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` UNITED STATES DISTRICT COURT
` EASTERN DISTRICT OF TEXAS
` TYLER DIVISION
`OIL STATES ENERGY SERVICES )
`LLC, f/k/a STINGER WELLHEAD )
`PROTECTION INC., ) CIVIL ACTION NO.
` ) 6:12cv611
` Plaintiff, )
` )
`v. )
` )
`TROJAN WELLHEAD PROTECTION )
`INC., f/k/a GUARDIAN )
`WELLHEAD PROTECTION INC., )
` )
`and )
` )
`GREENE'S ENERGY GROUP, )
` )
` Defendants. )
`___________________________ )
` CONTAINS HIGHLY CONFIDENTIAL
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` VIDEOTAPED ORAL FRCP 30(B)(6) DEPOSITION OF
` OIL STATES ENERGY SERVICES LLC BY AND THROUGH
` BOB MCGUIRE
` Houston, Texas
` Friday, August 1, 2014
` Reported by:
` MICHAEL E. MILLER, FAPR, RDR, CRR
` Notary Public
` JOB NO. 82902
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`Greene's Energy Group, LLC v. Oil States Energy Services, LLC, IPR2014-00216, Ex. 2031
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` August 1, 2014
` 9:09 a.m.
`
` VIDEOTAPED ORAL FRCP 30(B)(6)
`DEPOSITION OF OIL STATES ENERGY SERVICES BY
`AND THROUGH BOB MCGUIRE, held at the offices of
`Morgan Lewis & Bockius, 1000 Louisiana
`Street, Suite 4000, Houston, Texas, pursuant to
`the Federal Rules of Civil Procedure before
`Michael E. Miller, Fellow of the Academy of
`Professional Reporters, Registered Diplomate
`Reporter, Certified Realtime Reporter and Notary
`Public in and for the State of Texas.
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`A P P E A R A N C E S:
` MORGAN LEWIS & BOCKIUS
` BY: Crystal Axelrod Esq.
` 1000 Louisiana Street
` Houston, Texas 77002
` Counsel for Plaintiff
` FINDLAY CRAFT
` BY: Brian Craft Esq.
` 6760 Old Jacksonville Hwy
` Tyler, Texas 75703
` Counsel for Defendant Trojan Wellhead
` Protection Inc., f/k/a Guardian Wellhead
` Protection Inc.
` FOLEY & LARDNER
` BY: John Feldhaus Esq.
` Bradley Roush Esq.
` 3000 K Street, N.W.
` Washington, D.C. 20007
` Counsel for Defendant Greene's Energy
` Group
`
` ALSO PRESENT:
` Pam Longoria, Videographer
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` PROCEEDINGS
` (August 1, 2014 at 9:09 a.m.)
` THE VIDEOGRAPHER: This is the start
`of tape labeled number one of the videotaped
`deposition of Bob McGuire in the matter
`Oil States Energy Service et al v. Trojan
`Wellhead Protection et al in the United States
`District Court for the Eastern District of Texas,
`Tyler Division, No. 6:12cv611.
` This deposition is being held at
`1000 Louisiana Street, Suite 4000, Houston,
`Texas, 77002, on August 1st, 2014, at
`approximately 9:09 a.m.
` My name is Pam Longoria. I am the
`Legal Video Specialist from TSG Reporting
`Incorporated, headquartered at 747 Third Avenue,
`New York, New York. The court reporter is Mike
`Miller in association with TSG Reporting.
` Will counsel please introduce
`yourselves.
` MR. FELDHAUS: John Feldhaus of
`Foley & Lardner for Defendant Greene's Energy
`Services.
` MR. ROUSH: Brad Roush of Foley &
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`OIL STATES ENERGY SERVICES LLC - B. McGUIRE - 8/1/14
` Lardner for Defendant Greene's Energy Service --
` Energy Group.
` MR. CRAFT: Brian Craft with Findlay
` Craft in Tyler, Texas, here on behalf of Trojan
` Wellhead Protection Inc.
