 SCR Drive Control cubicles each to include: Item Qty Description ---- --- ----------- 1 1 AC Input, 1600AF, Stationary Mount, Circuit Breaker Switch with UV trip and auxiliary contacts. 2 1 Voltmeter, 0 - 1000 VDC 3 1 Ammeter, 0 - 2000ADC 4 1 SCR "ON" indicating lamp, (Red) 5 1 6 pulse, 1800 amp, 750 VDC, vertical air cooled SCR Bridge. The bridge shall be protected using semiconductor type fuses with form C contacts, which are activated when the fuse opens. 6 1 Surge Suppression "ON" Indicating Lamp (Green). Surge Suppression will be provided to clamp any transient voltages, which could be damaging to the SCR devices. The surge suppressor will consist of a fused set of metal oxide varistors (MOVs). 7 1 Set of DC assignment contactors to allow for multiple - -------------------------------------------------------------------------------- Page 16 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- assignments of the bridge. 8 1 DC Control Module with: o Pulse thyristor-firing circuits with "Hard Firing" outputs. The synchronizing signal originates directly from the AC line so that no pilot generator is required. o High speed current regulator with twenty-millisecond response. Automatic current limit load sharing for motors driving the same shaft and driven by separate armature supplies no setup or adjustment required. o Individual control of current limit for all drilling functions. The rotary table torque limit will be mounted in the driller's console. o Ramp generator on the Drawworks current regulator to control the rate of rise of motor torque. o Motor speed regulators for the Mud Pumps, Drawworks, and Rotary Table (Top Drive). Each regulator will be interlocked with its related assignment contactor. o All controls are designed to be "Foolproof", no preset sequence of operation is required. The operator may push any button at any time and the system will either follow when it is safe or block the command if it is not consistent with the operation. o Manual firing control for emergency operation. o Thyristor gate suppression at approximately 150% of the bridge rating. o "Zero Throttle Interlock", the hand throttle must be returned to zero after an assignment change before the motor can be powered. o Module Fault Finder includes a meter and switch mounted on the front for monitoring critical internal voltages 2) MODEL 1400 ENGINE/GENERATOR CONTROL CUBICLE NOV will supply three (3) Model 1400 Generator Control cubicles each to include: Item Qty Description ---- --- ----------- 1 1 2000AF, Stationary Mount Circuit Breaker with LI solid state trip unit, manually charged, electric closing soleNOVd, UV release and necessary auxiliary contacts. 2 1 Circuit Breaker Pushbutton "CLOSE" 3 1 Ammeter Meter - -------------------------------------------------------------------------------- Page 17 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- 4 1 Kilowatt Meter 5 1 Kilovar Meter 6 1 Generator Hour Meter 7 1 Engine Control Pushbutton "OFF IDLE-RUN" 8 1 Generator "RUN" Indicating Lamp (White) 9 1 Generator "ON LINE" Indicating Lamp (Red) 10 1 Generator Sync Indicating Lamp (Amber) 11 1 Manual Engine Speed Adjust Potentiometer 12 1 Manual Voltage Adjust Potentiometer 13 1 Engine Generator Solid State Control Module with: o Voltage Regulator o Electronic Governor Control o Response time of .8 second typical o Maximum load unbalance between engines (one hot, one cold) at all points, no load to full load, +5% of its rated load o Working temperature range of 30 DEG. C to +50 DEG. C o No load to full load regulation of +1% o Governor electronics arranged for battery power to advance throttle for "black start" capability. o Reactive power is shared between the generators by reactive power droop compensation o Real power is shared by a master / slave command line o Exciter power supply, 12 amp maximum current (the exciter current limit is set to suit the individual exciter) o Exciter power supply maximum voltage is 240 volts (this is set by the choices of the exciter transformer and the generator self excitation requirements) o Protective functions built into the regulator are: o Reverse Power Trip o Under Frequency Trip o Over voltage Trip o Over speed Trip o Frequency / Voltage Scheduled for Engine Operation at Idle Speeds 3) BLANK CUBICLE FOR FUTURE GEN CONTROL NOV will supply one (1) blank cubicle for future Gen Control. This cubicle will 4) SYNCHRONIZING SYSTEM NOV will supply a Synchronizing System that will consist of the - -------------------------------------------------------------------------------- Page 18 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- following items: Item Qty Description ---- --- ----------- 1 1 Synchronizing System (1) - Synchronizing selector switch (2) - Synchronizing lights (clear) (1) - Synchroscope (1) - Synch check relay (1) - Voltmeter-main bus & Generator (0 750 V) (1) - Frequency Meter-main bus & Generator (50 - 70 Hz) 5) GROUND DETECTION NETWORK NOV will supply a Ground Detection Network consisting of the following items: Item Qty Description ---- --- ----------- 1 1 Ground Detection Circuit (3) - Ground Detection Lights (1) - Percent DC Ground Meter (1) - Percent AC Ground Meter (1) - Test Pushbutton (1) - Audible Alarm to be mounted on the exterior of the house (1) - Strobe Light to be mounted on the exterior of the house (1) - Alarm Acknowledge Pushbutton 6) HANDS-OFF CIRCUIT (HOC) The HOC will supply power for the engine starting circuit and the pulse pick-up circuit in each of the AC generator control modules. The items included will be: Item Qty Description ---- --- ----------- 1 1 Set of CPT's. 2 1 Set of fuses. 3 1 Single-phase diode bridge. 4 2 12V Batteries 7) POWER LIMIT SYSTEM The Power Limit Circuit will monitor the KW & KVA of each engine generator set. If either of these parameters reach its limits, the Power Limit Circuit will reduce the power being delivered to the loads so that the load on each generator is held at its limit until the loads on the SCR drives are reduced (by other action) to a level below the generator limit. A meter on the Driller's Console indicates percent - -------------------------------------------------------------------------------- Page 19 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- Power Limit. A warning lamp is illuminated on the Driller's Console at a load level just below the power limit. 8) PLC SYSTEM The System Host PLC is a high speed, versatile modular mini-PLC. The PLC is used for serial communication with remote consoles and other rig devices. Additionally, the PLC incorporates the SCR bridge assignment logic. The PLC shall consist of the following. Item Description ---- ----------- 1 Siemens S7-300 Modular Mini-PLC 2 32 Bit, Fixed & Floating Point CPU 3 Up To 1024 Digital Inputs / 1024 Digital Outputs 4 Up To 256 Analog Inputs / 256 Analog Outputs 5 Complete Instruction Set With "Built-In" Functions 6 Built-In Self Diagnostics 7 Fiber Optic Communication Capability 9) DRILLER'S CONSOLE The console will be constructed of 12-gauge stainless steel and the hand throttle wheels of solid stainless steel. Each hand wheel will drive two (2) independent potentiometers to provide 100% backup of the throttle function. The console will be watertight and include a gasket type door. The console will be equipped with purging for application in a Class I Division 2, Group D Hazardous area. A rig air supply fitting will be provided for connection to an external 85 to 150 psi dry air supply. An internal pressure regulator is included to maintain a positive interior pressure relative to the ambient. NOV to supply a driller's console with the following controls and indicators: Item Qty Description ---- --- ----------- 1 1 SCR Assignment Switch 2 1 Rotary Table Speed Control 3 1 Rotary Table "FWD OFF REV" 4 1 Drawworks Speed Control 5 1 Drawworks Switch "FWD OFF REV" 6 2 Mud Pump Speed Controls 7 2 Mud Pump "ON-OFF" Switch 8 1 Rotary Table Torque Limit Selector Switch 9 1 Rotary Table Torque Meter Scaled for Amps 10 1 PLC "By-Pass" Switch 11 1 Power Limit Meter 12 3 Generator "ON" Lamps (Red) 13 4 SCR "ON" Lamps (Green) 14 1 Drawworks Blower "ON" Lamp (White) * 15 1 Rotary Table Blower "ON" Lamp (White) * - -------------------------------------------------------------------------------- Page 20 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- 16 2 Mud Pump Blower "ON" Lamps (White) * 17 1 Power Limit Lamp (Amber) 18 1 Console Purge Loss Lamp (Amber) * 19 1 PLC "OK" indicator lamp (Amber) 20 1 Ground fault Indication Lamp (Amber) * 21 1 Audible alarm activated for items marked (*) 22 1 Alarm Silence Button 23 1 PLC I/O module for PLC communication 24 1 AC Emergency Shutdown Push Button (All Engine Kill) 25 1 DC Emergency Shutdown Push Button 26 Lot Pyle National plugs & receptacles 10) DRILLER'S FOOT THROTTLE The foot throttle is constructed of 12-gauge No.304 stainless steel throughout, built to withstand the environment normally encountered on the rig floor. It includes dual stainless steel return springs to provide a fail safe return to the off position in the event of a spring failure. Provisions for a dry air connection to the electrical compartment are also included. The foot throttle connects directly to the Driller's console through a three-conductor cable. 11) DRAWWORKS DYNAMIC BRAKE SYSTEM NOV will provide a Drawworks Dynamic Brake system. The dynamic brake will slow the Drawworks A motor from full speed to some preset cathead speed within 10 to 15 seconds after the foot throttle is released. The power generated by the freewheeling DC motor is fed into a stainless steel grid resistor bank mounted out on the porch. During normal operation of the Drawworks, the dynamic brake is not connected. If at any time the motor speed is higher than the DW throttle setting and the foot throttle is not in use, the brake circuit will engage and reduce the motor speed to the hand throttle setting. 12) EDDY CURRENT BRAKE CONTROL SYSTEM National Oilwell Varco's primary brake control system, for application with and eddy current brake. The system shall consist of the following: Item Qty Description ---- --- ----------- 1 1 Air cooled 25 kW SCR unit with door mounted alarm minimic panel (NEMA 1) 2 1 Driller's control unit (intrinsically safe) 3 1 Power selector unit (intrinsically safe) 4 1 Power transformer, 3 phase, 30 kVA, 60 Hz, 480 Volt AC primary, 220 Volt AC secondary (Drip-proof) - -------------------------------------------------------------------------------- Page 21 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- 13) 600 VOLT FEEDER SECTION NOV will provide a Feeder Section in the line-up containing the following items: Item Qty Description ---- --- ----------- 1 1 1200 AF Circuit breaker for MCC transformer. 2 1 1600 AF Circuit breaker for Top Drive Feeder 14) TRANSFORMERS NOV will provide the following ventilated dry type transformers: Item Qty Description ---- --- ----------- 1 1 1000 kVA, 600:480 Volt, 60 Hz, three phase, aluminum wound, NEMA 3R enclosed MCC transformer. 15) 480 VOLT MOTOR CONTROL CENTER NOV will provide the following vertical sections of MCC. The MCC will be NEMA type, 480 Volt, 60 Hz, with individual breakers. The horizontal bus will be copper and suitably rated. The vertical bus will be copper and rated for 300 amps. A copper ground bus will run the full length of the MCC line up. Each starter will be complete with a 480:120 control power transformer fused on the primary and secondary (magnetic only) breaker, a contactor and an ambient compensated overload element (heater). LEGION: FVNR = Full Voltage Non-Reversing HOA = Hands - Off - Automatic 3WRC = 3 Wire Remote Control AF = Amp Frame AT = Amp Trip Item HP Size Type Control Function ---- --- ---- ---- ------- --------------------------------- 1 1.5 1 FVNR HOA Mud Pump #1 Lube Oil Pump 2 3 1 FVNR HOA Mud Pump #1 Linear Wash Pump 3 15 2 FVNR HOA Mud Pump #1A Blower 4 15 2 FVNR HOA Mud Pump #1B Blower 5 60 4 FVNR HOA Mud Pump #1 Charging Pump 6 1.5 1 FVNR HOA Mud Pump #2 Lube Oil Pump 7 3 1 FVNR HOA Mud Pump #2 Linear Wash Pump 8 15 2 FVNR HOA Mud Pump #2 A Blower 9 15 2 FVNR HOA Mud Pump #2 B Blower 10 60 4 FVNR HOA Mud Pump #2 Charging Pump 11 15 2 FVNR HOA DWA Blower 12 15 2 FVNR HOA DWB Blower 13 15 2 FVNR HOA RT Blower Motor 14 25 2 FVNR 3WRC Trip Tank #1 - -------------------------------------------------------------------------------- Page 22 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- 15 25 2 FVNR 3WRC Trip Tank #2 16 100 4 FVNR 3WRC Mud Mix Pump#1 17 100 4 FVNR 3WRC Mud Mix Pump #2 18 100 4 FVNR 3WRC Spare 19 100 4 FVNR 3WRC Desander Pump 20 100 4 FVNR 3WRC Desilter Pump 21 60 4 FVNR 3WRC Degasser Pump 22 25 2 FVNR 3WRC Water xfer Pump #1 23 25 2 FVNR 3WRC Water xfer Pump #2 24 25 2 FVNR HOA Brake Cooling Loop #1 25 25 2 FVNR HOA Brake Cooling Loop #2 26 75 4 FVNR 3WRC Main HPU 27 25 2 FVNR 3WRC Centrifuge FD Pump #1 28 75 4 FVNR 3WRC Centrifuge #1 29 25 1 FVNR 3WRC Centrifuge FD Pump #2 30 75 4 FVNR 3WRC Centrifuge #2 31 10 1 FVNR HOA Spare 32 10 1 FVNR 3WRC Spare 33 25 2 FVNR HOA Spare 34 25 2 FVNR 3WRC Spare 35 50 3 FVNR 3WRC Spare 36 75 4 FVNR 3WRC Spare Feeder Circuit Breakers Item AT/AF Function ---- ------- -------- 1 150/150 Air Compressor #1 2 150/150 Air Compressor #2 3 150/150 Lighting transformer 4 100/100 BOP Closing Unit Pump #1 5 100/100 Spare 7 40/60 House AC #1 8 50/60 Baylor Brake Supply 9 30/30 HPU Disc Brake 10 40/60 House AC #2 11 150/150 Mud Tank Panel 12 50/60 Accumulator BOP 14 30/30 Spare 15 20/30 Dog House A/C Feeder 16 15/30 Dog House Purge Feeder 17 60/60 Spare 18 15/30 Block Heater #1 19 15/30 Block Heater #2 20 15/30 Block Heater #3 21 15/30 Spare 22 150/150 Spare - -------------------------------------------------------------------------------- Page 23 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- 16) POWER CONTROL HOUSE The Power Control House will be designed for transportation by an oilfield trailer. The house size will be approximately 10' W x 46' L x 10'6" H. The house columns and ceiling frame will be constructed from structural steel seam welded. The outside shall be fabricated from twelve-gauge sheet steel. All corners are to be formed by bending leaving no sheet edge exposed. Three of the walls will be insulated with three-inch thick polystyrene block insulation. The floor and the wall with the receptacles and plugs will not be insulated. The inside surface of the walls will be finished with a sandwich style insulating board with aluminum sheet interior. A rubber neoprene mat will run the full length of the interior aisle of the House. One (1) 42 circuit 120Y208 volt, 3 phase, 4 wire panel board will be mounted on an interior wall for lighting and other required needs. Four (4) fluorescent lighting fixtures (2 40WRS) will be supplied for aisle lighting. Two (2) 120 volt duplex receptacles will be included. An emergency lighting fixture will also be included in the center interior of the House. Two (2) steel doors with panic hardware will be supplied, one at each end and on opposite sides of the house. Both doors shall be designed to open to the outside by pushing down on the opening bar. The two (2) air conditioning units will be of the split unit type with