`SOUTHERN DISTRICT OF TEXAS
`HOUSTON DIVISION
`
`WESTERNGECO LLC
`
`VS.
`
`ION GEOPHYSICAL
`CORPORATION, EUGRO
`GEOTEAM,
`INC., ET AL
`
`O9-CV-1827
`
`Houston, Texas
`
`7:30 a.m.
`
`July 30, 2012
`
`JURY TRIAL
`
`Volume 6
`
`Morning Session
`
`BEFORE THE HONORABLE KEITH P. ELLISON
`UNITED STATES DISTRICT JUDGE
`
`APEEARANCES:
`
`GD~JCDLNJ>LUPOF4
`
`MD
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`10
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`11
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`12
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`13
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`14
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`15 FOR THE PLAINTIFF:
`
`Lee L. Kaplan
`16 SMNSER, KAPLAN & VESELKA, LLP
`700 Louisiana, Suite 2300
`17 Houston, Texas 77002
`713.221.2300
`
`18
`
`19 Gregg F. Locascio
`KIRKLAND & ELLIS LLP
`20 655 Fifteenth Street Northwest
`Washington, DC 20005
`21 202.879.5290
`
`22
`
`Sarah Tsou
`
`23 Timothy K. Gilman
`KIRKLAN & ELLIS LLP
`
`24 Citigroup Center
`153 East 53rd Street
`25 New York, New York 10022
`212.446.6435
`
`Johnny C. Sanchez, RMR, CRR — jcscourtreporteI@aol.com
`
`WESTERNGECO Exhibit 2121, pg. 1
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`Direct~Walker/By Mr. Locascio
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`1 Q.
`
`If you turn to PTX 114.
`
`2 A.
`
`That's the one.
`
`The 114 that's on the second page.
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`3 What's that?
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`956 reference. That's —— a bit small, but
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`4
`
`if you look at the second paragraph.
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`MR. LOCASCIO: Blow that up. Thank you.
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`THE WITNESS:
`
`Zoom in on that.
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`Another example where Q—Marine's enhanced
`
`acquisition techniques is in maximizing subsurface coverage
`
`33 surveys.
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`So this was -— this is actually a magazine
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`10 article.
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`It's a final draft which was sent for me for fact
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`11 approval. But it's a magazine article having to do with a
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`12 trade show.
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`13
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`And over the Marlim complex of fields
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`14 operated by Petrobras in Campos basin, heavily obstructed
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`15 area, known for unpredictable currents and sea states.
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`16 Innovative utilization,
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`remote source vessel, continuous
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`17 recording and streamer steering enabled subsurface
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`18 coverage.
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`19
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`So on that project, say it was a direct
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`2O award, we acquired it and they could tell from —— given the
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`21 quality of the data, which they'd never got before,
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`they
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`22 could see that there were actually two fields,
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`that the two
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`23 bits weren't actually connected. And so,
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`that completely
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`24 changed their development plans for the second field.
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`25
`
`MR. LOCASCIO: Dave, can you zoom out a second?
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`Johnny C. Sanchez, RMR, CRR — jcscourtreporter@aol.com
`
`WESTERNGECO Exhibit 2121, pg. 2
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`Directwwalker/By Mr. Locasaio
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`BY MR. LOCASCIO:
`
`Q.
`
`At the bottom left, it's sort of looks like there's a
`
`Q video game.
`
`Do you see that?
`
`08:18:11
`
`A.
`
`Yeah.
`
`Q.
`
`Can you tell us about that?
`
`A.
`
`We have —— we do have fun sometimes. This —— we
`
`wanted to get the —- find a way of getting the point over
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`to our customers, because this was still very new. And
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`0&1&25
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`so, we —— this was on the trade show floor for two or
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`three years, and we invited our customers to sit down.
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`And it's —— the graphics were fairly simplistic, but
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`behind it was -- we'd introduced the enhancement to Q
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`called "advanced spread control," and that really
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`08m8m7
`
`L
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`automated and got these different modes.
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`So we had them steer the vessel through
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`some obstructions, around some obstructions, and they did
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`it twice.
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`The first time they did it conventionally, and
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`the second time we switched the streamer steering on and
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`08m9m2
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`they could get through the —— get through the
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`obstructions.
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`It proved to be very popular, and we gave
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`them —- there was a PS3 as a prize at the end of each day
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`for the highest score, and you basically started from
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`20,000 to down when you were offline.
`
`o8n9n9
`
`There was interest because we had -- it
`
`Johnny C. Sanchez, RMR, CRR — jcscourtreporter@aol.com
`
`WESTERNGECO Exhibit 2121, pg. 3
`PGS v. WESTERNGECO
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`Directewalker/By Mr. LoCascio
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`was great for us because the students all came along, but
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`the people who won it every day were the older people
`
`because the students are doing this, and older people are
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`just a little bit more calm.
