Recognition Programs. Chinook Drilling 8/9/2012

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1 2012 Recognition Programs Chinook Drilling 8/9/2012

2 2

3 3 Table of Contents 34.0 Recognition & Accountability Programs Operational Management Rig Manager Driller Crew Members Recognition Programs Safety Day Program Loss of Safety Days - Rigs, Rig Managers and Drillers Management Involvement Field Employee Involvement CAODC Safety Day Program - Rigs, Rig Managers and Drillers Safety Point Recognition Program Increase in Accumulation of Points (1000 day Level) Taxable Benefit Hazard ID & Near Miss Reports-All Employees HSE Program Improvements-All Employees Completion of Documentation-Rig Managers Regulatory Compliance WCB- Rig Managers and Drillers Only Loss of Safety Awards Points Rig Manager Bonuses Accountability...11

4 Recognition & Accountability Programs Recognition awards will be given throughout the year for work efforts deemed above average. Outstanding performance in all areas, including safety, is a priority of Chinook Drilling Operational Management. The Company is an active participant in industry safety award programs through the CAODC Industry Association. In addition, a Company Safety Recognition Program is in place. It includes awards for achievement of safety goals and objective as well as programs recognizing individual initiatives and overall rig performance. Awards presentations are made periodically at the worksite, company and industry functions. Management has an obligation to promote these programs through active participation in awards ceremonies Operational Management Operational Management is accountable for the safe work of all Rig Managers and crews employed at work sites assigned to their specific responsibility. Appraisals of their performance and reviews for continued service and/or compensation shall include safe work as a significant component in their performance recognition Rig Manager The Rig Manager is accountable for the safety of all crew members employed on the work site. Appraisals of his performance and reviews for continued service and/or compensation shall include safe work as a significant component in his performance recognition Driller The Driller is accountable for the safety of all crew members employed on the work site during his shift Crew Members All employees including those active in the Company & Industry Recognition Programs are accountable for the personal safe work performance and the safety of coworkers.

5 Recognition Programs Chinook Drilling has established a comprehensive employee recognition program that promotes outstanding performance. Achievements by individuals, crews and manager shall be recognized through corporate awards for: 1. Safety Days Recognition 2. Safety Point Recognition 3. Specific Employee Recognition Years of service Improvement to HSE Programs 4. Industry Awards Individual Recognition Rig Recognition In addition, Rig Managers shall be rewarded by Rig Manager Day bonus program. See Section 41.0 The key to this program is: Safe Work Performance Hazard Recognition Compliance with Regulations Management of Contract Obligations General Administrative Skills The objective of this program shall be to recognize and reward both achievement and effort in the realization of the Company s goals and objectives Safety Day Program Chinook Drilling will measure and track safety performance of all employees via safety record keeping systems. Safety days will be accumulated for Rig Managers based on the safety performance of all employees on the rig. In addition, company safety days will be accumulated for all employees based on the safe work performance of all on tour at any one time. Employees will be eligible for awards as they reach preset safety day levels. The safety day program works in conjunction with company and industry recognition programs. SAFETY DAY AWARDED- 1.5 day / 12 hr (Field Employees) SAFETY DAY AWARDED- 1.5 day / full day (Rig Managers) SAFETY DAYS DEDUCTED- Safety days will be deducted as per policy

6 Loss of Safety Days - Rigs, Rig Managers and Drillers Accountability for a safe work environment and ability to reach levels of recognition is favourable for each individual employee and Rig. When a serious incident occurs, loss of recognition will occur. The following will outline the circumstances where these instances will take place Management Involvement Operational Management will monitor and ensure compliance and accountability within the program policies and standards Field Employee Involvement Rig Manager The Rig Manager is accountable for the safety of all crew members employed on the work site. In the event of a Lost Time Accident, the Rig Manager will lose accumulated Company and CAODC safety days. Loss of safety points will be deducted as per policy. Driller The Driller is accountable for the safety of all crew members employed on the work site during his shift. In the event of a Lost Time Accident during the shift, all employees on shift at the time of the accident, including the driller, will forfeit accumulated company and CAODC safety days. Loss of safety points will be deducted as per policy. Crew Members All employees including those active in the Company & Industry Recognition Programs are accountable for the personal safe work performance and the safety of coworkers. In the event of a Lost Time Accident during the shift, they will forfeit accumulated company days. Loss of safety points will be deducted as per policy. Example: Rig and crew on tower has 1000 days and a lost time incident occurs, the Rig and crew will lose all safety days accumulated. Rig Manager will also lose all accumulated safety days. Other crews will have their safety days intact; however will be a part of the overall loss of days on the rig. Rig Manager- accumulated days goes to 0 days Crew on Shift- accumulated days goes to 0 days Other Crews- all individual days remain intact. NOTE: Along with the above deductions if an employee quits without notice they will forfeit all accumulated points and safety days.

7 CAODC Safety Day Program - Rigs, Rig Managers and Drillers In addition to the Company Recognition Programs, Chinook Drilling will participate in the Canadian Association of Oil Well Drilling Contractors (CAODC) Industry Recognition Program and will abide by the association s rules. Under this program, Rigs, Rig Managers, and Drillers are recognized at 200, 400, 600, 800, 1000, 1200, 1400, etc. safety day performance achievements. Chinook Drilling will administer this program for all Rigs, Rig Managers, and Drillers, according to the rules set out by the CAODC. Recognition for the achievements will be made at the annual recognition awards night. NOTE: This recognition is separate from Chinook Drilling s safety point recognition program.