the condenser and evaporator sections mounted separately. Each unit will be rated at 7.5 tons. The hot air generated by the SCR bridges will be discharged out the top of the cubicles and contained within the dead air space between the ceiling and the roof. This air will then be ducted to the return air side of the evaporator sections of the units. Transformers and air conditioning condenser units will be mounted on a covered porch at one end of the house. The incoming power connections will be located in a recessed box located at the top and on one side of the house and spaced approximately eight feet apart. This location is on the same side of the house as the SCR line up. The receptacles for the outgoing DC power and rig AC loads are to be installed in panels which slant downward to relieve stress on the outgoing cables, except for the receptacles located at the very bottom of the plug panel, which will not be slanted downward because of the physical limitations of their - -------------------------------------------------------------------------------- Page 24 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- location. The mating plugs for the receptacles will also be supplied with the house. The exterior of the house will be cleaned with a sweep blast of sand to remove scale and oxidation. The exterior coating will consist of a sub coat of primer and a topcoat of urethane linear gray. The interior floor will be painted ANSI gray. Qty. 3 EA. R163-7M36 Generator Set Stewart & Stevenson packaged Model R1630F900 generator sets, 600 volt, 3 phase, 60 Hz, 0.6 PF, 1800 RPM, equipped as follows: Diesel Driver o Detroit Diesel 16V2000/G80, Model R163-7M36 o 1350 BHP @ 1800 RPM, Prime Rated o 16V configuration o 4 stroke direct injected o Bore and stroke 5.12 x 5.91 (130 x 150); 1944 CID (31.88L) o Turbocharged (dual) o Charge air cooled, SPCC o SAE "0" flywheel housing o Detroit Diesel Electronic Controls MDEC o Provides engine monitoring and control o Electronic (isochronous) governing o Accessory Package A. Instrumentation o DDC Electronic Display Module. Provides engine monitoring functions to include: o Engine RPM o Coolant temperature o Oil pressure o Battery voltage o Diagnostic function o Engine hours o Overspeed shutdown. Independent of electronic controls. o Magnetic pick-up o Air inlet shut down o MDEC sensing of following alarm and shutdown functions: o High coolant temperature alarm o Low coolant level alarm o High oil temperature alarm B. Air cleaner. Dual dry type for standard service, mounted with pre- - -------------------------------------------------------------------------------- Page 25 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- cleaner caps. C. Lubricating System o Filter, replaceable spin-on. o Gear driven oil pump. o Angularity limits: 30 DEG. Front up/down, 30 DEG. side tilt. o Integral oil cooler D. Fuel System o Racor filter/moisture separator with replaceable element. o DDC secondary filter, replaceable spin-on o MDEC Electronic Unit Injector (EUI) E. Start System o Air starter, bell housing mounted, complete with actuator valve and filter. F. Electrical System o Dual 12V HD batteries, mounted, marine boxes o Engine driven 24V alternator, 70 amp (battery and alternator package may be deleted if 24V power available from others for electronic engine controls) o MDEC wiring harness o DDC Electronic Computer Module (ECU), mounted G. Cooling System o Radiator, front mounted, engine driven blower type fan, separate Circuit Charge Cooling (SCCC) equipped with dual cores o Separate Circuit Charge Air Cooling (SCCC) engine systems. o Jacket water heater, 110/220V o 115 DEG. F ambient sizing H. Pancake Exhaust System - Dual o 2.8" flex pipes o 2 - Exhaust silencer, spark arresting, loose GT ###-###-#### o 2 - 6" spool pieces o 2 - 8" exhaust outlets with 45 DEG. mitered outlet and bird screen Exhaust insulation for mufflers & flex piping - installed during rig up. Generator o National Oilwell Varco 1750 KVA NOV/Baylor alternator, single bearing for direct mounting to 16V2000, "0" housing, 1800 RPM. EXPANDED DESCRIPTION BELOW - -------------------------------------------------------------------------------- Page 26 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- Construction o Engine, generator, radiator assemblies unitized on heavy duty structural steel. Accessory packages installed and mounted unless noted as loose. o Oil and fuel lines extended and fastened to base side rails for convenient service and quick connection. o Dimensions - 198" L x 75"W; Weight - 24,500 lb. - Estimate Manuals, Documentation, Testing o Operation and Maintenance Manuals (2 copies each unit) o Generator test reports o Detroit Diesel Corporation dynamometer test reports o Stewart & Stevenson Standard Manufacturers test GENERATOR Model: S437QUJ National Oilwell Varco AC Generator with direct connected brushless rotating exciter in accordance with the following: o RPM: 800 o Electrical Rating 1050kW, 0.6pf, 1750kVA, 3pH, 60Hz, 600V, Wye o Temperature Rise 105 DEG. C by resistance over 40 DEG. C ambient o Duty Continuous SCR o Insulation Class H form wound - VPI o Enclosure Drip proof guarded o Weight Approximate 9,500 lbs. o Bearings One anti-friction, grease lubricated o RTD's 6 X PT100 in stator, 1 X PT100 in bearing o Excitation Brushless - shaft mounted o Housing Adapter SAE "0" o Drive Disc SAE 518 o Accessories: o Oversized terminal box with bus bars o Space heaters Qty. 1 LOT 16V2000-HOUSE-3 Generator House Engine/generator enclosure for three (3) Detroit Diesel 16V2000 power sets consisting of: o Three (3) 10' x 40' Three runner oilfield type skids. Skids - -------------------------------------------------------------------------------- Page 27 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- constructed of W18" beam with 1/4" checkered plate flooring. o Three (3) 10' x 38' long roofs (10' clear height). Roofs corrugated panel metal construction. o Installation for three (3) National Oilwell Varco furnished pancake syle muffler systems o One (1) fuel feed manifold with supply line to generator set each skid. o One (1) fuel return manifold with return line to generator set each skid. o Install following National Oilwell Varco furnished equipment on skid extensions: o Two (2) Air Compressors o Two (2) Air Receivers o One (1) Air Dryer o One (1) Cold Start Unit Provide piping between air compressors and air receiver and to engine starters. MUD PUMPS Qty. 2 EA. 12-P-160 NOV model 12-P-160 mud pump, triplex single acting. SPECIFICATIONS Max. input horsepower 1600HP(1193KW) Rated pump speed 120SPM Piston stroke 12" Max. working pressure 5000psi Max. liner bore 7-1/4" Suction connection flange 10"ASA-150lb.R.J. Discharge connection flange 6" API-5000lb.R.J. Dimension 5309L x 2889W x 1905H Weight 24810kg FEATURES o Forged crank-shaft. Connecting rods and pinion shaft o Roller bearing throughout o Two-piece piston rod allows removal of piston without disturbing liner o Clamp lock liners and piston rod assemblies in place o Full circle spray cools and lubricates liners regardless of pump speed o Metal to metal liner retention - -------------------------------------------------------------------------------- Page 28 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- o Herringbone gears o Two piece cylinder modules with complete interchangeability between modules o "Fast Change" valve cover arrangement o External liner spray system o Equipped with 6-1/2" "NOV-Mission" Supreme liners & pistons. o Standard lube system Qty. 2 EA. Discharge Strainer Cross, complete with: o 5" 5000# discharge flange connections o 4" 5000# top connection for pulsation dampener o 5" 5000# end connection for strainer clean-out Qty. 2 EA. Flange, 5-1/8" 5000# Blind flange, to match 2-1/16" gauge. Qty. 4 EA. Flange, 5-1/8" 5000# API 6B Weld neck flange. Qty. 2 EA. Blind Flange, 5-1/8" 5000# Mod. 6B blind flange. Qty. 8 EA. Ring Joint Gasket. Qty. 2 EA. Jib Crane with Trolley only For a 12-P-160 Mud Pump, for handling fluid end expendable parts (only) Qty. 2 EA. 1/2 ton hand hoist for use with Jib Crane Qty. 2 EA. National Oilwell Varco Shear Pin Type Relief Valve 3" standard service pin shearing type relief valve with pin of same diameter for 1500-5000psi Qty. 2 EA. 1292369 In-Line Suction Stabilizer for 12-P-160 Pump application. Qty. 2 EA. LS-20-5000 LS-NOW Model Pulsation Dampener. Maximum service pressure 5,000 PSI Surge capacity: 20 gallons - -------------------------------------------------------------------------------- Page 29 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- Connection: 4" API 5,000 RTJ Diaphragm: Hydrogenated Nitrile (installed) Qty. 2 EA. Pump Drive For 12-160-P mud pump with: o Extended skid frame o Rear mounted dual belt drive o Complete with sheaves, hubs & V-belts o Vertically split belt guards For use with YZ08/YZ08A DC motors Qty. 4 EA. YZ08/YZ08A Motor - Pumps Yongji YZ08/YZ08A drilling motor. SPECIFICATIONS o Rated power: 1072 HP/800 KW o Rated voltage: 750 V o Rated current: 1150 A o Rated speed: 970 RPM o Rated torque 5925 ft-lb/8033.7 N.m o Max. current: 1600A o Max. torque: 9002 ft-lb/12206.4 N.m o Exciting type series o Insulation class H o Cooling type: Air forced ventilation o Ex-proof type: Air pressurization o Weight: 7054 lb/3200 kg FEATURES o Self excited series field o Single shaft extension with standard hub o Pressurized connection box with bolts for connecting armature & field cables o High current, powerful torque and wide speed adjusting range at constant power o C/W blower driven by 15HP ex-proof AC motor, 460V, 60Hz and 230V spacer heater. Qty. 2 EA. Mud Pump Master Skid Oilfield master skid for mud pump with rear mounted drives. Pump # 1 skid dimension is 13' X 30' and Pump #2 is 12' X 30', each are mounted - -------------------------------------------------------------------------------- Page 30 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- on a three runner oilfield type skid with the top and ends completely plated with 1/4" plate. Each skid has a sump for containment as well as pipe supports for HP piping lines. MUD SYSTEM Qty. 1 EA. MS-2T-1314BBL Mud Tank System - Two Tank, Total Capacity of 1314 BBL / Patent Pending SHAKER TANK GENERAL DESCRIPTION: 1. To be equipped with the Following Equipment: A. Brandt King Cobra Linear Motion Shale Shaker utilizes a Cobra Linear Motion screen deck containing four screens and 33.4 sq. ft. screening area and the contour plus deck design with drying panel. Screen area: 33.4 sq. ft., flat screens Screens/deck: four screens Screen angle: contour deck design 0 DEG., +5 DEG., +5 DEG., +5 DEG. Deck angle: adjustable from -5 DEG. to +3 DEG. "G" force: nominal 6.3 G's Electrical: direct drive, two 2.5 hp canister vibra motors, 60 Hz, 230/460 volt, 3 phase, explosion proof Overall dimensions: Length: 120" Width: 65" Height: 69" Weir height: 41" Weight: 4300 lbs. (Screens are not included with shaker) - Left hand B. Brandt King Cobra Linear Motion Shale Shaker utilizes a Cobra Linear Motion screen deck containing four screens and 33.4 sq. ft. screening area and the contour plus deck design with drying panel. Screen area: 33.4 sq. ft., flat screens Screens/deck: four screens Screen angle: contour deck design 0 DEG., +5 DEG., +5 DEG., +5 DEG. Deck angle: adjustable from -5 DEG. to +3 DEG. "G" force: nominal 6.3 G's Electrical: direct drive, two 2.5 hp canister vibra motors, 60 Hz, 230/460 volt, 3 phase, explosion proof Overall dimensions: Length: 120" - -------------------------------------------------------------------------------- Page 31 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- Width: 65" Height: 69" Weir height: 41" Weight: 4300 lbs. (Screens are not included with shaker) - right hand C. One (1) Degasser Model DG-10, vertical vacuum degasser with 60" diameter vessel mounted on an oilfield skid. includes explosion proof 1800 rpm 5 hp motor and starter, suction and discharge piping, and jet nozzle with 1-3/4" bore. Maximum capacity: 1000 gpm. Electrical service: xp 3 phase 230/460v/60Hz. D. One (1) Desander Vertical Model DSN-3V-10CTX, 3 cone features manifold constructed of 8" sch. 40 pipe mounted on an angle iron base, three (3) 10" diameter CTX desander with grooved end inlet and overflow, desilting capacity of 1500 gpm. E. One (1) Desilter Model DSLR-20GG-4CTX, 20 cone features 24" round manifold constructed of 3/8" plate mounted on an angle iron base, twenty (20) 4" CTX cones with grooved end inlet and overflow, desilting capacity of 1300 gpm. F. One (1) Vertical Centrifugal Pump Model 67065408ITAD0DS, degasser feed/clean out centrifugal 6x5x14 14" impeller 1150rpm 60hp vertical centrifugal pump w/dual mechanical seals @18 ppg mud. G. One (1) Vertical Centrifugal Pump Model 670861516IT70DS, desander feed/clean out centrifugal 8x6x11 11" impeller 1750rpm 100hp vertical centrifugal pump w/dual mechanical seals @14 ppg mud. H. One (1) Vertical Centrifugal Pump Model67861516IT70DS, desilter feed/clean out centrifugal 8x6x14 14" impeller 1750rpm 100hp vertical centrifugal pump w/dual mechanical seals @14 ppg mud. I. Three (3) Agitators 10hp Agitator Model MX-MA10-MTHC, drill mud agitator with 30:1 helical gear speed reducer, cast iron drop bearing housing for shaft support, and 10 hp, 1800 rpm explosion proof c-face motor. Includes shaft 36" long and impeller up to 40" diameter pitched blade impeller. Electrical service: xp 3 phase 230/460v/60Hz. 2. Shaker Tank Overall Dimension Is 55-0' Long X 12-0" Wide. 3. Tank will be as follows: (52' 9" long x 10-0' wide x 8' 6" high walls) A. One (1) settling tank (sand trap) double slopped floor 114.923bbls - -------------------------------------------------------------------------------- Page 32 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- B. One (1) degasser tank 151.696bbls C. One (1) desander tank 120.608bbls D. One (1) desilter tank 120.608bbls E. One (1) reserve tank #1 161.156 4. Shakers are mounted on two individual skids for fast moving and to prevent having to have any fold up or down walk around. 5. Walls and partitions are to be fabricated of crimped 1/4" plate. 6. Flat bottom floors will be constructed of 3/8" plate. 7. Galvanized serrated grating will be installed over the mud compartments, on walkways, on equipment platforms, and on stairs. 8. Skid beams will be W12 X 45 PPF A36 for the main mud tank skids. 9. The equipment skid to mount the degasser, desander, and desilter is setting on the reserve side of the mud tank with easy mount connection with no support members under the skid to interfere with other equipment possibilities. All 1-1/4 serrated grading will be mounted on the skid. 10. Rim line will be constructed of 6" square tubing with 1/2" wall thickness. The rig side of the rim used for transferring mud and jetting each section to the reserve side and displacing mud. 11. Rim line will be constructed of 6" square tubing with 1/2" wall thickness. The off-rig side of the rim used for transferring water and 2" outlets provided for shaker, desander and desilter, chemical mixing, and mud mixing area. 12. Hinged manways with rung ladders will be installed in all compartments. 