` MS. AXELROD: This is Crystal Axelrod
` with Morgan Lewis & Bockius for Oil States.
` THE VIDEOGRAPHER: Will the court
` reporter please swear in the witness.
` BOB McGUIRE,
` having been duly sworn,
` testified as follows:
` EXAMINATION
` BY MR. FELDHAUS:
` Q. Good morning, Mr. McGuire.
` A. Good morning.
` Q. I think we've met before.
` A. Yes, sir.
` Q. Thank you for coming back today.
` A. Yes, sir.
` Q. So you've been deposed before?
` A. Yes, sir.
` Q. So you know how this works. I won't
` go through any ground rules.
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`OIL STATES ENERGY SERVICES LLC - B. McGUIRE - 8/1/14
` A. Those are the gross prices before
` discount.
` Q. Do you frequently give discounts?
` A. Yes.
` Q. How often?
` A. All the time on these.
` Q. So is there a standard discount?
` A. I think we use a 72% as our standard,
` somewhere in that neighborhood. I don't set the
` pricing on a day-to-day basis, so I'm not sure.
` Q. Does that discount sometimes become
` even greater?
` A. Yes, it could.
` Q. And do you have different discounts
` for different customers?
` A. Probably do.
` Q. Do you know what customers might get
` the biggest discounts?
` A. Off the top of my head, no, I don't
` know that. But I would say it would be a
` customer that we do more work for than -- than
` the less that we do.
` Q. All right. I'd like to just go
` through those line items so I understand what
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` they represent, okay?
` A. Okay.
` Q. So "Base charge," can you explain to
` me what that entails, the base charge of $16,830?
` A. That's our base charge for the
` equipment on location for the first six hours.
` That includes the tools, the valves, the frac
` heads, the wireline adapters, cup tools and set
` of ring gaskets, just exactly the way it explains
` there.
` Q. And so that's just for the equipment
` just sitting there; is that correct?
` A. That's the base charge for the first
` six hours.
` Q. And I'm just trying to make sure in
` my mind.
` A. Yeah.
` Q. In other words, I'm looking at the
` next item, "Rig-up," so can you explain what the
` rig-up is, sir?
` A. If we go out -- like it says, "day
` prior to the job," if we go out the day prior to
` the job, that's what we charge to go out and rig
` up the day prior.
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` Q. I guess my question, then, is: Would
` the base charge -- does that include rigging it
` up on the well?
` A. If we rig up and start the job in one
` day, yes.
` Q. Okay. Now, the next line item is
` "Each additional stage, per stage." What does
` that represent?
` A. That represents our charge per stage
` at the -- after the initial stage is done on the
` well.
` Q. And can you explain what a stage is?
` A. It is the fracturing of a single set
` of perforations in a well. You may have 15
` different sets of perforations, so there would
` be -- they could theoretically frac it 15
` different times, have 15 different stages.
` Q. How long does it take to frac a
` stage?
` A. Varies with the zone, where -- I
` mean, some, as little as 30 minutes; some, as
` long as 30 hours. I mean, it can vary.
` Q. And the next line item,
` "Pump-down/plug and perf," could you explain what
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` that is?
` A. That is what we charge if they're
` pumping down plugs and guns. If they have to go
` into a pump-down in horizontal wells, once the
` well goes horizontal, the plugs will not follow,
` the plugging guns will not follow, so they have
` to use surface pumps to pump fluid by them to
` drag them out in the horizontal.
` Q. So that would -- and, excuse me, I'm
` not so familiar with this technology. But the
` plug is the item that is placed after a
` perforation is effected?
` A. A plug would be -- you would frac a
` stage and you would set a plug, and that would
` isolate that frac off. You would perforate, you
` would frac, and then you would come back in, set
` another plug, so you set the plug after you frac
` a stage.
` Q. All right. So that -- plug and perf
` is something that's not really associated with
` the isolation tool; is that correct?
` A. It's a service that happens through
` our tool, because it's easier to do it through
` our tool than to rig everything down.
