Gulf Drilling International took active part in the Offshore Middle East 2010 Exhibition, which was held at the Qatar Exhibition Centre in Doha between 12th - 14th October, 2010. The exhibition was opened by H. E. the Minister Of Petroleum and Industry Mr Abdullah Bin Hamad Al-Attiyah. He confirmed that future Offshore Middle East Exhibitions will be held in Qatar.

GDI participated with a new exhibition stand that attracted a large number of visitors. Although this year’s attendance figures were slightly lower than usual due to a conflict with other exhibitions in the region. This exhibition was still very successful for GDI. We had the opportunity to meet many of our existing and potential clients. We met with senior officers from Shell, Oxy, Qatar Petroleum, RasGas and Dolphin Energy.

We were also very proud to have a model of our Al-Khor rig on display at the Shell exhibition stand as this rig will be operating for Shell in their upcoming drilling campaign. Shell had a premium position at the entrance of the exhibition hall and this model was viewed by most visitors.

Offshore Middle East 2010 is the only event dedicated to offshore oil and gas technology in the Middle East. This event provided a forum where industry leaders addressed technical issues, showcased pioneering technology and shared lessons learnt about finding, developing and producing oil and gas

in Middle East offshore regions.

We were very honoured to take part in the Offshore Middle East Exhibition. We received widespread praise for our booth and the knowledgeable staff who manned it.

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NEWSLETTER ISSUE 12 | NOVEMBER 2010

GUlf DrIllInG InTErnATIOnAl AT OffSHOrE MIDDlE EAST 2010

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We remain committed to making Safety and the Environment our top priority. In that endeavor, we have invested in training and development of our human resources. Some of the initiatives are:

• SafetyLeadership–Sofarwehave completed 6 sessions with 2 more to follow.• HSEcertificationforallourrig employees that are equal to or exceed minimum requirements of clients.• Embarkedonaninternalstudyof the “Macondo Well Blow Out” in the Gulf of Mexico. All key rig personnel are encouraged to study

and provide comments to focal points in each drilling division. This will be followed by a workshop to list lessons learnt for GDI to adopt and implement.

This has been a challenging year for GDI from marketing perspective, we have had 5 rigs (4 offshore rigs and 1 land rig) ending their contracts in 2010. I am relieved to announce that 2 out of the 4 offshore rigs have had their contracts extended and we are in the final stages of completing the formalities, relating to the other offshore rigs by the end of the year. For the Onshore rigs, early indications suggest that our client still requires them, and our contracts will be renewed.

We continue to invest in our rigs to keep them in line with the latest industry requirements or bring them up to client specifications. In that spirit we are upgrading the GULF-2 and will bedoingamajorrefitoftheAL-DOHAnextyear to ensure it performs to the satisfaction of our clients. GDI have been making efforts to diversify into the Jack-up accommodation barge market, to maintain growth and to remain the dominant player in a profitable market segment that is complimentary to offshore drilling.

Our cost cutting initiative has made significant savings in operating and capital costs. Our Maximo Maintenance Management System is now implemented throughout the rig fleet and we expect

to see savings in operations and in our supply chain management. Our new warehouse and open storage facilities at DSSA in Dukhan are now ready to move into. This consolidation initiative will further improve our materials management and our response time to end users. I am pleased to see our Rig Managers taking a proactive role in looking after their rigs and their crews. We see greater crew stability through the combined efforts of operations,HSEandsupportdepartments,and we have achieved cost savings that are strongly contributing to our bottom line. I am counting on every employee’s support to cut excesses and wastage to ensure that we rationalize our expenses to maintain solid financial results.

Performance in the third quarter of 2010 has exceeded our KPI targets. Better rig efficiency, roll-out of the computerized maintenance system and effectiveness of our cost optimization campaign have all had significant impact. I appreciate and commend all GDI staff for making the extra effort at a time when we are facing reduced rig rates, while we remain committed to continuous improvement in all spheres of our business, without compromising on efficiency, customer satisfaction and most importantly the safety of all our employees.

Sincerely yours,Ibrahim J. Al-OthmanChief Executive Officer

CEO’S MESSAGE

The safety leadership program has continued to maintain its momentum since its launch in April 2010. There will be four more courses running from late October until mid November. By the end of this year over two hundred and forty rig crew members would have completed this program. We will continue to run this program into 2011 with plans already in motion

to initiate the same number of courses for next year. The aim of this program will be to achieve great improvements in safety leadership whilst ensuring the courses are interactive and enjoyable for all participants. At the same time, we will continue to analyze its impact on our HSEstatistics,toensureitsefficacyandtokeep fine tuning our training portfolio to deliverthebestpossibleHSEresults

SAfETy lEADErSHIP PrOGrAM

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When GDI started its operations back in 2004, it used to have a manual maintenance system that handled all maintenance operations onboard all of its drilling locations; however, this system did not provide any of the clarity, consistency, or efficiency required by the company’s management. It was lacking a comprehensive capital asset register, and the standard processes. It was also non compliant with industry best practices.