13. All handrails will be constructed of 1-1/2" square tube with 3/16" wall thickness and most of the handrails will be designed to stay in place during shipment but lay down to avoid having to rig them up each time. 14. Toe plates will be installed on the perimeter of tank and/or walkway and surrounding the cuttings chute. 15. Handrails to be furnished around cuttings chute. - -------------------------------------------------------------------------------- Page 33 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- 16. Wedge style dumps to be installed in each compartment off-rig side. 17. Shaker tank piped for one (1) desander, one (1) desilter single source pumping, and each compartment will have suction in a sump for transferring and jetting mud. 18. Discharge and suction piping will be kept below the grating except where necessary to feed equipment. 19. Piping extensions higher than the mud agitators will be connected with a union for quick rig up and rig down. 20. All piping up to 6" will be schedule 80 IPS. 21. All piping 8" and larger will be schedule 40 IPS 22. Mud trough will be sized for 1500gpm. 23. All pumps to be mission magnum with dual mechanical seals intended for sucking the tanks dry. 24. All butterfly valves will have actuators below the grating with socket adapter for manual operation. 25. Where possible butterfly valves to be outside mud tanks and all butterfly valves are above mud level. 26. Agitator beams located in three sections of the tank. 27. Shaker tank piped for one (1) degasser, one (1) desander, one (1) desilter, and each compartment will have suction in a sump for transferring and jetting mud. 28. One (1) set of external stairs will be built for shaker tank access with 42" handrails. 29. One (1) crossover platform from Shaker Tank to Intermediate Tank #1. SUCTION TANK GENERAL DESCRIPTION: 30. To equipped with the following equipment: A. Two (2) Vertical Centrifugal Pumps Model 67065408ITAD0DS, __ charging mud pumps and feed/clean out - -------------------------------------------------------------------------------- Page 34 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- centrifugal 6x5x14, ___ 14" impeller 1150 rpm 60 hp vertical centrifugal pump, ___ w/dual mechanical seals @ 18 ppg mud. B. Two (2) Vertical Centrifugal Pumps Model 670654509ITAD0DS, mix and feed/clean out centrifugal 6x5x14, 14" impeller 1150 rpm 75 hp vertical centrifugal pump, w/dual mechanical seals @ 18 ppg mud. C. Four (4) Agitators 10hp Agitator Model MX-MA10-MTHC, drill mud agitator with 30:1 helical gear speed reducer, cast iron drop bearing housing for shaft support, and 10 hp 1800 rpm explosion proof c-face motor. Includes shaft 84" long and impeller up to 36" diameter and 49' diameter in suction #2 pitched blade impeller. Electrical service: xp 3 phase 230/460v/60Hz D. One (1) Mud Hopper Model MH-6-WVT, MUD MIXING HOPPER with venture tube hopper mud 6" with venture features include venture discharge nozzle, jet nozzle, sack cutting table, and hopper isolation value. 31. Suction tank overall dimension 55' long x 12'-0 wide. 32. Tank will be as follows: A. One (1) suction tank #2 232.275bbls B. One (1) reserve tank #2 135.427bbls C. One (1) suction tank #1 156.269bbls D. One (1) premix (pill) tank 121.42bbls 33. Mud tank measurement 46'-3/4"long x 10-0" wide. 34. Walls and partitions are to be fabricated of crimped 1/4" plate. 35. Flat bottom floors will be constructed of 3/8" plate. 36. Galvanized serrated grating will be installed over the mud compartments, on walkways, on equipment platforms, and on stairs. 37. Diamond checkered thread plate will be installed on the hopper floor and on the tank top over the hopper porch. 38. Skid beams will be W12 X 45 PPF A36 for the main mud tank skids. 39. Rim line will be constructed of 6" square tubing with 1/2" wall thickness. The rig side of the rim used for transferring mud and jetting each section to the reserve side and displacing mud. Hinged manways with rung ladders will be installed in all - -------------------------------------------------------------------------------- Page 35 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- compartments. 40. Rim line will be constructed of 6" square tubing with 1/2" wall thickness. The off-rig side of the rim used for transferring water and 2" outlets provided for shaker, desander and desilter, chemical mixing, and mud mixing area. 41. All handrails will be constructed of 1-1/2" square tube with 3/16" wall thickness and most of the handrails will be designed to stay in place during shipment but lay down to avoid having to rig them up each time. 42. Toe plates will be installed on the perimeter of tank and/or walkways. 43. Wedge style dumps to be installed in each compartment. 44. All pumps to be mission magnum with dual mechanical seals intended for sucking the tanks dry. 45. Suction tank piped for one (1) mud hopper, two (2) charging pumps, and each compartment will have suction in a sump for transferring and jetting mud. 46. All piping up to 6" will be schedule 80 IPS. 47. All piping 8" and larger will be schedule 40 IPS 48. All four (4) compartments will be agitated. 49. Overflow and underflow pipes will be fitted with hammer seal unions. 50. All butterfly valves will have actuators below the grating with socket adapter for manual operation. 51. Where possible butterfly valves to be outside mud tanks and all butterfly valves to be above mud level. 52. One set of stairs to tank will be built for the suction tank access with 42" handrail. Paint System: Blasted and primed with epoxy inside and out and painted with enamel hardener. - -------------------------------------------------------------------------------- Page 36 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- Qty. 1 1490413 Caustic Barrel National Oilwell Varco Caustic Barrel, telescoping. Qty. 1 1490308 Mud Check Station National Oilwell Varco Mud Check Station with sink. Qty. 1 EA. PBDG-48 Poor Boy Degasser 48" OD X 15 ft. long Poor Boy Degasser, skid mounted. Skid suitable for also mounting optional choke kill manifold). TO MOUNT ON COMMON SKID WITH TRIP TANK ASSEMBLY. Qty. 1 EA. Trip Tank Assembly - 100 BBL Trip tank assembly, skid mounted, constructed. TO MOUNT ON SAME SKID AS POOR BOY DEGASSER. (Two pump assemblies from below, to be mounted and piped on skid) Qty. 1 EA. Brake Water Cooling Unit Brake water cooling unit. Cooling system consist of a water tank integrated into the drawworks master skid, with piping, mounting for (2) 3x2x13 circulating pumps, and a heat exchanger. Heat exchanger is cooled with rig water. Qty. 2 EA. 61373-2 Brake Water Cooling Pump 3x2x13 Mission Magnum pump with 13" impeller, mechanical seal, 3ph, 60hz, 460V, 25 HP, explosion proof motor. Mounted on a low profile channel base. Elevation of centerline of assembly 12-15/16". Qty. 4 EA. 323280081-2 Trip Tank & Water Transfer Pump 3x2x13 Mission Magnum I pump with 11" impeller, mechanical seal, 3ph, 60hz, 460V, 25 HP, explosion proof motor. Elevation of centerline of assembly 15". Qty. 1 EA WT-400BBL 400BBL Water Tank General Construction: - -------------------------------------------------------------------------------- Page 37 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- o 3 runner wide flange oilfield skid o 3/8" flat plate bottom o 1/4" v-crimp walls o Open top design o 1/4" floor plate on skid extension o Ladder rungs inside & out o 4" drain with butterfly valve o 10'-0" wide x 7'-0" deep x 32'-8" long mounted on a 42'-0" long skid- provision for transfer pumps located on skid porch. o 400 BBL Cap. HIGH PRESSURE MUD PIPING High Pressure Mud Piping System Qty. 1 EA. The system will be fabricated as per NOV drawings. Spec of valves. o 4"-5000PSI W.P. gate valve 4" 5000psi buttweld mud gate valve for H2S. o 2"-5000PSI W.P. gate valve 2" 5000psi weldneck mud gate valve for H2S, API 6A, flanged with ring grooves lined. Qty. 3 PKG Vibrator Hose w/Nitrile Lining 4" X 12' X 10,000 PSI test pressure/5,000 PSI working pressure vibrator hose with 4" NPT male threads on each end and a safety clamp & chain each end. Qty. 1 EA. Rotary Hose w/Nitrile Lining 3-1/2" X 75" X 10,000 PSI test pressure/5,000 PSI working pressure rotary hose with 4" NPT male threads each end and a safety clamp & chain each end. BOP CONTROL AND CLOSING SYSTEM Qty. 1 EA. MB200-11BT3 1. Type80, M-SERIES accumulator module MODEL MC220-11BT3, in accordance with API RPI6E/16D, consisting of: - -------------------------------------------------------------------------------- Page 38 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- (a) Twenty Two (22) - eleven (11) gallon 3,000 PSI working pressure bladder type accumulators. The accumulator shell is manufactured from a single piece of chrome molybdenum steel and is free from joints, seams or welds. The top loading design permits field repair without voiding the certification. The accumulator assembly is tested to 4,500 PSI. This vessel meets USCG, API and other agency requirements. Accumulators are provided with ASME u-1a certificates and may be certified by other agencies if required at the time of order. (b) Four (4) - 4-1/2" OD machined steel accumulator manifolds. These manifolds are free from welds, seams or joints and meet requirements for working pressure up to 5,000 PSI. The accumulator manifolds are each equipped with an isolation and bleed valve to permit isolation of approximately twenty five percent (25%) of the accumulators for maintenance or checking pre-charge while maintaining the remaining accumulator capacity in operation. Space is provided for mounting up to twenty four (24) accumulators. (c) One (1) - 3500 PSI pressure relief valve set at 3,300 PSI i.e 10% above the working pressure of accumulator pressure to prevent over pressurizing the accumulators and pump systems and is self resetting, to comply with API RPI6E/16D specifications. (d) One (1) - 350 gallons fluid reservoir complete with baffles, 4" inspection ports, metal protected sight level gauge, air vent and 14" cleanout man way. The reservoir is provided with a tank flange for installation of low pressure fluid level alarm. Space is provided for up to six (6) manifold valves and one (1) annular valve. (e) One (1) - 5 station machined unit mounted hydraulic control manifold rated at 5,000 PSI working pressure. The machined manifold is free from welds, seams or joints and is used to supply hydraulic pressure to the hydraulic control manifold function valves. (f) One (1) - alternate source valve for introduction of hydraulic fluid from an alternative pump sources to comply with API RPI6E/16D requirement. This valve is plugged when not in use. (g) The assembly is complete with 1" schedule 160 piping rated for 5,000-PSI working pressure. Assembled on a welded structural steel skid with mounting provisions for electric pump, air pump, hydraulic control manifold and interface modules described in the following paragraphs of these specifications. - -------------------------------------------------------------------------------- Page 39 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- 1.1 T-series electric pump module model UET50HT460. This module is mounted on item 1 of these specifications and is used to pump fluid stored in the reservoir at atmospheric pressure, up to 3000 PSI to charge the accumulators and operate the BOP stack functions as per API RP16E/16D, consisting of: (a) One (1) - positive displacement reciprocating triplex plunger pump with 1-1/4" plungers. (b) One (1) - nominal ratio mechanical chain and sprocket drive assembly encased in an oil bath type chain guard. (c) One (1) - 50 horse power, 1775 rpm, 3 phase, 60 hz, 460v explosion proof electric motor, suitable NEMA frame, horizontal mount. (d) One (1) - NEMA explosion proof electric motor starter with off/auto mode selector switch and 3 phase over current protection and auxiliary contact to operate "pump running" light in remote panel, ul listed. Note: electric motor, starter & pressure switch are approved for installation in hazardous zones as identified in API RP 500 Class 1, group D, Division 1. Starter to motor wiring is 4 conductor, hexane insulated flexible armored cords with gland entries. (e) One (1) - explosion proof electric dual adjustment pressure switch set to automatically stop the pump when system pressure reaches 3000 PSI and restart the pump when system pressure drops to nominal 2700 PSI. (f) Complete with 2-1/2" 20 mesh suction strainers and 1-1/2", 5000 PSI working pressure discharge check valve. Note: The output flow is 19.70 gpm 1.2 T- series air pump module model UA8546-TB. This unit is mounted on item 1 of these specifications and is used in conjunction with the primary electric pump to meet API RP16E/16D requirements, consisting of: - (a) Four (4) - 8-1/2" air motor driven 60:1 ratio pumps with self-adjusting packing. This assembly produces approximately 20.0 gpm at mid range pressure of 2000 PSI and 15.6 gpm at 3000PSI with 125 PSI of air supply. - -------------------------------------------------------------------------------- Page 40 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- Note: Minimum air supply pressure required for operation of air pump without stalling is 50 PSI. (b) One (1) - hydro-pneumatic pressure switch set at 2900 PSI to shut the air pump off at normal operating pressure. The pumps will automatically start again if system pressure falls approximately 400 PSI. (c) One (1) - 1" air control manifold with four (4) pump shut - off valves, inlet air filter, air line lubricator, air pressure gauge and 1" npt female customer inlet connection. (d) Four (4) - 20 mesh suction inlet strainers. (e) Four (4) - 1/2" 5000 PSI working pressure discharge check valves. 