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` Q. Do some customers do their own plug
` and perf?
` A. There may be a customer out that has
` their own wireline and pump units. I can't tell
` you that for sure, but...
` Q. And what -- could you explain what a
` wireline is?
` A. Wireline is a truck -- a wireline
` truck is a truck that has x number of feet of a
` cable on it that is attached to a tool string, be
` it a perforating gun and a bridge plug, that is
` ran into the hole during this plug and perf.
` That's how the plug and gun are conveyed into the
` well, by wireline.
` Q. So potentially, then, for each stage,
` there could be one pump-down/plug and perf; is
` that right?
` A. There could be more. Depends on how
` many sets of perforations they've got and how
` many perforating guns they need to run into the
` well to get that part of the zone perforated.
` Q. And then the next line, "Each
` additional stage, ball drop per six hours after
` first six hours of pumping," can you explain what
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` that relates to?
` A. That relates to the dropping of
` balls. If we were dropping balls manually on our
` tool, through our tool, then, basically, instead
` of plug and perf, the operators at that point
` have chosen to run a sliding sleeve in their
` wellbore design, and the ball is dropped at the
` surface, pumped down the well, and a certain size
` of ball will open a certain size sleeve.
` Q. And could you explain what a ball is?
` A. It's a ball. It could be phenolic.
` It could be ceramic. It could be aluminum. They
` could be collagen-based to dissolve. I mean,
` there's any number of them out there right now.
` Q. And what is the function of a ball?
` A. The ball goes down into the wellbore.
` They're sized to a sleeve. A sleeve may have a
` 3-inch ID, and so they may pump a 3-1/16 ball.
` That ball be will go down into the
` wellbore, it will hit that sleeve, it will
` actually shift that sleeve to what we call the
` open position, and it opens up a set of holes.
` Instead of having to run a perforating gun in and
` perforate, there's already holes open. Once you
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`OIL STATES ENERGY SERVICES LLC - B. McGUIRE - 8/1/14
` shift that sleeve open, it's open. And that ball
` shifting that sleeve isolates the lower zone from
` that frac.
` Q. All right. So that -- is that
` something that's done after the fracking
` operation?
` A. It's done at the tail end of the
` frac -- each frac stage.
` Q. All right. So --
` A. They may have 50 stages on a well
` like this with 50, 49 sleeves.
` Q. So that's what opens the well up to
` get the oil out?
` A. It opens the -- the ball opens a
` sleeve up that is exposed to the zone that has
` oil in it, yes.
` Q. All right. So there could be
` multiple of those for each of the jobs you do,
` then; is that right?
` A. Could be, yes. Yes.
` Q. And "Blast joint," could you explain
` what that is?
` A. A blast joint is a piece of steel
` that we run in through the top of a frac head to
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` allow coil or wireline to be run in the hole
` while they're fracking, and it protects the coil
` or the wireline from direct abrasion from the
` frac fluid.
` Q. How common is it that you would
` provide a blast joint on a job?
` A. We provide them all the time on coil
` tube and frac jobs.
` Q. Can there be more than one blast
` joint per job?
` A. Not necessarily, no.
` Q. Okay. And then the next line item,
` "Adaptor flange to one treating line," what does
` that relate to?
` A. If we have to supply a -- we have
` a -- say we have a four-way frac head and we have
` to have the top rigged up to be a fifth hole for
` them to run five lines, we may have to supply an
` adaptor flange back to a treating line connection
` on top.
` Q. So that would be if they wanted to
` increase pressure or flow through --
` A. Rate.
` Q. Rate?
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` A. But it depends on service company
` parameters of how many lines they need to run
` based on rate.
` Q. All right. And we say "rate," we're
` talking about the rate of the fracking fluid?
` A. Barrels per minute being pumped in
` the well.
` Q. So this would be something that's
` part of your isolation tool?
` A. On this, yes. This is on a stage
` frac tool, yes.
` Q. And the next line item, excuse me,
` "Tubing adaptor pin and head," what is that?