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`So they tended to win.
`
`And
`
`they said, PS3. What the hell am.l going to do with that?
`
`Q.
`
`Sir, was the technology behind the scenes, if you
`
`will, running this similar to the actual lateral steering
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`technology you used on the boat?
`
`A.
`
`It was exactly.
`
`It was a massive computer actually
`
`behind it. Didn't look very —— graphically that exciting.
`
`No, it was exactly that.
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`So we put currents into it, and it behaved
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`exactly the way the streamers do behave in the real world.
`
`So it was —— it was a bit of entertainment, but it was
`
`serious as well.
`
`Q.
`
`I want talk to you about other customer reactions.
`
`I‘ you can turn to PTX 94 in your binder.
`
`Were there oil companies that believed
`
`that lateral steering was critical to 4D efforts?
`
`A.
`
`There were.
`
`So this is ~— this is a magazine article
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`for "Offshore Technology." And of course,
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`they phoned us
`
`up and asked us for pictures, but we had no control over
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`what went into this one.
`
`So you can't say you're not
`
`going to do it.
`
`H was pleased when it came out.
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`So "Offshore Technology" is one that is used
`
`Johnny C. Sanchez, RMR, CRR — jcscourtreporter@ao1.com
`
`¢>C0D0F4
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`5 6 7 8 9 0
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`L1
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`L2
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`L3
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`4 5
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`7
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`Pd CD
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`DJ J>
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`DJ CD
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`WESTERNGECO Exhibit 2121, pg. 4
`PGS v. WESTERNGECO
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`Di'rect—Wal]<er/By Mr. Locascio
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`for all our industry,
`
`the oil industry.
`
`So some of you
`
`guys may be in the oil industry if we're in Houston. You
`
`may read this magazine.
`
`I don't know.
`
`So to get a seismic article in "Offshore
`
`Technology" was quite —— at the time quite unusual.
`
`Anyway, yes, so it's ~~
`
`If you look at this top section --
`
`MR. LOCASC: 0: Dave, can we pull up this?
`
`BY MR. LOCASCIO:
`
`Q.
`
`It says,
`
`"WesternGeco's marine seismic solution is
`
`gaining acceptance among E&P companies for it's high
`
`definition images and vast improvement in repeatability."
`
`Are the E&P companies the oil companies?
`
`A.
`
`Yes.
`
`The E&P stands for exploration and production.
`
`I was very happy with that headline.
`
`MR. LOCASCIO: And if you turn to the second
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`page. Dave, if you can flip.
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`8 9
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`10
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`ll
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`12
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`13
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`14
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`15
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`16
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`17
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`18
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`BY MR. LOCASC:O:
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`19
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`20
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`21
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`22
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`23
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`24
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`Q.
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`There's a picture down here at the bottom that I want
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`to ask you about.
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`A.
`
`Right.
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`Q.
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`A.
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`Can you tell the jury what that is?
`
`Yes. This is a screen dump.
`
`So on the boat,
`
`the
`
`navigators who are monitoring where everything is in the
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`instrument room are watching continuously where everything
`
`Johnny C. Sanchez, RJVIR, CRR — jcscourtreporter@aol.com
`
`WESTERNGECO Exhibit 2121, pg. 5
`PGS v. WESTERNGECO
`IPR2014-00689
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`Diroct—Walker/By Mr. LoCascio
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`CI)\10‘\U'!»J>QJl\)9—‘
`
`is. And.we position everything so we know where it is.
`
`So the convention on the left—hand side is
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`a screen dump.
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`It was a Q-Marine vessel, but we switched
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`the steering off. And this —- I wanted this picture.
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`Switch the steering off, and there was a
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`bit of a cross—current, and you can see where —— I think
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`that this was about the last shot point before we switched
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`the gun. You can understand they bottled at that point.
`
`Q.
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`Looks like you're flying pretty close to the edge
`
`there.
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`A.
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`Very close to the edge, yeah.
`
`I was —— I thought it
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`was a great shot, but I was glad I saw it after.
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`I think
`
`if I'd been on board,
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`I would have —— whew.
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`Anyway, so that's conventional, and then
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`we switched the steering on.
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`So it's the same vessel.
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`And then the second —— the picture on the right—hand side
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`is the steered streamers. And those two pictures were
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`taken 20 minutes apart.
`
`Q.
`
`So that's real data. That's not just somebody's
`
`cartoon of what this looks like?
`
`A.
`
`Oh, no, no. That's real screen data. That's a
`
`screen dump from the on board Vessel.
`
`MR. LOCASCIO: Thanks, Dave.
`
`BY MR. LOCASCIO:
`
`Q.