1.3 M-series hydraulic control manifold module model UMGT2RB06P10 mounted on item 1 of these specifications, consisting of: (a) One (1) - air motor driven, sub plate mounted 1500-0-10, 1" ported, low dead band pressure reducing and regulating valve for controlling annular regulated pressure. This regulator features failsafe remote control capability through a pneumatic motor gear drive assembly and additionally provides manual adjustment at the regulator should pilot pressure for remote control be interrupted. The regulator will respond to pressure changes on the down stream side with sensitivity sufficient to maintain the set pressure within +- 150 PSI as per requirements of API RP53/16D. This regulator is automatically limits maximum outlet pressure to 1500 PSI which is within the manufacturer specifications for all annular preventers except the Cameron type "d". (b) One (1) - sub plate mounted, 1500-0-10 1" ported, pressure reducing and regulating valve for controlling manifold regulated pressure to the ram type preventers and/or hydraulic actuated choke and kill line valves. This regulator is manually adjusted and limits maximum outlet pressure to 1500 PSI during normal operation. Maximum outlet pressure of 3000 PSI is available upon request however the manifold regulator bypass serves the purpose. Note: The regulators are all stainless steel fitted, linear shear seal type valves with increased flow rates and 5000 PSI rated working pressure bodies. (c) Two (2) - 25 micron filters. One is installed in supply line to each hydraulic regulator. - -------------------------------------------------------------------------------- Page 41 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- (d) One (1) - 1" size stainless steel fitted, 4-way, 3 position manually operated rotary shear seal selector valve rated for 3000 PSI WP for controlling pressure to open and close the annular preventer. This valve is isolated from the manifold valve circuit and receives supply pressure from the annular regulator. (e) Five (5) - 1" size stainless steel fitted, 4 way, 3 position manually operated rotary shear seal selector valves rated for 3000 PSI working pressure to control pressure to open and close ram preventers and/or hydraulically actuated choke and kill line valves. (f) One (1) - shear/blind ram guard mounted on the 4 way valve to prevent accidental operation of the shear/blind ram. (g) One (1) - 1" size, 4-way, 2 position manually operated rotary shear seal 3000 PSI WP. by-pass valve for operation of the manifold regulator by-pass function. This valve allows selection of regulated pressure or 3000 PSI (full accumulator pressure) to the manifold valves for emergency operation of the ram type preventers. (h) One (1) bolt on gauge panel assembly with snubber oil consisting of:- o accumulator pressure gauge 0-6000 PSI (0-42000 KPA), 6" face, glycerin filled, panel mount, dual scale. o manifold regulated pressure gauges 0-10000 PSI (0-70000 KPA), 6" face glycerin filled, panel mount dual scale. o annular regulated pressure gauge 0-3000 PSI (0-21000 KPA), 6" face glycerin filled, panel mount, dual scale. (i) One (1) - 10000 PSI working pressure manifold bleeder valve for bleeding system pressure to the reservoir when required for maintenance. (j) One (1) - manifold self resetting relief valve set at 5500 PSI. (k) Supply piping and outlet pipes to the preventers for 5000 PSI working pressure. 1.4 A-series interface module model IA2-AOPRB06 this module permits pneumatic remote control of the manifold functions from two remote panels. It is mounted on item 1 of these specifications as per API RP16E/16D, consists of:- (a) Six (6) - 3" x 2" air cylinders complete with mounting brackets plumbing items and fittings installed on the 4-way rotary shear - -------------------------------------------------------------------------------- Page 42 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- valves on the manifold module for remote operation of the BOP stack functions. (b) One (1) - air cylinder complete with mounting brackets, plumbing items and fittings installed on the by-pass valve for remote operation of the manifold regulator by-pass function. (c) One (1) - annular regulator pneumatic drive installation kit consisting of:- o two (2) - quick exhaust air valves. o One (1) - air pressure regulator with gauge. o One (1) - air lubricator. o One (1) - manually operated air directional control valve, spring centered with air pilot operators for remote control and local increase/decrease control. (d) One (1) -air shuttle valve assembly with two junction box assemblies to interface with the remote panels. One (1) 3-way air transmitter assembly for remote indication of annular pressure, manifold pressure and accumulator pressure to the driller's panel. (e) Three (3) - air pressure regulators to control instrument air pressure to each air transmitter. (f) One (1) - float operated explosion proof switch installed in the fluid reservoir actuated by low fluid level. The switch is hardwired to the interface junction box using cable glands and armored cable rated for division 1 hazardous installation. (g) One (1) - explosion proof cast enclosure suitable for division 1 installation containing: o Pressure switches for remote indicator lights and alarms for: o low accumulator pressure. o low reservoir fluid level. o low air supply pressure. (h) One (1) - alarm control circuit installed in the explosion proof enclosure. An alarm condition will cause the appropriate warning light to flash and the horn to sound at the unit and tool pusher panel. Depressing the alarm acknowledge button on the panel will silence the horn and cause the warning light to remain steady. The warning remains lit until the condition that caused the alarm is corrected. 1.5 Graphic air operated driller remote control panel aogprb06-fc with - -------------------------------------------------------------------------------- Page 43 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- graphic illustration of bop stack to meet API RPI6E/16D, consisting of:- (a) Six (6) 1/4" spring centered, 4-way control valves for operation of the preventers and hydraulically operated gate valves. (b) One (1) - 1/4" spring centered 4-way control valve for remote operation of the bypass/internal override function. (c) One (1) - 1/4" spring centered 4-way valve with lubricator and air regulator for increase/decrease control of the annular pneumatic motor driven hydraulic regulator. (d) Four (4) - gauges: - one (1) 0-300 PSI air pressure, and three (3) receiver gauges, one (1) 0-3000 PSI annular pressure, one (1) 0-6000 PSI accumulator pressure and one (1) 0-10000 PSI manifold pressure. (e) One (1) - master air safety valve which must be operated before the driller can operate any of the preventers. (h) One (1) - alarm box consisting of: o One (1) - light indicator to indicate electric "pump running". o One (1) - "lamp test" push button. o Three (3) - indicator lights to indicate following alarm conditions:- o low accumulator pressure. o low reservoir fluid level. o low air supply pressure. o standby power on. o One explosion proof warning horn. o One (1) - alarm acknowledges pushbutton switch. An alarm condition will cause the appropriate warning light to flash and the horn to sound at driller's panel. Depressing the alarm acknowledge switch will silence the horn and cause the warning light to remain steady. The warning light remains lit until the condition that caused the alarm is corrected. o One (1) exf -10 explosion proof male receptacles for connection of the electric control cable to unit junction box alarms. (f) One (1) - air junction box fixed plate JGF-24 mounted on the remote panel for connection to the junction box hose plate on the air cable. - -------------------------------------------------------------------------------- Page 44 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- (g) One (1) - filter, lubricator assembly. (h) Free-standing cabinet panel complete with lubricator and all air valve, fittings, and connections. 1.6 Interconnect air hose bundle assembly model 150JG19JG. This unit interfaces the driller remote control panel to the air junction box of the interface module located on the accumulator unit, consisting of:- (a) Two (2) - 24 air junction box hose plates (one assembled on each end of the air hose bundle). (b) One (1) - one hundred fifty (150) ft. Length of 19 lines air hose bundle, each line is a 3/8" o.d. polyethylene air tube. All lines are encased in a flame resistant polyvinylchloride sheath. 1.7 Interconnect electric cable assembly model 150-OO10XF with explosion proof connectors on one end and hardwired on accumulator unit alarm junction box at other end used to connect tool pusher panel to interface module located on the accumulator unit, consisting of: (a) One (1) - exf 10 explosion proof female connector to connect to the tool pusher panel female receptacle and unit mounted junction box. (b) One hundred fifty (150) ft.10 conductor cable with 16 AWG standard copper and insulated wires encased in sheath. 1.8 Graphic air operated tool pusher remote control panel AOGORB06-FC with graphic illustration of bop stack, consisting of:- (a) Six (6) 1/4" spring centered, 4-way control valves for operation of the preventers and hydraulically operated gate valves. (b) One (1) - 1/4" spring centered 4-way control valve for remote operation of the bypass/internal override function. (c) Four (4) - gauges: - one (1) 0-300 PSI air pressure, and three (3) receiver gauges, one (1) 0-3000 PSI annular pressure, one (1) 0-6000 PSI accumulator pressure and one (1) 0-10000 PSI manifold pressure. (d) One (1) - filter, lubricator assembly. (e) One (1) - master air safety valve which must be operated before the driller can operate any of the preventers. - -------------------------------------------------------------------------------- Page 45 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- (f) One (1) - air junction box fixed plate JGF-24 mounted on the remote panel for connection to the junction box hose plate on the air cable. (g) Free-standing cabinet panel complete with lubricator and all air valve, fittings, and connections. 1.9 Interconnect air hose bundle assembly model 150JG19JG. This unit interfaces the driller remote control panel to the air junction box of the interface module located on the accumulator unit, consisting of:- (a) Two (2) - JGH24 air junction box hose plates (one assembled on each end of the air hose bundle). (b) One (1) - one hundred fifty (150) ft. Length of 19 lines air hose bundle, each line is a 3/8" o.d. polyethylene air tube. All lines are encased in a flame resistant polyvinylchloride sheath. 1.10 Twelve (12) - 1" x 15 ft, 3000 PSI fire resistant bop hose. 1.11 Twelve (12) - 1" x 25 ft, 3000 PSI fire resistant bop hose. 1.12 One (1) - 22 pro-12 pipe rack assemblies mounted on side junkbin/bop closing unit skid. Each pipe rack consists of 12 numbers of 1'x22'-7-1/4" pipe with 1"fig 602 hammer union halves on each ends. 1.12 Thirty six (36) - 1" fig 602 hammer union. 1.13 0902-0100 - charging and gauging assembly to aid in pre-charging of the accumulator bottles consisting of: Air chuck, adapter, gauge, tank valve, swivel connector, hose, coupler, nut and bleeder valve. 1 ###-###-#### - bladder pull rod. This item enables easy replacement of the separator bottle bladder. 1.15 0902-0200 - valve core tool. This item enables easy removal and installation of the valve cores. 1.16 0902-0400, spanner wrench 1.17 All the above will be mounted on the JunkBin/BOP Closing Unit transportation skid. - -------------------------------------------------------------------------------- Page 46 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- CONTROLS & INSTRUMENTATION Qty. 1 EA Ideal Rig Control & Instrumentation System For 1500HP IDEAL Rig System Land Rig The Ideal Rig Control System provides conventional control for DC motors and machinery, plus many efficiency and safety enhancing features found in more sophisticated integrated control systems. The Drillers Console is ergonomically designed and manufactured with a stainless steel frame and 304 stainless steel facial panels. The console contains the following equipment: o Drawworks Controls o Pump Controls o Rotary Table Controls o Cathead Controls o Weight Indicator o Driller's Meter Panel o Driller's Display Panel o Emergency Stop Much emphasis has been placed on console layout and ease of operation and as a result this user-friendly product requires no special operator training. There are no hydraulic components in the driller's console. Driller's Meter Panel The Driller's Meter Panel (DMP) provides additional analog and digital indication of the main drilling parameters on conventional analogue meters and digital readouts. The operation of this panel is independent of the DDP and as such it provides full display redundancy. For the Ideal Rig, meters indicate Hook Load, Stand-Pipe Pressure, Tong Torque, Rotary Table Torque, Rotary Table RPM, Mud Pump #1 SPM, Mud Pump #2 SPM and trip tank indicator. Driller's Display Panel The Driller's Display Panel (DDP) is a color touchscreen display that is used for SDAQ Drilling Information System. The unit is fully ruggedized for drill floor operation. Requires 110v AC 60Hz rig supply. DDP Specifications: o 15" Active Matrix Color LCD o 1024 x 768 Resolution XGA LCD screen o 400 cd/m2 minimum brightness o Console mounted - -------------------------------------------------------------------------------- Page 47 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- o Weight: 20kg o Dimensions: 420(L) x 200(W) x 410(H)mm The Ideal Auto Driller & Brake Control Safety System This system incorporates remote braking, kinetic energy monitoring and automatic drilling systems. The control system features: o Joystick Control of Disc Brakes and Eddy Current Brake. o Floor and Crown Block protection. o Block Speed Limiting. o Soft Stop at Crown & Floor. o Emergency stop. o Auxiliary Brake Monitoring. o Weight on Bit Auto Drilling o Rate of Penetration Auto Drilling The Ideal Auto Driller & Brake Control Safety System is a complete system hardware package and is supplied with all materials (except cables), required to effect its installation, including: o Safe Area Signal Conditioning Unit o Safe Area Power Supply Unit with Battery Back Up o Control / Display Unit o Intrinsically Safe Spear Shaft (Drillers offside) mounted Height Sensor. o Intrinsically Safe Weight Sensor o Audible Alarm o Main Brake/Clutch Solenoid o Safe Area Auxiliary/Electric Brake Interface o Safe Area Drawworks on/off throttle relay o Installation kit including, junction boxes, cable glands, hoses, fittings, mounting brackets and associated fasteners. 1. Remote Braking The joystick control system provides electronic over hydraulic operation of the disc brakes. The joystick is a "dead man" type device. The service calipers are fully applied with the joystick in the spring returned position. Center to forward on the joystick gradually releases the brakes, with the maximum joystick stroke fully releasing the brakes. When the operator releases the joystick it springs forward, fully applying the service brakes. To assist the driller the console is fitted with dual hydraulic pressure gauges which indicate both driller side and off driller side brake caliper pressures. - -------------------------------------------------------------------------------- Page 48 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- 2. Kinetic Energy Monitoring The kinetic energy monitoring system monitors the load, speed and position of the traveling block and when required operates the drawworks brakes, clutches and motors to bring the traveling block to a controlled stop within preset limits of travel. Interfaces are included for operation of the drawworks auxiliary brake; service and emergency / park brakes and clutches as well as the drawworks drive motor/s. During downward travel, the system measures the total hook load to determine a safe velocity profile for downward motion. As the blocks descend and speed is gained, the auxiliary brake is engaged to bring the block speed within the safe velocity profile. This process continues until the block comes to rest at, or just above, the bottom limit of travel. However, should the auxiliary brake fail to control the descent as requested, then the system will assume an auxiliary brake fault and will immediately actuate the service and emergency / park brake calipers in an effort to bring the blocks to a controlled stop. Should the speed be at or below 6" per second at the lower limit the system assumes that the driller has control and will allow him to proceed below the lower limit at this speed. Should the speed increase to above 6" per second the system will immediately actuate the service and emergency / park brake calipers. When traveling upwards the system assesses upward velocity and hook load and, when required, will switch off the drive to the drawworks motors and at the same time it shall apply, momentarily, the Elmagco brake to bring the drawworks and traveling block assembly to a standstill at, or just below, the upper limit of travel. Just before the blocks come to a stop the service and emergency / park brake calipers are also set to prevent any subsequent, unwanted, downward motion. An override facility is available on the drillers console to allow upward travel beyond the upper limit. This override requires that the driller operates a spring return pushbutton and speed does not rise above 12" per second. 