` A. That is -- I'm not sure why that's
` even in this price list, but tubing adaptor pin
` and head is for a frac -- more for a frac
` stack-related operation than a stage frac tool.
` I may not be the one to be best
` talking about that, but that would be my take on
` that tubing adaptor pin and head.
` Q. It sounds like something that's not
` normally part of a --
` A. It's not part of a stage tool.
` Q. Okay. And then, "Boom truck rental,
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` per hour (nondiscounted)," what does that mean?
` A. That would be our charge for our
` crane rental per hour, when we have a crane on
` location. We always have a crane on location
` with a stage tool.
` Q. Why does it say "nondiscounted"?
` A. Because we don't discount the rate.
` Q. Okay. And then "mileage charge,"
` what does that relate to?
` A. The mileage charge for heavy vehicles
` is all the -- basically, DOT vehicles that we
` have going out to location.
` Q. And I guess each of these
` reference -- I see each has a reference number.
` So the next one, reference number 1500, "Forced
` closure/flow-back charge," could you explain what
` that relates to?
` A. Forced closure and flow-back, if
` they -- it's done at the successful completion of
` a frac job, or sometimes it's done because the
` well screens out.
` We have a flow cross in between our
` two master valves on the tool that they can rig
` up a flow-back line to, and we charge them to
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` flow that back through our tool because it can be
` severely abrasive coming back through a side
` port.
` Q. So this is the frac fluid flowing
` back from the tool?
` A. Flowing back, yes.
` Q. So is there any other way to do a
` flow-back, other than through the tool?
` A. You could pull the tool.
` Q. And then the next line item, 1600,
` "Incomplete service" -- well, it's sort of
` obvious what that means, but I'll ask you to
` explain it.
` A. If we get to location and something
` beyond our controls happen that the job's
` canceled and the customer tells us he doesn't
` need us anymore, that would be our incomplete
` service charge for driving out there.
` Q. And then line item, 1400, "Additional
` time to complete job," please explain that too.
` A. That's just additional time after the
` first six hours, the base charge. It's per six
` hours on location after the -- after the first
` six hours.
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` Q. And that's just for the tool?
` A. Yes.
` Q. All right. So, in other words, if
` the tool is on location for more than one day --
` well, do these tools get used 24 hours a day?
` A. 24 hours a day, yes.
` Q. Okay. So this is a charge if they
` stop using it and it's just sitting there on the
` well? Or I guess it's the charge past six hours.
` I understand. I'm sorry.
` A. Yes.
` Q. Okay. The term "Stand-by time"
` sounds like it's not doing anything, but this is
` the charge whether --
` A. Stand-by time would be if they are --
` the stand-by time charge is if they're shut down,
` say, waiting on water, waiting on sand. There
` could be any number of issues why the job is shut
` down. That would be stand-by time on location.
` Q. I see.
` A. After six hours.
` Q. I see. Otherwise, the per stage
` charge is effective?
` A. Yes.
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` Q. I understand.
` Now, we have a series of line items.
` "Abrasive charge for all proponents," could you
` explain what those relate to?
` A. That's "Abrasive Charge for All
` Proppants."
` Q. I'm sorry.
` A. And "proppants" is a frac sand that
` is used on a frac job to prop the formation open,
` and we charge an abrasive charge because as they
` pump -- the more volume they pump through a tool,
` the more that tool wears out, and it's abrasive
` to the steel. And so we -- that's sort of like a
` wear-and-tear charge.
` Q. Oh. Oh, I see. Oh.
` So depending on how much -- I'm
` sorry, a proppant?
` A. Proppant.
` Q. Proppant. I'm sorry.
` Depending on how much proppant they
` force through the tool, they get charged
` according to this schedule?
` A. Yes.
` Q. I see.
`
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`OIL STATES ENERGY SERVICES LLC - B. McGUIRE - 8/1/14
` And then line item 13001, "Operator
` on location per six hours/per operator," could
` you explain what that is?
` A. That is our operator charge on
` location. We charge that per six hours, per
` operator.