8 Safety Point Recognition Program The Safety Point Recognition program awards employees for working safely and contributing to the ongoing of identification of hazards, improvements to current policy/procedures/etc, completing documentation, legislative compliance, or other suggestions that improve efficiency and safety. This program works separately and in conjunction with the safety day program in order to award points. 1. Each employee with the exception of operational management will be eligible for the safety point recognition program. 2. Each field employee will be rewarded for each safe day worked and are awarded after every accumulated 25 safety days. (E.g. 12 hrs equals 1.5 safety days times 16.7 equals safety days) POINTS AWARDED- 1.5pts / 12hr (Field Employees) POINTS AWARDED- 1.5 pts / day (Rig Managers) POINTS DEDUCTED- Points will be deducted as per policy. Refer to Section NOTE: Safety days are based on prorating through a computer database system. The above examples are to assist in simplifying the explanation. This means all hours will be accumulated until they reach the 25 day threshold, then points are awarded Increase in Accumulation of Points (1000 day Level) Along with normal accumulation of points reaching significant plateaus will be rewarded with additional rewards. After 1000 days have been accumulated with no lost time injuries, all field employees will be rewarded by double of bonus points per shift/day. POINTS AWARDED- 2 pt/ 8hr (Field Employees) or (3pts / 12hr Shift) POINTS AWARDED- 3 pts/full day (Rig Managers) 39.2 Taxable Benefit Redemption of safety points for work site safety items such as fire retardant clothing, safety footwear etc are not considered taxable items. Redemption of safety points for items other than safety items results in a taxable benefit to the employee and the amount of the taxable benefit will be included in the employee s employment income.

9 Hazard ID & Near Miss Reports-All Employees 1. All rigs documents will be reviewed and top 3 hazid/nm reports will be flagged for recognition and additional reward points. 2. If no documents are submitted then no points or recognition can be given on selected rigs. 3. The top 3 selections will be reviewed by the HSE Coordinator & Field Superintendent for approval & reward of points 4. Each of the top 3 from each rig will be awarded 15 points to their safety award points 5. List of award winners will be distributed to all rigs at the end of each quarter for posting and review POINTS AWARDED- 15pts/employee 39.4 HSE Program Improvements-All Employees 1. Contribution to improvement to safety to specific Rig locations 2. Contribution to Improvements to safety to Chinook Drilling programs POINTS AWARDED pts 39.5 Completion of Documentation-Rig Managers 1. Completion of Inspection as required by policy 2. Completion of meetings as required by policy 3. Corrective actions in a timely manner 4. Correct & complete submission or incident reports and injury documentation within 24-48hrs POINTS AWARDED- 15pts 39.6 Regulatory Compliance Awarding of points for compliance 1. Compliant inspections from OHS, ERCB, etc with no non compliance infractions 2. Satisfactory compliance with the COR Audit Loss of points for non-compliance 1. Unsatisfactory Inspections (2+ deficient items) POINTS AWARDED- 30pts POINTS DEDUCTED- 30pts

10 WCB- Rig Managers and Drillers Only Awarding of points for compliance 1. LTI Free Year 2. Injury Recordable Free Year 3. WCB documentation submission within 72 hours of injury Loss of points for non-compliance 1. Recordable Incident- Lost Time Incident, Restricted Work, Medical Aid 2. WCB documentation not submitted within 72 hours of injury POINTS AWARDED- 100pts POINTS DEDUCTED- 100pts 40.0 Loss of Safety Awards Points In order to assist with accountability at every level, if any individual crew member sustains an injury that requires time away from their regular duties, all members of the crew and Rig Manager will lose all or part of their accumulated safety awards points. DESCRIPTION POINTS DEDUCTED Lost Time Incident (LTI) 500 Restricted Work Case (RWC) 250 Medical Aid 250 Example: Rig Manager has 1000 points accumulated and a lost time incident occurs, the Rig Manager will lose 500 points, as such, will have 500 points remaining. All Crew members on Shift were the LTI occurred will have 500 points deducted. If they have less than the maximum deduction amount then, they will forfeit all points accumulated to that point. (E.g. LTI incident: 405 points accumulated- 500 point deduction= 0 points remaining) NOTE: Safety infractions deemed serious enough by Management to warrant disciplinary action could result in reduction of safety points for an individual or entire crew. NOTE: Along with the above deductions if an employee quits without notice they will forfeit all accumulated points and safety days.

11 11 NOTE: Currently if an employee is inactive for longer than six months, their accumulated safety points will be removed. If the employee becomes active again following the six months they will begin accumulating safety points from zero Rig Manager Bonuses In addition to salaries and day rates, a Rig Manager Bonus will be paid to eligible employees on an annual basis. The bonus paid will be affected by four variables: The overall bonus pool is based on company cash flow performance as compared to budget and will be approved annually by the Chinook Drilling Management. The bonus will be prorated to DAYS WORKED (each Rig Manager should qualify for his pro rata share of the pool above based on days worked over total eligible Rig Manager days worked.) An accountability point system will be used to determine the individual Rig Manager s achievement of his pro rata share of the pool based on four performance criteria. In order to be eligible to receive a bonus, the Rig Manager must be employed by the company and at April 1 st of the following year. ITEM BONUS DEDUCTIONS SAFETY (maximum deduction $4000) LTA as defined by WCB/CAODC $2000 WH&S report with a 1,2,3 unfavourable ratings $500 ERCB INSPECTION Unsatisfactory ERCB rig inspection $500 TOTAL DEDUCTIONS $ Accountability All employees of Chinook Drilling are accountable for safety performance; working safely is a condition of employment.

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