3. Auto-Drilling The auto drilling system provides a simple, user-friendly auto-driller that can control hook load and hence weight on bit (WOB), automatically. Additionally the unit can be set to auto-drill in Rate of Penetration (ROP) mode for "top-hole" or other specific drilling applications. In WOB operation the system compares the actual bit weight to the desired bit weight releasing the drawworks brakes to feed off drill line. As this is happening any increase in bit weight is compared to the - -------------------------------------------------------------------------------- Page 49 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- corresponding movements of the drawworks drum. In this way the system continuously monitors the relationship between drawworks rotation and the transfer of weight from the hook to the bit. The frequency and duration of the brake release cycle is then controlled to provide optimum ROP while ensuring that bit weight is kept at a constant level. In ROP operation the system acts as a block lowering speed control device. The block will descend at the desired rate set by the operator. Additionally the system will automatically stop and reset itself to zero ROP should a preset WOB be exceeded in this mode. 4. DISPLAY PARAMETERS o Ton Miles o Hook Load o Block Speed o Height from Floor o Rate of Penetration / Weight on Bit o Brake Caliper Hydraulic Pressure (Electrical Gauge) o Set-up Menu o Maintenance Menu Ideal Auto-Driller & Brake Control Safety System - Features and Benefits The system ensures safe block speeds and progressive, shock free stops should the floor and crown limits be exceeded. Should the Baylor brake be requested to slow the traveling block and fail to do so the main brakes will be applied regardless of block height. The joystick allows the driller to be located at an ergonomically efficient location on the rig floor without the need for complicated mechanical linkages. This affords the Driller a superior view of what is happening on the rig floor and racking board and gives flexibility to optimizing the rig floor layout. The joystick removes the requirement for continuous operation of the traditional, heavy brake handle. The repeatability of Ideal Auto-Driller provides maximum rate of penetration whilst guarding against overweighting of the drill bit. These features reduce driller fatigued and enable him to more alertly focus on the safety and efficiency of the drilling operation. - -------------------------------------------------------------------------------- Page 50 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- Simplicity is a prime user criterion in the system design. The intuitive controls are self-explanatory. Minimal training is required to operate and run the system. SDAQ Drilling Information System The SDAQ monitors and displays drilling parameters and related alarm functions on the DDP. Information is displayed in analog or digital formats, as selected by the driller. The standard Ideal Rig configuration monitors the same parameters monitored on the Driller's Meter Panel, plus pump stroke counters, rig air pressure and HPU pressure. The SDAQ can also distribute real time drilling information to other devices connected to the system network, including other terminals on the rig location (safe or hazardous area), M/D Totco RigSense, or remote monitoring services connected to the rig via modem. Sensors The following sensors are supplied on the Ideal Rig to provide feedback for the Driller's Meter Panel, the Ideal Auto-Driller and the SDAQ systems. All sensors are intrinsically safe. 1. Hook Load Sensor (EEx Zone 1). Solid state, strain gauge pressure transmitter, 4 to 20 mA. Range 0 to 1080 PSI to suit deadline sensator. 2. Mud pressure sensor (EEx Zone 1). Solid state, strain gauge pressure transmitter, 4 to 20 mA. Range 0 to 5000 PSI. 3. Rotary/Top Drive torque sensor. Split core current transformer, 4 to 10 mA. Range and calibration nominally 0 to 1000 amps (Adjusted to suit rig). 4. Mud pump SPM sensor 9EEx Zone 1). Inductive proximity switch, NAMUR digital output. 5. Rotary/Top Drive RPM sensor (EEx Zone 1). Inductive proximity switch, NAMUR digital output. 6. Height/ROP sensor (EEx Zone 1). Digital shaft encoder with quadrature output, 250 pulses per drawworks resolution. 7. Tong torque sensor (EEx solid state, strain gauge pressure transmitter, 4 to 20 mA. Range nominally 0 to 2000 PSI (Adjusted to suit rig). 8. Tension load cell 25k - for tong torque, utilizes item #7 for signal transmission. Signal Conditioning Unit (SCU) - -------------------------------------------------------------------------------- Page 51 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- The sensors are connected to remote I/O in the SCU, inside the SCR house. Remote I/O is equipped with barriers and marshalling components for field terminations. Cable to the Control Cabinet is included. Specifications: Weight Approximately 100 lbs Dimensions 600mm x 600mm x 300mm Electrical 110-220VAC, 50/60 Hz Qty. 1 EA. WL100 KINNECOR / LANTEC Wireline Winch Stand mounted winch, with 5.5" dia. barrel, 16" dia. flange, 20" long and cable dia .092" performance based on motor torque of 5,888 LB. IN. @ 68RPM: Drum holds 34,800 T of cable on 57 layers. (outfitted with 25,000 ft, stainless steel line) Bare drum line pull = 2,100 LB @ 100 FPM Mid drum line pull = 990 LB @ 210 FPM Full drum line pull = 740 @ 282 FPM AIR SYSTEM Qty. 2 EA. HP75 Air Compressor Ingersoll-Rand Model HP75 air compressors Type Oil flooded screw air compressor Model 75 HP Capacity 299CFM Rated pressure 140PSI Power supply 480V/60Hz/3Ph Cooling method Air cooled Ambient temperature <46[_]C SCOPE OF SUPPLY: Air compressor mounted on air receiver, main electric motor, modulation system, oil cooler, after cooler, air filter, oil filter, water/gas separator, electrical control system, piping, enclosure, etc. Qty. 1 EA. LD-0.8/10 - -------------------------------------------------------------------------------- Page 52 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- Cold Start Unit Two-stage cold start compressor unit, belt drive, guard skid with 301 cc gasoline fuel engine. Qty. 2 IR85D Ingersoll-Rand Model IR85D air dryer. o Model IR85D o Capacity 7.5 M3/min. o Max. inlet temperature 66DEG. C o Filtering capability Oil 0.5ppm o Particle size 1u Qty. 2 EA. VAR-53CF-PI 53CF vertical air receiver with ring base. The 400 gallon receiver is ASME coded and stamped fro 165 PSIG working pressure. Finish is factory standard. 36"OD x 98"L Air Accessory Kit consist of Pressure Relief Valve Pressure Gauge Automatic Drain Qty. 1 EA. 32CF Horizontal air receiver with mounting feet. The 230 gallon receiver is ASME coded and stamped for 165 PSIG working pressure. 30"OD, 84" length. With accessory kit. Air Accessory Kit consists of: Pressure Relief Valve Pressure Gauge Automatic Drain Qty. 2 EA. QJ200-5B Model QJ200-5B Utility air winch. Five (5) ton capacity. Air winch consisting of the following features: 1. Key part, piston air motor and adopts dual supporting structure making a more smoothly and efficiently operation. 2. Unique design lubrication system of motor valve core makes a more thorough lubrication and a more dependable winch. 3. Air distribution valve box is grouped with motor body, making it easier to replace quick-wear parts. 4. High starting torque allows for start-up with load. - -------------------------------------------------------------------------------- Page 53 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- 5. Equipped with automatic brake system and hand brake. 6. Automatic brake mechanism integrated in air motor valve box allowing one handle control for lifting, lowering and braking. Technical Parameters Working Pressure 0.5 - 0.9 MPa 72 - 130 psi Maximum Line Pull (first layer) 50kN 5.5 US ton Maximum rope speed 35 m/min 114.8 ft/min Air Consumption (7atm) 3 m3/min 800 gal/min Rated Power 15kW 20hp Air motor Piston Stroke 76mm 3in Cylinder number 5 5 Diameter 220mm 8.7in Drum Width 435mm 17.1 in Diameter of flange 485mm 19in Rope Storage 120m 393 ft Rope Diameter 15.875mm 5/8in Overall Length 1300mm 51in Overall Width 940mm 37in Overall Height 985mm 39in Weight 620kg 1370lb Qty. 1 EA. 8CF 8 c.f. horizontal air receiver, 60 gallon, ASME coded and stamped to accept minimum 165 PSIG working pressure. 20" OD x 48" Length FUEL SYSTEM Qty. 1 LOT FT-400-BBL-CYL Cylindrical fuel tank, having a 400 BBL capacity, saddle mounted on a three runner skid with oilfield type skid ends for tailboarding. Tank includes one 20" OD manway, ladder rungs inside and out, one (1) 2" vent, one (1) 4" fill connection, and one (1) 4" drain and one (1) sight level gauge. Skid extension decked with 1/4" checkered plate to accommodate fuel transfer pump and one fuel filter. Pump and filter quoted separately. Qty. 1 EA. K-FF1081 National Oilwell Varco Model FS-1081 Fuel Filter System - -------------------------------------------------------------------------------- Page 54 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- This filter package is a three-stage filter type. There is a prefilter to remove dirt, a coalescer element to form dissolved water into droplets and separator element to make the water droplets drop out of the fuel. PREFILTER: Contains a quantity of three pleated paper filter elements each rated to remove solids to five (5) microns. The three elements will hold approximately twenty pounds of dirt before time to change out the elements. The purpose of the prefilter is to trap solids or dirt before they can reach the coalescer. COALESCER: Contains a quantity of two coalescer elements and two separator elements. The purpose of the coalescer element is to separate the water from the fuel by forming the water into droplets so that the water will fall out of the fuel by gravity. The purpose of the separator element is to repel any droplets that do not fall out of the fuel. This tank has an automatic drain valve to let the separated water out. This is what is commonly referred to as two-stage separation. It is important to remember that even though the coalescer and separator elements will remove dirt, their primary function is to remove water. Rated to remove water to 5 parts per million or 99.999995%. DIESEL FUEL TRANSFER PUMPS Two packages each having a Roper 2AM21 gear pumps with built in relief valve, rated at 35-39 GPM mounted on a base with a flexible coupling, OSHA coupling guard and a 3 HP, 1800RPM, explosion proof motor, 230-460Volts, 3 phase, 60 cycle. MOUNTING: These two filter tanks along with the two pump packages are mounted on a base, piped with valves for series flow through the tanks or to bypass the filters. The pumps will be manifold together so that product can flow through either pump while the other pump is operating. Pressure gauges are mounted on each of the tanks to measure pressure drop and know when to change filters. The system will also include an automatic drain for water, and all necessary valves, unions etc. to make it a complete functional unit. The system only requires a hose from the main fuel storage and a hose to the day tank. The total unit is painted with a two-part catalyst setting epoxy. ELECTRICAL RIG-UP Electrical materials, supervision, electrical rig-up, welding, and rig down. - -------------------------------------------------------------------------------- Page 55 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- LIGHTING SYSTEM - 120Volt 60 HZ 1. Mast, Racking Board, Crown and Obstruction Lighting 2. Rig Floor - Drawworks Lighting 3. Pipe Rack and Area Lighting 4. Substructure Lighting 5. Mud Pump Lighting 6. Generator Skids 7. Doghouse 8. Water Tank 9. Brake Cooling Tank 10. Hydraulic Unit Skid clamps, safety cables, and stringer, and whips. 11. BOP Skid 12. Work Shop 13. Fuel Tank Skid 14. Suction Tank, 3 - AC Generators 600 Volt 60 HZ 15. Agitator Tank All fixtures to be completed outfitted with plugs and receptacles, cable GENERATOR POWER AND CONTROL CABLES 1. A/C power and control cables to connect generators to SCR House 2. Control cables for generators 3. Glastic plate for cable entrance @ generator 4. Cable Trays included D.C. MOTOR POWER AND CONTROL CABLES Mud Pumps Motors (4) Drawworks Motors (2) Rotary Table Motor (1) 1. Power and Control Cables AC POWER AND CONTROL CABLES 1. (2) Mud Tanks are included 2. Cable tray's included PLUG AND RECEPTACLE PANELS FURNISHED BY NOV 1. Plugs and receptacles furnished by Prime - -------------------------------------------------------------------------------- Page 56 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- A. Between Mud Pump 1 and Mud Pump 2 (4 motors) B. For Mud Tanks & System C. Grasshopper D. (2) Water Tanks E. 120 Volt Power BOP Closing F. Swing out Booms on Water Tank G. Mud Pump Boom H. Workshop & Connections I. BOP Plugs @ Doghouse J. BOP Plugs @ BOP RIG-UP SPECIFICATIONS A. Cables supplied will be Polyrad XT 125 degree C type P B. Electrical Rig-up will meet API standards C. All connections to be weatherproof D. Receptacles to have watertight covers E. Grounding of skids included F. Function Test & Support ENGINEERING A. As built drawings on a C.D. will be provided to NOV. MECHANICAL RIG-UP Qty. 1 LOT MRU-T-RD-1500 Rigup Test Rig Down Qty. 1 LOT EL-CBLTRY-GRHPR Cable Trays To Grasshopper Qty. 1 EA. BN-1, Bell Nipple Qty. 1 FL-12, 12" Flow Line Qty. 1 EA. Mousehole Scabbard Assembly Qty. 1 EA. Rathole Assembly MISCELLANEOUS EQUIPMENT DRILLER'S CABIN Ideal Rig Control & Instrumentation System - -------------------------------------------------------------------------------- Page 57 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- For 1500HP IDEAL Rig System Land Rig The Ideal Rig Control System provides conventional control for DC motors and machinery, plus many efficiency and safety enhancing features found in more sophisticated integrated control systems. The Drillers Console is ergonomically designed and manufactured with a stainless steel frame and 304 stainless steel facial panels. The console contains the following equipment: o Drawworks Controls o Pump Controls o Rotary Table Controls o Cathead Controls o Weight Indicator o Driller's Meter Panel o Driller's Display Panel o Emergency Stop Much emphasis has been placed on console layout and ease of operation and as a result this user-friendly