`
`Sir, what's WesternGeco's policy on licensing its
`
`Johnny C, Sanchez, RMR, CRR — jcscourtreportor@aol.<:om
`
`WESTERNGECO Exhibit 2121, pg. 6
`PGS v. WESTERNGECO
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`Direct—Walker/By Mr. LoCasci'o
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`Q.
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`Why?
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`A. Well, there's two reasons: One,
`
`i talked about
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`someone having —— putting a bid in a country where the
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`government may have a say, so you may say we would put in
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`something -— and probably our competitors would as well --
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`not just specific to ours —— put in something that just
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`meets that technical requirement, even though you don't
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`know that's a real technical requirement, and then we'd
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`put in an alternative that meets the technical
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`requirement.
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`The only thing is we want to demonstrate the
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`value of our technology.
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`Q. What do you mean?
`
`A. Well, we can —— we can show customers, well, if you
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`did it without,
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`then you can work through in cost. We may
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`work up a costing on exactly what a project would cost
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`without, and demonstrate the saving costing with, and then
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`they can make up their mind. And it's there in black and
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`white because it's our opportunity.
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`It's our shop window
`
`to —— the technical people are convinced, but we need to
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`deal with procurement departments as well.
`
`Q.
`
`Let's look at another tender, sir, PTX 543.
`
`can we pull that up some. Thank you.
`
`If we can j
`
`blowup from this piece right here.
`
`Can you explain to the jury what we're
`
`looking at here in Plaintiff's 543?
`
`Johnny C. Sanchez, HMR, CRR — jr:scourfreporter@aol.com
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`1 2 3 4 5 6 7 8 9
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`1O
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`18
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`25
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`WESTERNGECO Exhibit 2121, pg. 7
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`Di'rect—Walker/By Mr. LoCascio
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`OI)\10\U‘|nJ>(;J[\)!-—‘
`
`A.
`
`So this is Apache PA Australia.
`
`So this is when you
`
`look at it, this is three surveys.
`
`It says "WA26lP334P"
`
`and "246" and "247P" combined.
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`So the northwest shelf of Australia is a
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`very perspective area.
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`It's a very interesting area.
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`Zt's partly -— there's quite lot of production from it and
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`it's open, and Apache is particularly active.
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`It's got a
`
`lot of blocks out there.
`
`Okay. Did you bid on this job?
`
`We did bid on this job.
`
`And did you get this job?
`
`No, we didn't, unfortunately. Which was particularly
`
`a shame on this one because this three was just the start
`
`of a whole sequence of projects.
`
`Q.
`
`A.
`
`Q.
`
`Do you know who got this job?
`
`Fugro did with ION DigiFlN.
`
`And how do you know that Apache wanted lateral
`
`steering on this job?
`
`A.
`
`So if you go down a bit on this —— so first of all,
`
`it's Apache, and it's February 2010.
`
`So I know Dave
`
`Marcus, who is a very dominant character, chief physicist
`
`for Apache will be saying I want streamer steering on all
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`this project because he decided at the end of 2008.
`
`So if
`
`I had nothing else, again,
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`that would be a big clue.
`
`Q.
`
`Does the letter we're looking at here, tell you
`
`Johnny C. Sanchez, RMR, CRR — jcscourtreporter@aol.Com
`
`WESTERNGECO Exhibit 2121, pg. 8
`PGS v. WESTERNGECO
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`Direct—Walker/By Mr. Locascio
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`something as well?
`
`A.
`
`Yeah.
`
`If you go to the middle,
`
`the big paragraph
`
`there's a bit that's underlined.
`
`Q.
`
`Did you underline that or did it come that way from
`
`Apache?
`
`A.
`
`No, it came that way from Apache. They want to be
`
`absolutely clear on their requirements.
`
`Q.
`
`A.
`
`And what does it say?
`
`So if you look at the —— don't read it all, but that
`
`first line preferred acquisition, it says 10 times 75
`
`times, 5000 meters.
`
`Q.
`
`A.
`
`is that right here in that first sentence?
`
`Yeah. And underneath it just two lines down it says,
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`10 times 75 times 6,600 meters.
`
`Q.
`
`Now,
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`that way of describing a streamer array with 3
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`numbers, 10 times 75 times 5000 meters. What does that
`
`say?
`
`A.
`
`So that says I want 10 streamers,
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`I'd like 10
`
`streamers.
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`I want them 75 meters apart, and they will be
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`for these —— remember this is three projects. One project
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`wanted 5,000 meters, and the other two projects I think
`
`wanted 6,600 meters long.
`
`So I've got a very long spread
`
`with streamers quite close together for that part of the
`
`s-l>(A)l\3I—‘
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`Q.
`
`Okay. And what does that indicate to you about the
`
`Johnny C. Sanchez, RMR, CRR — jcscourtreporter@aol.com
`
`WESTERNGECO Exhibit 2121, pg. 9
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`DireCL—Walker/By Mr. LoCascio
`
`l
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`customer's requirements for this job?
