OPENING SLIDE #1 Imagine drilling for oil in a minefield! At least 200 million pounds of explosive devices have been dumped in our oceans over the years and they're posing a threat to oil & gas exploration. Hello everyone, my name is Paul Seely and today I'd like to discuss with all of you the topic of discarded Chemical Warfare Agents and Underwater Unexploded Ordnance, commonly referred to as UXO. As the world population continues to grow and we venture into previously remote areas to expand our search for resources, we are encountering hazardous remnants of wars past. Now most of us may not recognize these hazards or know how to mitigate the threats they pose. The objective of today's discussion is to bring awareness to the capabilities being offered by SAIC, primarily to the offshore oil & gas industry. We'll discuss briefly how this problem has come about and what SAIC can provide to solve the problem. SLIDE #2 Here's just a brief synopsis of what we'll be discussing. SLIDE #3 Alright, many of you are probably thinking, why are UXO a problem for the oil & gas industry? Here are some of the driving forces that make UXO a concern them. The oil & gas industry is being forced to search for viable wells in deeper waters because wells in shallower waters are being used up. As a result, they are entering what was once UXO and chemical dumping sites. Consequently, as we saw with the Deepwater Horizon incident, precautions must be taken to ensure well heads and pipelines are not subject to inadvertent exposure to high explosive detonations. Chemical barrels and munitions also pose a hazard should their contents become adhered to remotely operated vehicles, umbilical or other equipment that personnel may come into contact with. SLIDE #4 As you can see in this slide, the at sea dumping of UXO and chemical warfare agents was globally prevalent up until the early 1970's. This comes as a surprise to many people, but several incidents occur each year where fishermen inadvertently bring up these remnants of war in their nets. Not surprisingly, historical records were not well maintained, but several areas in the Gulf of Mexico and off the east and west coasts of the U.S. were documented and designated dumping areas. SLIDE #5 There are a total of 79 documented dump sites around the U.S. coastline. However, there was significant dumping outside these areas due to poor navigation equipment, emergency disposals and careless dumping practices. The website uxoinfo.com is building a database of these dump sites. This is a brief list of some sites on the east coast. SLIDE #6 Before we get into the capabilities offered, let's take just a minute to consider why they would be important to our customer. When oil & gas companies conduct operations out to sea, they incur significant expenses. Each day at sea adds to that expense and if operations are delayed because of UXO or Chemical agents, the companies are losing millions of dollars a day. Even more unsettling is the risk of damage to equipment, well heads or pipelines from an accidental detonation. This is why having experts on scene who can immediately and conclusively identify, characterize and mitigate the UXO threat is very important from both a safety and cost savings perspective. SLIDE #7 Now here's a snapshot of what SAIC can provide that will help keep at sea delays because of UXO to a minimum. Basically, we do preliminary research to find out if the area of operation is a recorded dump site or how far away the nearest recorded dump site is. From there, we train ROV operators on precautions when operating around UXO or chemical warfare agents. Finally, when suspected UXO is encountered, we identify it, assess its condition (i.e. armed or unarmed) and formulate a mitigation strategy based on the requirements of the customer and the condition of the UXO. SLIDE #8 This is a more detailed outline of the services offered. We've broken the operation down in phases, beginning with Phase 1, the desktop study. This phase provides an estimation of what might be encountered and is a helpful planning tool. SLIDE #9 Phase II begins with the AUV or sonar survey of the intended area of operation. It identifies potential UXO threats as sonar anomalies and is the first indication of how cluttered the environment is. Additionally, anomalies can be categorized by size, location and marked for follow on ROV investigation. SLIDE #10 The ROV investigation or Phase III gives us the best picture of the anomaly and in most cases the anomaly can immediately be categorized as a UXO, Chemical container or other non-hazardous debris. It is also important during this phase to ensure the ROV operator is maintaining good umbilical discipline, as dragging it across UXO could cause a detonation and destroy the ROV. SLIDE #11 This brings us to the final phase of the service, mitigation. Based on the preceding phases, can the item be avoided? If the answer to this question is no, then we begin weighing our other options, for instance: Is the UXO armed? Is it safe to move? Does it contain chemical warfare agents? The ultimate decision will be based on the type and condition of the ordnance, as well as, environmental considerations and customer desires. SLIDE #12 Our technology in the area of mitigation sets our service apart from our competitors. High pressure abrasive water jets have been used extensively on land for UXO operations, however, we are continuing the development of these jets for underwater use. This gives another option to customers besides simply blowing up an underwater UXO. The High pressure abrasive water jet can essentially dissect a UXO underwater and we can also contain the waste stream. This is a much more environmentally friendly approach when compared with an underwater detonation. SLIDE #13 It's always helpful to look ahead for future opportunities, so here are some possibilities for future expansion in alternative energy and environmental remediation areas. SLIDE #14 I do thank you all very much for your attention and as a quick review of our discussion let's recap the main topics we covered today: 1. The driving forces of the underwater UXO problem 2. A concise history of underwater UXO 3. SAIC's services and why they're valuable to the customer 4. Details about our services and what sets them apart 5. Some potential areas of future expansion. SLIDE #15 This is what we as SAIC need to pursue opportunities with the oil & gas industry: 1. Funding to hire four qualified EOD Technicians 2. Beginning travel budget of $35k 3. Support from Business Development 4. IR&D Budget of $75k to complete development of the underwater water jet SLIDE #16 Are there any questions? Again, thank you.