product requires no special operator training. There are no hydraulic components in the driller's console. Driller's Meter Panel The Driller's Meter Panel (DMP) provides additional analog and digital indication of the main drilling parameters on conventional analogue meters and digital readouts. The operation of this panel is independent of the DDP and as such it provides full display redundancy. For the Ideal Rig, meters indicate Hook Load, Stand-Pipe Pressure, Tong Torque, Rotary Table Torque, Rotary Table RPM, Mud Pump #1 SPM, Mud Pump #2 SPM and trip tank indicator. Driller's Display Panel The Driller's Display Panel (DDP) is a color touchscreen display that is used for SDAQ Drilling Information System. The unit is fully ruggedized for drill floor operation. Requires 110v AC 60Hz rig supply. DDP Specifications: o 15" Active Matrix Color LCD o 1024 x 768 Resolution XGA LCD screen o 400 cd/m2 minimum brightness o Console mounted o Weight: 20kg o Dimensions: 420(L) x 200(W) x 410(H)mm The Ideal Auto Driller & Brake Control Safety System - -------------------------------------------------------------------------------- Page 58 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- This system incorporates remote braking, kinetic energy monitoring and automatic drilling systems. The control system features: o Joystick Control of Disc Brakes o Floor and Crown Block protection. o Block Speed Limiting. o Soft Stop at Crown & Floor. o Emergency stop. o Auxiliary Brake Monitoring. o Weight on Bit Auto Drilling o Rate of Penetration Auto Drilling o Safe Area Signal Conditioning Unit o Safe Area Power Supply Unit with Battery Back Up o Control / Display Unit o Intrinsically Safe Spear Shaft (Drillers offside) mounted Height Sensor. o Intrinsically Safe Weight Sensor o Audible Alarm o Main Brake/Clutch Solenoid o Safe Area Auxiliary/Electric Brake Interface o Safe Area Drawworks on/off throttle relay o Installation kit including, junction boxes, cable glands, hoses, fittings, mounting brackets and associated fasteners. Remote Braking The joystick control system provides electronic over hydraulic operation of the disc brakes. The joystick is a "dead man" type device. The service calipers are fully applied with the joystick in the spring returned position. Center to forward on the joystick gradually releases the brakes, with the maximum joystick stroke fully releasing the brakes. When the operator releases the joystick it springs centered, fully applying the service brakes. To assist the driller the console is fitted with dual hydraulic pressure gauges which indicate both driller side and off driller side brake caliper pressures. Kinetic Energy Monitoring The kinetic energy monitoring system monitors the load, speed and position of the traveling block and when required operates the drawworks brakes, clutches and motors to bring the traveling block to a controlled stop within preset limits of travel. Interfaces are included for operation of the drawworks auxiliary brake; service and emergency / park brakes and clutches as well as the drawworks drive motor/s. During downward travel, the system measures the total hook load to determine a safe velocity profile for downward motion. As the blocks descend and speed is gained, the auxiliary brake is engaged to bring the block speed within the safe velocity profile. This process continues until the block comes to rest at, or just above, the bottom limit of travel. However, should the auxiliary brake fail to control the descent as requested, then the system will assume an auxiliary brake fault and will immediately actuate the service and emergency / park brake - -------------------------------------------------------------------------------- Page 59 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- calipers in an effort to bring the blocks to a controlled stop. Should the speed be at or below 6" per second at the lower limit the system assumes that the driller has control and will allow him to proceed below the lower limit at this speed. Should the speed increase to above 6" per second the system will immediately actuate the service and emergency / park brake calipers. When traveling upwards the system assesses upward velocity and hook load and, when required, will switch off the drive to the drawworks motors and at the same time it shall apply, momentarily, the Elmagco brake to bring the drawworks and traveling block assembly to a standstill at, or just below, the upper limit of travel. Just before the blocks come to a stop the service and emergency / park brake calipers are also set to prevent any subsequent, unwanted, downward motion. An override facility is available on the drillers console to allow upward travel beyond the upper limit. This override requires that the driller operates a spring return pushbutton and speed does not rise above 12" per second. Auto-Drilling The auto drilling system provides a simple, user-friendly auto-driller that can control hook load and hence weight on bit (WOB), automatically. Additionally the unit can be set to auto-drill in Rate of Penetration (ROP) mode for "top-hole" or other specific drilling applications. In WOB operation the system compares the actual bit weight to the desired bit weight releasing the drawworks brakes to feed off drill line. As this is happening any increase in bit weight is compared to the corresponding movements of the drawworks drum. In this way the system continuously monitors the relationship between drawworks rotation and the transfer of weight from the hook to the bit. The frequency and duration of the brake release cycle is then controlled to provide optimum ROP while ensuring that bit weight is kept at a constant level. In ROP operation the system acts as a block lowering speed control device. The block will descend at the desired rate set by the operator. Additionally the system will automatically stop and reset itself to zero ROP should a preset WOB be exceeded in this mode. Display Parameters o Ton Miles o Hook Load o Block Speed o Height from Floor o Rate of Penetration / Weight on Bit o Brake Caliper Hydraulic Pressure (Electrical Gauge) o Set-up Menu o Maintenance Menu Ideal Auto-Driller & Brake Control Safety System - Features and Benefits - -------------------------------------------------------------------------------- Page 60 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- The system ensures safe block speeds and progressive, shock free stops should the floor and crown limits be exceeded. Should the Baylor brake be requested to slow the traveling block and fail to do so the main brakes will be applied regardless of block height. The joystick allows the driller to be located at an ergonomically efficient location on the rig floor without the need for complicated mechanical linkages. This affords the Driller a superior view of what is happening on the rig floor and racking board and gives flexibility to optimizing the rig floor layout. The joystick removes the requirement for continuous operation of the traditional, heavy brake handle. The repeatability of Ideal Auto-Driller provides maximum rate of penetration whilst guarding against overweighting of the drill bit. These features reduce driller fatigued and enable him to more alertly focus on the safety and efficiency of the drilling operation. Simplicity is a prime user criterion in the system design. The intuitive controls are self-explanatory. Minimal training is required to operate and run the system. SDAQ Drilling Information System The SDAQ monitors and displays drilling parameters and related alarm functions on the DDP. Information is displayed in analog or digital formats, as selected by the driller. The standard Ideal Rig configuration monitors the same parameters monitored on the Driller's Meter Panel, plus pump stroke counters. The SDAQ can also distribute real time drilling information to other devices connected to the system network, including other terminals on the rig location (safe or hazardous area), M/D Totco RigSense, or remote monitoring services connected to the rig via modem. Sensors The following sensors are supplied on the Ideal Rig to provide feedback for the Driller's Meter Panel, the Ideal Auto-Driller and the SDAQ systems. All sensors are intrinsically safe. * Hook Load Sensor (EEx Zone 1). Solid state, strain gauge pressure transmitter, 4 to 20 mA. Range 0 to 1080 PSI to suit deadline sensator. * Mud pressure sensor (EEx Zone 1). Solid state, strain gauge pressure transmitter, 4 to 20 mA. Range 0 to 5000 PSI. * Rotary/Top Drive torque sensor. Split core current transformer, 4 to 10 mA. Range and calibration nominally 0 to 1000 amps (Adjusted to suit rig). * Mud pump SPM sensor 9EEx Zone 1). Inductive proximity switch, - -------------------------------------------------------------------------------- Page 61 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- NAMUR digital output. * Rotary/Top Drive RPM sensor (EEx Zone 1). Inductive proximity switch, NAMUR digital output. * Height/ROP sensor (EEx Zone 1). Digital shaft encoder with quadrature output, 250 pulses per drawworks resolution. * Tong torque sensor (EEx solid state, strain gauge pressure transmitter, 4 to 20 mA. Range nominally 0 to 2000 PSI (Adjusted to suit rig). * Tension load cell 25k - for tong torque, utilizes item #7 for signal transmission. Signal Conditioning Unit (SCU) The sensors are connected to remote I/O in the SCU, inside the SCR house. Remote I/O is equipped with barriers and marshalling components for field terminations. Cable to the Control Cabinet is included. Specifications: Weight Approximately 100 lbs Dimensions 600mm x 600mm x 300mm Electrical 110-220VAC, 50/60 Hz Miscellaneous Equipment Drillers Dog House / Control Cabin The driller's cabin is designed to provide the drilling operators a safe and comfortable work environment. The cabin will be suitable for the required area classification. Considerations made include: Environment Considerations made include comfortable colors, low noise levels, and high automation level this environment will enhance the quality and the success of the drilling operations where critical split-second decisions are often made. Ergonomics The driller's cabin and other control panels are designed to make the operator able to work long shifts without stress or strain. The positioning of instruments and controls has been thoroughly evaluated with regard to frequency of use, interrelation and ease of operation and help reduce fatigue to the driller. Classification The driller's cabin will be rated for a Class 1 Division 2 area. The protection means for this housing will be accomplished by pressurization according to NFPA496 requirements. - -------------------------------------------------------------------------------- Page 62 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- Safety Since most of the machinery operations are controlled from the driller's cabin the safety will be enhanced considerably. There will be two (2) escape routes from the cabin. Protection bars and netting on the sloped windows secure operators from falling/ moving objects. All windows are of 9/16" laminated, heat strengthened safety glass. Layout From the driller's cabin the operator can control most of the equipment used in the drilling process. Most controls used are included in the drillers control console and are in easy reach of the operators. The driller's cabin is located on the drill floor and is designed to have a clear line of sight to the operating machinery and people on the drill floor. The equipment/control panels in the driller's cabin will be placed in the most visual / convenient position (fire /gas, drillers talk back, etc.)Driller's cabin features: the cabin supply includes as a minimum the equipment listed below: Driller's cabin carbon steel enclosure. Removable protection net attached to the protection bars on sloped windows. Insulated walls, roof and floor Architectural items such as: wall panels, ceiling panels, Floor cover, door and windows Wall mounted HVAC Junction boxes where required Access to equipment in ceiling/floor the driller's cabin will have available space for The drillers cabin will have available space for the Typical instrumentation / equipment as listed below: DCC panel Ex telephones ESD pushbuttons Talkback station BOP panel Choke panel - -------------------------------------------------------------------------------- Page 63 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- Fire / gas monitor / panel Thermostat / pressurization monitoring system for HVAC the driller's cabin is connected to an independent HVAC The driller's cabin is connected to an independent HVAC system with dual blowers and two independent power feeders. The HVAC unit is located on the outside wall of the cabin. The HVAC system supplies the necessary air to pressure the cabin and maintain a safe working environment within the hazardous area. The operator has the ability to see an HVAC common alarm on the SDI screens if something should occur. The driller's cabin will be configured to accept the top drive driller's console. The topdrive drillers console will be free issued for installation. Installation material will include the appropriate plugs and/or receptacles and cabling Drillers cabins will be designated as follows A drillers cabin with Top drive console installed will be called a model "C" cabin. A drillers cabin without a top drive console installed will be called a model "B" cabin. The installation of the top drive console will occur at the equipment install phase of the project. Qty. 1 SET YNG-CTWLK One (1) section catwalk, 60" wide x 18" high x 49' long. Decked with 1/2" plate for approximately 10' from the pipe ramp and 3/8" plate for the remaining length. Qty. 1 EA. WS 10 One (1) workshop / change house. The workshop skid; 1. Skid dimension is 10'-0" x 38'-0" x 9'-8 3/8" high. 2. Locker quantities - change house (24). 3. Storage bin quantities - workshop (34). 4. (1) Workbench located in workshop. 