Therefore, both the IT and maintenance departments joined forces and set out a strategy for GDI to have a state of the art AMS (Asset Management System), which can provide an electronic platform by which maintenance activities are planned, executed, logged and audited. This AMS will help in providing the following:• Drivemaintenancebestpractices,

improve GDI’s performance and save money and time. • Empowerallworkerswitheasy to use self-service (web and mobile) applications to increase efficiency and time utilization. • Electronicallymanagethefullasset lifecycle with a complete view of the assets and equipment. • Goingforanintegratedsolution with the current ERP system that enhances integration among various related departments and systems, in addition to having a more accurate and fully comprehensive financial cost for the maintenance tasks being executed.• Assistindevelopingscheduled maintenance plans that would reduce unexpected emergencies and ensure that minimum downtime is achieved.

The consultancy for the project started at the end of 2008 and was finished by Feb 2009. After which, the data acquisition

and system implementation started and all of the project rollout across all locations was finalized by June 2010. Therefore, we are proud to say that currently the GDI maintenance team is using a state of the art maintenance system that offers much needed control, information and smooth operational efficiency.

ASSET MAnAGEMEnT SySTEM (AMS)THELATESTSTATEOfTHEArTmAinTEnAncESySTEmfOrGDi

What is your position in GDI, and how long have you been working in the company?I have been working at GDI as the Human resource manager since 19thApril, 2009.

Can you give us an idea about your educational and professional background? I have completed my Bachelor degree in Business Administration; I bring with me ten years of relevant experience in the field of Human resources. i have alsodevelopedmyselfasanHrprofessionalthrough the various Hr related coursesthat I have attended.

What is your normal working day like?Every working day for me at GDI is very busy, exciting and full of new challenges.

What are the main challenges that you face with your job?The main challenges in my job are meeting the Annual Departmental Targets and KPI’s.

What keeps you enthusiastic about your work at GDI?Meeting our department’s targets and working with my team.

What do you enjoy the most in your work tasks?I enjoy facing new challenges at my work and overcoming them through determination and hard work.

What are the main things that have changed at GDI since you joined them?Many things have changed and improved in the company since I joined, such as work aspects related to policies and procedures, quality, prompt services,

recruitment and development of Qatari nationals.

How has GDI’s image developed through the years?GDI’s image has improved immensely recently over the last couple of years; therefore, I can definitely say that we are getting’’STrOnGErByTHEDAy”.

What are the most important characters/aspects of GDI that your department team tries to convey through all their work?My team always tries to demonstrate team work and confidentiality in all the tasks that we handle.

MEET THE EMPlOyEE:Mr. HaMad al-Mansour / HumAnrESOurcEmAnAGEr

Traditionally, it was thought, to improve rig service you need to have high inventory levels; this ensures that end user requests are filled quickly. But it also means that the value of inventory will be high. High inventory ties up cash and warehouse space that could be put to better use, and is detrimental to corporate profitability. Managing inventory is a daunting task for an enterprise with thousands of products that are scattered in different rig stores and warehouses. The fact that different disciplines in the company have differing objectives, adds another dimension to the hurdle of inventory reduction.

In May 2010 GDI conducted a holistic review of all its current and future requirements in the context of inventory levels required for each cost centre, in addition to the Central Warehouse that currently maintains and fulfils rigs requirements. Target inventory (KPI) for the next three years based on current inventory levels is being implemented according to the following plan:•2010targetinventorycapis US$ 12,000,000 (reduction of 4.8%) •2011targetinventorycapis US$ 11,500,000 (reduction of 4.2%)•2012targetinventorycapis US$ 10,500,000 (reduction of 8.7%)

The GDI Inventory system has the ability to check in real time, whether a particular item is available at any storage location before any new orders are placed. This facility is also available to end users so that urgent requirements can be met in the minimum possible time. The net effect is, improvements to the following metrics: Reduction in slow moving inventory; Reduction in item obsolescence; In-time delivery;HigherendusersatisfactionandFaster inventory turnover.

In addition to coordination between departments and cost centres, other benefits from this exercise are:•forecastaccuracy•Supplychaintransparency•Leadtimeofdeliverymanagement•inventoryturnover•Warehousetransfersandtrackingaccuracy•Billofmaterialandinventoryaccuracy•fasterprocessingofvendorpayments

We have seen that it is important to iron out the conflicting interests of end users. This was achieved by discussing and agreeing on service levels, production efficiency, inventory control and corporate KPIs. Once everyone had a sense of ownership of the process, it became achievable and realistic. Now all cost centres operate as a team on a single strategy, towards the same objectives, allowing GDI to optimize inventory levels without negatively impacting our core business operations.

The current status of inventory levels is still above the 2010 year’s KPI target by 7% (as of August 2010). This demands extra effort from all parties involved to contribute effectively so that we reach that goal by the year end.

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GDI’S InvEnTOryOPTIMIzATIOn PlAn