` Q. And I take it there's -- how many
` operators are on location for each job?
` A. It -- generally, always two.
` Sometimes three. Some customers request four for
` a 12-hour change-out. But the ones -- if there's
` four on location and two off at any given time,
` we're only charging for the two that are on call.
` Q. And then the next line item, 0030-A,
` "Base charge 4-1/16 15K," what does that relate
` to?
` A. That's related to we have a couple
` 4-1/16 15K stage tools.
` Q. So that -- that is the base charge
` for the 4-1/16 15K stage tool?
` A. Yes.
` Q. That looks like it's less than the
` standard base charge; is that right?
` A. Yes.
`
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`CONTAINS HIGHLY CONFIDENTIAL
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`OIL STATES ENERGY SERVICES LLC - B. McGUIRE - 8/1/14
` Q. Why is that?
` A. Because it's a smaller size.
` Q. What is the standard?
` A. 5-1/8.
` Q. So what is a 4-1/16 -- that's also a
` stage frac tool?
` A. The 4-1/16 size is a stage frac tool.
` It's a 4-1/16 ID. It's basically for a
` smaller-type wellhead, and we've got three of
` those tools. The standard tool that we run is a
` 5-1/8 ID.
` Q. And so the ID of the tool, does that
` also represent the ID of the casing that
` you're -- that's in the well?
` A. No.
` Q. What -- is there a relationship
` between the ID of the tool and the ID of the
` casing?
` A. The only relationship is that you
` want the ID of the tool larger than the ID of the
` casing.
` Q. And then line item 0030-B, "Each
` additional stage," I take it that's the same as
` above --
`
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`Page 91
`OIL STATES ENERGY SERVICES LLC - B. McGUIRE - 8/1/14
` Q. Can you tell me what that document
` is?
` A. The e-mail page, or the back
` document?
` Q. Well, I guess the back document.
` A. It kind of goes back to Exhibit 38.
` I guess it's out of my boss' presentation of
` where we present to our upper management our key
` competitors and the competitive landscape.
` Q. There's a list of competitors on
` there. Do you recognize those competitors?
` A. Front or back? This one or...
` Q. Well, let's start with the list of
` competitors on OSES093617.
` A. Okay.
` Q. It says "Key Competitors." Do you
` recognize those competitors?
` A. Yes, I do.
` Q. And do any of them compete in the
` isolation tool business?
` A. Yes, they do.
` Q. Which ones?
` A. Halliburton, IES, Trojan, Canadian
` Wellhead, in the traditional form of competition
`
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`CONTAINS HIGHLY CONFIDENTIAL
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`Page 92
`OIL STATES ENERGY SERVICES LLC - B. McGUIRE - 8/1/14
` with isolation tool.
` Q. Are there others that compete in a
` nontraditional form?
` A. Yes. They run frac sleeves.
` Q. What are frac sleeves?
` A. Frac sleeves are a short piece of
` metal that has seals at the bottom and the top of
` it that they can put in the tubing spool and
` isolate the tubing spool, and then have a
` changeover flange from the top of the tubing
` spool to the frac valve, frac stack, that would
` take a 5K tubing spool, upgrade it to a 10K, and
` they'd have a 10K wellhead on top.
` There are quite a few companies out
` there that do that.
` Q. So where do they seal in the tubing
` spool?
` A. Just above the bit guide. They're
` installed manually.
` Q. Do any of them seal on the bit guide?
` A. Not to my knowledge, no.
` Q. So how long have these sleeves been
` used?
` A. Probably since 2- -- early 2003, 2004
`
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`OIL STATES ENERGY SERVICES LLC - B. McGUIRE - 8/1/14
` or 2005.
` Q. So the seal is basically -- I don't
` want to characterize your testimony, but my
` understanding from what you said, the seal would
` be sort of a mandrel that seals in the tubing
` spool above the bit guide at the bottom, and then
` it has a seal on the top that --
` A. At the top of the tubing spool.
` Q. That would seal against the frac
` stack?