5. (1) Sitting Bench located in change house. Air conditioning/heating not included. Qty. 1 EA. JB-1 - -------------------------------------------------------------------------------- Page 64 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- Junkbin/BOP Closing Unit skid. Skid dimension 7'-0" x 38'-0" x 8'-10 3/4" high with a removable roof, mounted on a two runner oilfield type skid, top and ends completely plated with 1/4" plate. Junk Bin sides plated 2 ft. high with 1/4" plate. Qty. 1 Electrical Cable Handling System 4-Booms, 2-Pedestals (3) Swing arm booms with junction boxes leading to drawworks, HPU and mud system which are connected to the below. (1) Telescoping boom with drag chain which leads the bulk of cabling to the plug board of the SCR house from the substructure via the grasshopper. (2) Pedestals with junction boxes mounted on each mud pump skid that has a cable tray assembly leading to the SCR plug board This assembly mounts on the water tank and two mud pump skids. TOTAL $25,096,650.00 - -------------------------------------------------------------------------------- Page 65 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- SECTION 2 COMMISSIONING & STARTUP ON SITE 2.1 LOCAL SERVICE WITHIN US QTY. 3 EA PS-SERV To provide service technician to assist with the installation and commissioning of the equipment on-site. Seventeen days is allowed, excluding travel and living expenses (to be charge at cost plus 10%). Additional days, if required, will be charged at current day rates plus expenses at cost plus 10%. Standby or delay time will be billed at the above rates caused by, but not limited to the following conditions: o Weather and other Force Majeure Events, o Waiting on transportation, o Waiting on cranes, forklifts, utilities, etc. o Failure of equipment not provided by NOV o Lack of vendor/customer information o Late delivery of customer supplied equipment o Delays caused by field modifications to customer supplied equipment o Inability to perform work due to interference from other contractors o Inability to work more than 4 hours in any single day caused by the customer or other vendor. TOTAL $56,100.00 - -------------------------------------------------------------------------------- Page 66 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- STANDARD TERMS AND CONDITIONS 1. ACCEPTANCE Orders or other requests, whether oral or written, for machinery or equipment ("Equipment"), or the supply or sale of spare or replacement parts ("Parts") or for services ("Services") to be provided by National Oilwell Varco, L.P., on behalf of itself and its divisions and subsidiaries ("Seller") to its customers (each a "Buyer") are subject to Seller written acceptance by an authorized representative of Seller and any orders so accepted will be governed by (i) the terms and conditions stated in these Terms and Conditions for provision of Equipment, Parts or Services ("Terms and Conditions"), (ii) the written proposal submitted by Seller to Buyer ("Proposal"), if any, (iii) the written order acknowledgment issued by Seller to Buyer ("Acknowledgment"), if any (iv) any change orders identified as such and agreed to in writing by Seller (the Order, Terms and Conditions, Proposal, Acknowledgment, and any such change order, and any such additional terms as agreed to in writing by an authorized representative of Seller collectively referred to herein as "Agreement." Buyer's submission of a purchase order (or other similar document) shall be deemed to be an express acceptance of these Terms and Conditions notwithstanding language in Buyer's purchase order (or other similar document) inconsistent herewith, and any inconsistent language in Buyer's purchase order (or other similar document) is hereby rejected. Buyer's purchase order (or other similar document is incorporated in this Agreement, only to the extent of specifying the nature and description of the Equipment, Parts or Services and then only to the extent consistent with the Proposal or Acknowledgment. In the event of any conflict between a Proposal and an Acknowledgement, the Acknowledgment shall prevail. 2. PRICES Prices of Equipment, Parts or Services shall be as stated in the Proposal or Acknowledgment, or if there is no Proposal or Acknowledgment, as otherwise agreed to in writing by Seller. All price quotations are Ex-works (INCOTERMS 2000) Seller's premises or as agreed per quote and are subject to change without notice. All sales, use, import, excise and like taxes, whether foreign or domestic, shall be charged to and borne by Buyer. Seller bears no responsibility for any consular fees for legalizing invoices, certificates of origin, stamping bills of lading, or other charges required by the laws of any country of destination, or any fines imposed due to incorrect declarations. Charges will be added for factory preparation and packaging for shipment. Minimum freight and invoice charges apply, as in effect at the time of order. If by reason of any act of government, the cost to Seller of performing its obligations hereunder is increased, such increase shall be added to the quoted price. 3. PAYMENT TERMS Unless alternate payment terms are specified or approved by Seller's credit department, all charges, including applicable packing and transportation costs, billed by Seller are payable within Net 30 days of the date of invoice. Seller reserves the right to modify or withdraw credit terms at any time without notice. Unless otherwise specified all payments are due in the currency specified in Seller's Proposal, Acknowledgment and/or invoice. Interest shall be due from Buyer to Seller on over due accounts at the maximum rate allowed by law. When partial shipments are made, the goods will be invoiced as shipped and each month's invoices will be treated as a separate account and be payable accordingly. Payment for goods is due whether or not technical documentation and/or any third party certifications are complete at the time of shipment. Seller shall be entitled to recover all reasonable attorney's fees and other costs incurred in the collection of overdue accounts. Seller reserves the right where genuine doubts arise as to Buyer's financial position or if Buyer is in default of any payment, to suspend delivery or performance of any order or any part thereof without liability or without prejudice to and without limitation of any other remedy until Buyer cures the default and payment or satisfactory security for payment has been provided. Seller shall have the option to extend the delivery date by a time at least equal to the period of suspension. 4. DELIVERY Unless otherwise specified on the face hereof, all US and international sales shall be Exworks Seller's premises (INCOTERMS 2000), as modified by these Terms and Conditions. Where goods are to be supplied from stock, such supply is subject to availability of stocks at the date of delivery. Partial shipments may be made as agreed by Buyer and Seller. Stated delivery dates are approximate only and cannot be guaranteed. Seller shall have no liability for damages arising out of the failure to keep a projected delivery date, irrespective of the length of the delay. In the event Buyer is unable to accept delivery of goods when tendered, Seller may, at its option, arrange storage of the goods and Buyer shall be liable to Seller for the reasonable cost of such storage. This provision is without prejudice to any other rights, which Seller may have with respect to Buyer's failure to take delivery of goods, which includes the right to invoice Buyer for the goods. Buyer agrees that title to the goods will transfer to Buyer upon invoicing notwithstanding Buyer's inability to accept delivery and that Buyer assumes all risk of loss or damage to the goods from the date title passes to Buyer. 5. FORCE MAJUERE If either party is unable by reason of Force Majeure to carry out any of its obligations under this Agreement, other than obligations to pay money, then on such party giving notice and particulars in writing to the other party within a reasonable time after the occurrence of the cause relied upon, such obligations shall be suspended. "Force Majeure" shall include acts of God, laws and regulations, government action, war, civil disturbances, strikes and labor problems, delays of vendors, carriers, lightening, fire, flood, washout, storm, breakage or accident to equipment or machinery, shortage of raw materials, and any other causes that are not reasonably within the control of the party so affected. Seller shall be paid its applicable standby rate, if any, during any such Force Majeure event. 6. CANCELLATION Orders placed by Buyer and accepted by Seller may be canceled only with the consent of Seller and will subject Buyer to cancellation charges. All of Seller's documents, drawings and like information shall be returned to Seller upon Buyer's request for cancellation. No orders may be canceled subsequent to shipment. As estimated actual damages, Buyer agrees to pay Seller the greater of Seller's actual costs incurred prior to cancellation plus a reasonable profit, or the following minimum cancellation charges: a) 20% of order value if canceled 30 or more days prior to the original shipment date; b) 50% of the order value if canceled thereafter; or c) 100% of the value of any non-standard items, which are items not built for stock or built to customer specifications. Buyer shall verify the amount of the cancellation charges prior to canceling an order. 7. TITLE AND RISK OF LOSS Ownership and risk of loss pass to Buyer upon the earlier of (i) Seller's delivery of the goods to the carrier, or (ii) invoicing by Seller for the goods where Buyer is unable to accept delivery on the scheduled date. Seller retains a security interest in the goods until the purchase price has been paid, and Buyer agrees to perform upon request all acts required to secure Seller's interest. Seller accepts no responsibility for any damage, shortage or loss in transit. Seller will attempt to pack or prepare all shipments so that they will not break, rust or deteriorate in shipment, but does not guarantee against such damage. Claims for any damage, shortage or loss in transit must be made by Buyer on the carrier. 8. LIMITED WARRANTY NEW EQUIPMENT/PARTS. IN THE CASE OF THE PURCHASE OF NEW EQUIPMENT/PARTS AND SOLELY FOR THE BENEFIT OF THE ORIGINAL USER, SELLER WARRANTS, FOR A PERIOD OF 18 MONTHS FROM SHIPMENT OR 12 MONTHS FROM INSTALLATION, WHICHEVER IS EARLIER, THAT EQUIPMENT OF ITS OWN MANUFACTURE SHALL CONFORM TO THE MATERIAL AND TECHNICAL SPECIFICATIONS SET FORTH IN THE RELEVANT SCOPE OF WORK DOCUMENT OR PURCHASE ORDER AS AGREED TO IN WRITING BY SELLER AND BUYER. IF THE EQUIPMENT FAILS TO CONFORM WITH SUCH SPECIFICATIONS UPON INSPECTION BY SELLER, SELLER AT ITS OPTION AND AS BUYER'S SOLE REMEDY, WILL EITHER REPAIR OR REPLACE SUCH DEFECTIVE EQUIPMENT WITH THE TYPE ORIGINALLY FURNISHED. REMANUFACTURED TO "AS NEW" EQUIPMENT. SELLER WARRANTS TO BUYER, THAT FOR A PERIOD OF TWELVE MONTHS FROM THE DATE OF SHIPMENT TO BUYER OR INSTALLATION OF PART(S), WHICHEVER IS EARLIEST, THAT RECONDITIONED TO "AS NEW" MACHINERY OR EQUIPMENT WILL BE FREE FROM DEFECTS IN MATERIAL AND WORKMANSHIP. OVERHAULED EQUIPMENT. SELLER WARRANTS THAT FOR A PERIOD OF FOUR (4) MONTHS FROM THE DATE OF SHIPMENT OR THREE (3) MONTHS FROM INSTALLATION, WHICHEVER IS EARLIEST, THAT OVERHAULED EQUIPMENT WILL BE FREE FROM DEFECTS IN WORKMANSHIP. THIS WARRANTY EXPRESSLY ASSUMES THAT PARTS NORMALLY CONSIDERED CONSUMABLES (INCLUDING, BUT NOT LIMITED TO RUBBER GOODS, SEALS (RUBBER, POLYMER AND/OR METALLIC) AND/OR BEARINGS, ARE REPLACED DURING OVERHAUL. IF BUYER REQUESTS THAT SUCH PARTS NOT BE REPLACED, SELLER HEREBY DISCLAIMS ANY WARRANTY FOR SAID EQUIPMENT OR PARTS. SERVICE. SELLER WARRANTS THAT THE SERVICES TO BE PROVIDED PURSUANT TO THIS AGREEMENT SHALL CONFORM TO THE MATERIAL ASPECTS OF THE SPECIFICATIONS SET FORTH IN THE RELEVANT SCOPE OF WORK DOCUMENT AS AGREED TO IN WRITING BY SELLER AND BUYER. SELLER SHALL RE-PERFORM THAT PART OF THE NON-CONFORMING SERVICES, PROVIDED SELLER IS NOTIFIED BY BUYER PRIOR TO SELLER'S DEPARTURE FROM THE WORKSITE. SELLER'S WARRANTY OBLIGATIONS HEREUNDER SHALL NOT APPLY IF THE NON-CONFORMITY WAS CAUSED BY A) BUYER'S FAILURE TO PROPERLY STORE OR MAINTAIN THE EQUIPMENT OR PARTS; B) UNAUTHORIZED MODIFICATIONS, REPAIR OR SERVICE OF THE EQUIPMENT OR PARTS BY BUYER; C) UTILIZATION OF REPLACEMENT PARTS NOT MANUFACTURED BY SELLER; OR D) USE OR HANDLING OF THE EQUIPMENT OR PARTS BY BUYER IN A MANNER INCONSISTENT WITH SELLER'S RECOMMENDATIONS. FURTHER SELLER'S WARRANTY OBLIGATIONS UNDER THIS ARTICLE 8 SHALL TERMINATE IF A) BUYER FAILS TO PERFORM ITS OBLIGATIONS UNDER THIS OR ANY OTHER AGREEMENT BETWEEN THE PARTIES, OR B) IF BUYER FAILS TO PAY ANY CHARGES DUE SELLER. ANY THIRD PARTY WARRANTIES PROVIDED ON EQUIPMENT OR PARTS NOT MANUFACTURED BY SELLER ARE ASSIGNED TO BUYER, WITHOUT RECOURSE, AT THE TIME OF DELIVERY, PROVIDED SUCH WARRANTIES ARE ASSIGNABLE. THIS ARTICLE 8 SETS FORTH BUYER'S SOLE REMEDY AND SELLER'S ONLY OBLIGATION WITH REGARD TO NON-CONFORMING EQUIPMENT, PARTS OR SERVICES. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED PURSUANT TO THE PROVISIONS OF THIS ARTICLE 8, SELLER MAKES NO OTHER WARRANTIES OR REPRESENTATIONS OF ANY KIND, EXPRESS OR IMPLIED, AND SELLER DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTIBILITY AND FITNESS FOR A PARTICULAR PURPOSE. 9. CHANGES Seller expressly reserves the right to change, discontinue or modify the design and manufacture of its products without obligation to furnish, retrofit or install goods previously or subsequently sold. 10. RETURN OF MAKE TO STOCK GOODS Upon Seller's written approval, unused incorrectly shipped or "Made to Stock" goods ordered incorrectly, in new condition and of current manufacture and catalog specifications may be returned by Buyer for credit (subject to a restocking fee), provided written request is received within one year after the purchase date. Non-standard goods are not returnable for credit. Requests for return of goods must show original purchase order number, invoice number, description of material, and date of purchase. Return of goods does not relieve Buyer of the obligation to make payment against Seller's invoice, and any credit or refund allowed will be issued following Seller's receipt of the goods. The credit allowed on returned goods, if any, is a merchandise credit and is applicable only against future purchases of Seller goods. The credit given will be solely in Seller's discretion and may be based on the original or a subsequently adjusted price; a charge will be made to clean-up, refinish and restock. No rubber or electronic products or components may be returned for credit after six months from date of shipment. 