`
`A.
`
`He's obviously —— the needs have that streamer
`
`separation, so even if it wasn't Apache, we'd be looking
`
`and saying we'd want to do streamer steering on this
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`project.
`
`Q.
`
`Because for a 6,600—meter streamer --
`
`A.
`
`75 meters apart, that's a very dense spread without
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`lateral steering.
`
`Q.
`
`Did they tell you anything else, or did you have to
`
`just go on that basis?
`
`A.
`
`No.
`
`if you turn to the next page and you can see
`
`there's a bit in bold, right in the middle. And they
`
`said —— you can read that, "Proposals offering streamer
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`lengths greater than 6,500 and 5,000 meters, and number of
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`streamers fully steerable of 4 or more will be
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`considered."
`
`Q. What does that mean?
`
`A.
`
`So that means I must,
`
`:'m not going to compromise on
`
`streamer length, go ahead and 6,500 and greater than
`
`5,000. Now, because the streamer length really controls
`
`how deep you can get your seismic image from, so that's --
`
`streamer length is really important and number of
`
`streamers fully steerable, so they must be fully
`
`steerable. At the time some people were saying I'll just
`
`steer the tail.
`
`So fully steerable. And what's
`
`Johnny C. Sanchez, RMR, CRR — jcscourtreportcr@aol.com
`
`WESTERNGECO Exhibit 2121, pg. 10
`PGS v. WESTERNGECO
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`Direct~Wal]<er/By Mr. LoCascio
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`interesting here is it says four or more.
`
`Q.
`
`A.
`
`I thought he wanted 10?
`
`He wanted 10, but what he's signaling here is he will
`
`compromise on the number of streamers. That's a soft
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`technology requirement that they must be fully steerable
`
`and they must be that length.
`
`Q.
`
`If we can turn to the next header, 822 in your
`
`binder.
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`If we can pull that up.
`
`A"
`
`By the way, he also puts it explicitly underlined
`
`in —— in case we didn't get the point, it's on Page 008,
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`it says,
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`"A method for steering the streamers will be
`
`considered as a prerequisite."
`
`1 2 3 4 5 6 7 8 9
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`1O
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`11
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`12
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`13
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`Q.
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`Okay. Dave, can you pull that up?
`
`14
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`15
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`16
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`17
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`18
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`A.
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`A little bit belt and suspenders maybe, but I think,
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`you know --
`
`M. LOCASCIO:
`
`543.
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`THE W_ TNLSS: You couldn't fail to get the
`
`message on that one.
`
`19
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`BY MR. LOCASCIO:
`
`2O
`
`21
`
`22
`
`23
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`24
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`25
`
`Q. Where did you see that it was a prerequisite in this?
`
`A”
`
`Q.
`
`A.
`
`Q.
`
`If you look at Page 008 ~-
`
`Okay.
`
`If you look Section 1, which has been underlined.
`
`Okay. This is the first sentence where it said,
`
`"A
`
`method for steering of the streamers will be considered a
`
`Johnny C. Sanchez, RMR, CRR — jcscourtreporter@aoI.com
`
`WESTERNGECO Exhibit 2121, pg. 11
`PGS v. WESTERNGECO
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`09:11:15
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`CO~J(7\(II#5L0B0F4
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`Direct~Walkcr/By Mr. LoCascio
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`prerequisite"?
`
`3’
`
`Yeah.
`
`Q.
`
`That's pretty clear indication that you have to have
`
`it on this job?
`
`A.
`
`Yeah.
`
`if we missed the subtle and the unsubtle,
`
`that's the kick where it hurts,
`
`just in case we were
`
`asleep on —— and the person doing the bid was asleep.
`
`Q.
`
`Dave, if we can go to 822 again, please.
`
`Mr. Walker, if you turn to the binder to PTX
`
`822. Can you tell us what tender this is?
`
`A.
`
`Yes.
`
`So this is a Tullow for Cote d'Ivoire, which is
`
`Ivory Coast.
`
`Q. Where is that?
`
`A.
`
`That's in the Gulf of Guinea. We're doing a lot of
`
`Guinea. This is the gulf of Guinea in West Africa.
`
`So
`
`it's two or three countries to the west of Nigeria for
`
`that job.
`
`And did you bid on this job?
`
`We did bid on this job.
`
`And did you get this job?
`
`No. We lost this.
`
`To who?
`
`To Fugro with ION DigiFIN.
`
`Does this tender tell you anything that indicates you
`
`09:12:08
`
`need to use lateral steering?
`
`Johnny C. Sanchez, RMR, CRR ~ jCscourtreporter@aoZ.com
`
`WESTERNGECO Exhibit 2121, pg. 12
`PGS v. WESTERNGECO
`IPR2014-00689