` A. That would seal against a specific
` flange made for that.
` Q. The flange would be bolted onto the
` top of the tubing spool?
` A. The tubing spool.
` Q. And then the frac stack is bolted
` onto the flange?
` A. On top of that.
` Q. Okay. And what competitors use those
` sleeves?
` A. FMC, Cameron. A lot of the wellhead
` companies. Gosh, a lot of the wellhead companies
` have them.
` Q. Is there a disadvantage of the
`
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`Page 94
`OIL STATES ENERGY SERVICES LLC - B. McGUIRE - 8/1/14
` sleeve, as compared to an isolation tool?
` A. If you have a failure of a seal
` during a job, you cannot change out that seal
` very readily, and what you have to be able to do
` is run plugs, set plugs, isolate the well with
` bridge plugs, then you pull it off, change that
` out, where, with an isolation tool, if you have
` an issue with a seal, you can stroke -- you can
` shut the annular valve, you can stroke up, you
` can change it out, you can go back in the hole
` and be back in business again.
` It's a lot more expensive to do it
` the other way.
` Q. Do you know what the fail rate is on
` the sleeves?
` A. I have no idea.
` Q. Do you know what the -- when you say
` "failure," what kind of failure would you
` envision?
` A. You could have a seal failure, an
` actual pressure seal failure. You could have a
` wash that washed the short mandrel section,
` washed a hole in it that would allow
` equalization. You could have a top seal failure.
`
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`OIL STATES ENERGY SERVICES LLC - B. McGUIRE - 8/1/14
` Q. Do you experience such failures with
` your isolation tools?
` A. No.
` Q. Why not?
` A. I'm talking about specifically the
` frac sleeve.
` Q. Right. But I guess -- so the frac
` sleeve, though, has a mandrel inside, uses a
` mandrel. Wouldn't your mandrel be subject to the
` same type of failure?
` MS. AXELROD: Objection, form.
` A. No. And the reason why is because
` the way our tool is designed, we gather the fluid
` and we put it on size going into the mandrel.
` It's at size going into the mandrel.
` On a frac sleeve, your mandrel may be
` a 5-inch ID where everything above is 7-inch, and
` it changes ID in a very short, short distance in
` that wellhead, which causes it to go into a
` turbulent flow, which can cause wash and cause
` problems.
` BY MR. FELDHAUS:
` Q. So the mandrel on the sleeve would be
` a larger ID than the --
`
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`OIL STATES ENERGY SERVICES LLC - B. McGUIRE - 8/1/14
` responses.
` MS. AXELROD: Well, given he's the
` attorney that prepared the interrogatory
` responses, yes, he would be the most
` knowledgeable person about them. I'll have to
` take that request under advisement and see how
` I'd like to respond to that.
` MR. ROUSH: Sure. We conclude this
` deposition.
` MR. FELDHAUS: Are you going to ask
` any?
` MS. AXELROD: No.
` THE VIDEOGRAPHER: Off the record at
` 3:26.
` (Time noted: 3:26 p.m.)
`
` ______________________
` BOB McGUIRE
`
` Subscribed and sworn to before me this ________
` day of ________________, 20____.
`
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`Page 193
`
` C E R T I F I C A T E
`
` I, MICHAEL E. MILLER, FAPR, RDR, CRR,
`Notary Public in and for the State of Texas, do
`hereby certify:
` That BOB McGUIRE, the witness whose
`deposition is hereinbefore set forth, was duly
`sworn by me and that such deposition is a true
`record of the testimony given by such witness;
` That pursuant to FRCP Rule 30,
`signature of the witness was not requested by the
`witness or other party before the conclusion of
`the deposition;
` I further certify that I am not
`related to any of the parties to this action by
`blood or marriage; and that I am in no way
`interested in the outcome of this matter.
` IN WITNESS WHEREOF, I have hereunto
`set my hand this 13th day of August, 2014.
`
` _________________________________
` MICHAEL E. MILLER, FAPR, RDR, CRR
`
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