11. LIABILITIES, RELEASES AND INDEMNIFICATION FOR PURPOSE OF THIS ARTICLE 11, THE FOLLOWING DEFINITIONS SHALL APPLY: (1) "SELLER GROUP" SHALL MEAN (I) SELLER, ITS PARENT, SUBSIDIARY OR RELATED COMPANIES, (II) ITS AND THEIR WORKING INTEREST OWNERS, CO-LESSEES, CO-OWNERS, PARTNERS, JOINT VENTURERS, IF ANY, AND THEIR RESPECTIVE PARENTS, SUBSIDIARY OR RELATED COMPANIES AND (III) THE OFFICERS, DIRECTORS, EMPLOYEES, CONSULTANTS, AGENTS AND INVITEES OF ALL OF THE FOREGOING. (2) "BUYER GROUP" SHALL MEAN (I) BUYER, ITS PARENT, SUBSIDIARY OR RELATED COMPANIES, (II) ITS AND THEIR WORKING INTEREST OWNERS, CO-LESSEES, CO-OWNERS, PARTNERS, JOINT VENTURERS, IF ANY, AND THEIR RESPECTIVE PARENTS, SUBSIDIARY OR RELATED COMPANIES AND (III) THE OFFICERS, DIRECTORS, EMPLOYEES, CONSULTANTS, AGENTS AND INVITEES OF ALL OF THE FOREGOING. (3) "CLAIMS" SHALL MEAN ALL CLAIMS, DEMANDS, CAUSES OF ACTION, LIABILITIES, DAMAGES, JUDGMENTS, FINES, PENALTIES, AWARDS, LOSSES, COSTS, EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND COSTS OF LITIGATION) OF ANY KIND OR CHARACTER ARISING OUT OF, OR RELATED TO, THE PERFORMANCE OF OR SUBJECT MATTER OF THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, PROPERTY LOSS OR DAMAGE, PERSONAL OR BODILY INJURY, SICKNESS, DISEASE OR DEATH, LOSS OF SERVICES AND/OR WAGES, OR LOSS OF CONSORTIUM OR SOCIETY). A. SELLER SHALL RELEASE, INDEMNIFY, DEFEND AND HOLD BUYER GROUP HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS IN RESPECT OF PERSONAL OR BODILY INJURY TO, SICKNESS, DISEASE OR DEATH OF ANY MEMBER OF SELLER GROUP OR SELLER GROUP'S SUBCONTRACTORS OR THEIR EMPLOYEES, AGENTS OR INVITEES, AND ALL CLAIMS IN RESPECT OF DAMAGE TO OR LOSS OR DESTRUCTION OF PROPERTY OWNED, LEASED, RENTED OR HIRED BY ANY MEMBER OF SELLER GROUP OR SELLER GROUP'S SUBCONTRACTORS OR THEIR EMPLOYEES, AGENTS OR INVITEES. - -------------------------------------------------------------------------------- Page 67 of 68  - -------------------------------------------------------------------------------- a [NATIONAL OILWELL VARCO LOGO] Proposal - -------------------------------------------------------------------------------- Customer Name: UNION DRILLING Quote No: NOI-11283-DWK Rev. 01 Project Name: NONE Date: 26-Apr-06 Cust Ref No: NONE - -------------------------------------------------------------------------------- B. BUYER SHALL RELEASE, INDEMNIFY, DEFEND AND HOLD SELLER GROUP HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS IN RESPECT OF PERSONAL OR BODILY INJURY TO, SICKNESS, DISEASE OR DEATH OF ANY MEMBER OF BUYER GROUP OR BUYER GROUP'S OTHER CONTRACTORS OR THEIR EMPLOYEES, AGENTS OR INVITEES, AND ALL CLAIMS IN RESPECT OF DAMAGE TO OR LOSS OR DESTRUCTION OF PROPERTY OWNED, LEASED, RENTED OR HIRED BY ANY MEMBER OF BUYER GROUP OR BUYER GROUP'S OTHER CONTRACTORS OR THEIR EMPLOYEES, AGENTS OR INVITEES. C. IN THE EVENT THIS AGREEMENT IS SUBJECT TO THE INDEMNITY LIMITATIONS IN CHAPTER 127 OF THE TEXAS CIVIL PRACTICES AND REMEDIES CODE (OR ANY SUCCESSOR STATUTE), AND SO LONG AS SUCH LIMITATIONS ARE IN FORCE, EACH PARTY COVENANTS AND AGREES TO SUPPORT THE MUTUAL INDEMNITY OBLIGATIONS CONTAINED IN PARAGRAPHS A AND B ABOVE, BY CARRYING EQUAL AMOUNTS OF INSURANCE (OR QUALIFIED SELF INSURANCE) IN AN AMOUNT NOT LESS THAN U.S. $1,000,000.00. D. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, IN ALL INSTANCES WHERE SELLER IS PROVIDING SERVICES AT A WELLSITE, BUYER, TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, SHALL RELEASE, INDEMNIFY, DEFEND AND HOLD SELLER GROUP AND SELLER GROUP SUBCONTRACTORS HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS ASSERTED BY OR IN FAVOR OF ANY PERSON OR PARTY, INCLUDING SELLER GROUP, BUYER GROUP OR ANY OTHER PERSON OR PARTY, RESULTING FROM: (I) LOSS OF OR DAMAGE TO ANY WELL OR HOLE (INCLUDING BUT NOT LIMITED TO THE COSTS OF RE-DRILL), (II) BLOWOUT, FIRE, EXPLOSION, CRATERING OR ANY UNCONTROLLED WELL CONDITION (INCLUDING BUT NOT LIMITED TO THE COSTS TO CONTROL A WILD WELL AND THE REMOVAL OF DEBRIS), (III) DAMAGE TO ANY RESERVOIR, GEOLOGICAL FORMATION OR UNDERGROUND STRATA OR THE LOSS OF OIL, WATER OR GAS THEREFROM, (IV) POLLUTION OR CONTAMINATION OF ANY KIND (OTHER THAN SURFACE SPILLAGE OF FUELS, LUBRICANTS, RIG SEWAGE OR GARBAGE, TO THE EXTENT ATTRIBUTABLE TO THE NEGLIGENCE OF SELLER GROUP, INCLUDING BUT NOT LIMITED TO THE COST OF CONTROL, REMOVAL AND CLEAN-UP, OR (V) DAMAGE TO, OR ESCAPE OF ANY SUBSTANCE FROM, ANY PIPELINE, VESSEL OR STORAGE FACILITY. E. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, NEITHER PARTY SHALL BE LIABLE TO THE OTHER AND EACH PARTY RELEASES THE OTHER FOR ANY INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES OR LOSSES (WHETHER FORESEEABLE AT THE DATE OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOST PRODUCTION, LOST REVENUE, LOST PRODUCT, LOST PROFIT, LOST BUSINESS OR BUSINESS OPPORTUNITIES. F. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, SELLER'S TOTAL LIABILITY FOR ALL CLAIMS, DAMAGES, CAUSES OF ACTION, DEMANDS, JUDGMENTS, FINES, PENALTIES, AWARDS, LOSSES, COSTS AND EXPENSES (INCLUDING ATTORNEY'S FEES AND COST OF LITIGATION) SHALL BE LIMITED TO AND SHALL NOT EXCEED THE VALUE OF THE PRODUCTS OR SERVICES PURCHASED G. THE EXCLUSIONS OF LIABILITY, RELEASES AND INDEMNITIES SET FORTH IN PARAGRAPHS A. THROUGH F. OF THIS ARTICLE 11 SHALL APPLY TO ANY CLAIM(S), LOSSES OR DAMAGES WITHOUT REGARD TO THE CAUSE(S) THEREOF, INCLUDING BUT NOT LIMITED TO PRE-EXISTING CONDITIONS, WHETHER SUCH CONDITIONS BE PATENT OR LATENT, THE UNSEAWORTHINESS OF ANY VESSEL OR VESSELS, IMPERFECTION OF MATERIAL, DEFECT OR FAILURE OF PRODUCTS OR EQUIPMENT, BREACH OF REPRESENTATION OR WARRANTY (EXPRESS OR IMPLIED), ULTRAHAZARDOUS ACTIVITY, STRICT LIABILITY, TORT, BREACH OF CONTRACT, BREACH OF DUTY (STATUTORY OR OTHERWISE), BREACH OF ANY SAFETY REQUIREMENT OR REGULATION, OR THE NEGLIGENCE OR OTHER LEGAL FAULT OR RESPONSIBILITY OF ANY PERSON (INCLUDING THE INDEMNIFIED OR RELEASED PARTY), WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE. H. REDRESS UNDER THE INDEMNITY PROVISIONS SET FORTH IN THIS ARTICLE 11 SHALL BE THE EXCLUSIVE REMEDY(IES) AVAILABLE TO THE PARTIES HERETO FOR THE MATTERS, CLAIMS, DAMAGES AND LOSSES COVERED BY SUCH PROVISIONS. 12. INSURANCE Upon written request, each party shall furnish to the other party certificates of insurance evidencing the fact that the adequate insurance to support each party's obligations hereunder has been secured. To the extent of each party's release and indemnity obligations expressly assumed by each party hereunder, each party agrees that all such insurance policies shall a) be primary to the other party's insurance; b) include the other party, its parent, subsidiary and affiliated or related companies, and its and their respective officers, directors, employees, consultants and agents as additional insured; and c) be endorsed to waive subrogation against the other party, it's parent subsidiary and affiliated or related companies, and its and their respective officers, directors, employees, consultants and agents. 13. GOVERNING LAW. A. Except for Equipment, Parts or Services provided, or to be provided, by Seller in North or South America (the "America's"), this Agreement shall be governed by and interpreted in accordance with English law, excluding conflicts and choice of law principles. B. For Equipment, Parts or Services provided, or to be provided, by Seller in the America's, this Agreement shall be governed by and interpreted in accordance with the substantive laws of Texas, excluding conflicts and choice of law principles. Seller retains the right to arbitrate and any all disputes that may arise in connection with the sale of its Equipment, Product or Services. 14. OWNERSHIP AND PATENT INDEMNITY. All software used in connection with the Equipment, Parts or Services, either purchased or rented from Seller, is copyrighted and owned by Seller and licensed to Buyer. Seller warrants that the use or sale of Equipment or Parts hereunder will not infringe patents of others by reason of the use or sale of such Equipment or Parts per se, and hereby agrees to hold Buyer harmless against judgment for damages for infringement of any such patent, provided that Buyer shall promptly notify Seller in writing upon receipt of any claim for infringement, or upon the filing of any such suit for infringement, whichever first occurs, and shall afford Seller full opportunity, at Seller's option and expense, to answer such claim or threat of suit, assume the control of the defense of such suit, and settle or compromise same in any way Seller sees fit. Seller does not warrant that such Equipment or Parts: (a) will not infringe any such patent when not of Seller's manufacture, or specially made, in whole or in part, to the Buyer's design specifications; or (b) if used or sold in combination with other materials or apparatus or used in the practice of processes, will not, as a result of such combination or use, infringe any such patent, and Seller shall not be liable and does not indemnify Buyer for damages or losses of any nature whatsoever resulting from actual or alleged patent infringement arising pursuant to (a) and (b) above. THIS PARAGRAPH STATES THE ENTIRE RESPONSIBILITY OF SELLER CONCERNING PATENT INFRINGEMENT. 15. REGULATORY COMPLIANCE By acceptance of delivery of this order, Buyer warrants it has complied with all applicable governmental, statutory and regulatory requirements and will furnish Seller with such documents as may be required. Seller warrants and certifies that in the performance of this contract, it will comply with all applicable statutes, rules, regulations and orders of the United States and of any state or political subdivision thereof, including laws and regulations pertaining to labor, wages, hours and other conditions of employment, applicable price ceilings if any, and that the articles delivered hereunder shall be produced in compliance with the Fair Labor Standards Act and the Equal Employment Opportunity provisions of pertinent Executive Orders and the regulations adopted thereunder. Seller will not provide any certification or other documentation nor agree to any contract provision or otherwise act in any manner which may cause Seller to be in violation of United States law, including but not limited to the Export Administration Act of 1979 and regulations issued pursuant thereto. All orders shall be conditional upon granting of Export Licenses or Import Permits which may be required. Buyer shall obtain at its own risk any required Export License and Import Permits and Buyer shall remain liable to accept and pay for material if licenses are not granted or are revoked. 16. CONFIDENTIAL INFORMATION Each party recognizes and acknowledges that it shall maintain all data, information, disclosures, documents, drawings, specifications, patterns, calculations, technical information and other documents (collectively, "Confidential Information") obtained from the other party in strict confidence subject only to disclosure required by law or legal process. In the event that Seller owns copyrights to patents to, or has filed patent applications on, any technology related to the Equipment, Services or Parts furnished by Seller hereunder, and if Seller makes any improvements on such technology, then such improvements shall not fall within the confidentiality obligations included herein, and Seller shall own all such improvements, including drawings, specifications, patterns, calculations, technical information and other documents. However, nothing hereinabove contained shall deprive the Receiving Party of the right to use or disclose any information: a) which is, at the time of disclosure, known to the trade or public; or b) which becomes at a later date known to the trade or the public through no fault of the Receiving Party and then only after said later date; or c) which is possessed by the Receiving Party, as evidenced by the Receiving Party's written records, before receipt thereof from the Disclosing Party; or d) which is disclosed to the Receiving Party in good faith by a third party who has an independent right to such information; e) which is developed by the Receiving Party as evidenced by documentation, independently of the Confidential Information, or (f) which is required to be disclosed by the Receiving Party pursuant to an order of a court of competent jurisdiction or other governmental agency having the power to order such disclosure, provided that the Receiving Party uses its best efforts to provide timely notice to the Disclosing party of such order to permit the Disclosing Party an opportunity to contest such order. 17. INDEPENDENT CONTRACTOR It is expressly understood that Seller is an independent contractor, and that neither Seller nor its principle, partners, employees or subcontractors are servants, agents or employees of Buyer. In all cases where Seller's employees (defined to include Seller's and its subcontractors, direct, borrowed, special, or statutory employees) are covered by the Louisiana Worker's Compensation Act. La. R.S. 23:102 et seg., Seller and Buyer agreed that all Products and Services provided by Seller and Seller's employees pursuant to this Agreement are an integral part of and are essential to the ability of Seller to generate Seller's goods, products, and services for the purpose of La. R.S. 23:106(A) (1). Furthermore, Seller and Buyer agree that Buyer is the statutory employer of all of Seller's employees for the purpose of La. R.S. 23:1061(A) (3) 18. GENERAL Failure of Buyer or Seller to enforce any of the terms and conditions of this Agreement shall not prevent a subsequent enforcement of such terms and conditions or be deemed a waiver of any subsequent breach. Should any provisions of this Agreement, or portion thereof, be unenforceable or in conflict with governing country, state, province, or local laws, then the validity of the remaining provisions, and portions thereof, shall not be affected by such unenforceability or conflict, and this Agreement shall be construed as if such provision supersedes all prior oral or written agreements or representations. Buyer acknowledges that it hast not relied on any representations other than those contained in this Agreement. This Agreement shall not be varied, supplemented, qualified, or interpreted by any prior course of dealing between the parties or by any usage of trade and may only be amended by an agreement executed by an authorized representative of each party. - -------------------------------------------------------------------------------- Page 68 of 68  1 [NATIONAL OILWELL VARCO LOGO] April 27, 2006 SPECIAL CONDITIONS The parties agree that these Special Conditions shall apply and supersede any corresponding terms in NOV's Standard Terms & Conditions. All other provisions in NOV's Standard terms and conditions remain "as is". Proposed Indemnity Provision for UDI's Agreement with NOV to Purchase "Ideal" Drilling Rigs. o NOV represents to UDI that NOV's Ideal Rig does not violate or infringe the patent or intellectual property right of any person and the sale of the Ideal Rigs to, and the purchase or use of the Ideal Rigs by, UDI will not violate or constitute an infringement or breach of any such rights. In the event that a claim is made against NOV or UDI for the sale or use of the Ideal Rig, NOV agrees to the following: o Nov agrees to indemnify, defend and hold UDI and its officers, directors and affiliates harmless from and against all losses, claims, liabilities, damages and expense (including reasonable attorney's fees) arising out of or based on any breach of the foregoing representation and warranty, and in the event that a third party's claims involves claims for relief other than the monetary damages such as enjoining or seeking to prevent the use of the Ideal Rig or any portion thereof by UDI, NOV's indemnity shall include, promptly providing to UDI, at NOV's election to either (i)substitute equipment equivalent to an Ideal Rig, which is not subject to such a claim and is otherwise non-infringing, or (ii) obtaining for UDI the right to use the Ideal Rig, or (iii) modify the Ideal Rigs owned by UDI in a manner acceptable to UDI so it becomes non-infringing, but are functionally equivalent, or (4) refund the purchase price. The above are the sole and exclusive remedies with respect to a violation of the above representation or warranty.  2 o Not withstanding anything contained herein to the contrary herein to the contrary, neither party shall be liable for any indirect or consequential damages sustained or alleged to have been sustained by the other party under this agreement NATIONAL-OILWELL, L.P. UNION DRILLING, INC ----------------------------------- ------------------------------------- DAVID C. CRUMPLER CHRISTOPHER STRONG V.P. SALES AND MARKETING PRESIDENT & CEO